Payer-Industry Partnerships in Emerging Markets: Best Practices for Successful Market Access of New Pharmaceuticals

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1 Copyright 2012 IHS Global Insight. All Rights Reserved. Payer-Industry Partnerships in Emerging Markets: Best Practices for Successful Market Access of New Pharmaceuticals P3696 July 2012 Report written by: Elena Akborisova, Anupama Bharath, Cecilia Chui, Binhan Oguz Berksoy, Farah Ramadan, Tania Rodrigues, and Leobaldo Solorzano. Under the supervision of Gaelle Marinoni: Project Manager Research Director: Gustav Ando

2 Table of Contents Payer-Industry Partnerships in Emerging Markets: Best Practices for Successful Market Access July 2012 Copyright 2011 IHS Global Insight. All Rights Reserved. 2 Scope of Research 4 Study Objectives 5 Methodology 6 I. Executive Summary Key Study Findings I Key Study Findings II Key Study Findings III Current Country Receptiveness to Industry-Payer Partnerships Public Sector Current Country Receptiveness to Industry-Payer Partnerships Private Sector Current Country Innovation Levels in Industry-Payer Partnerships Public Sector Current Country Innovation Levels in Industry-Payer Partnerships Private Sector 14 II. Payer Landscape Payer Landscape: Overview by Market I Payer Landscape: Overview by Market II Payer Landscape: Overview by Market III 18 III. Current Landscape for Industry-Payer Partnership Models Industry-Payer Partnerships: Types of Models Industry-Payer Partnerships: Opportunities by Market Industry-Payer Partnerships: The Role of NGOs Current Country Involvement of IHOs in Industry-Payer Partnerships Industry-Payer Partnerships: Current Viability Industry-Payer Partnerships: Extent of Payer Fragmentation 25

3 Table of Contents - Continued Payer-Industry Partnerships in Emerging Markets: Best Practices for Successful Market Access July 2012 Copyright 2011 IHS Global Insight. All Rights Reserved. 3 IV. Payer and Industry Perceptions on Partnerships Stance Towards Industry-Payer Partnerships Industry-Payer Partnerships: Expectations Industry-Payer Partnerships: Objectives Industry-Payer Partnerships: Measuring Outcomes Industry-Payer Partnerships: Timelines 31 V. The Future of Industry-Payer Partnerships The Future of Industry-Payer Partnerships: The Role of Healthcare Reform The Future of Industry-Payer Partnerships: The Structure of the Market for Medicines I The Future of Industry-Payer Partnerships: The Structure of the Market for Medicines II Opportunities for Industry-Payer Partnerships I Opportunities for Industry-Payer Partnerships II Challenges for Industry-Payer Partnerships I Challenges for Industry-Payer Partnerships II The Future of Industry-Payer Partnerships: The Role of Sustainability The Future of Industry-Payer Partnerships: Pricing Strategy I The Future of Industry-Payer Partnerships: Pricing Strategy II 42 VI. Conclusions on Industry-Payer Partnerships Conclusions I Conclusions II 45

Payer-Industry Partnerships in Emerging Markets: Best Practices for Successful Market Access July 2012 Copyright 2011 IHS Global Insight. All Rights Reserved.

To meet this goal, the study provides a detailed review of, and outlook for, the landscape for industry-payer partnerships; analyses the current models and emerging practices for partnership working;

4 Payer-Industry Partnerships in Emerging Markets: Best Practices for Successful Market Access July 2012 Copyright 2011 IHS Global Insight. All Rights Reserved. 4 Scope of Research The aim of this study is to inform the development of best-practice industrypayer partnerships in six emerging markets and with international health organisations (IHOs). To meet this goal, the study provides a detailed review of, and outlook for, the landscape for industry-payer partnerships; analyses the current models and emerging practices for partnership working; and identifies payer and industry perceptions, expectations, and objectives regarding partnerships in each of the markets. Based on wide-ranging interviews with key stakeholders (industry and IHO representatives, national, regional, and local payers), as well as healthcare market and policy environment analyses, the study is designed to provide you with in-depth insight to build meaningful relationships with the relevant stakeholders and support development of successful market-access strategies. More specifically, the report delves into the opportunities each market offers by way of types of partnerships, as well as the key emerging trends (e.g., healthcare reforms, broader market circumstances) that will impact the future of industry-payer partnerships.

