Who should pay the healthcare bill?

One of the biggest debates in the African pharmaceutical industry is the same as in the wider health sector – who should pay for medication and care: patients, the state or even employers?

Health care is provided in a number of ways around the world: through government expenditure and therefore taxation; through insurance schemes; through payment when needed; or often through combinations of all three methods. Yet most African people continue to pay for pharmaceuticals as and when needed, if they can afford them.

Many governments set their pharmaceuticals budget well in advance but the price of drugs changes, often in line with currency fluctuations. Nevertheless, government contracts are widely sought after because they involve very large volumes over long periods of time, providing a guaranteed income for producers. A variety of funding methods are being trialled in different parts of the continent. The government of Mozambique has introduced air travel taxes and a financial transaction tax to help fund health services.

A spokesperson for COHRED (the Council on Health Research for Development) said of African pharmaceutical manufacture: “The medicines produced must be affordable for the population they are manufactured to serve – particularly important in contexts where medicines are usually paid for out of pocket. Great care must be taken to achieving needed efficiencies in production and in scale. Even with these warnings, the overriding message is opportunity. Local production is another way in which African countries can demonstrate not simply self sufficiency, but also excellence.” Funding is a problem even in Africa’s stronger economies.

A World Bank report last year predicted that Ghana’s National Health Insurance Authority (NHIA) could become bankrupt as early as this year because of the lack of state funding. It stated: “The system is too inefficient to absorb significant new resources, however; without major reforms, some of which lie outside the purview of the NHIS, it is difficult to argue for major increases in funding.”

South Africa is seeking to spread the benefits of its health system and pharmaceutical availability to the whole population. On the grounds of cost, comprehensive free health care has been limited to children under the age of six and pregnant women, although more limited care is available for the whole population.

It had been hoped that the coverage of medical insurance schemes would increase but they have in fact declined because of the rapid increase in cost. This increase is partly the result of global developments, such the introduction of new, more expensive pharmaceuticals, but also because of domestic factors, such as the spread of HIV/AIDS and South Africa’s appallingly incidence of road traffic accidents and violent crime.

Challenges in Malawi

Further north, a report by Oxfam last year found that only 54 out of 585 local health centres in Malawi had the drugs to treat 11 common illnesses. Doctors at Kamuzu Central Hospital in Lilongwe wrote an open letter to President Joyce Banda, complaining of the lack of basic medical items, including plasters and antibiotics.

They wrote: “We have been struggling to provide these supplies using our private funding donated by friends and families, but we have come to realise that the situation, already dire, is not improving, and our current strategy is neither sufficient nor sustainable. In the meantime, we are experiencing the deaths of patients from treatable diseases (diarrhoea, pneumonia and malaria), which is heartbreaking. Talking to our colleagues, the situation is the same in all public hospitals.”

Among other factors, they blamed the lack of organisation in central government’s pharmaceutical procurement and the lengthy bureaucratic hurdles involved in ordering individual items. The government’s Central Medical Stores (CMS) supplies all government health facilities. It made its last major bulk purchase of medication in 2009, which was supposed to last for two years while the CMS was in the process of becoming a trust but the process of transition has taken much longer than expected.

A report by the UK’s Overseas Development Institute concluded: “In theory, as a trust, the CMS-T is envisaged to work in a more business-like fashion, with better cost accounting measures to ensure it is self financing and with greater independence. “In practice, aspects of how the trust will be constituted remain undecided, and it does not yet appear to have the full confidence of key stakeholders.”

Donors have worked through a parallel procurement system but the ODI report argues: “There is a danger that development partners (or other third parties) become locked into external procurement and provision of medicines indefinitely. Maintaining parallel systems can undermine incentives for change, and undermine the link between citizen and state, as people do not hold government responsible for service provision and leaders no longer feel responsible.” There is obviously still a very long way to go.