Christopher Ward

According to media reports, Russia intends to restrict advertising of fast foods, carbonated beverages and other snack foods in an effort to address through lifestyle changes its enormous chronic disease burden. At the same time , Russia has announced it will cut health care spending further impeding the country’s ability to significantly improve health outcomes in the short-term.

While encouraging better nutrition and other healthy lifestyle changes is laudable, lifestyle changes will take years if not generations to have a major impact on the prevalence of chronic disease in Russia. In the meantime the country suffers from a massive social and economic burden of chronic diseases, many of which are inexpensively treatable and manageable.

Mortality from cardiovascular diseases in Russia is more than double that of the United States and Western Europe and accounts of 57% of all deaths in Russia. Medicines for the prevention of cardiovascular diseases such as aspirin and other readily available, inexpensive medicines that manage hypertension or cholesterol levels cost as little as pennies a day. If efforts were made in Russia to ensure that patients at risk of cardiovascular disease had better access to medicines, the pay back to the Russian economy woud be enormous.

Preventing chronic diseases by encouraging healthy lifestyles is an essential strategy for fighting chronic diseases, but so to is improving access to medicines. While it may take years to see an improvement in health outcomes in Russia through lifestyle changes, improving access to medicines can deliver immediate benefits. 

Balancing Healthcare Goals is Imperative

Insurance cannot stand in for a public healthcare system for the poor. At the same time, policy must offer returns to private sector investment in innovative drug discovery .

From a pharmaceutical care perspective, continuing world development presently demands progress on two broad fronts. First, all existing medicines necessary for the people’s overall health need to be made universally available. This implies ensuring sufficient volumes of essential drugs are accessible at low cost. It also requires overcoming the daunting and expensive challenge of ensuring that all people, rich or poor, have access to the professional support that facilitates the effective use of pharmaceutical treatments.

Second, without investment in better medicines and vaccines, many health problems facing humanity will never be satisfactorily resolved. Supporting ongoing private and public pharmaceutical research will demand appropriate intellectual property laws and drug pricing arrangements needed to adequately incentivise genuinely innovative but inherently high-risk pharmaceutical research and development. This is necessary because few, if any, governments have ever channelled public money into such domains without hope of future financial gains

For some analysts, the two goals of improving access to medicines today and ensuring the research-based industry is funded well enough to meet tomorrow’s needs are irreconcilable. In the past, commentators such as the Nobel Prize winning welfare economist Amartya Sen have argued that in the Indian context, pharmaceutical patents may do more harm than good.

But the emergence of modern India as both a major producer of pharmaceuticals – it is now the world’s third largest pharmaceutical manufacturer in volume terms – and a world leader in other areas of knowledge-based enterprise is today an important example of a country seeking to achieve a better internal policy balance between equity and innovation. This has involved both movements towards accepting the strengthened intellectual property related provisions needed to foster research-based industry, and new attempts to address concerns about the high – potentially ruinous – out-of-pocket medical costs incurred by the poor and India’s notable lack of an adequately-funded public health service.

In the latter area, initiatives such as the National Rural Health Mission and the Rashtriya Swasthya Bima Yojna health insurance scheme are indicative of progress. Yet in the medium to long term more radical approaches to funding a national healthcare system to assure the ‘right to health’ embodied in the country’s constitution may well prove vital.

Costs and Benefits of the Draft NPPP

At present, national and international attention is focused on the draft National Pharmaceutical Pricing Policy which seeks to reduce the prices of many more expensive formulations. Viewed positively, the NPPP-2011 could, if implemented, help make good quality products more widely affordable, and to rationalise the existing marketplace by, for example, reducing any tendency for medical prescribing to be distorted by financially linked factors. Nevertheless, the desirability of the suggested new price controls can be questioned at many levels.

Firstly, although better-off people will be advantaged by being able to obtain high quality ‘international brand’ medicines at lower prices, the proposed changes would not increase access amongst poorer sections of society. India already enjoys amongst the lowest average pharmaceutical prices worldwide. Arguably, introducing ‘ceiling prices’ will contribute little if anything to answering more challenging questions relating to universal care provision, and the supply of treatments at or even below marginal production costs in the least-well-served communities. The latter might in fact be facilitated by the availability of higher prices elsewhere in the domestic market.

