Product Pricing

We are working to bring our medicines and vaccines to more people around the world in ways that are as accessible and affordable as possible for the patients who need them.

We strive to commercialize our products in a way that both develops our business and meets local needs in a responsible, accessible and efficient manner.

In keeping with George W. Merck’s timeless wisdom that “medicine is for the people,” we price our products to support access for patients today while also promoting the critical investments that will empower our scientists to invent the cures and treatments of tomorrow.

We approach pricing from the perspective of value. This approach looks at the value that a medicine provides through multiple lenses with the goal of reflecting its benefit to patients and to society, while at the same time paying an appropriate return on invested capital to our shareholders, to ensure that we are able to sustain research & development.

While each individual situation varies based on factual circumstances and market dynamics, generally, we consider:

  • Value provided to patients
  • Value provided to health care systems
  • Unmet need
  • Access
  • R&D sustainability
  • Competition

We have a long history of making our medicines and vaccines accessible and affordable through responsible pricing practices and industry-leading patient access programs. We are proud of the progress we have made to date and remain focused on responsible and sustainable pricing of our medicines moving forward.

As health care systems in many developed markets are moving to a value-based care model, we are working with payers and other stakeholders to find flexible approaches to pricing. These include the use of quality- and performance-based contracts where payment is linked to quality metrics or improved health outcomes.

As part of our commitment to transparency, in 2017 we started disclosing information on our Corporate Responsibility website about the price of medicines across our portfolio in the U.S. through our U.S. Pricing Transparency Report.

Pricing and access in low- and middle-income countries

In many countries, patients are able to obtain health care and medicines at competitive prices through public and private health insurance plans that negotiate significant rebates and discounts with pharmaceutical manufacturers.

In low- and middle-income countries, however, we recognize access to and funding for health care can be limited. While major public health programs in these countries that focus on health priorities such as HIV/AIDS, malaria, tuberculosis and routine immunization are heavily subsidized by the government through international organizations and private funding, health insurance programs often do not exist or are limited. As a result, patients in these countries frequently must pay the price of medicines out of pocket, a particularly daunting ask for families living near or below the poverty line.

Therefore, we develop and support various sustainable strategies to improve access in low- and middle-income countries, including directing differential pricing to patient sub-segments, either directly through national or local programs or indirectly through third-party health care funding sources that demonstrate reasonable and secure product distribution to intended patient segments and subject to applicable legal requirements.

Currently, we have differential pricing for 42 of our products, and 128 countries have implemented inter- or intra-country pricing for at least one of our products. This notable increase of differentiated prices in both the scope of our products and eligible countries is the result of several initiatives including expanding innovative concession program offers for our hepatitis C virus and women’s health product portfolios in low- and middle-income markets and the continuation of HIV and vaccine access pricing for Gavi-eligible and Gavi-graduated countries, as well as enabling expanded access through reduced vaccine pricing with UNICEF.

For example, we are engaged with stakeholders within the family planning community, including the United Nations Population Fund (UNFP), Marie Stopes International (MSI), Population Services International (PSI) and the United States Agency for International Development (USAID), to support advocacy of the “Total Market Approach (TMA)” in key markets to help governments better target subsidized products, help the public sector focus on the poorest segments of the population, increase the ability of the private sector to serve middle-income tiers of the population and decrease overall donor funding dependency. TMA leverages market efficiencies, helps expand equitable access and encourages intra-country price tiers based on economic population segments.

We partner with Gavi, the Vaccine Alliance to expand access in low- and middle-income countries to our vaccine, GARDASIL® [Human Papillomavirus Quadrivalent (Types 6, 11, 16 and 18) Vaccine, Recombinant]. Several of our vaccines [i.e., GARDASIL, PNEUMOVAX23® (Pneumococcal Vaccine Polyvalent), MMR-II® (Measles, Mumps and Rubella Virus Vaccine Live), VARIVAX® (Varicella Virus Vaccine Live) and VAQTA® (Hepatitis A Vaccine, Inactivated)] are provided at a reduced price through our agreement with PAHO, which targets access to low- and middle-income patients in Latin America.

In 2018, we established a partnership with Rotary International to initiate a grant program to rural school clinics in lower income districts supported with a differentiated price for our HPV vaccine. This initial pilot has helped to deliver HPV vaccination to over 3,000 girls to date. In Indonesia, we successfully engaged with the government on continued growth in their HCV elimination goals through supportive disease management efforts combined with reduced pricing. These efforts have recently led to expanded access treatment pilots initiated in three cities targeting 500 HCV patients complicated with renal impairment.

We remain committed to continued growth in identifying and implementing opportunities to support access through differential pricing. We will continue to champion innovative programs and partnerships to help increase the availability and accessibility of our medicines and vaccines for those who need them.

Performance

PRODUCT PRICING 2014 2015 2016 2017 2018
Number of products that are supported with differential pricing1, 235 35 40 42 42
Number of countries where inter- and/or intra-country pricing has been implemented3114 121 123 125 128
Investment in patient- and provider-education programs (in millions)$52 $80 $80 $90 $115
NOTE: Year-over-year differential pricing performance metrics can be impacted based on the timing of local-market or third-party contract renewals and/or product life-cycle introductions or deletions. Therefore, increases or decreases in these pricing metrics should not be interpreted as anticipating the level of trend growth in future years.
1 Differential pricing intended to facilitate access for the at-need population.
2 Products include HIV treatments, vaccines and other patented products.
3 Countries as defined by the World Bank 2017 GNI Classification, including UN-defined Least Developed Countries.