5 Payer-Industry Partnerships in Emerging Markets: Best Practices for Successful Market Access July 2012 Copyright 2011 IHS Global Insight. All Rights Reserved. 5 Study Objectives The report addresses the following key questions: Who are the payers in each market at the national, regional, and local level? How do payers and industry define and conceive of partnerships? What is the stance of each payer segment toward partnership working? What are payer and industry expectations and objectives when entering partnerships? How do payers and industry feel that partnership outcomes should be measured? What types of partnerships currently exist in each market? What are the strengths and weaknesses of these current models? How viable are these current models in light of market trends? How are the opportunities for partnerships evolving in each market? What new and innovative partnership models are emerging in each market?

6 Payer-Industry Partnerships in Emerging Markets: Best Practices for Successful Market Access July 2012 Copyright 2011 IHS Global Insight. All Rights Reserved. 6 Methodology Using primary and secondary research in combination with IHS Global Insight s market-access expertise, this report provides in-depth insights into the landscape for industry-payer partnerships across six emerging markets as well as in-depth insights into the landscape for industry-iho partnerships. Primary Research Our primary research consisted of 43 in-depth interviews with key stakeholders, namely representatives from industry, IHOs and national, regional, and local payers across six emerging markets. Interviews lasted between 30 and 90 minutes. Our primary research delved into stances, expectations, and requirements regarding partnerships, as well as experience with current models and awareness of emerging ones. Secondary Research Our desk research drew upon literature reviews, government and other relevant agency websites, and IHS Global Insight proprietary Healthcare and Pharma services (World Markets Healthcare, World Markets Pricing and Reimbursement, and Pharma Risk-Sharing Agreements database).

Appetite for such partnerships varies based on the type of payer (public versus private), pharmaceutical coverage (generic versus innovative), the organisation of the healthcare system (centralised

8 Payer-Industry Partnerships in Emerging Markets: Best Practices for Successful Market Access July 2012 Copyright 2011 IHS Global Insight. All Rights Reserved. 8 Key Study Findings I The framework for industry-payer partnerships in emerging markets is blurrier than in developed markets. Appetite for such partnerships varies based on the type of payer (public versus private), pharmaceutical coverage (generic versus innovative), the organisation of the healthcare system (centralised versus decentralised), infrastructure, etc. Industry-payer partnerships as they currently exist in emerging markets seem XXXXXXXXX than in developed markets. This can be explained by healthcare-related priorities, which are currently centred on XXXXXX XXXXXXXXXXXXXXXXXXXXX. As a result, payers and industry are XXX XXXXXXXXXXXXXX in terms of partnerships in emerging markets. Healthcare reforms, a shift in the epidemiologic profile, patient expectations, and growing income will soon call for more comprehensive healthcare coverage, especially with regards to XXXXXXXXXXXXXXX XXXXXXXX. As such, the need and scope for partnerships should expand in the short-to-medium term, with notably greater XXXXXXXXXXXXXXX XXXXXXXXXXX. Experience indicates that emerging market payers will look towards XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX to set their own framework for joint working.

provider landscapes, and cultural attitudes.

9 Current Country Receptiveness to Industry-Payer Partnerships - Public Sector Receptiveness to industry-payer partnerships* in the public sector varies across markets as it is notably influenced by healthcare and pharmaceutical coverage, infrastructure, legislation, payer and provider landscapes, and cultural attitudes. * Defined as the extent to which individual healthcare systems foster such partnerships Payer-Industry Partnerships in Emerging Markets: Best Practices for Successful Market Access July 2012 Copyright 2011 IHS Global Insight. All Rights Reserved. 9

respectively. The Office of Economic Evaluation of New Technologies, within the National Health Surveillance Agency (ANVISA), regulates medicines pricing.