Secondly, following from the above, it may be also be felt that the aim of lowering prices of more costly branded formulations is related more to achieving industrial (as opposed to welfare) policy goals. The full likely impacts of the presently planned interventions are difficult to assess. But although they are said to be based on a market-based pricing approach (which implies the existence of a degree of competition that calls into question the need for any further intervention) they could in theory have a protectionist effect by selectively disadvantaging international companies, due to legitimate operating cost differentials. If this proves true, it might thereafter discourage international investment in India or promote other undesirable reactions contrary to public interests.

Thirdly, economists who favour regulated competition may regard any Drug Price Control Order (DPCO) based strategy as inherently suspect. They are more likely to accept the need to fully recognise and stop corrupt practices such as promoting the use of medicines that are needlessly costly to patients via financial ‘kickbacks’. It does not appear that the presently envisaged changes would achieve this last end without more fundamental reforms.

Serving Global Public Health Interests

Indian health and economic policy-makers should try to do whatever they judge best for the Indian population. In a global market characterised by increasingly complex inter-dependencies between nations, commonly agreed interests of the world community need to be considered in all aspects of decision making, including those relating to the pharmaceutical sector. Past attitudes and ‘policy pathway dependencies’ might need to be revised in light of the fact that no country can stand alone.

For instance, decision makers may in future increasingly need to accept that as global development proceeds all countries should seek to spend similar amounts of their wealth on health and other welfare services, to further reduce not only internal inequalities but to enhance social justice globally. Otherwise, while elites may grow increasingly wealthy, there will be a danger of exporting poverty level wages for the less privileged right across the world. Likewise, richer members of any community should also arguably be prepared to make fair levels of contribution to the funding of research into new forms of treatment, regardless of where it can most cost effectively be undertaken.

The further development of more far-reaching alternatives and ideals such as those represented by, say, the establishment of Jan Aushadhi pharmacies, could be geared to provide not only ‘true generic’ products at well below average market prices. From a pharmaceutical care standpoint, it could also open the way to publicly resourced pharmacist-led prescribing and advice. This would challenge existing medical paradigms and could significantly enhance overall public health in contexts such as cardiovascular disease prevention and treatment.

The global healthcare community, which includes those national and international pharmaceutical companies that invest in innovative medicines research and are genuinely seeking to contribute to better outcomes, should support all those working to implement such potentially beneficial changes in the country. Today India is too economically important for any policy maker committed to increasing world prosperity to ignore, and its people’s needs are socially too significant for any health professional interested in improved world health to allow them to pass inadequately addressed.

HEALTH FINANCING AND FINANCIAL PROTECTION 

The principal objectives of the reforms in health financing and financial protection:

Objective 1: ensure adequacy of financial resources for the provision of essential health care to all 

Objective 2: provide financial protection and health security against impoverishment for the entire population of the country

Objective 3: put in place financing mechanisms which are consistent in the long-run with both the improved wellbeing of the population as well as containment of health care cost inflation

Government (Central government and states combined) should increase public expenditures on health from the current level of 1.2% of GDP to at least 2.5% by the end of the 12th plan, and to at least 3% of GDP by 2022. (3.1.1)

Ensure availability of free essential medicines by increasing public spending on drug procurement. (3.1.2)

Use general taxation as the principal source of health care financing – complemented by additional mandatory deductions for health care from salaried individuals and tax payers, either as a proportion of taxable income or as a proportion of salary. (3.1.3)

Do not levy sector-specific taxes for financing. (3.1.4)

Do not levy fees of any kind for use of health care services under the UHC (3.1.5)

Introduce specific purpose transfers to equalize the levels of per capita public spending on health across different states as a way to offset the general impediments to resource mobilisation faced by many states and to ensure that all citizens have an entitlement to the same level of essential health care. (3.1.6)

Accept flexible and differential norms for allocating finances so that states can respond better to the physical, socio-cultural and other differentials and diversities across districts. (3.1.7)

Expenditures on primary health care, including general health information and promotion, curative services at the primary level, screening for risk factors at the population level and cost effective treatment, targeted towards specific risk factors, should account for at least 70% of all health care expenditures. (3.1.8)

