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With shifting disease burdens, growing populations, and rising expectations comes a greater focus on value for money. International health funders and agencies want to know how to make the most of money spent by focusing on the highest impact interventions among the most affected populations. Whether through better procurement systems for health commodities, results-based financing, or more detailed assessments of the effective ness of health technology, CGD’s work aims to make health funding go further to save, prolong and improve more lives.
What can we say about the relative size and composition of health commodity markets across different countries? While it is possible to answer this question for high-income countries, and especially OECD markets, data to analyze such trends across low- and middle-income countries are harder to come by. We took a stab at piecing together publicly available data sources to find an initial answer as part of the background work to inform the CGD Working Group on the Future of Global Health Procurement. The working group aims to develop actionable policy recommendations on how smarter, more efficient procurement practices over the next 10-20 years can ensure high-quality health commodities are available at affordable prices to those who need them the most. And a better understanding of the size and composition of health commodity markets in low- and middle-income countries is essential to that effort.
You can find a full description of our methods, data sources, preliminary findings, caveats, and plans for next steps in our new CGD note. Here is a quick preview of our early findings and initial analyses. If you have questions, feedback, or ideas for us, please reach out in the comments section below.
As a starting point, we aggregated multiple publicly available sources of data on the value of multiple health commodities (pharmaceuticals, hospital consumables, diagnostic devices, bed nets, vaccines) for 2015 across 50 low- and middle-income countries (we included countries with GNI per capita < $7000; China is not included). Our analysis also differentiates expenditures between the public (i.e., governments, social health insurance funds, as well as grants and loans from donors and NGOs) and the private (i.e., out-of-pocket spending, private insurance, as well as private not-for-profit, charitable, and faith-based organizations) sectors. By doing so, we aim to estimate the split between government, donor/NGO, and private procurement. And we are also interested in understanding how these different sectors carry out procurement functions. For example, is procurement consolidated or fragmented?
The WHO World Medicines Situation 2011 report, which estimated total pharmaceutical expenditure for 161 countries using data for 2006, is to our knowledge the most recent estimate predating our work. Our initial findings (depicted in figure 1), though not directly comparable, provide more recent estimates and also differentiate donor/NGO funding—a component the WHO report did not capture. The WHO analysis estimated that 77 percent of health commodities in the low-income countries (LICs) they studied were financed by the private sector. Our methodology suggests a much lower proportion of 36 percent in LICs, but a comparable level of private finance in lower-middle-income countries (LMICs) and upper-middle-income countries (UMICs). It is worth noting that India—where the health commodity market is mostly privately financed—moved from LIC to LMIC status in 2008, which would significantly shift estimates for the two groupings. In addition, the levels of donor assistance for HIV nearly doubled between 2006 and 2015, which we believe has significantly increased the relative share of the health commodity market from donor financing, especially in LICs.
While these are still very early results—and there are certainly caveats underlying these findings—we observe what looks like a commodities transition from a predominantly public consolidated and donor-funded procurement landscape in LICs to one that is predominantly privately financed in MICs. In some ways this points to the priorities ditch hypothesis—a concept our colleagues Amanda Glassman and Charles Kenny explain here—applied to health commodities.
There is certainly ample room for improvement, and over the coming months we are looking to expand and improve our analyses. We hope to draw on additional sources of data including IMS Health data and Indian export data to gather new evidence to inform the working group’s recommendations. For example, we are looking to understand how procurement prices vary both between and across countries, and how the composition of what countries buy (commodities for non-communicable versus communicable diseases, for example) changes over time as they become richer.
Stay tuned for additional analyses as we move forward in this process. In the meantime, if you have ideas about data sources we could use, or ways to improve our analyses, do leave us a comment.
Tomorrow, December 12, marks the fifth annual Universal Health Coverage (UHC) Day. Half a decade after the landmark UN endorsement, more countries than ever are working to translate UHC goals into reality through defined, tangible, equitable, and comprehensive health services for their populations. To celebrate, CGD is pleased to host a short program—Better Decisions, Better Health: Practical Experiences Supporting UHC from Around the World—featuring a keynote from Dr. Mark McClellan, who has been at the forefront of improving the quality and value of healthcare in the US, and presentations from experts on practical experiences supporting UHC from Southeast Asia, sub-Saharan Africa, and at the global level.
Each year, millions of people fall into poverty because they have to pay out of pocket for medical care for themselves or a loved one. Many more can’t even access healthcare, creating serious risks for population health and disease outbreak and epidemic. UHC is the goal of ensuring that everyone, everywhere can access quality health services without the risk of financial hardship.
