Basing drug reimbursement on cost-effectiveness provides too little incentives for research and development. The reason for this is that cost-effectiveness is concerned with immediate value for money. But since the price of a drug usually declines over time, the drug might well provide value for money as seen over its entire life cycle, even though its price during patent protection is too high to warrant reimbursement according to the cost-effectiveness decision rule. This paper shows in a theoretical model that welfare could be improved if decision-makers took a longer perspective and initially allowed higher prices than immediate value for money can motivate. It also discusses the real-world relevance of applying dynamic cost-effectiveness.
Resource allocation and health financing
High levels of out-of-pocket payments have limited the ability of people to use services in poor countries. Evidence shows that removing or reducing user fees increases utilisation, at least in the short term, while out-of-pocket payments are often made by borrowing or by selling assets, putting people into debt and restricting their long-term economic survival. An important challenge therefore is to shift away from out-of-pocket payments through the development of prepayment schemes for universal coverage but, in resource-poor settings, additional funds will be critical. Some researchers claim that it is possible for developing countries to ‘wean themselves off’ international donor funding, essentially through the better use and management of domestic resources, but others believe it’s impossible for them to finance universal access without donor funding.
This report published by Oxfam examines the role of health insurance mechanisms will close health financing gaps and benefit poor people. The mechanisms discussed in this paper are private health insurance, private for-profit micro health insurance, community-based health insurance and social health insurance. It describes those mechanisms and their success or failure to deliver health rights particularly for people living in poverty.
This paper tackles the paper by Kirigia and Diarra-Nama from the WHO Regional Office for Africa, which claims that countries in the WHO Africa Region need to ‘wean themselves off’ donor funding for health in order to meet the annual WHO target of US$40 per person required to provide universal coverage. The paper evaluated the five strategies that the Kirigia and Diarra-Nama paper proposed and dismissed all of them. It predicted their impact on eight countries and noted a reduction in military expenditure would not make a difference either, as expenditure in these countries is low. Six countries still face a huge gap between current total health expenditure and the revised target made by the Commission on Macroeconomics and Health and need more aid urgently. They can be helped through sustained international health aid, with health recognised as a human right.
This response to Kirigia and Diarra-Nama’s paper points out that they do not propose alternative strategies to enable African countries to mobilise the funds without depending solely on donor funding. Kirigia and Diarra-Nama argue that eight countries whose current military spending is above the regional average of US$ 16 per person may have scope for savings. Thirteen countries whose tax share of GDP is less than 15% have scope for raising additional revenue by improving efficiency of their tax administration systems. The amounts, however small, are not insignificant in these countries where more than 60% of the population live below the international poverty line of US$1 per person per day. The effectiveness of international aid should also be judged on the extent to which it helps recipient countries to ‘wean themselves off’ external donor funding.
There is no good reason why a country with an income of US$366 per capita cannot afford to increase its domestic health spending from US$20 to US$34. It is the value of forgone alternative benefits (as perceived through either collective decision making or unilateral decisions of political authority) that puts a limit on how much a society can spend on health, not some health expenditure-GDP ratio technical limit. Further, general lessons of experience from parts of east and south-east Asia and Latin America show that, as countries experience substantial broad-based economic and social progress, greater health funding becomes feasible. Such a situation requires time, but has been realised in these countries within about 20 to 40 years. The author believes it will take a long time to reduce the high dependency on donor aid, but Africa should aim to increase domestic resource mobilisation.
In 2005, the member states of WHO adopted a resolution to develop health financing systems to deliver universal coverage of health services by moving away from out-of-pocket payments and developing prepayment methods instead. This paper proposes a comprehensive framework, focusing on health financing rules and organisations, that countries can use to achieve universal coverage. For many countries, it will obviously take some years to achieve the goal and their responses will be determined partly by their own histories and the way their health financing systems have developed to date, as well as by social preferences relating to concepts of solidarity. The proposed framework considers fund collection, pooling and purchasing/provision separately, as well as the links between the three functions to indicate what rules need to be modified or developed and where organisational capacity should be strengthened.
About 11 million of 33 million HIV-positive people have tuberculosis (TB) and, if financially troubled nations renege on aid pledges, it would deprive the poor of life-saving treatment. New Nobel laureate and HIV co-discoverer, Francoise Barre-Sinoussi, fears that the global economic crisis could cause nations to renege on commitments to fight tuberculosis and wipe out gains made against AIDS because so many people suffer from both diseases. The world is achieving success with antiretroviral treatment for HIV, but we have an epidemic of multi-resistance to tuberculosis treatment, which is really alarming. An estimated 33 million people worldwide are infected with HIV. About 11 million of them also have tuberculosis. By suppressing the immune system, HIV leaves people susceptible to other infections, especially TB.
The provision of universal access to healthcare, a right enshrined in the South African Constitution, is the responsibility of government. Although much progress has been made towards the creation of a national health system which makes ‘access to health for all’ a reality, much remains to be done. As a means to facilitate debate on the subject, the Policy Analysis Unit of the HSRC hosted a colloquium on ‘Health within a comprehensive system of social security’. The main purpose of the colloquium was to initiate policy dialogue and critical discussion on how health services are accessed, provided and funded – and to formulate ideas, views and recommendations that could be presented to those involved in health policy development. This publication contains the keynote addresses and a summary of deliberations that emerged from the colloquium.
The United Nations has teamed up with world leaders to launch a new initiative to strengthen health systems in an effort to reduce the number of women who die in pregnancy and childbirth, one of the eight Millennium Development Goals (MDGs), with a 2015 deadline. The task force on maternal mortality, which will be co-chaired by British Prime Minister Gordon Brown and World Bank President Robert Zoellick, will focus on innovative financing to strengthen health care systems and pay for health care workers. The recommendations that will flow from the group, which will include UN World Health Organization (WHO) Director-General Margaret Chan and several global leaders, will potentially save the lives of 10 million women and children by 2015. They will be presented to next year's meeting of the leaders of the Group of Eight (G-8) industrialised nations, to be held in Italy.