11 Payer-Industry Partnerships in Emerging Markets: Best Practices for Successful Market Access July 2012 Copyright 2011 IHS Global Insight. All Rights Reserved. 11 Payer Landscape: Overview by Market I Public Brazil The Ministry of Health, State Secretariats of Health and health councils function as payers at the federal, state and municipal levels, respectively. The Office of Economic Evaluation of New Technologies, within the National Health Surveillance Agency (ANVISA), regulates medicines pricing. The National Commission for Incorporation of Technologies in SUS (CONITEC) evaluates drugs for inclusion in the SUS. China The Ministry of Health manages the XXX XXXXXXX XXXX and the Ministry of Labour and Social Security the XXXX XXX. The National Development and Reform Commission (NDRC) sets prices for reimbursed drugs. Provincial Health Bureaus may tailor reimbursement lists and implement regional plans, while Municipal Health Bureaus are XXXXXXXXXXXXXX XXXXXXXXXXXX. Private Around XXX of the population has supplementary healthcare of one form or another; the market is dominated by XXXXXXXXXXXXXXX. The Federal Regulatory Agency for Private Health Insurance and Plans (ANS) defines the minimum obligatory coverage of medical procedures (Rol de Procedimentos) for this sector. Dominated by domestic players, the private market can be split into two main types of plans: XXXXXXXXXXXXXXXX XXXXXXXXXXXXXX, which pays XXXXXXXXXXXXXXXX in addition to the national insurance reimbursement, and XXXXXXXXXXXXXXXXX. Due to the important role that XXXXXXXX XXXXX plays in the healthcare system, XXXXXXXXXXXXXXXXXXXX.

Public sector generics/nondrug specific Payer-Industry Partnerships in Emerging Markets: Best Practices for Successful Market Access July 2012 Copyright 2011 IHS Global Insight. All Rights Reserved.

13 Public sector generics/nondrug specific Payer-Industry Partnerships in Emerging Markets: Best Practices for Successful Market Access July 2012 Copyright 2011 IHS Global Insight. All Rights Reserved. 13 Public sector innovative drugs Industry-Payer Partnerships: Types of Models The current types of partnership models can be segmented by public and private sector, and in turn by generics/non-drug specific and innovative drug-specific schemes; there are a number of models in the sweet spot which overlaps all these segments. XXXXXXXXXXXXXXX XXXXXXXXXXXXXXX XXXXXXXXXXXXXXX XXXXXXXXX XXXXXXXXXX XXXXXXXXXXXX XXXXXXX XXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXX Increasingly, PDPs/R&D alliances (especially for vaccines) XXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXX Private sector innovative drugs

14 Payer-Industry Partnerships in Emerging Markets: Best Practices for Successful Market Access July 2012 Copyright 2011 IHS Global Insight. All Rights Reserved. 14 NGOs degree of involvement in partnerships Industry-Payer Partnerships: The Role of NGOs In developing countries, NGOs fill the gap in market expertise and/or funding resources. NGOs degree of involvement in partnerships varies considerably country by country. In countries where payers engagement in partnerships is low, NGOs dominate the + partnerships landscape with the industry XXXX (e.g. XXXX, XXXX). These partnerships XXXX are mostly in the form of XXXXXXXXXXXXXXX XXXXXXXXXXXXX. XXXX In countries where there is XXXXXXXXXX XXXX XXXXXXXXX and where partnerships centre on XXXXXXXX XXXXX (e.g. XXXX, XXXX), NGOs involvement is low. XXXX In other countries (e.g. XXXX, XXXX), XXXX NGOs may be strategic third parties during industry-payers collaborations. -

Industry-Payer Partnerships: Expectations On the whole, payers expect patients and the healthcare system should benefit the most from partnerships.

Governments want responsibility for administration of XXXXXXXXXX XXXXXXXXXX XXXXXXXXXXXX (XXXX) because they involve XXXXXXXX XXXXXX of the XXXX XXXXX, and so there is a XXXXXXXXXXXX to have

16 Industry-Payer Partnerships: Expectations On the whole, payers expect patients and the healthcare system should benefit the most from partnerships. In terms of responsibilities, there is a trend for payers to view industry s role as prominent in partnership XXXXXX and XXXXXXXXXX, but more peripheral in XXXXXXXXXXXXX. Governments want responsibility for administration of XXXXXXXXXX XXXXXXXXXX XXXXXXXXXXXX (XXXX) because they involve XXXXXXXX XXXXXX of the XXXX XXXXX, and so there is a XXXXXXXXXXXX to have authority over the project. Who takes the lead in a partnership may depend on XXXXXXXXXX: in XXXXXXX areas (XXXXXXXXXX) where governments/payers have little understanding for what is being developed, manufacturers may XXXXXXXXXX; on the other hand, governments want to set their priorities in areas such as XXXXXX or XXXXXXXXXX XXXXX. Key influencers (e.g., XXXXXXXXXXXXXXXXX in China, XXXX in India), when involved, tend to feel best placed to communicate and negotiate with XXXXXXXXXX. Patient advocacy group involvement tends to be XXXX, XXXX from where XXXXXXXXXX(e.g., XXXXXXXXXXXXXXX) can be leveraged. Payer-Industry Partnerships in Emerging Markets: Best Practices for Successful Market Access July 2012 Copyright 2011 IHS Global Insight. All Rights Reserved. 16

