Big Pharma and Global Health


The increasing importance of the pharmaceutical industry in global health and development

Posted by Debbie Koh

Take a moment to think about the last time you bought some medication. Maybe you went to your local Duane Reade/CVS/RiteAid to pick up an over-the-counter drug. You might have debated over a brand name versus a generic, or what was covered by your insurance, but the whole process probably didn’t cause you too much anxiety. You probably don’t stop to think if your provider was able to prescribe that medication in the first place, if it was stored properly, or if those meds might even be a useless or possibly harmful counterfeit.

Now, place yourself in another setting. You know you need some medication and you walk into a pharmacy.  The shelves are pretty dusty and filled will medications, labeled and unlabeled. You describe what’s wrong to the guy behind the counter. He listens, and cuts off some tablets from a larger foil-wrapped strip. “Take these twice a day for one week,” he says. Are you thinking about some of those questions now?

For pharmaceutical companies, the developing world is an untapped market that is poised for growth. Recent developments, such as a landmark decision by India’s Supreme Court to reject a patent application for a cancer drug made by Novartis, seem to be protecting generic manufacturer’s ability to continue making low cost drugs available to this market. Other companies are trying to make their products available at competitive prices (the latest example: two name-brand HPV vaccines are now available for less than $5 per dose).

Creating a reliable pharmaceutical regulatory and distribution system hasn’t been a particularly trendy or popular priority in global health and development. But, as the focus around international aid shifts increasingly toward ownership and sustainability, it’s increasingly important to ensure that people can access high-quality, affordable medicines outside of donor-funded supply chains.

Debbie graduated from Wagner in 2010 with her MPA in Health Policy and Management, International Health. She returned to her native California in 2011 and currently works for Venture Strategies Innovations. Follow her on Twitter at @thedebkoh or connect via LinkedIn. All views expressed are her own.


Free Market Lessons from Sweden’s Single Payer System


Posted by Errol Pierre

The United States with a population of over 313 million people spends over 17% of its GDP on health expenditures while over 14% of its population lack health insurance. This has led to runaway costs, access to care issues, and in the face of recent healthcare reform efforts, worries of severe physician shortages come 2014. On the contrary, Sweden, with a much smaller, homogenous population of 9.4 million people has been able to keep health expenditures less than 10% of its GDP while covering all of its population. If efficiency of health dollars were the metric to compare health systems internationally, Sweden would lead the U.S. in this regard for the last 30 years. Despite their successes, like all developed nations, Sweden faced threats of increasing costs in the 1990’s due to an economic downturn. Additionally, Sweden also saw an aging population with a longer life expectancy from advancements in technology and modern medicine. When healthcare is government run it inevitably will succumb to rationing when tax dollars are scare. However, Sweden has been able to achieve sustainable results through policy and market reforms focused on (1) the decentralization of healthcare management, (2) cost containment measures, and (3) physician and hospital competition.

Decentralization of Healthcare Management

While Sweden is a model for a single payer system, many of their reforms can be applicable to the United Stated. In Sweden the Health and Sickness Care Law of 1982 decentralized the Swedish government’s control of healthcare to keep it “accessible, efficient, and equitable.”  Counties within the country were given more autonomy to set up boards and administer health services. In turn, many of the national rules dissolved. This decentralization gave more power for regional decisions within the counties of Sweden. This is unlike America where the answer to the uninsured population in its most recent healthcare reform efforts was to use the national approach of health exchanges and essential health benefits rather than delegating the particular solutions to individual states and localities. For example the Department of Health & Human Services mandated that every state have a health benefit exchange by 2014 or the Federal government would create one within the state.

Lesson Learned: Place the burden of the uninsured into the hands of local governments to formulate strategies to address the issues that are sensitive to the local values.

For example, in the U.S. one third of the uninsured find insurance within 6 months. In Sweden, many counties pay for insurance costs for citizens up to 6 months until they find a new job. This would eliminate 15 million of the 45 million uninsured. Additionally, 50% of the uninsured work part-time. A U.S. state resolution would be a sickness fund (similar to Medicaid) that caters to individuals that work less than 40 hours a week with multiple employers, which would lower the uninsured rates to ~20 million. Lastly, 43% of the uninsured are located in only 4 states (New York, Florida, Texas and California). A focus on local initiatives to answer a national problem similar to Sweden could have potentially been a better use of resources and national funds than a Federal law impacting all 50 states.

Cost Containment

In 1984, with the passage of the Dagmar Reform of 1984, national revenues were divvied up and doled out to counties as block grants based on population size. As a result, private providers could no longer directly bill the national healthcare system for medical services rendered. This is very similar to how physicians who treat Medicare enrollees operate today. From 1984 to 1985 the count of practicing physicians went from well over 5,000 to just over 2,000 greatly controlling costs. Block grants also declined the percentage of GDP in Sweden spent on health expenditures. Sweden is one of the few countries that have been able to lower the percentage of health expenditures.

