Insights from Miami | Brief #2

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In Biopharma, Market Approvals and Pricing Remain Big Challenges

by Hasham Mehmood, Senior Investment Officer, IFC

What are the optimal pathways toward regulatory approvals of new biopharmaceutical products? What are the main barriers to market access at post-approval stage and how can these barriers be overcome? What mechanisms and policies will lead to drug prices being set at affordable levels that lead to better health care for emerging market consumers? These were the hot button questions that a group of stakeholders sought to answer at a think-tank session held on the margins of the 2019 IFC health conference in Miami.

Segment Overview

Biopharmaceuticals are a $240 billion global market that is growing rapidly as evidence mounts of their effectiveness in treating so-called lifestyle diseases that are becoming more prevalent globally and especially in emerging markets. A biopharmaceutical, also known as a biologic medical product, or biologic, is any pharmaceutical drug product manufactured with, extracted from, or semi-synthesized from biological sources. Biosimilars are follow-on, similar versions of the original or ‘innovator’ biologics. Monoclonal antibodies, insulin, and vaccines are different types of biologics.  The session convened stakeholders from various parts of the life sciences industry and from philanthropic organizations who are keen to make medicines more accessible and affordable.

Challenges and Solutions

The participants discussed whether, in order to avoid producers having to pursue duplicative regulatory approvals, a global entity or regional entities should be established—or existing entities empowered—responsible for approving applications to market biopharmaceuticals. The idea of a regional or global regulatory body isn’t new: the European Medicines Agency has this responsibility in the 28-country European Union and the African Medicines Regulatory Harmonization Initiative, supported by the World Health Organization and World Bank Group, among others, is working to harmonize regulations in Africa, but in most markets, this doesn’t exist.

Responsibility for authorizing biopharmaceuticals usually lies with national regulators in each country. Manufacturers have to get approval from each country where they want to market their biopharmaceutical drugs, and the costs of doing this multiple times adds to the costs of doing business. National regulators have different reasons for not being willing to recognize each other’s processes to approve marketing of biopharmaceuticals, including a lack of trust of the technical capabilities of other regulatory bodies.

Participants discussed the following potential paths to regulatory harmonization: (i) the possibility of creating a global regulatory body; (ii) the creation of reciprocal approval arrangements between various countries bilaterally or multilaterally; (iii) the creation of regional regulatory bodies—for example in Southeast Asia, the Middle East–North Africa, or Latin America. Several participants urged the World Bank Group and similar institutions to use their convening power to drive the agenda on regulatory harmonization.

Another issue addressed was how to develop a coherent policy for pricing biopharmaceuticals that will lead to drugs being priced at levels appropriate for emerging markets, where overall income levels are significantly lower than in advanced economies. The price of biopharmaceuticals is a concern for emerging markets, where national healthcare budgets are smaller and individuals often have higher out-of-pocket costs. A tiered-pricing system, in which industry and governments agree on different pricing levels for biopharma products to boost access for citizens in poorer countries, might be one route for improving access. At the same time, making it easier for governments to negotiate drug prices with suppliers might be a route for lowering prices, and this could be helped by encouraging more countries to publish their drug pricing information. Similarly, for smaller markets, such as in Sub-Saharan Africa and Central America, demand aggregation between countries would also improve the respective countries’ negotiating position.

Participants discussed that it would be useful to have an independent report that identifies the most cost-effective approaches to bringing down the price of drugs. This could be a valuable resource for governments by giving them a tool to enable them to better negotiate and adjust drug prices in line with their GDP. How a country absorbs the price of a biopharmaceutical product—by the government, by private insurers, by patients’ out-of-pocket, or by a combination—ultimately depends on how that country’s health system is organized, including and especially how much the public sector spends on health care.

A related question was whether localizing biopharma manufacturing could help lower prices. Governments may seek to promote pharmaceutical manufacturing in their country—this also gets back to the issue of how countries issue drug approvals—especially for products that will be used in their own markets. Participants were divided on this issue. One advocate of localization noted that countries that don’t require local drug manufacturing can face intense pressure from large pharma manufacturers (usually in advanced economies) to grant them excessively patent-protected access to their markets. However, a participant more skeptical of localization said that forcibly transferring production to the market of final consumption often did not make economic sense and that in emerging markets, localizing manufacturing did not necessarily go hand in hand with lower prices.

Finally, participants noted that patient and even doctor acceptance of lower-cost biosimilars remains slow in many markets. A greater availability of data on the real-world use of biosimilars, as opposed to data derived from experimental settings, might drive higher acceptance. In addition, greater use of volume-based guarantees to drive down drug prices was advocated as a means of improving access. Participants suggested that development organizations such as the World Bank Group should follow in footsteps of the Bill & Melinda Gates Foundation and the U.S. Centers for Disease Control and Prevention by providing volume-based guarantees.

Published in July 2019