Lessons from market tweak on TB test
The use of molecular diagnostic tests for tuberculosis, widely considered superior to X-ray and microscopy, increased 10-fold after an experiment by public health experts and management researchers to pull down their prices through market dynamics.
This “market-shaping” intervention, carried out in India, may serve as a model for similar initiatives for other diseases in India and countries in South Asia and Africa with comparable diagnostic challenges, researchers said in a study published in the journal BMJ Global Health on Friday.
The researchers had tested a strategy to negotiate lower prices for the molecular tests, which can be used simultaneously to diagnose tuberculosis and to determine whether the TB bacilli infecting a patient are resistant to a key drug.
One of the tests, owned by a US-based manufacturer, cost a patient around $67 at the time the researchers launched their initiative. Their aim was to expand the market while getting the manufacturer to agree to sell at $33 a test.
“We calculated the profit margins that everyone in the supply chain -– manufacturer, distributor and retail diagnostic lab — made at $67 per test,” said Sarang Deo, associate professor of operations management at the Indian School of Business, Hyderabad.
Deo had provided advice on the design of the initiative, which was funded by the Bill and Melinda Gates Foundation.
“We argued that a lower price would reduce (the profit) margins, but a larger market would compensate for the lower margins (and) facilitate reasonable profits,” Deo told The Telegraph.
Collaborators from the Clinton Health Access Initiative in New Delhi set out across the country, speaking with doctors and a network of select private diagnostic laboratories, urging them to adopt the gene-based test and ensuring that the laboratories did transfer the price benefit to the patients.
The molecular tests provide advantages over conventional X-ray diagnostics, which can yield false positives (misleading shadows on chest X-rays causing uninfected people to be labelled TB patients), and microscopy tests of sputum that may yield false negatives (TB patients being labelled uninfected because the technicians failed to spot the tubercular bacilli).
Between 2013 and 2018, the number of tests carried out collectively by the 211 laboratories in the network increased from around 28,000 a year to over 274,000 a year.
The consortium of labs negotiated the lower procurement prices of the tests with the suppliers by promising to deliver the tests at lower retail prices, said Deo, who collaborated with Madhukar Pai, a public health specialist at McGill University, Canada, in designing the market intervention.
The collective uptake of the molecular tests by the 211 laboratories in the consortium was significantly higher than the use of these tests by all the other diagnostic laboratories across the country. This, Deo said, was a signal that the initiative probably contributed to the rise within the network.
The 211 laboratories, for instance, accounted for 263,000 uses of a specific molecular test during 2018, while all the other laboratories accounted for only 60,000.
Deo and his co-authors said their initiative had highlighted both the effectiveness and the limitations of the market-shaping intervention. While the adoption of the test expanded within the network, its use across India remains low.
An estimated 2.2 million Indians are infected with TB every year, which translates into an ideal annual requirement of around 22 million tests as only around 1 in 10 patients with TB-like symptoms are likely to actually have the disease.
Private providers in India currently use less than 300,000 tests a year, implying there’s scope for a scale-up.