Opinion: Solving tomorrow's global health markets

By Blair Hanewall 16 November 2016

A customer buys medicine from a pharmacy in Ivory Coast. Photo by: Anouk Delafortrie / CC BY-ND

There are a lot of successes to celebrate in global health from the last two decades: cutting child mortality in half; nearly halving maternal mortality; decreasing deaths from malaria by a factor of three; increasing global diphtheria-tetanus-pertussis, or DTP3, immunization coverage to more than 85 percent in 2015, and much more. While these successes can be attributed to many factors, a key driver has been the ability to leverage market dynamics to drive uptake of health products and services in developing countries.

Market dynamics for global health — how health products are bought and sold in order to further public health objectives — has been used for a number of years to increase access to essential vaccines, drugs, diagnostics and medical equipment among the poor. When markets fail, either economically or to achieve desired health outcomes, there are a number of tools that experts who understand market dynamics can leverage to correct these failures.

There are many recent examples of overcoming market barriers to increase access to health products in low-income markets. My colleague Susan Nazzaro, as part of the Markets Matter blog series, highlighted several, including improving the quality and durability of bed nets and reducing the price of indoor insecticides to combat malaria, reducing the price of HIV treatments, and ensuring the production of long-acting contraceptives.

Root causes and solutions to market failures

While market failures can exist in many areas, some markets are more susceptible to them than others. One example of this is in markets for pediatric versions of some key drugs, where there simply aren’t that many cases per year.

UNITAID — a funding organization dedicated to solving market dynamics problems — has proven to be a valuable partner. When markets were failing children living with HIV, UNITAID — in partnership with CHAI — intervened to systematically uncover the root causes of and solve the market failures leading to low access. Foul-tasting syrups, small uncoordinated orders to multiple manufacturers, and low diagnosis rates were hindering access to medicines. UNITAID and CHAI worked to consolidate orders around improved formulations for children and increase access to early infant diagnosis. As a result, a UNITAID investment of $4.1 million between 2006 and 2014 resulted in over 500,000 children being put on treatment.

There have also been a number of successes in using market tools to increase vaccine coverage. In 2011, few lower income countries had introduced rotavirus vaccine — which could prevent one of the leading causes of under-5 mortality.

The most widely used vaccines remained relatively expensive and the scale of production to reach large lower income countries had not yet been achieved by the major suppliers. In that year, Gavi, the Vaccine Alliance, collaborated with Clinton Health Access Initiative and the Bill & Melinda Gates Foundation to provide a volume guarantee for the preferred presentation of the vaccine. This guarantee allowed the manufacturers to scale up production and the scale economies achieved allowed the producer to reduce pricing by 50 percent from the lowest previous price — saving Gavi hundreds of million of dollars in future procurement costs.

Leveraging market dynamics is not a panacea, of course, and driving towards the desired global health outcome without creating unwanted distortions in the market can be tricky. Both expertise and different perspectives are needed to successfully drive market interventions without creating unintended negative consequences.

For instance, the actors need a detailed understanding the population needs, technology landscape, analytical and economical expertise to understand market failures and design effective interventions, close collaboration with stakeholders in the market, the ability to coordinate with buyers, ability to monitor the system to quickly react to market changes, and resources needed to design and implement these interventions over — sometimes — long periods of time. Individual programs and actors can negotiate pricing and supply to drive results, but without careful analysis and coordination between all parties there is often far less health impact.

Looking back, we have been more effective at addressing market barriers for what we think of as more responsive markets — markets where products are bought by a small number of entities, policy and regulatory pathways are clear, established delivery channels exist, and minimal coordination or interaction is required with other interventions. Yet we believe that these kinds of markets are going to be less common in the future.

These changes are exciting. We anticipate stronger primary health care systems that strategically purchase products and services independently, context-specific policy decisions, increasing diversity of service delivery channels — including vending machines, mobile orders and self-managed care — and primary care systems aiming to meet holistic needs of patients from preventive to communicable and noncommunicable diseases.

But we also see challenges with this more diverse and fragmented market. For example, if we can’t estimate strategic demand or coordinate purchasing among independent buyers, how do we create pull mechanisms to incentivize innovation for the next pandemic? How do we coordinate purchasing to secure affordable pricing for new, expensive health products? How do we promote quality of products in markets with multiple buyers with varying quality standards/policies? How do we coordinate the deployment of drugs or insecticidal chemicals to minimize development of resistance? In short, how do we find global, regional, and country strategies that will still allow us to influence health markets in this future?

We do believe solutions to these challenges are possible. To understand more complex markets where people see care from varying service delivery points, we will likely need to embrace efforts that cull data from various sources (media, texting, sales/buying, satellite, etc.) to put into machine learning systems to generate insights about market trends — i.e. where are people going to get what and how much, who are early adopters/influencers/hubs of social networks, etc. In the global response to Zika, UNICEF and other buyers developed an initiative to agree upon a target product profile and drive pull for Zika diagnostic. Rather than making this one-off tactic, we could institutionalize this mechanism to call upon when needed.

The Global Fund and Gavi are exploring more sophisticated forecasting and online buying. The buying platforms provide potential for back-end coordination to generate demand insights, understand pricing dynamics, and provide information about quality. In addition, the platforms could help individual countries, paying for their own health products, to benefit from negotiated prices. Further, for small volume but high value products where we want to incentivize suppliers to stay in the market and even improve products, the platform could aggregate orders — akin to how the Global Fund, U.S. President's Emergency Plan for AIDS Relief, and South Africa currently coordinate around tenders to maintain a healthy pediatric ARV market.

Moreover, just as regional economic blocs are exploring regulatory harmonization, regional blocs could explore regional procurement approaches to create buying power — especially around certain categories of products. This model currently exist in the United States allowing federal agencies to benefit from better prices. Related, countries could explore developing health technology assessment capacities — such as the National Institute for Health and Care Excellence in the U.K. — that provide guidance on cost-effective interventions across several countries to encourage predictability of uptake in the markets.

As noted above, some organizations and countries are already taking up the challenge. We aren’t starting from scratch. The plea is that, as we design local solutions, let’s consider how these approaches can help solve tomorrow’s global market failures as well. We’ve got a good thing going. Let’s not lose it.

Making Markets Work is an online conversation to explore what’s being done to make global health care markets accessible to people at the base of the pyramid. Over 10 weeks, we will amplify the discussion around effective health financing, analyze key challenges blocking universal market access in the health care supply chain, and explore the key strategies to make markets more effective. Join us as we look at this important issue, and share your thoughts by tagging #MakingMarketsWork and @Devex.

About the author

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Blair Hanewall

Blair Hanewall is the deputy director for integrated delivery at the Bill & Melinda Gates Foundation.


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