CGD convened the Global Health Forecasting Working Group in early 2006 to generate critical thinking about the magnitude and nature of the challenges of demand forecasting for essential medical technologies; the ways in which demand forecasting could be improved; and the specific actions and investments by international actors to improve global demand forecasting, particularly for products entering new markets, procured largely with external funding.
The Working Group - consisting of 26 individuals with a range of expertise from industry, public-private partnerships, funding agencies, and other backgrounds - found that forecasting challenges can be understood only by looking at the nature and distribution of underlying risks faced by the pharmaceutical industry, regulatory and purchasing intermediaries and funders, particularly in light of the new global health environment of more money, new products and a more complex international market. They recognized early on that the solutions - not only to the narrow technical issue of better forecasting, but to the big-picture concerns about reliable and expanded access to essential products - lie in strategies that reduce and share risk.
The Working Group focused attention on aggregate demand forecasts, which seek to capture global demand and are used for high-level planning by manufacturers, procurement intermediaries and funders. The group looked specifically at the challenges of forecasting for "new products and new markets" - that is, those products that are newly licensed and/or are new entrants into use in developing countries. This scope was adopted because the challenges of demand forecasting - and the consequences of demand uncertainty - are most pronounced for these products. Throughout the group's work, efforts were made to distinguish between forecasting-related issues that are specific to a particular medical product or class of products, and issues that are common across all or most new products. Recognizing the many product-specific and country based activities now underway, in developing recommendations emphasis was placed on identifying strategies that would work across a range of products, and that would promote economies of scale and scope.
Over the course of a year, the Working Group examined the ways in which better forecasting could contribute to improved short- and long-term access; developed an understanding of market-related risks for global health products that combines a conceptualization of risk from economics with a focus on steps in the value chain; identified the ways in the asymmetrical burden of risk across funders, regulatory and purchasing intermediaries and suppliers results in misaligned incentives with respect to producing optimal demand forecasts and broad access; and advanced a set of specific recommendations for actions by donors and technical agencies that would help to reduce overall risk and correct those misalignments. The group developed recommendations for "here and now" actions, within a long-term agenda of work on health systems, regulatory regimes, technology development and predictable international financing for health. Their findings and recommendations are laid out in A Risky Business: Saving Money and Improving Global Health through Better Demand Forecasts.