The Netflix plus model: Can subscription financing improve access to medicines in low- And middle-income countries?

Avi Cherla, Natasha Howard and Elias Mossialos

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: At present, pay for prescription models are insufficient at containing costs and improving access to medicines. Subscription financing through tenders, licensing fees and unrestricted or fixed volumes can benefit stakeholders across the supply chain. Pharmaceutical manufacturers can reduce the need for marketing expenses and gain certainty in revenue. This will decrease costs, improve predictability in budget expenditure for payers and remove price as a barrier of access from patients. Inherently, low- and middle-income countries lack the purchasing power to leverage price discounts through typical price arrangements. These markets can realise substantial savings for branded and generic medicines through subscription financing. Procuring of on-patent and off-patent drugs requires separate analysis for competition effects, the length of contract and encouraging innovation in the medicine pipeline. Prices of competitive on-patent medicines and orphan drugs can be reduced through increased competition and volume. Furthermore, pooling expertise and resources through joint procurement has the potential for greater savings. Incentivising research and development within the pharmaceutical industry is essential for sustaining a competitive market, preventing monopolies and improving access to expensive treatments. However, technical capacity, forecasting demand and the quality of generic medicines present limitations which necessitate government support and international partnerships. Ultimately, improving access requires progressive financing mechanisms with patients and cost containment in mind.

Keywords: financing; health policy; low- and middle-income countries; pharmaceuticals (search for similar items in EconPapers)
JEL-codes: F3 G3 N0 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2020-03-03
New Economics Papers: this item is included in nep-com and nep-hea
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Published in Health Economics, Policy and Law, 3, March, 2020. ISSN: 1744-1331

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Journal Article: The ‘Netflix plus model’: can subscription financing improve access to medicines in low- and middle-income countries? (2021)
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