​David Ripin / Danielle Kuczynski

CHAI as a Disruptive Market Force (Part 2): Despite successes, challenges remain in getting health commodities to those who most need them

The Clinton Health Access Initiative (CHAI) partners with governments, donors, manufacturers and other organizations to implement market-shaping interventions that help to improve health outcomes. “Market shaping” means working in a coordinated way with stakeholders across both the supply and demand sides of the market to ensure that appropriate, affordable and high-quality health commodities get to the people who need them at the right time. Successful market shaping can lead to improved access to health commodities, which results in better patient outcomes and significant cost savings. These cost savings in turn free up critical resources that can be reinvested in health systems so that more people get the life-saving commodities that they need for the same amount of money.

Shaping markets is done in partnership with organizations on the supply and demand sides of a given market, as well as a market-shaping entity, which is an entity that influences incentives and/or mitigates risk to improve access to health commodities. A market shaper can either use a consensus process involving all parties interested in a given market, or can act independently of other parties in the market space. CHAI works with the philosophy that monopsony (or a market situation in which there is just one buyer) approaches to buying and market shaping can present risks to achieving a best possible market outcome much in the way monopoly supply situations can. We approach market shaping with a strategy of coordination with market players, collaboration where it adds value, and pursuit of approaches that, when combined with the efforts of other market actors, result in a better outcome for the overall market than any one of those interventions might be expected to achieve on its own in the absence of additional market pressures.

Current market challenges

Despite successes, a number of challenges remain in the market for health commodities. To name just a few:

• Several new HIV drugs offer significant advantages over existing alternatives, but are not yet available in developing countries that depend on the availability of generic formulations. This is largely due to the lack of a clear demand “signal” in the market that prompts manufacturers to develop these new products. Market interventions are needed to accelerate the pace at which products are developed and made available to patients in resource-limited countries.

• Price reductions allow countries to greatly expand their health programs, but demand for lower-priced commodities can quickly outstrip the production capacity of suppliers. For example, in the case of long-acting reversible contraceptives, reduced prices have resulted in much higher demand and manufacturers have struggled to keep up with the higher volumes. Interventions are needed to increase production capacity of existing suppliers and accelerate introduction of new suppliers into the market.

• A number of countries are graduating from GAVI support in the coming years, at which time many will no longer receive donor funding for vaccines. To make matters worse, these graduating countries may lose access to the reduced vaccine prices that manufacturers offer GAVI countries. To maintain current vaccination rates and ensure access to new vaccines, vaccine prices for these countries will need to remain low.

• New drugs are now available that offer a cure for Hepatitis C. These drugs are significantly better than the existing regimen of low-efficacy, complicated-to-administer drugs. However, the new drugs are prohibitively expensive. In the absence of market-shaping work, the cure will remain unattainable for most patients in developing countries.

• Campaigns to eliminate certain neglected tropical diseases will shrink and ultimately end the markets for the commodities required to achieve elimination. A coordinated approach will be necessary to ensure that sufficient tools are in place to complete those campaigns before suppliers choose to exit the market.

CHAI and our partners remain flexible to identifying and addressing oncoming challenges as they arise and when possible, to preemptively prevent them.

What has been gained from market shaping

A focused market-shaping approach remains a relatively young and rapidly evolving dimension of global health. While there is still much to be done, CHAI and our partners have demonstrated that market shaping can be used to impact health outcomes and achieve significant savings for governments and donors. Successes have been achieved across a number of product and disease areas.

One example is in the area of vaccines. Working with the Department for International Development (DFID), the Bill and Melinda Gates Foundation, WHO, GAVI and UNICEF, CHAI helped to secure a 45 percent reduction in the price of pentavalent vaccine, which will result in at least $225 million in savings over five years and allow a greater number of children to be immunized and a greater number of lives to be saved with existing funding. CHAI also helped these partners to secure a 67 percent reduction in the price of rotavirus vaccine, which will result in over $650 million in savings over five years. Finally, CHAI supported negotiations that secured a 56 percent reduction in the price of Inactivated Polio Vaccine, which will result in savings of at least $150 million over five years. Total savings across these three areas are estimated to be more than $1 billion, and will help offset the increasing costs to fully immunize a child, which have been rising with the ongoing introductions of new vaccines.

Gains were also made on viral load testing for HIV. South Africa is the largest purchaser of viral load tests in the world. In partnership with South Africa’s National Health Laboratory Service (NHLS), UNAIDS, the Global Fund and the President’s Emergency Plan for AIDS Relief (PEPFAR), CHAI worked with pharmceutical firm Roche to negotiate a reduction in the price of viral load testing. The agreement will benefit not only the 2.6 million people on treatment in South Africa, but also millions more receiving Antiretroviral Therapy (ART) across sub-Saharan Africa and beyond. Prices were reduced on average by more than 40 percent, and the agreement is expected to save more than $150 million over the next five years.

In order to achieve and sustain market-shaping success, CHAI engages directly with country partners. Doing so, CHAI ensures the timely development of and rapid patient access to high-quality health commodities. For example, despite widespread availability of pediatric ART fixed-dose combinations (FDCs) in 2008, uptake remained low in most countries. What was required, beyond the simple availability of the products in the market, was a rapid, time-limited focus on the key elements of product uptake: adoption, product registration, procurement, uptake planning and execution, and uptake monitoring. In countries such as Uganda, where this approach was used, pediatric FDC uptake increased from 17 percent of eligible children to 100 percent over just two years.

Many other partners use innovative approaches to help shape markets. UNITAID is a global health initiative that is in part financed by a solidarity levy on airline tickets. Working with partners like CHAI, UNITAID helps to identify market shortcomings for life-saving commodities and support time-limited, targeted interventions to facilitate greater access to those commodities. These interventions can take a number of different forms, including helping to accelerate market entry of improved products, supporting demand-side activities to help countries adopt better technologies and create a global market for those technologies, and fostering market competition to drive down prices. Gains from interventions, such as reduced prices and increased availability of more cost-effective products, help to bring down overall treatment costs and ensure other large donors utilize their funds more efficiently. UNITAID’s approach is catalytic and has led to important results. For example, UNITAID’s support jump-started the pediatric ARV and diagnostics markets and helped more than 125,700 children gain access to treatment by the end of 2006, up from 71,500 in 2005. By 2012, 647,000 children under 15 years of age were receiving ARV’s.

The future of market shaping

There is a constant need to innovate in response to emerging market forces and changing market conditions. Flexibility to adapt to new constraints is critical, as is the need to put in place mechanisms that are themselves sustainable and resistant to market fluctuation.

Partners such as DFID will continue to play a critical role in market shaping, with an emphasis on maximizing the impact of each pound that they spend to improve the lives of poor people. DFID funds pioneering market-shaping work for essential health commodities such as medicines, vaccines, diagnostics and contraceptives, which helps organizations and governments allocate their funding more efficiently and enhances access for those most in need. Moving forward, DFID also recognizes the need to develop relationships with emerging powers like China, India, South Africa and the Persian Gulf, while still building and strengthening relationships with other entities. DFID expects that collaborating with emerging powers will help to make development assistance more effective; enhance the development impact of investment in poorer countries and regions; respond better to global challenges; and help develop an international system that more aptly reflects the needs of poor countries.

The next few years of market-shaping work at CHAI presents an opportunity to expand on lessons learned and address new challenges where they arise. We at CHAI hope to use market shaping to have an impact that is sustainable, responsive, and ultimately works us out of a job.

David Ripin (primary author) is the executive vice president of Access programs and chief science officer at CHAI and Danielle Kuczynski (supporting author) is a senior program manager at CHAI.

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