MedAccess submission to International Development Committee

Investment for Development: The UK’s Strategy Towards Development Finance Institutions

This submission from MedAccess Guarantee Ltd responds to the call for evidence relating to the above inquiry, opened on 9 November 2022. MedAccess is wholly owned by British International Investment.

 

Executive summary

  1. MedAccess is a social enterprise that works to improve access to medical products for people living in aid-eligible countries. Founded in 2017 by CDC Group, now British International Investment (BII), MedAccess brings commercial rigour to public health, working closely with business and government to improve supplies of World Health Organization (WHO)-approved health products. Its nine financial guarantees to date have helped more than 375 million people to access products to tackle diseases including HIV, malaria, tuberculosis, syphilis, and COVID-19. An independent Board oversees the work of MedAccess’ specialist team of 22 experts in global health, the pharmaceutical industry and investing. MedAccess remains wholly owned by BII but has a close relationship with the Foreign, Commonwealth & Development Office, which funds parts of its work, making a significant contribution to the UK’s global health priorities.

 

Foundation

  1. The idea to create MedAccess arose during discussions among global health partners including the UK’s Department for International Development (DFID), the Bill & Melinda Gates Foundation, and the Clinton Health Access Initiative (CHAI). All partners recognised that unpredictable markets for medicines and other health products often deterred companies from supplying to low- and middle-income countries (LMICs). Critical products were often not registered for use, unavailable, or unaffordablefrequently priced above European equivalents.

 

  1. DFID commissioned CDC to incubate the idea for an organisation focused on shaping healthcare markets in LMICs. The organisation would reduce the risks facing manufacturers in LMIC markets, providing guarantees in return for lower prices and stable supply. This would reduce pressure on procurer and country budgets, enabling them to introduce or increase orders for medical innovations. Once the market had been established other suppliers would be expected to enter, increasing price competition alongside more sustainable supply.

 

  1. CDC’s investment experts developed a company that could be funded under Investment Policy II (later the Catalyst Strategies portfolio), with a clear remit to focus on health impact over financial returns. The company – initially called the Credit Facility for Access to Medicine (CFAM) and later renamed MedAccess would blend private sector knowhow with public health expertise, using $200 million paid-in capital to negotiate agreements that reduced the price and increased availability of medical innovations in LMICs.

 

  1. CFAM was incorporated in November 2017, with an initial $100 million capital paid in. The second tranche of $100 million was paid in November 2019.

 

Current relationship with BII

  1. MedAccess remains wholly owned by BII, which is its sole shareholder.

 

  1. MedAccess is governed by an independent Board made up of seven members, chaired by Professor Helen Rees OBE. BII has one representative on the Board and on sub-committeesincluding the Investment Committee, which screens potential guarantee agreements. Former CDC CEO Diana Noble CBE is also an independent Board member, along with experts from the financial sector, pharmaceuticals, and global health.

 

  1. Day-to-day engagement for BII is led by two Investment Directors. They work with the CEO and the senior management team, providing advice, guidance and support where needed.

 

  1. MedAccess is an unusual investment for BII. Focused on maximising health impact, its financial goal is to achieve capital preservation rather than delivering a financial return to the shareholder. Any operating surpluses are invested back into the business to enable more health impact, allowing MedAccess to enter transactions with ‘skinny’ margins that would be impossible for a purely commercial entity. MedAccess is thus able to play a unique role in the global health ecosystem. This model fits with the stated aim of BII’s Catalyst Strategies to invest in markets with few precedents or benchmarks, taking a flexible approach to risk in exchange for pioneering impact. In 2021, BII endorsed MedAccess’ 2021-2025 strategy, expanding the scope of operation, and explicitly recognising that MedAccess is a blended finance organisation that will draw on grants to cover some of its operating costs while deploying BII capital for maximum impact.

 

  1. MedAccess’ close relationship with BII helps it to apply business disciplines to global health problems. MedAccess has earned a reputation in the global health community for rigorous diligence, creative problem solving, and firm but fair negotiation.

