Transcript Future Strategic Directions: Medicines Pricing and Financing Dr. Dele Abegunde Medicines Access and Rational Use.

Future Strategic Directions:
Medicines Pricing and Financing
Dr. Dele Abegunde
Medicines Access and Rational Use
Background
Access to pharmaceuticals essential to healthcare
25 -70% of health spending in the developing countries,
10-18% in OECD countries
Relatively low marginal cost of unit of pharmaceutical
production not translating to consumer surplus
Marginal cost of consumption at point of need for most
consumers in the developing countries is way greater than
zero.
Less that 3% of population in low-income countries have some forms of
insurance cover
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Background
Total pharmaceutical expenditure: 0.2 – 3.8% of GDP
TPE share of Total Health expenditure vary up to between 25 – 36% OECD
countries. Likely higher in LIMC countries?
Share of TPE from external sources increase from 12% in 2000 to 17% in 2006
in LMIC, 22% in the 49 least developed countries.
80% global TPE spent on 18% of population: May suggest regressive global
financing scenario
Medicines financing remain regressive in LMIC: Medicines are largely
financed through OOP – only about 3% have access to some forms of
insurance mechanism
Market failures justify public intervention
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Regulation for cost containment and equitable financing is weak in many
countries
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Medicines price activities Since about a
decade
WHO has partnered with HAI for about a decade
Medicines pricing surveys: up to 70 so far
Development of policy guidance
Global activities:
WHO Regions: EMRO, WPRO, PAHO
countries and
NGOs such as the OBIG/PPRI, OECD, MeTA etc.
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Global scenes
Innovative medicines financing schemes and tools
Pooled procurement
Patent pooling
Bilateral AIDS and donations
Air ticket tax
Sin tax – tobacco and soda
etc
Players- financial intermediation
GF, UNITAID, PEPFAR, GDF, GAVI, Bilateral, Task force for Innovative
financing . . . . . . . . . . .
Estimating real impact?
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Market impact analysis?
Structural impact?
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Challenges
Distorted view of total essential medicines financing with
inputs to specific disease programs by donors
Reduced government contributions to health and
medicines
Constrained technical capacity in countries
Political will
Global economic (financial) crisis
Human resources
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Healthcare systems
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Re crafting WHO response
Response so far resonates more with the supply side of
pharmaceutical market
Expanding response to the determinants of demand;
opportunity to advance development of response to
inaccessibility and low affordability of medicines
synergize with work so-far
Empowers consumers to increase access to essential medicines
Enhance positive consumer behaviour towards use of essential
medicines
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Stepping into the Future: WHO Strategy
Goal:
To ensure that medicines are available and affordable for all populations
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Purpose:
Encourage and support the development, strengthening and
implementation of global, regional and national actions aimed at greater
availability and improved affordability of medicines
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OBJ 1
Stimulate the commitment of governments, international
organizations and others to address the issues
surrounding medicine financing, pricing and availability
Increase global awareness of the main issues surrounding financial management of
pharmaceuticals, including prices, availability and affordability.
Intensify advocacy for equity in access to essential medicines
Promoting medicines financing schemes that targets empowering the poor
Advocate for high-level government support for country-level action
Promote and facilitate measures to manage and contain medicine prices
Collaborate with professional associations, scientific institutions, governmental and NGOs.
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OBJ 2
Develop practical guidance on the implementation of
policies and other interventions for managing medicine
prices and availability, including pharmaceutical financing
and reimbursement systems.
Convene international experts to review evidence for policy programmatic options
Support the regular publication of medicine price data: transparency, information
sharing, and tool for price negotiations and decision-making.
Develop tools to guide and assist policy and decision makers to navigate the broad mix of
policy options and implementing home-grown interventions.
Disseminate information on policies and other interventions.
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OBJ 3
Build national capacity for evidence-led development,
adoption, implementation and monitoring of policies and
interventions for improving the access to and the
financing of, essential medicines, and the evaluation their
impact.
support the collection and management of country information
provide technical support for the development, implementation and evaluation of national
policies and interventions
Facilitate dialogue and information exchange among policy- and decision-makers,
Advocate and support processes of pharmacoeconomic evidence-led decision making.
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Facilitate and support the process of developing, establishing and evaluating medicines
finance strategies
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OBJ 4
Support operational research in a broad spectrum of
relevant areas, including the determination of and
refinements of financing norms, measurement of price,
availability and affordability, and evaluation of
interventions
Promote the consistent use of standard methodology for medicine price and availability
measurement: WHO/HAI survey protocol
Encourage and support periodic surveys and routine monitoring of medicines prices,
availability and availability
Conduct secondary and subset analyses of medicine price, availability and affordability
Data: disease group, treatment, country and region.
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Support operational research into the effectiveness of various policies and interventions
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in different contexts.