Last week, in his keynote address at the DCP3 launch event in London, WHO Director-General Dr. Tedros Adhanom Ghebreyesus reaffirmed UHC as his “top priority.” He acknowledged that UHC is no easy task, and that it requires “political commitment and technical expertise” and that tough decisions “must be made about finite resources.” Tomorrow, we will celebrate and highlight how countries are addressing these challenges and making huge progress in their commitments to UHC.
Following a recommendation of the CGD working group on Priority-Setting in Health in 2012, the International Decision Support Initiative (iDSI) was established in 2013. iDSI is a global network of health, policy, and economic experts working with countries to get more health and better value for every dollar they spend, so that they can achieve fairer, higher-quality, and more sustainable UHC. iDSI forms regional and global partnerships that support and share knowledge with one another in order to achieve real-world health gains and build progress towards the health Sustainable Development Goal (SDG 3).
During our event tomorrow, we’ll hear from iDSI partners about challenges and successes in their paths towards UHC. We will also explore how we can continue our efforts in the future, especially with Dr. Tedros’ announcement of the five-year strategic plan to see 1 billion more people with health coverage by 2023.
We need to work together to make smarter investments in health and tough choices based on rigorous evidence and evaluation of the costs and benefits of different healthcare policy decisions. Join us (RSVP here) tomorrow as we celebrate our achievements so far and gear up for the work ahead in this movement towards UHC.
After collaborating for several years under the leadership of Ghana’s National Drugs Programme, Ghanaian and UK partners came together earlier this year to help Ghanaian health authorities identify efficiency improvements in how the country’s National Health Insurance Scheme (NHIS) manages hypertension. Hypertension—a major risk factor for cardiovascular disease—is a growing burden across sub-Saharan Africa that now affects almost one in two Ghanaians; strokes and heart attacks were the third and fifth biggest killers in Ghana in 2016.
The resulting analysis (discussed here) was led by a Ghanaian heath technology assessment (HTA) task force under the auspices of the Ministry of Health, the International Decision Support Initiative, and the University of Southampton’s Health Technology Assessment Centre, itself a major partner of the UK’s NICE in producing HTAs for the British National Health Service. The task force report identifies a number of opportunities for improving efficiency without compromising (and in several cases, whilst improving) population health outcomes. It provides recommendations on institutionalising HTA whilst addressing skills and data gaps for making such targeted analyses routinely available to those who make spending decisions in Ghana. Ghanaian decision makers are particularly keen to use the analysis for redeploying any realisable efficiency savings into identifying, treating, and managing high blood pressure, especially amongst the estimated 300,600 Ghanaians who currently suffer from severe hypertension (which puts them at risk of imminent stroke or heart attack) but who remain undiagnosed, untreated, or inadequately treated.
According to the task force’s analysis, what drives inefficient spending boils down to two questions:
What hypertension medicines is Ghana’s NHIS buying?
How much is Ghana’s NHIS paying for the medicines it buys?
In other words, the model estimates are heavily driven by the selection of products and formulations, and by their acquisition costs. With a two- to eightfold variation in annual treatment costs within drug classes, and up to 50-fold across classes, this is hardly surprising. As a result, a slight (10 percent) shift in prescribing (in accordance with Ghanaian and international guidelines) from the most expensive to the cheaper and equally effective class would yield enough savings to treat all those diagnosed with hypertension but currently not on treatment four times over, generating 46,000 extra disability-adjusted life years (DALYs). (And in fact, this figure is likely to be an underestimate given that the model uses 2003 life expectancy calculations—the 2015 calculations are more favourable.) A 10 percent reduction in the average drug prices of the 17 hypertensive products that NHIS currently reimburses would generate savings amounting almost to 1 percent of the country’s significant $500m pharmaceuticals market, or one-eighth of the Ministry of Health’s centrally held procurement budget of $40m. Just to bring it closer to home (and to pick on the worst outlier), the British NHS gives an indicative price per capsule for the cheapest generic version of Nifedipine 10mg of 4-5 pence (£0.047) (if you have a UK IP address, you can confirm this on the British National Formulary website). The NHIS site price is almost twice that at £0.084 per capsule (1 GBP = 5.82802 GHS).
