A proposed novel approach to TB drug financing

The goal is to develop a universal TB drug regimen that can treat both drug-susceptible and drug-resistant strains and will be administered for only two months or less. Donors including the Bill & Melinda Gates Foundation have provided funding for research and development to help achieve this, but it requires more investments, according to a draft proposal by the Center for Global Development and the Office of Health Economics in the U.K.

The proposal, called “Market-Driven, Value-Based Advance Commitment,” or MVAC, builds on a decade-old model that Gavi, the Vaccine Alliance and a number of donors tried to implement to bring pneumococcal vaccines in the low- and middle-income market. The model was meant to unlock private sector investment in the research and development of health products that the industry sees as risky or where there’s not much revenue. A donor-financed fund was created to guarantee payments to pharmaceutical companies once the product entered the market. The price was negotiated in advance to keep the price low while still allowing industry to gain a return on investment.

That model had mixed success, but it inspired the Center for Global Development to try to remodel it in response to the current global health landscape where health budgets are increasingly being taken up by chronic diseases such as kidney failure or diabetes. There is also uncertainty in sustaining donor investments in the long term, particularly in middle-income countries that are no longer eligible for, or will soon graduate from, international assistance, said Rachel Silverman, a policy fellow at CGD who was involved in the proposal.

Under the reimagined model, countries will make a commitment to purchase a health product if and when it becomes available in the market. Each country would pay a price that reflects local value and affordability, given policymakers’ budget constraints, leveraging health technology assessment institutions that are working in a number of emerging markets, such as Brazil, China, and Thailand, to inform coverage decisions for universal health coverage.

Country commitments will be made official in an agreement with a multilateral development bank, which will act as guarantor to the industry, ensuring that countries fulfill their purchase commitments in the future. An international governance body would be in charge of providing guidance and overseeing the agreement.

“Governments change, priorities change. It's hard to predict the future. And a verbal promise to purchase something might not come to fruition. But if the World Bank as an intermediary with a very strong credit rating is willing to put its credibility behind the commitment, then industry can feel much more secure that the commitment is real … and won't sort of dissipate if they put in the upfront work of investing in R&D,” said Silverman.

The approach is not necessarily limited to tuberculosis, but the disease currently offers a huge market opportunity, particularly in middle-income countries, where private sector research and development spending on a better TB regimen is lacking, said Silverman.

CGD and OHE have been working on the proposal for more than a year, but wanted to continue consultations. It has received mixed reactions from the global health community, particularly civil society organizations that have long raised concerns on the high prices of medicines.

At the heart of the issue is access and affordability. Some civil society members felt the proposal would impede rather than improve countries’ access to quality but cheaper medicines by preventing countries from pursuing compulsory licensing — which countries can use to open generic competition for patented medicines, helping bring down the cost of drugs.

Silverman, together with CGD Director of Global Health Policy Kalipso Chalkidou and Office of Health Economics Director Emeritus Adrian Towse, acknowledged in a blog post published Wednesday that with MVAC, countries won’t be able to apply their compulsory licensing rights for the specific product to which they committed purchasing under the agreement. But they argued the agreement is voluntary and ensures the country gets guaranteed access to a cure, if and when it becomes available, at a pre-agreed price determined by the country’s ability to pay. If the company reneges on its commitment to provide the drug at the locally affordable price, the deal is off and the country could pursue compulsory licensing for that product.

“In the same way countries may use the threat of compulsory licensing to extract price concessions, we are offering a path for countries to use the threat of compulsory licensing to ensure — in advance — that innovative drugs will be offered at a locally affordable price point,” they wrote.

The question of affordability is built right from the beginning of the commitment, Silverman told Devex.

“I was telling you about this idea of health technology assessment, which basically looks at, okay, how much money do you have in your health system? How much value does this product add to your health system? Does it save you money elsewhere in the health system? How much help does it produce for your citizens? And that basically allows you to say: ‘Okay, for a product meeting this profile, what's the maximum price we can justify paying for it that is cost effective in our system?’ By its very definition, that's an affordable price — a price you can afford to pay for the value that product brings,” she said.

“And I think one thing to be very clear about is that we're not imagining a scenario in which individual patients are paying out of pocket for this drug that would come to market,” she said. “What we're imagining was that countries would be stepping up to their responsibilities as payers under universal health coverage and providing packages, cost effective products and services, to their population.”

She acknowledged, however, there was still a lot of work to be done to get different stakeholders “comfortable with this kind of proposal.”

“We see this as something that is a way forward for all stakeholders, as a win, win, win for all the parties involved. But I think convincing everyone that is the case, and answering their questions, [and] accounting for their concerns is a process,” she said.

Source: Devex