In 2019, pharmaceuticals accounted for between 7% and 34% of total health spending by OECD countries. However, advances in the research and development of innovative medicines are significantly transforming the healthcare landscape, allowing chronic diseases – the greatest cost drivers – to be treated more effectively and affordably.
Our approach to pricing medicines
To help ensure that all patients have access to the most effective medicines for their needs, we are working to prevent cost from becoming a barrier to treatment. Therefore, we adapt our medicine prices according to people’s ability to pay in different geographical or socioeconomic segments.
We are committed to fair, flexible and sustainable pricing – both within and across countries. We therefore adapt our prices based on local market considerations, such as unmet medical and treatment needs, health system capacity, infrastructure, and education standards. This approach involves working closely with governments and other stakeholders. In addition, we continuously monitor dynamic healthcare environments and markets, pricing and reimbursement systems as well as legal and regulatory guidelines, adjusting our prices as necessary.
We conduct price analyses annually to validate price thresholds and provide guidance on local pricing to our subsidiaries for the following year to ensure they meet patient access needs, taking a consistent, data-driven approach. We also make our products affordable to patients in low- and middle-income countries with an equitable value and access strategy that includes participating in government tenders, providing flexible pricing, establishing high-quality affordable brands or branded generics, and operating patient access programs.
Furthermore, we support innovative risk-sharing agreements and are working to improve data efficiency in health systems in order to achieve an optimal distribution of funds and resources.
Roles and responsibilities
Our Global Market Access and Pricing unit evaluates market launch prices in coordination with the respective franchises. The team reports directly to a member of our Healthcare Executive Committee. The GMAP unit systematically evaluates and applies our medicines portfolios for equal access initiatives. Our local affiliates are responsible for managing prices and adapting them to evolving local conditions in compliance with our pricing governance and the defined price approval process.
Our commitment: Medicine price guidelines and principles
The affordability of our health solutions is part of our broader patient value proposition. Our medicine pricing adheres to the stipulations of our overarching Access to Health Charter and is defined in detail in an internal guideline. Additionally, our Patient Access Programs Policy sets out standards for offering medicines at affordable prices.
Value-based contracting models
We are committed to advancing value-based healthcare through pricing and contracting mechanisms that fully comply with all applicable local laws and regulations. In collaboration with payers, such as health insurance companies, we have developed various product- and market-specific reimbursement and contracting models. These help to provide patients with prompt access to our innovations.
In Germany, Ireland and the United Kingdom, we continued in 2021 with innovative risk-sharing agreements that provide immediate access to Mavenclad® for patients with multiple sclerosis (MS). In addition, we expanded the value-based contracting model for Mavenclad® to ten more countries in Asia, Europe, Latin America, and the Middle East.
Equitable value and access approaches to serve low- and-middle-income patients
We work in close partnership with governments and other stakeholders on innovative, differential medicine pricing schemes. In addition, we supply products at affordable prices to certain countries in Africa, Asia, Latin America, and the Middle East. In India, for example, we collaborate with public sector representatives across the oil and gas, energy, and railway sectors to offer certain general medicine and endocrinology products to underprivileged patients at discounted prices.
Strategic tender activities
Our Biopharma tender excellence initiative offers a strategic tender framework. This includes a web-based system that helps country teams increase quality and agility in tender decisions, while improving performance tracking and collaboration. We regularly participate in government tenders for products used in public hospitals serving low-income patients. Many of these tenders take place in low- to middle-income countries.
High-quality, affordable second brands
For some of our existing high-quality products, we have created second brands at affordable prices, particularly in countries with a large percentage of patients with very low incomes. For example, second brands for the betablocker bisoprolol (Concor®) are available at affordable prices in Brazil, Chile, Poland, and South Africa.
Patient access programs
We operate patient access programs that enable us to offer certain products at affordable prices in several countries. In India, we offer a program for our cancer drug Erbitux®, for example, to provide financial assistance to eligible underprivileged patients – in line with local laws and regulations. We have reached over 500 patients through this program every year since 2017.
We have been collaborating with national pharmacy chains in Mexico to provide patients with adherence support, discounts on blood tests and education on prediabetes and diabetes, thyroid and cardiovascular disorders. To improve adherence, in Central America (Costa Rica, the Dominican Republic, Guatemala, Honduras, Nicaragua, and Panama), we offer a digital loyalty program for the conditions mentioned above.