WHO/EMP TBS: Medicines Pricing and Financing | 03 November 2010 1 |1 | 1 Future Strategic...

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


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


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 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.


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?


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?


Government health expenditure (as source) is Increasing Government health expenditure (as source) is Increasing


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


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


Source: Helen Tata, WHO


$ ‘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


Supply management in the developing countries:Supply management in the developing countries:

a case of too many cooks while the gourmet remains un-served!


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


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


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


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.


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.


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


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.


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


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


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;


Public (National) financing MechanismsPublic (National) financing Mechanisms

Insurance

Pooled procurements

Global initiativesUNAIDS

Global Funds

UNITAID – HIV/

HLTFIF – MDG focused


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


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


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.


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.


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


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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