Warm up activities
Financing of medicines
Normative exploration of TPE – collaboration with University of Brunel
the UK and experts
Preliminary explorations into adaptation of the developments in Micro
financing to improving economic access to essential medicines:
Micro insurance, Community health funds, Mutual health organizations, Rural
health insurance, Revolving drug fund, Community involvement in user-fees
Management
Advocating for and promoting the expansion of existing insurance
coverage particularly to include out patient prescription
Promoting developments to improve the incorporation of
pharmacoeconomic values into medicines policy
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Advancement in the medicine pricing domain
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General funding models - macro
National, country model a.k.a Macro model
Maximize
Health welfare = Ʃ Cost of Medicinesj X Treatment needs j
Subject to:
budget constraints (GDP, budget allocation, income from cost recovery)
Availability constraints (supply and distribution) constraints
Health system constraints
Public/private market participation
Budgetary model
Total Cost = Ʃ Cost of Medicines (Cj ) X Quantity (Qj)
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General funding models - micro
Household (consumer) model aka Micro model
Out of pocket from household wealth, budget, social capital, etc.
Medicines compete with:
other healthcare services and product
Food security
Other household demand – education, transportation, shelter etc
household investment
Demand for medicines is inelastic
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Imperfections & Public policy intervention
Imperfections:
Asymmetrical information
Supplier induced demand
Justification for public intervention in the funding of
medicines
Most advanced countries
Pooled risks:
Public insurance and reimbursement systems - tax based, premium based,
Labour insurance or Government insurance schemes.
Private insurance systems.
Most developing countries:
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Out of pocket expenditure – over 90%
Public provision – weak at best
Some forms of insurance coverage especially community health financing
schemes
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Measures to address financial access
1
supply-side
measures
1. Manufacturers
2. Providers
3. Middle market
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proxy demandside measures
1. Prescribers: physicians,
nurses, CHEW
2. Pharmacists,
dispensers
3
demand-side
measures.
1. patients
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Mechanisms
Cost containment policies:
Almost often public
Targets
Financing mechanisms:
Public and private
Measures
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Strategies to improve medicine financing in countries
– increased investment and
– public spending on health;
– improved aid effectiveness;
– better efficiency and use of prepayment
– risks pooling arrangements;
– improved payment methods
– safety nets for the poor and vulnerable;
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Public (National) financing Mechanisms
Insurance
Pooled procurements
Global initiatives
UNAIDS
Global Funds
UNITAID – HIV/
HLTFIF – MDG focused
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Downstream financing Mechanisms
Insurance
Challenges: Formal sector, limited cover to the larger
informal sector
Community financing (Micro finance)
Community health (medicines) insurance
Relatively untapped broad area of opportunities
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Microfinance: CHI
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Generic expression that describes a variety of health financing
arrangement:
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Micro insurance
Community health funds
Mutual health organizations
Rural health insurance
Revolving drug fund
Community involvement in user-fees management
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CHI
Community finance schemes
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This market is evolving in the contest of:
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Strength
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Social capital
Pre existing community institutions
Interconnectivity between local communities
Limitations to overcome to serve the community well
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Government failure to organize taxes, public finance, provision of social protection to
vulnerable populations and to exercise oversight over the health sector.
Market failure to offer effective exchange between demand and supply
Lack of insurance and reinsurance mechanisms to spread risk over larger population
Isolation from formal financing and provider networks
Have difficulties in mobilizing enough resources to cover costs of priority health services
for the poor
Limited ability to encourage prevention or use of therapies effectively
Rely on management staff with limited professional training.
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CHI
five key policies available to governments to improve the effectiveness and
sustainability of existing community financing schemes.
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subsidized premiums of low-income populations
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insurance to protect against expenditure fluctuations and re-insurance to
enlarge the effective size of small risk pools
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effective prevention and case management techniques to limit expenditure
fluctuations
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technical support to strengthen the management capacity of local schemes
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establishment and strengthening of links with the formal financing and
provider networks.
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Microfinance Institutions (MFIs) – Alternative Finance
Institutions (AFIs).
Microfinance
Quality of financial services for poor and near-poor clients
Most have been not-for-profit non-governmental organizations
In addition to a financial objective, they also have a developmental or social
Objective
AFIs include state-owned agricultural, development, and postal banks; memberowned savings and loan institutions; other savings banks; low-capital local and/or
rural banks; and specialized microfinance institutions and programs (MFIs) of varying
types
There are over 750 million accounts in various classes of financial institutions that are
generally aimed at markets below the level of commercial banks, and that some
substantial fraction of these institutions' clients are probably poor or near-poor.
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Regional coverage (MFIs, AFIs)
Region
Africa (sub-Saharan)
East Asia and the Pacific
Europe and Central Asia
Latin America and the Caribbean
Middle East and North Africa
South Asia
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% of Accounts
4
48
3
2
7
36
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Accounts by institutional types (AFIs)
Region
Postal Banks
MFIs
Credit unions and coops
Community Banks
State Agricultural development
banks
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% of Accounts
48
18
5
3
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Innovative financing methods
• hypotheticated taxes, e.g. 'sin taxes' for tobacco and alcohol
• national and state lotteries dedicated to health
• public-private partnerships between governments and the private sector
to co-fund health care.
• Other mechanisms are internationally focused, such as:
– the (recently proposed) International Finance Facility (IFF). This would frontload development assistance by selling government bonds secured by future
aids flows
• debt for health swaps, in which external government debt is converted
into domestic debt, thereby resulting in less pressure to generate foreign
exchange for debt service. A debt-for-health swap also represents an
opportunity for a foreign donor to increase the local currency equivalent
of a donation.
• the use of public-private partnerships to develop new products using
capital markets.
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Thank you for listening
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