Medicines have delivered tremendous progress in recent decades. They have improved survival and quality of life for many patients and changed the course of diseases such as HIV, certain cancers and more recently, hepatitis C. As a key element of preventive, curative and palliative care, appropriate use of medicines can prevent costly complications and help avoid downstream health care costs. These advances have been brought to us by a global industry whose research and development to sustain this innovation, borne mainly by private enterprises and investors, is costly, time-consuming and risk-prone.

Despite this, policy makers and other stakeholders have become increasingly concerned about the outputs of the pharmaceutical innovation system. Many new drugs, often targeting small populations, enter the market with very high prices, making affordable access to them difficult for both payers and patients. The arrival of very effective but expensive drugs with high budget impact - such as those for hepatitis C - have left countries ill-prepared to respond to this challenge. At the same time, the expected market rewards for the development of new drugs for unmet medical needs – such as new antimicrobials and some drugs for rare diseases – are sometimes insufficient to incentivise the needed R&D. Finally, R&D costs and pricing structures are often opaque, raising legitimate questions about the value offered by some increasingly costly new treatments.

Over time, these issues have affected the trust some payers and other stakeholders have in the pharmaceutical innovation system. Strengthening stakeholders’ understanding of how the pharmaceutical market works, and moving the debate from a ‘panic’ reaction to high prices to a more comprehensive assessment of how the market can be made to work better for patients, payers and producers, is necessary to a future system that delivers the right innovations, to the right patients, at the right prices.

The OECD received a request from France in 2016, subsequently confirmed by Health Ministers of its member countries, to assess the best available evidence, and to identify policy options to address these challenges. In preparing this report, the OECD Secretariat undertook wide-ranging and extensive stakeholder consultations – with policy-makers, the pharmaceutical industry, patient groups, health professionals, and NGOs – and received invaluable contributions from many national and international experts in pharmaceutical policy.

This report identifies a web of interrelated factors that often make health systems unable to ensure patients have appropriate access to innovative medicines at reasonable cost. Given the complex context, the report does not present firm policy recommendations. Rather, it identifies a number of key policy options for policy makers to consider in order to improve the current system, in promoting access while continuing to provide appropriate incentives for developing the next generation of products. These policy options are guided by five objectives: i) to increase the value of pharmaceutical spending; ii) to ensure access to medicines in countries with different levels of development; iii) to support a system with transparent and well-established rules; iv) to foster competition in on-patent and off-patent markets; and v) to promote better dialogue among stakeholders. Some options – such as harmonisation and cooperation in regulation and health technology assessment – require international cooperation, while others – such as defining transparent criteria for coverage and pricing policies or optimising the use of managed entry agreements – are within the remit of individual countries. We trust this report will contribute to informed and constructive dialogue among stakeholders, and support a shared objective of encouraging the continued development of innovative medicines that bring value to health systems and societies.

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