future strategic directions: medicines pricing and financing
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Future Strategic Directions: Medicines Pricing and Financing. Dr. Dele Abegunde Medicines Access and Rational Use. Background: The future is in the present. Access to pharmaceuticals essential to healthcare 25 -70% of health spending in the developing countries, 10-18% in OECD countries - PowerPoint PPT PresentationTRANSCRIPT
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 20101 |1
Future Strategic Directions: Medicines Pricing and
Financing
Future Strategic Directions: Medicines Pricing and
Financing
Dr. Dele Abegunde
Medicines Access and Rational Use
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 20102 |2
Background: The future is in the present.Background: The future is in the present.
Access to pharmaceuticals essential to healthcare
25 -70% of health spending in the developing countries, 10-18% in OECD countries
Production is technically efficient.
Relatively low marginal cost of unit 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
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 20103 |3
BackgroundBackgroundTotal 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 and global economic recession threatening to dry up traditional funding sources
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 20104 |4
WHO responseWHO response
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, PAHOcountries and NGOs such as the OBIG/PPRI, OECD, MeTA etc.
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 20105 |5
Global responseGlobal response
Innovative medicines financing schemes and tools
Pooled procurement, Patent pooling, Bilateral AIDS and donations, Air ticket taxSin tax – tobacco and soda, etc
Players- financial intermediation is growing
GF, UNITAID, PEPFAR, GDF, GAVI, Bilateral, MDG Task force for Innovativefinancing . . . . . . . . . . . 450 and counting
Estimating real impact?
Market impact analysis?Structural impact?
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 20106 |6
What is happening in countries?What is happening in countries?
Increased funding, more investment to improve access to medicines
Access to medicines improving in some disease areas?
Impact on health systems and unfavoured diseases areas
Pharmaceutical work force challenges
Uneven development of the procurement, supply and systems
Demand for medicines is increasing in scale and scope
Is optimal and equitable access to medicines being achieved?
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 20107 |7
Government health expenditure (as source) is Increasing Government health expenditure (as source) is Increasing
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 20108 |8
Official Development Assistance (ODA) and Health ODAOfficial Development Assistance (ODA) and Health ODA
Source: OECD
Official Development Assistance (ODA) for Health, Bilateral and Multilateral flows[ in constant 2006 US$ billions]
1
2
3
4
5
6
7
8
9
10
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
"H
ealt
h"
OD
A U
S$
bil
lio
ns
10
20
30
40
50
60
70
80
90
100
To
tal
OD
A U
S$
bil
lio
ns
ODA for Health Total ODA
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 20109 |9
Source Of Funds
ESSENTIAL MEDICINES
ARVs MALARIA TB OIARVs Ped
REAGENT Blood safety(+ HIV test)
VACCINES CONDOMS CONTRACEPTIVESMEDICALSUPPLIES
GOVERNMENT
MULTILATERAL DONOR
BILATERAL DONOR
NGO/PRIVATE
GOVERNMENT
WBGLOBAL
FUND
SIDA
PEPFAR
USAID
UNICEF
OMS
ABBOTT
CSSC
COLUMBIA
PFIZER
JICA
CLINTON
UNITAID
CIDA
CDC
GAVI
CUAMM
HAVARD
NORAD
AXIOS
Tanzania: Funding by Supply TypeTanzania: Funding by Supply Type (2006-2007 Data)(2006-2007 Data)Tanzania: Funding by Supply TypeTanzania: Funding by Supply Type (2006-2007 Data)(2006-2007 Data)
$ ‘000 65,869 56,853 54,201 4,700 3,722 37,027 17,300 3,905 17,734 53,859 315,170
% 20.9% 18.0% 17.2% 1.5% 1.2% 11.7% 5.5% 1.2% 5.6% 17.1% 100%
Source: Supply management, WHO/EMP/MAR
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 201010 |10
Source: Helen Tata, WHO
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 201011 |11
$ ‘000 5,666 45,335 11,718 0.3 2,984 1,495 10,889 0 1,305 0.6 1,862 82,156
% 7% 55% 14% 0.5% 4% 2% 13% 0% 2% 1% 2% 100%
Zambia: Funding by Supply typeZambia: Funding by Supply type
Source Of Funds
WORLD
BANK
PEPFAR
DFID
USAID
UNICEF
WHO
CHAZ
CHAI
JICA
WORLDVISION
UNFPA
ZABART
ESSENTIAL MEDICINES
ARVs MALARIA TB OIARVs
Ped
REAGENT Blood safety(+ test HIV)
VACCINES CONDOMS ContraceptivesMEDICAL
Supplies
Category of
Products Color
GOVERNMENT
BILATERAL DONOR
MULTILATERAL DONOR
NGO/PRIVATE
BGATES
ITN
AXIOS
UNITAID
GLOBALFUND
CDC
GLASER
M
O
H
Source: Supply management, WHO/EMP/MAR
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 201012 |12
Supply management in the developing countries:Supply management in the developing countries:
a case of too many cooks while the gourmet remains un-served!