Additionally, as the economy worsened in the early 1990’s, the Swedish government froze taxes from 1991 until 1994. During this time 22% of the country’s beds for acute bed care were eliminated. Also self referrals received a higher copayment. This is very different in the U.S. where economic downturns cause private insurance enrollment decreases due to cost containments that occur in the private sector. However, since all health care cost controls are not vested in local state government, public spending and public health expenditures balloon during such times. For example, Medicaid spending increased by one third from 2000 to 2003 during the U.S. economic down turn. It grew by 10% between 2010 and 2011 representing 25% of all expenditures for states. U.S. healthcare reform efforts plan to reduce Medicare and Medicaid by 500 billion respectively which is likely to get caught up in the same political stalemate as the Medicare “doc-fix” since these decisions have not been decentralized and delegated to local governments. Since Sweden represents close to 80% of all health expenditures compared to less than 50% in the U.S., they are more sensitive to cost containment measures which lead to quicker reaction and better results.

The Federal government in the U.S. has continued to push off a fix to Medicare reimbursement reductions due to lobbying from physicians and trade groups. If these decisions were made at a local level to handle local concerns, States would have the ability to better control costs. Additionally, 50% of the Medicaid spend is handled by the states. This allows the states conversely to only handle 50% of the costs.

Lesson Learned: Medicare and Medicaid should be handled purely at the state levels since many states have balance budget amendments, cannot run deficits, and it is very costly for states to borrow funds.

Lastly, in 2002, Sweden introduced reference pricing and generic substitution for pharmacy coverage. This meant that when a drug was purchased, the health system would pick up 110% of the lowest priced drug. If a brand name drug was requested over a generic, the consumer would be responsible for the difference. From 2002 through 2005 Sweden realized $7 billion in savings which was close to 10% of total drug spend.

Lesson Learned: Adopt reference pricing and generic substitution in both Medicare and Medicaid programs across the U.S. to sharply cut pharmacy growth rates.

Physician & Hospital Controls

The United States is quickly facing a physician shortage when 20 million or more Americans will enter the insurance market in 2014 through Health Benefit Exchanges. In 1993 Sweden passed a law called The Point of Service Primary Care Reform which answered concerns of primary care shortages. The law made counties responsible for making sure every Swede had access to primary care. Additionally, it capped the amount of specialty training that occurred outside general medicine. It set ceilings and floors for the amount of patients treated by a single practice (1-3k patients per year). It provided credits and loan forgiveness to primary care doctors who started a new practice. And finally, the law allowed pay for performance measures that reduced the reimbursement to physicians who underperformed. Such controls including other initiatives has led to the use of electronic medical records for 94% of Swedish primary care physicians as compared to only 45% in the U.S. Additionally, 49% of Swedish physician practices have the capacity for advanced electronic health information compared to only 26% in the U.S. Lastly, 54% of Swedish practices will see patients after hours as compared to 29% in the U.S.

Lesson Learned: Strong controls on physicians at the local government level can greatly eliminate the potential of primary care shortages and improve the quality of care.

Conclusion

There are feasible lessons to be learned from recent healthcare reforms in Sweden particularly in the areas of decentralization, cost containment, and physician controls. In particular there are four lessons to be learned that are viable in the U.S. despite the current political climate and threat of the unconstitutionality of the Patient Protection and Affordable Care Act. Lesson 1: decentralize the burden of the uninsured to the individual states. Lesson 2: Allow individual states to budget for health care through block grants. Lesson 3: adopt reference pricing and generic alternative scripting. Lesson 4: place strong controls on physicians to eliminate shortages and increase access to care.

Despite America’s strong dislike for government run healthcare, roughly 40% of the population (125M Americans) is enrolled in a federally facilitated health program. Specifically there are 44M Medicare recipients, 62M Medicaid recipients, 10M Tricare recipients (health insurance for the U.S. military) , and 8M Federal Employee Health Benefit recipients. Sweden has been able to use free market principles within a government run system to manage care and cost. And yes, with any balance between quantity and quality, rationing of care does exist. But in a free market, when does rationing based on supply and demand not exist outside of anomalies like luxury and inferior goods?


What’s Trending in Global Health


Posted by Debbie Koh

Trends are a part of our lives. Fashion, YouTube videos, Twitter hashtags – they all come and go. International health and development is not immune to these cycles either. On January 30, Bill Gates announced the commitment of pharmaceutical companies, public and private donors in the “London Declaration” to eliminate neglected tropical diseases (NTDs) by 2020. This overdue focus certainly should be celebrated – you know it’s bad if the fact that nobody pays attention to this group of diseases has been worked into their name.

Two days later, the New York Times ran an op-ed by Paul Farmer,“Why the Global Fund Matters,”in which he essentially pleads for the continued existence of the formerly behemoth funding mechanism. Before the establishment of the Global Fund to Fight AIDS, Tuberculosis and Malaria and the Presidents Emergency Plan for AIDS Relief (PEPFAR) in the early 2000s, development assistance for HIV/AIDS was less than $1 billion. By 2005, more than $3 billion was being spent to fight HIV/AIDS. Throw TB and malaria into the mix (and the establishment of the President’s Malaria Initiative) and the total amount of development assistance for health by mid-decade was more than $17 billion. Between 2001 and 2008, the total development assistance for health more than doubled.[i]

So what’s the problem? By 2008 and 2009, development assistance for HIV/AIDS and TB slowed while areas like maternal, newborn and child health enjoyed rapid growth. This is in no doubt aided by the rapidly approaching 2015 deadline for achieving the Millennium Development Goals, including Goal 5 – reducing the maternal mortality ratio by three quarters.As someone working in maternal health, I already get the sense of needing to strike while the iron is hot, before the attention and funding moves on, if it hasn’t started to already.