Ultimately, a lot of these issues relate to procuring medicines. CGD recently launched a working group on the Future of Global Health Procurement to consider the efficiency, quality, affordability, and security of global and increasingly country-led procurement, especially in light of countries such as Ghana rapidly transitioning away from aid. (The head of Ghana’s national drugs programme is a working group member.) Early data suggest a transition in commodities, with the gap left by the reduction in donor monies as countries move into the lower-middle-income grouping being filled by private procurement, mostly unconsolidated, and private financing, mostly out of pocket. This is the priorities ditch applied to commodity spending.
The Ghanaian authorities understand what is at stake as the fight to ensure the financial viability of their National Health Insurance Scheme. As the new Ghanaian Minister of Health states in the preface to the task force report: “Every cedi spent within the Ghanaian healthcare system should utilise the best possible value for health gains.” In that sense, the country is perhaps ahead of global organisations such as the WHO and the Global Fund, which still find it challenging to endorse and implement the notion of value for money. Ghana has strong institutions in place to commission, produce, and act on careful assessments of value for money for investments and, critically, disinvestment decisions. But it will need help to strengthen these analytical, administrative, and policy capacities before analyses such as the one discussed here can be produced routinely and in-country.
Ghana will need, for example, access to simple, ideally Excel-based, models as well as support in developing the skills to adapt those models to local circumstances. A repository of executable cost-effectiveness and budget impact models spanning all major diseases and conditions would be a valuable global public good. Ghanaian policymakers will also need support with incorporating the country’s vertical programmes into its NHI benefits package as donors depart. Take HIV: according to a recent Health Policy Plus (HP+) report, and as shown in the figure below, Ghana will need twice the projected commitment by PEPFAR and GFATM to achieve WHO’s 90-90-90 target (by 2020, 90 percent of people who are HIV infected will be diagnosed, 90 percent of people who are diagnosed will be on antiretroviral treatment, and in 90 percent of those who receive antiretrovirals, the amount of virus in their blood is undetectable). Another CGD working group is looking at incorporating economics and modelling in global health goals and guidelines; it just had its first meeting in DC and plans to release its report in summer 2018.
Whether it’s called strategic purchasing (a term increasingly popular in global health cycles), evidence-informed commissioning (popular in the UK), or value-based insurance (popular in the US), the quest to squeeze better value out of existing resources is global. But lack of clarity regarding global and national healthcare investment goals, coupled with low technical capacity in ministries of health and insurance funds and multiple competing interests for attracting healthcare dollars, all make proactive evidence-informed buying hard to achieve. Ghana has taken the first step in the right direction but there is a long road ahead. The global health community ought to help Ghana and countries like it strengthen their national systems for allocating resources including when selecting, negotiating prices, and procuring medicines for their populations. This is a global public good worth investing in.
 The task force comprised representatives from all major players in Ghana’s healthcare system, including the National Drugs Programme of the Ministry of Health, the local WHO office, Ghana’s Health Service, Ghana’s universities in Accra and Kumasi, NGOs, regional authorities, the National Health Insurance Agency, and professional associations, including the chair of the country’s well-established Standard Treatment Guidelines and Essential Medicines committee, who also chaired the task force.
 NICE’s guidelines have been relaxed from the original recommendation to start with a diuretic when the other antihypertensive classes lost their patent in the UK in the early 2010, leading to generic entry and a significant drop in prices. This is not the case in Ghana, where diuretics are still orders of magnitude cheaper than calcium channel blockers or ACE inhibitors.
Earlier this month, the Global Fund’s Office of the Inspector General (OIG) released a new audit report on Wambo.org, its online procurement platform for drugs and other health commodities, which is intended to streamline global health procurement and generate savings of $246 million by 2019. The headline: despite high marks from its users, Wambo.org is not yet on track to deliver the projected savings—and, in fact, it has not even recouped its far more modest start-up costs of about $10 million. But more than the headline, a close read of the report narrative helps us understand why reality does not yet reflect the Global Fund’s optimistic assumptions—and, reading between the lines, suggests three important lessons for the Global Fund and other international funders.
1. Calculating savings requires a meaningful counterfactual
The headline of the audit report suggests that Wambo.org is not on track to achieve its projected $246 million in savings by 2019—the “realistic” scenario set out in its original business case. But savings can only be calculated relative to a meaningful baseline or counterfactual, and the report does not inspire confidence that the methodology is sufficiently responsive to these other factors. Based on past trends, it’s likely that prices for health commodities will decline by 2019—but could that be attributed to Wambo? What about the new deal, spearheaded by the Bill & Melinda Gates Foundation, to provide best-in-class HIV treatment for just $75 per patient-year? Or the efforts of the Global Fund’s Pooled Procurement Mechanism more generally, which overlaps in scope with Wambo.org and has already claimed $650 million in savings over four years? Moving forward, an honest assessment of Wambo-related savings must account for these other factors by establishing a clear counterfactual.
