Is sliding scale the way to go in emerging markets? GlaxoSmithKline wanted to know. So the company is testing a radical new pricing plan that would offer meds to patients according to their ability to pay. The pilot pricing programs are now underway in India, South Africa, and Morocco, countries with a growing middle class, plus significant numbers of people in poverty.
The idea is to generate a premium from wealthier patients, the Financial Times reports, to subsidize losses on low-price sales to poor patients. It's a new approach in these so-called "middle income" countries; in the past, drug makers have tended to sell, say, HIV drugs at cut rates in the very poorest countries, but in middle income countries, charged higher prices. That meant only the patients in the highest income brackets could afford to pay.
Now, poor patients would have access to those meds--and GSK is hoping that big sales volume will offset the lower prices. We'll have to keep an eye on this pricing test; more and more drug makers are targeting emerging markets such as India and China for sales growth.