Our position on medicine pricing

When we determine how to price our medicines, we consider a number of factors – primarily what medical need the product meets for clinicians and patients, and how the clinical profile of the drug compares with other treatments for the same condition. Other factors include the level of development of the local economy and the pricing and reimbursement systems in the country.

How we determine product pricing

How we determine product pricing

The way the price and reimbursement of medicines are determined varies a lot between countries. In some countries price and reimbursement are the result of negotiations between the pharmaceutical manufacturer and the government; in other countries negotiations involve insurance companies or intermediaries purchasing medicines on behalf of their customers. And in some countries governments make bulk purchases of medicine through so-called tender orders, an auction-like process to which several companies are invited to submit their best bid.

In the world’s poorest countries, we have made a special commitment called our Access to Insulin Commitment, to improve access to quality treatments for patients. We guarantee that we will provide low-priced human insulin in 76 Least Developed Countries as defined by the United Nations, other low-income countries as defined by the World Bank and middle-income countries where large low-income populations lack sufficient health coverage, as well as selected organisations providing relief in humanitarian settings. Our guarantee entails that we will provide human insulin in vials at a guaranteed ceiling price. The ceiling price from 1 August 2020 is set at USD 3.00 per vial.

Our vision for the future

We believe new outcomes-based pricing models will contribute to better evaluation of the true value of medicines. While the models may be different from one disease area to another, and may be more difficult to implement in some areas than others, they should be based on the following principles:

  • Innovation is rewarded based on the value offered to patients
  • Value is defined as the outcomes achieved relative to the costs
  • Outcomes are measured through health data and real world evidence

We are committed to driving initiatives aimed at finding innovative, outcomes-based pricing models in close collaboration with other key stakeholders.

Our positions

We have formulated positions on issues of relevance to our business and our role as a global corporate citizen.