2. But savings ≠ value
A $240 laptop is not necessarily good value for money.
True story: last fall I needed to buy myself a new laptop, but didn’t want to spend a lot of money. So I was delighted to open Amazon and find a shockingly cheap option for $240. It seemed fully operational, came loaded with a year-long subscription to Windows 10, and otherwise checked all the boxes—plus, I was “saving” hundreds of dollars! The computer arrived, turned on, and took 5 minutes to open an internet browser window—before promptly switching itself off. It continued to spontaneously shut down at random intervals, rendering it more or less unusable. And while $240 may be pretty cheap for a laptop, it’s pretty expensive for a two-pound block of gray plastic. (Thankfully, Amazon refunded the broken laptop after hearing my sob story.)
Clearly, value for money means more than a cheap sticker price; it means selecting products that deliver the most value for a given resource envelope. (Relatedly, my colleagues Kalipso Chalkidou and Janeen Madan Keller recently offered a compelling argument for why the Global Fund should adopt health technology assessment more broadly within its programs and operations.) The audit report does not directly comment on this issue with respect to Wambo, but hints at a continued lack of clarity. For example, the OIG discusses Wambo’s “catalogue function,” a promising feature that alerts purchasers when a less expensive option is available. But according to the report, the prompt appears to be generated on the basis of nominal price alone—not on cost-effectiveness. In theory, this could be pushing purchasers to choose less cost-effective options, even as they appear to generate “savings” based on sticker price alone. Perversely, this could even be counted as “savings” relative to a baseline in which more cost-effective products were purchased.
More generally, the Global Fund (and the Wambo.org project team specifically) needs to rethink its focus on achieving “savings’” without clear reference to the effectiveness of products being purchased. And going forward, the business case for Wambo.org should focus less on savings and more on delivering value: the most cost-effective health products, at sustainable prices, delivered when and where they’re needed.
While Global Fund documents projected that Wambo.org would save $246 million by 2019, the audit report suggests those original estimates were well off-base, and spends a substantial amount of time walking through the points where reality diverged from expectations. The OIG reports that the projections were developed by an external consultant using a proprietary model—and, somewhat alarmingly, the OIG was unable to access all the methods and data upon which those projections were based.
Reading through, it’s clear that the original estimate derived from a number of somewhat heroic assumptions, some of which are not directly tied to the functionality of Wambo.org per se. For example:
Assumption: 50 percent of the Global Fund’s overall procurement volume would be channeled through Wambo.org by 2019, which would in turn drive substantially lower prices for health commodities, accounting for $150 million in savings by 2019.
Reality: Onboarding has proceeded at a far slower pace, existing long-term agreements with suppliers remain in place (no change in prices), and there’s no evidence yet that greater volume will necessarily lead to additional savings beyond the negotiated prices already in place. Prices may already be at their lowest sustainable level due to aggressive negotiation in the previous period.
Assumption: The Global Fund would be able to renegotiate its logistics agreement, saving $27.8 million by 2019.
Reality: No change.
Of course, we all make assumptions; indeed, clearly articulated assumptions are an essential input to any sort of planning document or projection. And, as always, the Global Fund deserves enormous credit for its robust and transparent investigatory arm, which is what allows us to interrogate these methods in the first place.
Nonetheless, the large gap between expectations and reality underlines that while projections can be based on assumptions, impact must be transparently, rigorously, and directly measured based on actual data. In this audit report, we have a partial example of such a process, where the OIG is questioning/attempting to assess each of the projected savings levers. But the OIG’s audit-oriented process should not substitute for an independent, methodologically rigorous, and transparent impact evaluation, measured against a clearly articulated counterfactual.
Wambo.org seems to be a useful tool for helping to manage the Global Fund’s existing procurement arrangements, and high user satisfaction offers a great entry point for further expansion. But the clear divergence between the Global Fund’s lofty expectations and the relatively marginal impact observed thus far underlines the importance of understanding “value,” interrogating assumptions, and directly measuring impact against a meaningful counterfactual.
With aid budgets shrinking and even low-income countries increasingly faced with cofinancing requirements, this is the right time for global health funders such as the Global Fund and their donors to formally introduce Health Technology Assessment (HTA), both at the central operations level and at the national or regional level in recipient countries. In this CGD Note, we explain why introducing HTA is a good idea. Specifically, we outline six benefits that the application of HTA could bring to the Global Fund, the countries it supports, and the broader global health community.
