Paying for Pricey Medications: Debt Financing Options Could Provide a Solution


Jun 22, 2015

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This commentary originally appeared in BioProcess International Magazine on June 16, 2015.

In an era of US$1,000/dose medications, a new approach may be needed to finance an emerging breed of expensive but highly effective pharmaceuticals and vaccines, according to a new RAND Corporation analysis. In other industries, it is common for suppliers to encourage customer investment — particularly for costly capital purchases such as new automobiles and machinery — through approaches such as equipment leases or supplier-financed credit. The healthcare industry could learn from such approaches.

For example, instead of paying up front for the cost of a treatment — $20 billion to vaccinate Brazil's 203 million people against dengue fever, for example — a health system could issue debt instruments to the manufacturer. Those instruments could be structured as bonds, as mortgages, or as lines of credit. Terms and interest rates would vary....

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Soeren Mattke is managing director of RAND Health Advisory Services, the consulting practice of RAND Health, RAND Corporation, 20 Park Plaza #920, Boston MA 02116; 1-617-338-2059;, RAND Health is the nation's largest independent health policy research program, with a broad research portfolio that focuses on healthcare costs, quality, and public health preparedness among other topics.