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 201013 |13
ChallengesChallenges
Distorted view of total 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
Healthcare systems
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 201014 |14
Re crafting WHO responseRe 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 medicinessynergize with work so-farEmpowers consumers to increase access to essential medicinesEnhance positive consumer behaviour towards use of essential medicines
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 201015 |15
Stepping into the Future: WHO StrategyStepping into the Future: WHO Strategy
Goal:
To ensure that medicines are available and affordable for all populations
Purpose:
Encourage and support the development, strengthening and implementation of global, regional and national actions aimed at greater availability and improved affordability of medicines
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 201016 |16
OBJ 1OBJ 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.
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 201017 |17
OBJ 2OBJ 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.
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 201018 |18
OBJ 3OBJ 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.
Facilitate and support the process of developing, establishing and evaluating medicines
finance strategies
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 201019 |19
OBJ 4OBJ 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.
Support operational research into the effectiveness of various policies and interventions in different contexts.
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 201020 |20
Warm up activities 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
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 201021 |21
Strategies medicine access Strategies medicine access
Efficiencyfinancing of supply and demand (medicines market)Strengthening the market for medicines
Equitable access to medicinesProtection of the vulnerable
Medicines financing planning and forecasting capacityBudgeting functionstrengthening collaboration with partners and donors.
Mainstreaming medicines with the larger health system
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 201022 |22
Strategies to improve medicine financing in countriesStrategies 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;
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 201023 |23
Public (National) financing MechanismsPublic (National) financing Mechanisms
Insurance
Pooled procurements
Global initiativesUNAIDS
Global Funds
UNITAID – HIV/
HLTFIF – MDG focused
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 201024 |24
Downstream financing MechanismsDownstream financing Mechanisms
Insurance
Challenges: Formal sector, limited cover to the larger informal sector
Community financing (Micro finance)
Community health (medicines) insuranceRelatively untapped broad area of opportunities
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 201025 |25
Microfinance: CHIMicrofinance: CHI
Generic expression that describes a variety of health financing arrangement:
– Micro insurance– Community health funds– Mutual health organizations – Rural health insurance– Revolving drug fund– Community involvement in user-fees management
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 201026 |26
CHICHI
Community finance schemes– This market is evolving in the contest of:
• 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
– Strength• Social capital• Pre existing community institutions• Interconnectivity between local communities
– Limitations to overcome to serve the community well• 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.
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 201027 |27
CHICHI
five key policies available to governments to improve the effectiveness and
sustainability of existing community financing schemes.
subsidized premiums of low-income populations
insurance to protect against expenditure fluctuations and re-insurance to enlarge the effective size of small risk pools
effective prevention and case management techniques to limit expenditure fluctuations
technical support to strengthen the management capacity of local schemes
establishment and strengthening of links with the formal financing and provider networks.
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Regional coverage (MFIs, AFIs)Regional coverage (MFIs, AFIs)
Region % of Accounts
Africa (sub-Saharan) 4
East Asia and the Pacific 48
Europe and Central Asia 3
Latin America and the Caribbean 2
Middle East and North Africa 7
South Asia 36
WHO/EMP TBS: Medicines Pricing and Financing | 03 November 201029 |29
Innovative financing methodsInnovative 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 front-load
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 listeningThank you for listening