Do not use insurance companies or any other independent agents to purchase health care services on behalf of the government. (3.1.9)

Purchases of all health care services under the UHC system should be undertaken either directly by the Central and state governments through their Departments of Health or by quasi-governmental autonomous agencies established for the purpose. (3.1.10)

All government funded insurance schemes should, over time, be integrated with the UHC system. All health insurance cards should, in due course, be replaced by National Health Entitlement Cards. The technical and other capacities developed by the Ministry of Labour for the RSBY should be leveraged as the core of UHC operations – and transferred to the Ministry of Health and Family Welfare. (3.1.11)

Recommendation 3.1.2: Ensure availability of free essential medicines by increasing public spending on drug procurement. 

Low public spending on drugs and non-availability of free medicines in government health care facilities are major factors discouraging people from accessing public sector health facilities. Addressing this deficiency by ensuring adequate supplies of free essential drugs is vital to the success of the proposed UHC system. We estimate that an increase in the public procurement of medicines from around 0.1% to 0.5% of GDP would ensure universal access to essential drugs, greatly reduce the burden on private out-of-pocket expenditures and increase the financial protection for households. Increased spending on drugs needs to be combined with a pooled public procurement system to ensure adequate supplies and rational prescription of quality generic drugs by the public health system. Distribution and availability of quality medicines across the country could be ensured by contracting-in of private chemists

Recommendation 3.5.1: Enforce price controls and price regulation especially on essential drugs. 

We recommend the enforcement of price controls and price regulation on essential and commonly prescribed drugs. The current practice of using monopoly and market dominance measures for consideration of price control on drugs needs to be replaced by the criterion of ‘essentiality,’ which is likely to have maximum spill-over effects on the entire therapeutic category. We recommend the use of ‘essentiality’ as a criterion and applying price controls on formulations rather than basic drugs. Direct price control applied to formulations, rather than basic drugs, is likely to minimise intra-industry distortion in transactions and prevent a substantial rise in drug prices. It may also be necessary to consider caps on trade margins to rein in drug prices while ensuring reasonable returns to manufacturers and distributors. All therapeutic products should be covered and producers should be prevented from circumventing controls by creating nonstandard combinations. This would also discourage producers from moving away from controlled to non-controlled drugs. At the same time, it is necessary to strengthen Central and State regulatory agencies to effectively perform quality and price control functions.

Recommendation 3.5.2: Revise and expand the Essential Drugs List.

We recommend the revision and expansion of the National Essential Drugs List (NEDL) to include appropriate and approved alternative medicines. Public procurement of NEDL drugs should include identified and approved chemical, biological and AYUSH medicines. This will also ensure that AYUSH drugs are available at health facilities, thereby greatly enhancing the contribution of AYUSH doctors. Including new drugs and vaccines into government drug procurement should, however, be based on scientific evidence and due consideration must be given to safety, efficacy and cost-effectiveness.

Recommendation 3.5.3: Strengthen the public sector to protect the capacity of domestic drug and vaccines industry to meet national needs.

We recommend strengthening the capacity of the public sector for the manufacture of domestic drugs and vaccines. The public sector can play a crucial role in ensuring sufficient national capacity of essential drugs at affordable prices. This will greatly enhance drug and vaccine security and prevent disruptions, shortages, reductions and cessation of supply. Central and state governments should assist and revive public sector units (PSUs) that manufacture generic drugs and vaccines, limit the voting rights of foreign investors in Indian companies, and take other measures to retain and ensure self-sufficiency in drug production. It is also equally important to strengthen safeguards for intellectual property rights. The Central government must ensure that the patents regime does not compromise drug access and affordability.

We also need to urgently revisit India’s FDI regulations to amend the present rules of an automatic route of 100% share of foreign players in the Indian industry to less than 49%, so as to retain predominance of Indian pharmaceutical companies and preserve our self-sufficiency in drug production.

Recommendation 3.5.4: Ensure the rational use of drugs.

