At the August annual meeting of Cipla, a major India-based generic drug company, YK Hamied, the chairman, noted the company is extending its generics business model to biological drugs, aka “biosimilars” or “bio-betters,” in part through a $200 million dollar investment in building a biologics plant (Business Standard article). Further he said, “We believe this activity is also humanitarian and like our crusade on the HIV/AIDS front, we will attempt to make a similar contribution in the sophisticated cancer market, reaching one and all cancer patients with valuable drugs at affordable prices.” Of course, the company’s HIV/AIDS crusade drew the wrath of the major pharma company competitors whose drugs were being pirated (at the time the drugs were not patented in India nor the countries where they were sold) but brought the cost of annual antiretroviral therapy (ART) down from $12000 to $300 (it’s under $100 now). Subsequently, or consequently, the company is now providing the drugs for about 40% of all ART. And, although many companies, including the big pharmas, are developing a biosimilars business (c.f., Bloomberg article), their products are intended for the well-reimbursed high-income country markets. Cipla, a major generics company with annual revenues in excess of $1 billion (2010 Annual Report), apparently believes there will be a market for treating “all cancer patients with valuable drugs at affordable prices.” However, unlike the ART market where the meds are purchased through government-backed programs like the US’s PEPFAR (PEPFAR) and the Global Fund (Global Fund), cancer, while a major killer in many rest-of-world countries (IPS News article), has no donor country-funded market.
My guess is that the Cipla and other generics companies that are developing biosimilars are thinking that patients in the developing world will pay for their cancer therapy the same way those of us in the developed world do now, through private health insurance. Such plans exist and are part of the “microinsurance” industry, a relatively new approach that has the attention of the international development community as well as businesses. The basic idea is that people with incomes under $2 per day already put a significant part of their income into health care and therefore can afford to put small sums into policies to cover injury or illness needing hospitalization (Epoch Times article). A 2007 survey found that 78 million people in the world’s 100 poorest countries have some type of micro-insurance, the most popular by far being for death/disability (more than half), followed by property loss and lastly, health (about 10%) (MIC Landscape Study).
The interest in the microinsurance concept is shown through international conferences on the topic (e.g., next month in the Philippines, 6th International Microinsurance Conference), advocacy groups like the Microinsurance Center (MIC), and at least two on-line resource centers (Microinsurance Network and Microfinance Gateway). Even the Gates Foundation is involved through its support of the Aga Khan Development Network’s Microinsurance Initiative which started pilot projects in Tanzania and Pakistan in 2009 (AKAM Initiative). Not surprisingly, the insurance industry sees a business opportunity in providing low-cost insurance products. The 2007 survey reported that more than half the coverage was provided by for-profits, and a recent report by Lloyd’s, one of the largest insurance companies, called microinsurance a “win-win situation” (Lloyd’s report). There is even a $100+ million fund, Leapfrog Investments (Leapfrog), that specializes in investing in developing world insurance companies.
However, the wider adoption of health insurance faces several barriers; for example, insurers need to be fiscally sound. A 2008 report by Oxfam notes that, of the approximately 35 million people in all countries who are covered by micro health insurance (90% of whom are in Asia and 9% in Africa), most have it through private entities such as insurance companies or microfinance institutions and the small size of these organizations and lack of government regulation may lead to their failure (Oxfam report). One of the largest (300,000 beneficiaries) and longest running (since 1996) programs in Asia is provided by Grameen Kaylan, a division of the Grameen Bank, and is still working towards being self-supporting (Microcapital article). Another program in Kenya has had success by pairing microlending with a requirement to buy health insurance, at cost of about $15 per year (San Mateo Journal article). According to a recent review of microinsurance, designing the right product to address local market risks, convincing the customer of value, and building a large client base are critical for success but the authors also note that microinsurance is becoming a “boardroom strategy” (Knowledge Wharton article). It looks to me that, to meet the huge needs in the developing world, some drug companies and an emerging mix of government, not-profits, and for-profits payers are working on the affordability problem with some success. Maybe there’s a lesson here for the big pharma companies and the US health insurance industry.