Can Managed Entry Agreements Help LMICs Navigate the Rising Cost of Medicines?

The skyrocketing cost of high-cost, innovative medicines is straining healthcare budgets worldwide. In 2021, global pharmaceutical spending hit $1.4 trillion, with oncology drugs alone accounting for over $185 billion—a staggering 70 percent increase since 2016. For low- and middle-income countries (LMICs), where health budgets are already stretched thin and essential health services remain out of reach for many, these escalating costs pose an even greater challenge.

To address this, high-income countries have increasingly turned to managed entry agreements (MEAs)—deals between pharmaceutical companies and healthcare payers designed to provide access to high-cost medicines while managing financial risks and clinical uncertainties. Now, countries such as Thailand, Costa Rica, Colombia, Peru, and Brazil have passed regulations or expressed interest in using MEAs for expensive medicines.

But are MEAs a realistic solution for LMICs? Can they offer financial sustainability while ensuring equitable access to life-saving treatments? This blog explores the potential of MEAs, their feasibility in LMICs, and what lessons can be drawn from high-income countries where these agreements have already been tested.

Not all MEAs are created equal

MEAs come in different forms, but their effectiveness varies widely. While some agreements have helped control costs and expand access to high-cost medicines, others have struggled with complexity, high administrative burden, and limited real-world impact. Different types of MEAs include:

1. Financial agreements (FA): The most commonly used MEAs in at least two-thirds of OECD countries and EU member states, these agreements—such as price-volume deals and discounts—are straightforward to implement and help manage costs without requiring extensive monitoring.

2. Performance-based agreements (PBA) or outcomes-based agreements (OBA): These agreements link payment to treatment effectiveness. However, countries like Italy, the UK, and Sweden have scaled back or restructured these agreements due to their high administrative burden and limited success in reducing uncertainty around medicine effectiveness.

Coverage with evidence development (CED): A form of performance-based MEA, these agreements condition reimbursement on further data collection. Unfortunately, many OCED programs have failed to generate meaningful evidence or influence pricing negotiations, leading several countries to discontinue or reform them.

3. There is also a combination of FA and PBA, so-called hybrid models.

A 2023 OECD report found that many PBAs lack formal evaluations, making it difficult to assess their long-term impact. Confidentiality clauses further limit transparency, preventing independent assessments of their effectiveness. While payment-by-result agreements continue to be used, the absence of robust data collection and analysis has limited their effectiveness in shaping policy decisions.

Are MEAs a viable option for LMICs?

Despite interest in them, MEAs remain largely untested in LMICs. A 2018 World Bank study identified 285 documented MEAs worldwide but found none in LMICs. The study highlighted several key barriers:

• Lack of enabling legal and policy frameworks for negotiating MEAs.
• Limited institutional capacity for pooled purchasing, data collection, and patient monitoring.
• Challenges in fostering trust between payers and pharmaceutical companies.
• Judicialization of health, where governments are legally forced to fund high-cost drugs through court rulings, making it difficult to say no to expensive treatments.

These structural barriers make it challenging for LMICs to implement MEAs as they currently exist in high-income countries. However, as more high-cost medicines enter the market with limited data—with 75 percent of new active substances approved by the US Food and Drug Administartion now approved via accelerated regulatory pathways—there is an urgent need to require manufacturers to collect and report real-world evidence on treatment effectiveness and costs.

At the same time, LMICs have an opportunity to design procurement and reimbursement systems that are fit for purpose. As these systems evolve, they can integrate mechanisms that improve purchasing quality, promote transparency, and ensure accountability. Additionally, advancements in AI and data analytics could help both governments and pharmaceutical companies analyze large volumes of real-world data, enabling better decision-making and stronger MEA implementation in LMICs.

A way forward: Can MEAs work for LMICs?

MEAs may not be a silver bullet, but with the right adaptations, they could help LMICs navigate the financial pressures of high-cost medicines. Moving forward, LMICs could:

• Develop legal and policy frameworks that facilitate MEA negotiations while ensuring transparency.
• Invest in institutional capacity for data collection, patient monitoring, and real-world evidence generation.
• Leverage AI and digital tools to improve tracking of treatment outcomes and pricing effectiveness.
• Explore regionally coordinated MEAs, enabling LMICs to pool purchasing power and negotiate better terms.

If structured carefully, MEAs could offer LMICs a valuable tool to expand access to life-saving treatments without bankrupting health systems. The challenge now is learning from past experiences and designing MEAs that work for LMICs, not just replicating models drawn from high-income countries.