Unpacking the Black Box of Payer Policy: A Demand-Side Approach for Equitable Uptake of Cost-Effective Health Innovation

People living in Middle and Low Income Countries (MLICs) do not get access to innovative treatments and new treatments meeting MLIC requirements do not come to market. These issues should be addressed through a demand-side approach— better payer policy in MLICs, supported by international actors, to speed development and dissemination. An Innovation Uptake Institute (IUI) can serve as an honest broker between country payers and suppliers.

People living in Middle and Low Income Countries (MLICs) do not get access to innovative treatments and new treatments meeting MLIC requirements do not come to market. These issues should be addressed through a demand-side approach— better payer policy in MLICs, supported by international actors, to speed development and dissemination. An Innovation Uptake Institute (IUI) can serve as an honest broker between country payers and suppliers. 

In a Briefing Note published by the Center for Global Development available here, authors Kalipso Chalkidou, Adrian Towse and Rachel Silverman argue that neither (i) current limited private sector markets in MLICs, nor (ii) donor push funding is delivering. The current model of push funding is problematic and may generate products that are inappropriate or unaffordable for the intended beneficiaries, frustrating donors, given the size of the investments they have made.  

With many high-burden countries facing a transition from external health assistance, and donors unlikely to expand or even maintain existing push initiatives, this suggests a grim outlook for future global health innovation and uptake. Recent CGD analysis suggests that governments are slow to increase expenditure on public health products following aid transition; instead, private expenditure—mostly out of pocket—rises quickly to meet growing demand. Scarce government expenditure is often not targeted to the most cost-effective health interventions but instead used to cover higher-level care demanded by vocal, growing, urban populations. This spend is largely unorganized, often inefficient, and almost always inequitable.   

We are likely to see: 

• A continuing and deteriorating product pile up;  
• Advocacy for voluntary or compulsory licensing and genericization of any successful innovations, further reducing the appetite for private investment in priority areas;  
• Gradual (but slow) expansion of payer-side HTA-type mechanisms in MLICs, but likely to be used reactively in a cost-containment role, rather than to set priorities and support uptake;  
• Investment of scarce MLIC domestic healthcare dollars in high-cost, hospital based high-tech innovation, despite weak systems and professional skills 
• MLICs continuing to pay high prices even for commoditised products. 

The authors propose establishing an Innovation Uptake Institute (IUI) to serve as an honest broker between country payers and suppliers, helping payers to bolster their strategic capacity through market intelligence, capacity-building, and shared technical resources.   Specifically, they see a need to strengthen country payers through (1) better national purchasing functions; (2) effective support from international bodies and institutions to inform national purchasing; and (3) international cooperation, with large middle-income countries at the helm, to coordinate and/or pool demand. Ten tools stand out as particularly promising. Table 1 maps the 10 solution tools identified in the article along three component parts of the product lifecycle.  

Table 1: Mapping Challenges with Support Tools that can offer Solutions  

 The IUI would aim to crowd in private investment in disease areas currently deprioritised by conventional industry by quantifying potential market size and supporting better coordinated/pooled demand. It would have a broad remit, including products yet to be developed, under development, or already in the marketplace; and serving a broad coalition of country payers and development partners. 

Though the IUI would focus on demand-side strengthening, the IUI itself would be fiercely independent from both the demand and supply sides—from suppliers, payers, and advocates alike—in order for its products and support activities to be trusted and effective. 

The Institute would need to pursue a mixed funding model, albeit with a dependence on donor grants at early stages and when targeting the poorest geographies with very limited ability to pay.   

In a crowded, dysfunctional, and likely unsustainable global health innovation ecosystem, payer policy remains an understudied and neglected function within the innovation value chain. By systematically and strategically strengthening payer policy, potentially aided through the establishment of a dedicated Innovation Uptake Institute, the global health community can begin to address some of the deep challenges related to misaligned innovation and low uptake of new and cost-effective products—improving access and health outcomes across MLICs.