 

Transactions to date

 

Disease area

Health product

Geography

Partners

Financial product

Announced

1

HIV, hepatitis, HPV

Viral load testing platform

Africa

Hologic, CHAI

Volume guarantee

July 2018

2

Malaria

Next-generation mosquito nets

Africa

BASF, Gates Foundation

Volume Guarantee

October 2019

3

COVID-19

Various

Global

UNICEF

Procurement guarantee

July 2020

4

Tuberculosis

3HP TB preventive treatment

Global

Macleods, CHAI

Volume guarantee

August 2021

5

Malaria

RTS,S vaccine

Africa

GSK, Gavi

Production guarantee

August 2021

6

HIV, syphilis

Dual rapid diagnostic test

Global

SD Biosensor, CHAI

Volume guarantee

November 2021

7

COVID-19

COVID-19 vaccines

Global

COVAX, Open Society Foundations

Procurement guarantee

April 2022

8

HIV

Self-test

Global

Wondfo, CHAI

Volume guarantee

July 2022

9

Malaria

G6PD test

Global

SD Biosensor, CHAI

Volume guarantee

September 2022

10*

Tuberculosis

Pretomanid

Global

Viatris

Volume guarantee

December 2022

*MedAccess announced a partnership with Viatris to reduce the price of pretomanid, a treatment for drug-resistant TB, in December 2022. The final contract is expected to be signed in early 2023.

 

Impact

  1. As of June 2022, MedAccess agreements had helped secure affordable access to medical innovations for more than 375 million people in over 90 countries.

 

  1. By partnering with MedAccess and entering or scaling up in new markets, companies have unlocked more than $455 million in sales.

 

  1. Disease area highlights include:

HIV

  1. MedAccess’ guarantee for Hologic disrupted the market for viral load testing, leading to a new low ceiling price of $12 per patient test, including all consumables (such as reagents, manufactured in Manchester), which has become the benchmark for major procurers. The partnership, part of Hologic’s Global Access Initiative, has led to more than 500,000 people with unsuppressed HIV viral load being identified and more than 250,000 people being switched to more suitable second-line treatment. By the end of 2021, the guarantee had directly led to $27 million savings for procurers including the Global Fund and PEPFAR.

Malaria

  1. MedAccess guarantee for BASF secured a 40% price reduction for next-generation mosquito nets to tackle malaria in areas where mosquito resistance to standard nets is increasing. A study in Tanzania showed the nets reduced clinical episodes of malaria by 44% over two years compared to standard nets. More than 35 million nets have been distributed under the terms of the guarantee.

 

  1. MedAccess also enabled the continued production of the world’s first malaria vaccine. Production was at risk as GSK waited for policy and funding decisions from WHO and Gavi. MedAccess’ guarantee enabled GSK to continue producing the vaccine antigen, meaning millions more doses will reach children in Africa more quickly.

Tuberculosis

  1. In December 2022, MedAccess announced a partnership with Viatris that will see the price of pretomanid – one part of a highly effective regimen for drug-resistant TB – reduced by 34%. The parties are in the process of concluding a volume guarantee that will increase access to the WHO-recommended regimen.

 

  1. In 2021, MedAccess provided a volume guarantee for Macleods, which enabled the Indian manufacturer to scale up production of its 3HP TB preventive therapy while reducing the price per patient course from $40 to $15. In July 2022, MedAccess announced that Macleods had agreed to reduce the price further, to $13.50 per patient course.

COVID-19

  1. MedAccess acted quickly in 2020 to provide UNICEF with a procurement guarantee, enabling the world’s largest procurer of medical products to place bulk orders and accelerate shipment of essential COVID-19 supplies including PPE, diagnostics, oxygen, specialist syringes, and clinical equipment. In 2022, MedAccess provided a guarantee to the COVAX Facility to help it to meet country demand for additional COVID-19 vaccines.

 

Transactions and diligence

  1. MedAccess has developed a robust pipeline process to take potential agreements from scoping to legal execution. The process has eight steps:

 

 

  1. Proposed agreements are scrutinised through a formal Investment Committee process as part of the diligence step. The Investment Committee is made up of Board members and at least one independent expert. The Committee meets with the MedAccess team to discuss the transaction and once it is satisfied that the proposed agreement will achieve impact with appropriate risk, it provides authorisation to proceed to negotiate and finalise contracts. If there are any major changes to the agreement during negotiation, the Investment Committee may be required to meet again.

 

  1. MedAccess uses a bespoke Development Impact Framework to measure impact, developed in 2019 in consultation with the then-DFID Chief Economist. All proposed agreements must exceed a minimum threshold for health benefits and cost-effectiveness improvements to be progressed through the pipeline process.