Agriculture and food security, social franchising, and mobile health technology are just a few areas gathering momentum. I am not arguing for any one over the other, and reality is that the total amount of funding for HIV/AIDS still remains high, even if growth is slowing. I’m as guilty of following the herd as anyone else:  I jumped from HIV/AIDS work to maternal health and eagerly track what’s new and upcoming in the field. I do worry, though, that these recent developments are indicative of shortening attention spans in a field that requires sustained commitment and focus.

The fight against HIV/AIDS continues to be a drawn out, difficult battle with “wins” that are very different from what we envisioned a decade ago. Truly reducing maternal mortality in the world will require a long-term and complex combination of health interventions, economic growth, political will, education and empowerment. NTDs are low hanging fruit now, but who will be there to address the social, environmental, and other unanticipated factors that will inevitably thwart these new efforts?

Paul Farmer’s plea serves as a reminder that achieving true, lasting impact in global health is a long haul. Lives are at stake in our work. Let’s not forget our commitment to them.


[i]Institute for Health Metrics and Evaluation. Financing Global Health 2011: Continued Growth as MDG Deadline Approaches. Seattle, WA: IHME, 2011.

Debbie graduated from Wagner in 2010 with her MPA in Health Policy and Management, International Health. She returned to her native California in 2011 and currently works for Venture Strategies Innovations. Follow her on Twitter at @thedebkoh or connect via LinkedIn. All views expressed are her own.


7 Billionth Birthday Raises Public Health Concerns


Posted by Errol Pierre

The world reached an important milestone on Monday, October 31st. The UN reported that there are now 7 billion people on the planet. Marking such a milestone was no easy task. Every second approximately 4 births and 2 deaths occur worldwide. That makes it nearly impossible to zero in on the exact number of people at any given time. Nonetheless in a symbolic gesture the UN celebrated this achievement with a press conference held by Secretary-General Ban Ki-Moon. There were also several coordinated festivals around the world celebrating the births of children on Monday in a sign of solidarity.

Danica May Camacho of Manila, Philippines was one such birth. She was born minutes before Monday but close enough to be bestowed the wonderful honor of being a ‘7 billionth baby’.  Her celebration was joined with fanfare from news cameras, photographers, and well wishers but other concerns lingered in the delivery room. Danica May was born premature. At 5 pounds and 8 ounce, she joined the other 13 million babies worldwide that are born too soon every year. Obstetrician & Gynecologist know all too well that premature birth is the leading cause of newborn deaths in the world.  Ironically, November 17th marks World Prematurity Day. So in just a few short weeks, March of Dimes and other organizations will participate in a robust international awareness campaign about Danica May’s plight.

There have been strides over the years to lower infant mortality but the averages are still too high. A 2011 report from the UN listed the worldwide infant mortality rate at 42 deaths for every 1,000 births. Luckily for Danica May, rates vary wildly and differ by country and region. The Philippines is well below this average with only 21 deaths per 1,000 births. However that is still 700% higher than countries like France, Germany, Japan, and Israel, which have some of the lowest rates in the world hovering around just 3 deaths per 1,000 live births.

And this is only half of the problem. About 40% of infant mortality can be attributed to premature births. The remaining 60% are caused by many other risk factors and socioeconomic conditions. Danica May has a 44% chance of growing up in poverty being born in the Philippines increasing the likelihood that she will have issues with access to food, shelter, education, clean water and healthcare. Higher income countries fair better but wide disparities within those countries still exist. Say Danica May were born in the United States for example. Her chances of growing up in poverty decrease in half to 22%. However, if she were Black or Hispanic, those chances only decrease by a quarter to about 35%. Understandably, money is a factor. The Philippines only spends 4% of its GDP on healthcare compared to the United States which spends closer to 17%.  But more money does not always correlate to more quality. Every single country in the world with a lower infant mortality rate than the United States actually spends less money as a percentage of GDP on healthcare.

These issues point to a much larger concern about our planet and its readiness to handle 7 billion people; let alone more. We are on pace to celebrate the 8 billionth baby by 2025. Public policy and health professionals dare to wonder if the world can accommodate the needs of so many humans. On Monday, Nozipho Goqo gave birth in Johannesburg, South Africa to a child which joined Danica May in recognition from the UN as another ‘7 billionth baby’. She named her child, Gwakwanele, which in Zulu means “enough”. Goqu might be right.

Errol Pierre works at a large insurance company focused on business development, sales, and strategy for employee benefits. He is currently pursuing a degree in Health Policy and Management with a specializing in health finance. He can be reached at errol.pierre@nyu.edu