PARTNERING FOR CHANGE:Novo Nordisk’s Partnership with the International Committee of the Red Cross and the Danish Red Cross

Verena Girschik, Assistant Professor, Department of Management, Society and Communication
Jasper Hotho, Associate Professor, Department of International Economics, Government and Business
Andreas Rasche, Professor, Associate Dean, Department of Management, Society and Communication

In 2018, the International Committee of the Red Cross (ICRC), the Danish Red Cross and Novo Nordisk formed Partnering for Change, a partnership to tackle the growing issues of non-communicable diseases (NCDs) affecting millions of people in humanitarian crises worldwide. This picture was taken at an informal gathering between the three heads of organization and a large group of Novo Nordisk staff at the Novo Nordisk headquarters after the formal launch of the partnership, 18 April 2018. (Left to right) Lars Fruergaard Jørgensen, President and CEO of Novo Nordisk, Peter Mauer, President of ICRC, Anders Ladekarl, Secretary-General of Danish Red Cross

INTRODUCTION

By the time the panel discussion on “Chronic Care in Humanitarian Crises” started, the highprofile event at the 2019 UN World Health Assembly had been months in the making. The panel brought together representatives from a string of prominent organizations, including the World Health Organization (WHO), the World Bank, the office of the UN High Commissioner for Refugees (UNHCR) and the International Committee of the Red Cross (ICRC). All of the participants were highly interested in combating chronic diseases in lower-income countries. The stage was surrounded by banners announcing a newly formed partnership among the Danish pharmaceutical company Novo Nordisk, the ICRC and the Danish Red Cross called Partnering for Change (P4C). The partnership’s aim was to develop improved models of care for people with diabetes, a non-communicable disease (NCD), in crisis contexts in order to address the unmet needs of refugees and other victims of conflict. In the audience, which included journalists, health scientists and representatives from non-governmental organizations (NGOs), all eyes were on this ground-breaking partnership.

NCDs are a class of non-infectious, chronic diseases, such as diabetes, hypertension and cardiovascular diseases, that require continuous monitoring and care. Providing care for NCDs in crisis contexts is difficult and costly, not least because healthcare systems are often absent or overburdened, and people are on the move. Therefore, humanitarian organizations are increasingly turning to private firms for funds, assistance and expertise. However, many NGOs and intergovernmental agencies have ethical concerns about involving the private sector in health-related matters, especially when their activities aim to address the needs of vulnerable people. There are also practical concerns about the viability and effectiveness of collaboration between the private and the humanitarian sectors. For example, in 2018, the Philips Foundation decided not to prolong its initial collaboration with UNICEF because it was concerned about the limited extent to which the collaboration managed to improve children’s access to care.1 As such, business-humanitarian collaboration must address challenges related to ethics and effectiveness.

As the panel discussion came to a close, the P4C members of the organizing team standing at the back of the room reflected on the years it had taken to launch their partnership. They quietly wondered: Would this be different? Had they been right to enter into this ambitious partnership? In contrast to the Philips/UNICEF partnership, would this humanitarian partnership work? In the meanwhile, a representative from Médecins sans Frontières asked the panel a critical question: Given that the cost of insulin remained high in many places, were partnerships with the private sector truly the best way to improve access to diabetes care for patients in crisis contexts? Could pharmaceutical companies not simply lower the cost of this life-saving drug instead? The team behind P4C felt that this question was likely to be just one example of the intense scrutiny that the partners could expect.

1 Interview with Margot Cooijmans, Philips Foundation, aired on 15 May 2019 (https://www.youtube.com/watch?v=g5n-xR14YoI).

NOVO NORDISK, DIABETES AND ACCESS TO CARE

Novo Nordisk was a global healthcare company headquartered in Denmark. The company specialized in the discovery and development of innovative biological medicines for chronic diseases. In contrast to many of its pharmaceutical peers, which had highly diversified disease and product portfolios, Novo Nordisk had a business model largely focused on diabetes. The company had been a leader in the diabetes market throughout its nearly 100-year history, and it had a broad portfolio of insulin and other products used in the treatment of diabetes. Insulin is often needed to treat diabetes, an illness that occurs when an individual has raised blood-glucose levels because the body cannot produce any or enough insulin, or because it cannot effectively use the insulin that it produces. Insulin is an essential hormone that allows glucose from the bloodstream to enter the body’s cells, where it is converted into energy. If left unchecked over a long period of time, too much glucose in the blood stream damages the body’s organs, leading to disabling and life-threatening complications, such as cardiovascular disease.2

Novo Nordisk established leadership in diabetes by focusing on meeting unmet patient needs, and by driving innovation to meet those needs and improve patient outcomes. For example, Novo Nordisk introduced the first long-acting insulin in 1946 and the first insulin pen in 1985. These innovations helped make insulin more effective and easier to administer, thereby improving the quality of life for people living with diabetes. Although Novo Nordisk continued to drive innovation, the company also ensured that earlier generations of low-cost insulin remained in its portfolio in markets around the world.