The extensive practice, in both public and private sectors, of prescribing hazardous, non- essential and irrational medicines should be eliminated. In addition to legislative and other regulatory measures, intensive efforts should be made to educate and encourage doctors and citizens to use generic drugs and avoid the use of irrational medicines. Critical for this is the introduction of an IT-enabled electronic system that tracks patient records – discussed later in the section on management reforms. Standard treatment guidelines should also become the basis for mandated and audited rational prescription practices.

Recommendation 3.5.5: Set up national and state drug supply logistics corporations.

We recommend the adoption of centralized national and state procurement systems in order to realize economies of scale and create the conditions necessary to drive down the prices of drugs, vaccines, and medical devices. Towards this end, we recommend the setting up of a national and state level Drug Supply Logistics Corporation for the bulk procurement of low-cost, generic essential drugs. This will enable all providers to access generic drugs with significant cost savings. The Government should also consider setting up at least one warehouse in each district to ensure availability of drugs to all providers.

Recommendation 3.5.6: Protect the safeguards provided by the Indian patents law and the TRIPS Agreement against the country’s ability to produce essential drugs.

We recommend that the strict protection from any dilution of many safeguards in India’s current amended patent law including restrictions on the patenting of insignificant or minor improvements of known medicines (under section 3[d]). Compulsory licenses (CL) should be issued to companies, as and when necessary, to make available at affordable prices all essential drugs relevant to India’s disease profile. This provision, under India’s own Patents Act and TRIPS as clarified by the Doha Declaration, shall allow countries to use such licenses in public interest and can be invoked in the interest of public health security. Also, the ‘data exclusivity clause’ must be removed from any Free Trade Agreement that India enters into, since such a clause extends patent life through ‘evergreening’ and adversely affects drug access and affordability.

Recommendation 3.5.7: Empower the Ministry of Health and Family Welfare to strengthen the drug regulatory system.

It is important to eliminate the multiplicity of responsibilities and jurisdictions of authority relating to pharmaceutical production and regulation by entrusting full responsibility to the Ministry of Health and Family Welfare. The Ministry of Health and Family Welfare must be empowered to introduce interventions for regulating the production of drugs as well as the operation of drug outlets. The functioning of State regulatory agencies should be strengthened by ensuring adequate workforce and testing facilities. Additional financial resources should be earmarked and allocated for setting up drug quality testing facilities in states and for the employment of additional regulators to serve in these facilities and regulatory agencies.

We recommend in public interest the transfer of the functioning of the Department of Pharmaceuticals, which is now under the Ministry of Chemicals and Fertilizers to the Ministry of Health and Family Welfare. By bringing in both the manufacture of drugs as well as drug price control, the Ministry of Health and Family Welfare will not only be responsible for ensuring the quality, safety and efficacy of drugs but also accountable for the unhindered availability of all essential drugs under the UHC system. This will also help better align drug production and pricing policies to prioritized national health needs.

Patients from across Africa met in Johannesburg, to discuss strategies to prevent and manage chronic diseases in advance of the September 2011 UN Summit on Non Communicable Diseases (NCDs). Non communicable diseases are responsible for 60 percent of all deaths in the world and the majority of those deaths occur in low-income and developing countries

The International Alliance of Patients’ Organizations (IAPO) African Regional Network Meeting in Johannesburg, South Africa was held with the support of two South African patient groups: the South African Depression and Anxiety Group (SADAG) and the Patients’ Health Alliance of NGOs (PHANGO). Representatives from the Department of Health in South Africa and the World Health Organization actively participated in the discussions and encouraged the participants to actively and aggressively make their concerns known.

The meeting brought together 18 IAPO member patient groups from nine African countries: Cameroon, Ghana, Liberia, Malawi, Nigeria, South Africa, Uganda, Zambia and Zimbabwe. Prior to the IAPO Regional Network Meeting SADAG and PHANGO hosted a round table with over 30 patient advocates from nearly 20 South African patient organizations that are not IAPO members.

Those attending the IAPO African Regional Network Meeting expressed frustration that health policies and initiatives rarely include patient involvement. The patient advocates called for greater involvement in the design and delivery of strategies to prevent and manage non-communicable diseases, and chronic diseases more broadly. Those with chronic conditions know best how they affect them and their lives and can help ensure healthcare services are developed to make the most efficient and appropriate use of limited resources.