 

  1. The potential impact of each transaction is assessed against a counterfactual: what would happen if MedAccess did not provide a guarantee? Clinical and economic data are combined with partner interviews and country visits. The team works closely with health ministries to accommodate their priorities. Projected change is categorised into three standardised indicators:

 

  1. MedAccess uses its projected impact to set targets and track its transactions.

Governance and transparency

  1. MedAccess is governed by an independent Board of seven experts in finance, pharmaceuticals and global health. As well as the Investment Committee, the Board has sub-committees focused on Audit and Finance, People and Remuneration, and Governance and Nominations.

 

  1. As a BII investee company, MedAccess’ strategy and business plans are reviewed and approved by BII’s investment committee.

 

  1. MedAccess publishes its annual impact review and its annual report and accounts in June each year. The documents are published on MedAccess’ website and filed with Companies House.

 

  1. MedAccess has its own website and social media accounts on Twitter and LinkedIn. The website is maintained with news stories as well as static pages that explain why MedAccess is needed, what it does and how it does it. Social media channels are updated daily with posts focusing on impact and MedAccess’ role in the global health ecosystem.

 

Alignment to FCDO priorities

  1. MedAccess’ priorities are aligned with those of BII and FCDO. Both organisations have funded MedAccess, with BII providing $200 million paid-in capital and FCDO providing up to £7.3 million as part of its Global Fund Accelerator. In providing the funding, BII and FCDO have been clear that they expect MedAccess to achieve maximum health impact with UK taxpayers’ money.

 

  1. MedAccess’ work supports FCDO priorities on health, including those set out in the December 2021 approach paper: Ending Preventable Deaths of Mothers, Babies and Children by 2030.

 

  1. The paper notes that the UK recognises the need for innovative financing approaches for health and nutrition in Pillar 1 (Strong health systems) and commits to “work with market-shaping organisations to strengthen access and affordability of life-saving innovations” in Pillar 4 (Research, technology, and innovation).

 

  1. MedAccess’ work aligns with the aims set out in the 2022 International Development Strategy, which puts stronger health systems at the core of the UK’s global health approach. By increasing access to medical innovations at affordable prices, MedAccess helps to ensure that the products patients need are available when they need them.

 

  1. FCDO and MedAccess colleagues maintain close relationships at all levels. This enables real-time information sharing on opportunities and areas for potential collaboration. MedAccess benefits from FCDO’s presence and profile among global health institutions. FCDO is able to consider MedAccess as part of the UK’s approach to global health, providing bespoke innovative finance solutions to health access challenges.

 

Looking to the future

  1. In its 2021-2025 strategy, MedAccess set out ambitions to achieve greater impact by expanding its work. Alongside stretching transaction and impact targets, the strategy increased the range of financial products in MedAccess’ offer and provided a clear mandate to work on non-communicable diseases.

Financial products

  1. MedAccess can provide debt finance to suppliers looking to make investments that will expand the supply of critical medical products at affordable prices. Many healthcare manufacturers struggle to access capital to scale up production where demand is uncertain, or the market is perceived to be risky. MedAccess aims to combine debt finance with demand modelling and market-shaping expertise to support sustainable businesses. MedAccess only provides finance to companies that undertake to expand access and improve affordability.

Non-communicable diseases

  1. MedAccess is actively developing partnerships to enhance the supply of products to tackle non-communicable diseases such as cancer and diabetes. Markets for non-communicable diseases are highly fragmented and do not benefit from global procurers such as the Global Fund. This leads to high prices, uncertain supply, and, in many cases, products not being available at all. Many patients turn to illicit suppliers and risk accessing poor quality or even dangerous products. MedAccess recently published a call for expressions of interest in a volume guarantee to improve access to radiotherapy in LMICs.

 

Support for local manufacturing

 

  1. MedAccess is working with manufacturers and global health partners to support increased local manufacturing of vaccines and other health products. MedAccess is possibly the only company that can provide both demand-side and supply-side finance, and may be able to play a unique role in supporting African manufacturers of vaccines and medicines. MedAccess can support companies to scale up production and achieve economies of scale that lead to affordable prices. At the same time, it can offer guarantees to ensure offtake, reducing the risk that manufacturers are left with unsold products.

 

Further information

 

  1. If the Committee requires further information, please do not hesitate to contact Michael Anderson, CEO, on manderson@medaccess.org or Rob Kelly, Head of External Relations, on rkelly@medaccess.org