Novo Nordisk was well-known for its strong engagement in social and environmental issues. The company had an unusual capital structure with around 75% of the voting shares held by the Novo Nordisk Foundation, which provided a stable basis for its activities and also allowed for long-term decisions (see Exhibit 1). One aim of the Foundation was to help the companies in which it invested contribute positively to the lives of people and the sustainability of society.3 Based on the belief that a healthy balance among financial achievements, environmental sustainability and societal responsibility were important for business, Novo Nordisk incorporated the triple-bottom-line philosophy into its company bylaws in 2004. Novo Nordisk was therefore known for pioneering more balanced decision-making, and for introducing an integrated approach to social and environmental issues.

Notably, Novo Nordisk advocated for a need to fight diabetes as a global challenge. Diabetes remains one of the most widespread chronic diseases with 463 million adults affected worldwide as of 2019. An estimated 80% of all people with diabetes live in low- and middle-income countries4. As such, millions of people around the world are living with diabetes, but only a fraction of them have access to medicine and care. The reasons for the lack of access to diabetes care are numerous and differ between countries. They range from poorly developed infrastructure to a lack of trained healthcare professionals, a lack of insulin and supplies, and limited affordability. Pharmaceutical companies have often been viewed as part of the problem to the extent that they protect their patents and, thereby, impair affordable access to care.

Determined to overcome this stigma, Novo Nordisk had long invested in building a strong reputation by demonstrating its commitment to addressing the growing global diabetes burden. As part of its commitment, Novo Nordisk had made it an aim to make insulin accessible for patients all around the world. In 2001, it launched a differential pricing policy aimed at reducing the cost of insulin for people with diabetes living in the least-developed countries. In 2017, the company launched its Access to Insulin Commitment, which replaced the former pricing policy and expanded the focus to low- and middle-income countries and humanitarian organisations. As of 2020, the policy covered 76 low- and middle-income countries as well as selected humanitarian organizations.5 As part of this policy, the company guaranteed a price ceiling for insulin of USD 3 per vial. Novo Nordisk also demonstrated its social responsibility through several partnership initiatives aimed at improving supply chains and treatment capacity in areas where access to diabetes care proved problematic. In terms of its overall social performance, Novo Nordisk ranked sixth on the Access to Medicine Index in 2018. Notably, the ranking highlighted that Novo Nordisk had “strong management structures for access and exhibits robust performance in the application of good practice in both capacity building initiatives and donation programmes”.6

Capacity building was an integral part of Novo Nordisk’s strategy, especially in low-income countries and emerging markets in which healthcare systems were often not equipped to treat diabetes. The treatment of diabetes and the use of insulin are complex activities. Therefore, healthcare professionals need to be well-trained to ensure good patient outcomes. Moreover, insulin requires appropriate distribution networks and infrastructure that can maintain cold chains, as otherwise it degrades and becomes ineffective. As such, Novo Nordisk had to work closely with local healthcare systems and collaborate with governments, professional organizations, patient associations and other societal actors. It was only through such concerted efforts that the company could improve diabetes care in low- and middle-income countries. The relations that Novo Nordisk cultivated with societal actors not only enabled it to have a social impact but also allowed it to establish a presence and stakeholder network that could not easily be imitated by competitors. This contributed to the company’s competitive edge.7

Novo Nordisk had a great deal of experience in managing cross-sector partnerships. To enable these partnerships, the company proactively hired people with a range of backgrounds (e.g., in development and humanitarian work) and with experience in building and sustaining strong stakeholder relations. For instance, the “Changing Diabetes® in Children” partnership, initiated in 2009, supported the creation of local structures for diagnosing and treating diabetes in children in selected low-income settings. The partnership worked closely with local ministries of health and national diabetes associations, which were in charge of the program’s day-to-day management. This partnership was the only collaborative agreement through which Novo Nordisk donated insulin. These donations were supplemented by donations of blood glucose-measuring equipment by Roche (another pharmaceutical company). However, Novo Nordisk had never partnered with a humanitarian organization prior to 2017.

2 See https://www.diabetesatlas.org/en/
3 See https://novonordiskfonden.dk/en/
4 See https://www.diabetesatlas.org/en/
5 See https://www.novonordisk.com/sustainable-business/access-and-affordability.html
6 See https://accesstomedicinefoundation.org/publications/2018-access-to-medicine-index
7 Girschik, V. (2020). Managing legitimacy in business‐driven social change: The role of relational work. Journal of Management Studies, 57(4), 775-804.