The patient advocates also raised concerns about the inequity of provision of funding and services between chronic conditions which leads to competition between disease areas rather than treating all patients whether they have a common and well known condition, such as cancer, or a rare disease.

The participants believe that the current global discussion on non- communicable disease presents an opportunity to shape healthcare systems in a way that ensures they meet patients’ needs equitably in terms of access, quality and safety. They also believe that these efforts will fail unless patients and local communities are involved in developing and delivering healthcare systems and services.

IAPO is the only global alliance representing patients of all nationalities across all disease areas and promoting patient-centred healthcare worldwide.

The great challenge facing policy makers in Canada and the United States is how to deal with the growing economic burden of the health needs of an aging population.

For years demographers and health economists have claimed that increasing health expenditures are unsustainable. Yet the growing ecomic weight of a coninually ageing population has not broken the back of any nation’s economy,  Nor is it likley to.

Medical innovation does not just increase spending on new technologies. Over time, it reduces other health care costs. During the 1980s and 1990s hospitalization rates in Canada and the United States dropped dramatically in Canada and the United States as new medinces and technolgies helped to prevent and manage diseases.

When people live longer active and productive lives they also add more to a nation’s overall economic productivity. In the last three decades, mortality rates from heart and cardiovasculoar disease have been halfed . Hospitalizations for acid reflux and other digestive disease have been decimated. Mental diseases such as schizophrenia, which just a little over two  decades ago was one of the leading causes of hospitalization in Canada, are now managed at home or in the community.

There is no doubt that as our population ages, the economic burden of health care will grow.  But equally there also is no doubt that improved health outcomes that are in large part the result of medical innovations and improved knowledge about both health and disease also make a positive economic  contribution by enabling us to live longer productive lives.

For more about the importance of medical innovation see my recent interview in World Pharmaceutical Frontiers.

 

According to the Partnership to Fight Chronic Disease, health care costs for people with a chronic condition are five times higher than for those without such a condition. Poor health and chronic disease reduce economic productivity by contributing to increased absenteeism, poor performance, and other losses.

Over 75 percent of health care expenditures are attributable to chronic diseases that can be prevented or managed. Over the past decade, there has been a dramatic increase in the number of employer sponsored health plans that offer health management or wellness.

According to Mercer’s National Survey of Employer Sponsored Health Plans, health plan cost increases in 2010 for employers with extensive health management programs were about 2 percentage points lower than for employers offering limited or no health management programs.*

Encouraging employees to get involved in managing their own health is not only good sense - it’s also good buisness.

*http://www.mercer.com/press-releases/1400235?siteLanguage=100

Results from MetLife’s 8th Annual Study of Employee benefits Trends confirms “that programs that foster health & wellness, financial advice and guidance and work-life balance can be very effective at improving productivity at work. With the growing significance of productivity as a benefits objective, the strategic use of these programs might be an important consideration. They may help to support productivity goals once the job market begins to recover and it could be harder to maintain the productivity gains reported by employers that were associated with increased employee workload during the recession.”

As companies move out of the economic down-turn and seek to improve their financial health the design of employee benefits can improve the bottom line and provide a competitive edge. By recognizing that the design and implementation of employee health and wellness programs companies can improve productivity, reduce absenteeism and retain valued workers.

Source: MetLife 8th Annual Study of Employee Benefits Trends April 2010

New medicines are often blamed for being a major health cost driver in Canada  but the reality is that they account for a relatively small proportion of health care spending growth. But they bring value by reducing hospitalizations, preventing disease, and allowing people to live longer within their own homes. In the future, as the promise of more medical innovation is fulfilled, more health spending should be on medicines and vaccines that reduce the need for hospitalizations and other more costly services.

In 2010, total health care spending in Canada (private and public) is projected to increase by $9.53 billion over 2009 spending. Increased spending on hospitals and other institutions accounts for over $4 billion or 43.2% of that increase. Growth in spending for physician services accounted for 17.7 % of the increase. Spending on dentists, vision services and other health professionals contributed 15.8 % of the year over year increase. Prescription drugs contributed just 12.1 % to the 2009 to 2010 health spending increase.  

Dats Source: Canadian Institute for Health Information, 2010 National Health Expenditure Trends 1975-2010