How can countries get optimum health value for their money? What's a health benefits plan and why do countries need them? How should countries decide what's included in their health coverage and what's not? A new CGD book from Amanda Glassman, Ursula Giedion, and Peter C. Smith answers these questions and more.
Vaccinate children against measles and mumps or pay for the costs of dialysis treatment for kidney disease patients? Pay for cardiac patients to undergo lifesaving surgery, or channel money toward efforts to prevent cardiovascular disease in the first place?
For universal health care (UHC) to become a reality, policymakers looking to make their money go as far as possible must make tough life-or-death choices like these.
Many low- and middle-income countries now aspire to achieve universal health coverage, where everyone can access quality health services without the risk of impoverishment. But for universal health care to work in practice, the health services offered must be consistent with the available funds, and this implies very difficult decisions—particularly for low- and middle-income countries that are resource-constrained, but where demand for high-quality health services and technologies is increasing rapidly.
In collaboration with iDSI, we’re launching a new book, What’s In, What’s Out: Designing Benefits for Universal Health Coverage. It shows how a defined list of services that will be funded with public monies (called a “health benefits package” or HBP—known in the US as “essential benefits”) can help bridge the gap between the aspirational rhetoric of universal health care and the real budgetary limitations that many countries face. A good HBP should be practical and made in consideration of the fiscal, human resource, infrastructural, and geographic constraints of that setting. When done well, the HBP defines the health services a government can deliver, and ensures health services are fairly and equitably delivered to citizens—and are cost-effective.
Leading experts and policymakers from more than 15 countries contributed to the book. Together, they consider the many dimensions of governance, budgets, methods, political economy, and ethics that are needed to decide “what’s in and what’s out” of a HBP in a way that is fair, evidence-based, and sustainable over time.
Set fair and transparent processes to select, revise, implement, and monitor the HBP.
Not only does the creation of a HBP include the work of designing a sustainable benefits package by using methods exercises to identify the services that will be financed with public resources, but it also requires updating, monitoring, evaluating, and implementing. Like the package itself, the design process for the HBP must be consistent with time, financial, and human resources available. Inclusion or exclusion of specific medical interventions can have life-or-death consequences for specific groups, but the establishment of a fair and technically sound process for priority-setting can help increase overall public buy-in. Adherence to good governance principles during the HBP design process—transparency, consistency, and stakeholder participation—helps sensitize stakeholders to the rationale for setting limits and can thus improve the package’s legitimacy and sustainability.
Use rigorous methods to get the most health for your money.
Since the HBP requires tough decisions, the design process must be thorough and it requires the necessary resources to ensure fairness and technical rigor. Not only does a benefits package need to be explicit, but for it to work properly, its components must be selected by consistently applying an explicit set of criteria. Cost-effectiveness analysis allows a country to rank different interventions and select treatments that will achieve the most health for the given budget. The cost-effectiveness threshold will vary according to context-specific factors. While simple cost-effectiveness analysis only considers health gain, a range of more sophisticated methods account for other factors, including financial risk protection, health systems constraints, equity considerations, and more.
Manage the ethical, legal, and political implications of inclusion and exclusion decisions.
When making the hard choices to decide what’s in and what’s out of a HBP, political, legal, and ethical stakes are high. Policymakers should be sure to consider ethical implications throughout the HBP design and adjustment process. They should try their best to include fair processes and procedures, avoid harms to individual patients, and offer respect and dignity for patients.
Rather than a technical manual for conducting health technology assessments or cost-effectiveness analysis, this book puts HBP development and design methods into a broader context and considers how these methods may be applied to coverage decisions in low- and middle-income countries. It offers a collection of views and perspectives, and also provides real-life examples of HBP design and adjustment in order to show the diverse approaches to priority-setting around the world.
We’ve learned a lot from compiling this book and we’re excited to share these lessons with you. We encourage you to check out our webpage and to order your copy of the book. We also hope you’ll join us on Wednesday, October 11 for a policy breakfast to celebrate the book’s release. We’ll hear from Ole Norheim, Tim Evans, and Eduardo Gonzalez-Pier on their experiences in running benefits plans policies around the world, and how the book and related efforts can help to translate UHC from rhetoric to reality.
Many low- and middle-income countries aspire to universal health coverage (UHC), but for rhetoric to become reality, the health services offered must be consistent with the funds available, which may require tough tradeoffs. An explicit health benefits package—a defined list of services that are and are not subsidized—is essential in creating a sustainable UHC system.