Innovative Funding for Medicines in Latin America
A Solution Framework for Advancing Access
Institute Report
Nov 25, 2019

About the Report

The pharmaceutical industry has made great strides in recent years developing novel medicines, however, in Latin America, access to most of the latest innovative medications is limited, particularly in oncology and rare disease. This report outlines a solution framework aimed at improving access to medicines within Latin America and increasing critical funding for innovative medicines. The solution framework builds upon real world examples from other countries that address inequality in access to innovative oncology and rare disease therapies. Possible solutions are presented for five countries (Brazil, Mexico, Argentina, Colombia, and Costa Rica) based on their unique context and needs.

Report Summary

Constrained healthcare budgets in Latin America and the lack of an adequate funding framework for innovative medicines present significant hurdles to access and reimbursement for innovative medicines. Among fourteen solutions implemented globally to overcome funding challenges, four were assessed to be more feasible to implement and likely to have a greater impact on healthcare financing in Latin America. These four policy building blocks — creation of dedicated drug funds, earmarked taxes, social impact bonds and R&D capital investment through public/private partnerships — can form the foundation of a solution framework for funding innovative medicines in Latin America. 

Potential application of this framework in the context of multiple countries requires some adjustments to properly fit specific country contexts. Solutions put forth for Argentina, Colombia, Mexico, Costa Rica and Brazil do not include every component of the framework, but elements of the framework provide a basis for a tailored context-specific solution that can be further evaluated with government and other stakeholders. These country-level funding frameworks target current resources that could be reallocated to meet objectives of previously passed legislation on rare disease and oncology and involve innovative funds that can generate a sustainable and traceable funding mechanism to provide resources to clinicians and patients. 

Key Findings

Latin America has struggled to keep up with the OECD average across a number of healthcare indicators

  • Innovative drugs are essential to populations within Latin America yet access and reimbursement remain significant issues.
  • For four of the five Latin American countries, total health expenditure as a percentage of gross domestic product (GDP) is lower than the 8.9% OECD average. 
  • Health expenditure per capita is on average 77% lower or approximately US$2,474 lower than the OECD average of US$3,205.

Four global case studies appear to be most feasible and likely to have high impact on the funding of innovative medicines in Latin America

  • Some Latin American countries already have policies establishing dedicated drug funds but still struggle to make them financially sustainable.
  • Earmarked taxes are an accepted funding mechanism across Latin America but competing priorities may challenge their reallocation to innovative medicine funding.
  • Social impact bonds, similar to earmarked taxes, provide a direct stimulus for a specific initiative through amendment to tax regulations.
  • R&D capital investment serves as an indirect funding mechanism to stimulate innovative medicine spending but requires joint partnership between the industry and governments to make it sustainable.

Four policy building blocks form the backbone of an innovative medicine solution framework that can be adapted to specific country contexts in Latin America

  • An effective solution to improve innovative medicine access and reimbursement incorporates learnings from past applications, specifically: solutions should address funding challenges to provide access to innovative medicines, be feasible to adopt within existing health systems with minor adaptation, be clear, objective and transparent, and be sustainable.
  • The framework is not a one-size-fits-all solution and requires some adjustments to properly fit specific country contexts when applied across Latin America.
  • Solutions for each country — Argentina, Colombia, Mexico, Costa Rica and Brazil — do not include every component of the framework, but elements of the framework provide a basis for a tailored context-specific solution in each. 
  • These country-level funding frameworks target current resources that could be reallocated to meet objectives of previously passed legislation on rare disease and oncology and involve innovative funds that can generate a sustainable and traceable funding mechanism to provide resources to clinicians and patients. 
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