
Volume Guarantees and the High-Price, Low-Volume Trap with Hema Srinivasan
with Hema Srinivasan
About this episode
Hema Srinivasan, formerly the Chief Access Officer of MedAccess, a leader of CHAI’s market shaping work, and a former country director for a major pharma company, joins host Inder Singh to discuss how market shaping in global health has evolved to use more formal tools like volume guarantees. They discuss when and how volume guarantees should and should not be used, how they can help address the high-price, low-volume trap to dramatically lower prices and expand access to critical health products, and other use cases including ensuring supply security or incentivizing supply expansion.
Episode quotes
Click a timestamp to jump straight to it in the player.
Escaping the high-price, low-volume trap
It's core to the way any manufacturing organization runs its business. If you reduce uncertainty around how much you're going to produce, if you maximize the scale at which you're producing, you will save costs, and you can pass those on to the customer. And in the case of global health, that often becomes self-fulfilling. So, reducing that high-price, low-volume trap can become quite catalytic, where we would often see this issue where the price is really high, the volumes are low. We know if the price came down, the volumes would be quite a bit higher, and everyone would win. But the supplier doesn't see enough in the market to say, ‘Let me reduce the price and hope for the best.’
The credibility test every market shaper has to pass
You can't build a market-shaping success story just based on credibility with the public health community or credibility with the buy side of the market. You really need credibility with the suppliers and we tried to do a lot without that. That didn't work so well.
How do you know a volume guarantee is the right tool?
If we see the enabling environment is there for uptake and there are just these few critical market-related barriers that we can solve for that unlock that equation, then, we can implement a volume guarantee, and it can have massive impact. But the trick is really spending the time to understand is the market-related barrier what's really holding back access, and not something like developing a whole new product that isn't available today or doing a ton of health worker training work for many, many years. I think those other barriers to access always exist, but if they are much more important than the price or the supply, a volume guarantee won't be successful.
Keep listening
More from the show
All episodes →
CHAI's Approach to Cost Plus Negotiations with Aaron Patillo
Aaron PatilloAaron Patillo was a key member of the Clinton Health Access Initiative's (CHAI) original drug access team. Based in Beijing, he brokered deals with pharmaceutical companies that helped slash the price of HIV/AIDS medicin…

Local versus Global Market Shaping with Oliver Sabot
Oliver SabotWhen it comes to market shaping, having a wide range of tools in your kit is critical. “You don’t want to be a hammer looking for a nail,” says today’s guest Oliver Sabot. Sabot has spent years shaping markets in various…

So You’ve Built Buying Power and Sent a Demand Signal, Now What?
After five guest interviews packed with insights, host Inder Singh takes a step back to explore a key concept in market shaping—and what is often the first move. Across the interviews this season, regardless of sector, t…