18 Payer-Industry Partnerships in Emerging Markets: Best Practices for Successful Market Access July 2012 Copyright 2011 IHS Global Insight. All Rights Reserved. 18 Challenges for Industry-Payer Partnerships I Challenges for industry-payer partnerships in the emerging markets differ from those in the developed markets and in many cases represent the flip side of emerging market opportunities: the infrastructure for these opportunities is often in a nascent stage or still rapidly evolving. Fragmented healthcare systems are resource intensive in terms of scoping and pursuing partnership opportunities with a multiplicity of stakeholders; Dominance of XXXXXX in the public systems limits the mainstream implementation of XXXXXXX XXXXXXXXXXX; Nascent comprehensive private insurance markets despite the opportunities that exist for XXXXXXX XXXXXXXXXX/XXXXXX XXXXXXX XXXXXXXXXX and growing middle- to higher-income segments; Limited sources of financing and the international trend toward cost containment; XXXXXXXXXX that challenges transparency in the public and private sectors; Cultural attitudes towards cross-sector collaboration; Heavy regulation of the market (e.g., XXXXXXXXX XXXXXXXXXXXX in Russia); Geography can create challenges in terms of access points to remote areas; there may also be the need to adapt for urban/rural segments of the population; Income inequality creates XXXXXXXXX challenges for XXXXXXXXX XXXXXX schemes; there is also the need to adapt for XXXXXXXXXXXXXXXXXXXXX segments of the population for certain schemes (e.g., patient education initiatives).

20 Conclusions I Emerging markets present a set of opportunities and challenges that (at least in the short term) are different from developed markets, and notably in terms of product mix, infrastructure, access to care, patient mix, legislation, healthcare priorities, etc. As it stands, XXXXXXXXXXX XXXXXXXXX and XXXX XXXXXX XX XXXXXXXXX are at the heart of payer-industry partnerships in emerging markets. However, as access to healthcare gradually expands, payers in emerging markets will likely be on an accelerated evolution path in relation to cost management. As a result, emerging market payers are expected to look towards the developed markets for best-practice payer-industry partnerships and rational use of medicines. This is already happening in countries with XXXXXXX access to healthcare (e.g., XXXXXX and XXXXXX) where payers are liaising with developed market health-technology assessment agencies and experimenting with risk-sharing agreements. Areas to consider for payer-industry partnerships include policy development, strategic healthcare priorities, XXXXXX XXXXXXXXXX XXXXXXXXXX, and XXXXXXX XXXXXXXXXX XXXXXXXX. Payer-Industry Partnerships in Emerging Markets: Best Practices for Successful Market Access July 2012 Copyright 2011 IHS Global Insight. All Rights Reserved. 20

21 Payer-Industry Partnerships in Emerging Markets: Best Practices for Successful Market Access July 2012 Copyright 2011 IHS Global Insight. All Rights Reserved. 21 IHS GLOBAL commits itself to due care and to the ethical standards (confidentiality, exclusivity) of the industry. As a member of «Syntec études marketing et opinion», IHS GLOBAL applies and requires application of: The ICC/ ESOMAR international code, the ICC ESOMAR international guidelines, the French legislation n of 6 January In accordance to CCI Esomar standards, the present document is confidential and under IHS Global copyright, as are all documents produced as part of this project (questionnaire, description of the methodology, databases, etc) rue du 4 septembre Paris cedex 02 Tél : Fax : RCS : PARIS B ISSN Dépôt légal : July 2012 Products by IHS GLOBAL are for the Client's internal use only. The Client can not distribute all or part of them to third parties (be it freely or against payment) without prior written consent by IHS GLOBAL. Should IHS GLOBAL approve of this distribution, the Client must explicitly mention the following elements: the research methodology, the size of the sample, the release date of the research as well as IHS GLOBAL as source of the findings.

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