Medicines play an important role in health initiatives, yet the financing of pharmaceutical companies and biologics contract manufacturing organizations has always been a challenge. It is because medicines are a basic necessity but they are expensive. A middle-class household spends over half of its health expenditure on buying medicine. Medicines must be made affordable and accessible to all areas of population. It can be done through pharmaceutical financing.

Achieving Financial Sustainability in Pharmaceuticals

Financial sustainability is obtained when the resources balance the costs and are sufficient to support a basic quality of service for a given level of healthcare demand. If the demand is more than resources, which is the case right now, the pharmaceutical industry is left with only four options. 

• Improve Efficiency:

Efficiency refers to using the available resources in the best way possible for a better outcome. It includes allocative and technical efficiency. 

In allocative efficiency, the services are distributed in the population. It means that the majority of the pharmaceutical budget should be spent on making medicines for primary health care instead of specialized medicines for referral hospitals. It will most likely save more lives. 

Technical efficiency refers to producing a given output at a relatively lower cost. Most pharmaceutical efficiency management is technical. It includes improved selection and use of resources along with improved management and distribution of the drugs. 

• Controlling Demand: 

The demand for health services is unlimited but there is always something controlling that demand. In health systems the demand can be controlled by six measures 

• Increase cost to the patient. 
• Impose rationing and administrative controls. 
• Provide alternatives. 
• Increase waiting time. 
• Reduce service quality. 
• Targeted education. 

Some health services unintentionally control the demand by increasing the waiting time and decreasing the quality of medicine. Adding increased costs on top of low quality and high waiting time makes it a perfect recipe for controlling demand. It is important to introduce measures to provide medicines to the poor people. If the costs are too high, poor people might unintentionally suffer at the hands of market failure. 

• Increase Financial Resources:

Increasing the financial resources can help in increasing the quality and product amount to meet the needs of the people. Financial resources can be increased by various methods, including 

• Public financing
• User charges
• Health insurance
• Community financing
• Voluntary financing
• Donor financing
• Development loans 

More financial resources directly amount to an increase in the accessibility and quality of medicines. Public and private sector investments in the pharmaceutical industry can help reach financial sustainability. 

• Accepting the Decline in Healthcare Quality:

If everything else fails, the last straw is to hold on to the available healthcare quality and system. Although improved efficiency, reduced demand and increased financial resources can make the financial equation of the pharmaceutical industry sustainable, there is still a long way to go. 

Concluding Thoughts:

Given the current condition of medicine availability, especially in developing countries, a solid pharmaceutical financing strategy is required by every country to follow. When efficiency and demand are unable to sustain the financial equation, more investments are needed. So, policymakers, medicine program managers and NGOs need to base their strategies on using available resources optimally and strive for more financial resources.