Pharma must look to other industries for models of managing high cost of new drugs

New financing approaches are required in order to account for the emerging extremely expensive drugs and vaccines, according to an analysis from RAND Corporation, an independent health policy research program.

The health care industry could learn from approaches used in other industries such as suppliers encouraging investment through equipment leases or supplier-financed credit, says lead author Soren Mattke. Instead of paying upfront for the cost of a treatment, for example the $20 billion needed to vaccinate the population of Brazil against dengue fever, health systems could issue debt instruments to the manufacturer, structured as bonds, mortgages or lines of credit.

This approach is not unknown even in the healthcare sector: when hospitals need expensive equipment, they can lease it, or the supplier can offer financial arrangements to ease the upfront cost, and Dr Mattke says “it’s not far-fetched for pharmaceutical companies to offer payers financial arrangements to ease some of the up-front costs.”