Cost of healthcare
DEMAND AND SUPPLY - Boo Chanco (The Philippine Star) - June 21, 2019 - 12:00am

There was this interesting article in the Financial Times about how “the world’s poorest countries are paying some of the highest drug prices…”

The FT report was based on the work of the Washington-based Center for Global Development. The group, consisting of policymakers, representatives from global health institutions and donors, procurement specialists and academics examined billions of dollars in spending by developing countries.

Their conclusion: low- and middle-income countries were paying 20 or 30 times more for medicines such as omeprazole, for heartburn, or paracetamol, a common pain reliever.

According to FT, the study revealed that “in the poorest nations, branded generics — which command a price premium — make up about two-thirds of the market by volume and value… By contrast, in the US and the UK, unbranded quality-assured generics account for 85 percent of the pharmaceutical market by volume, but only about a third by cost.”

The study also found out that there isn’t much competition in the supply of essential medicines in low- and middle-income countries. These markets tend to be dominated by a single, or small number of suppliers, directly affecting the prices paid by public bodies or consumers.

“In some low- and middle-income countries, the largest seller of certain medicines “accounts for upwards of 85 percent of all sales, such as contraceptives in Zambia, the Philippines, Senegal, and Kerala; cancer medicines in Zambia and Kerala; diabetes medicines in Zambia; and antiparasitics in the Philippines, Zambia, Tunisia, and South Africa.”

What should we do? The researchers are urging poorer nations to sharpen their procurement skills to get better deals.

“A concerted push is needed to professionalize procurement and broaden capacity from the global to national level,” researchers said.

The sad situation is starting to bite “as countries became wealthier and donor money diminished, more of the total expenditure came from people’s own pockets, exacerbating inequalities. If you’re buying as an individual you can’t get a good deal.”

According to the FT, Amanda Glassman, executive vice-president and senior fellow at the Center for Global Development, blamed “flawed drug-buying practices and broken generic markets… We’re talking about access to common meds, not the latest cutting-edge cancer drugs.”

Ms. Glassman added: “Drug purchasing is incredibly important, and if it’s done badly you end up with the poorest countries in the world paying some of the highest drug prices.” That undermined progress towards universal health coverage, she said.

Well… things could have been worse in the Philippines. But thanks to former senators Orly Mercado and Mar Roxas, laws were passed to support generic drugs, which control ability of the drug cartel to dictate prices.

Still, the work isn’t done. It seems the western drug companies merely tied up with locals that produce generics. It would be interesting to see a competition commission study on the state of the local drug industry’s ability to act as a cartel in dictating drug retail prices.

Drug prices, however, aren’t the only problems of Filipinos in need of health care. Our health care system can use some reforms, but it isn’t likely we will see anything meaningful soon.

We have a “pay as you go” system where the patient and his family coughs up the cash needed to pay the doctor, the hospital and the prescription drugs. Of course, we have PhilHealth, but its limited funds are being milked by its own corrupt officials.

A revenue of P15 billion is expected next year from increased sin taxes and P140 billion until 2023. Some P154 billion in PhilHealth funds have already been stolen by some health care providers who billed and got paid for services that were not rendered.

If you are employed by a fairly large company that provides health care coverage, you are among the lucky ones. But you lose that privilege once you retire, never mind that you need money for healthcare the most after retirement.

We shouldn’t have to worry about seeking health care even if we don’t have a regular job or have retired. But a more socialized approach to health care is not feasible with massive bureaucratic corruption.

Coming from a family of doctors, I am surprised and appalled that many doctors are involved in the PhilHealth scam. How can you trust a doctor who steals from our health care fund? Or conducts unneeded cataract operations?

For that matter, our current “pay as you go” system for medical services puts doctors in a cloud of doubt… specially if they have economic interests in the hospital providing the services.

Are the doctors making the right diagnosis, or could it be that their treatment options are somewhat dictated by their economic interests? Could your doctor be requiring more tests, X-rays or CAT scans than necessary because he gets a cut from the hospital or laboratory?

A retired doctor gave me an example how such conflicts of interest could happen.

“Recommending surgery, for instance… long cut equals hospital stay. Every doctor,  the endocrinologist, the internist, etc., shares the revenues from the cut and the obligatory stay with or without direct participation. Most interventions do not require hospitalization. It will take a little longer before the country is weaned from long cuts.”

The same retired doctor also explained to me that in more advanced countries, patients can have the benefit of a second opinion. Our doctors frown on patients who ask for it. 

You can’t even bring a doctor not accredited by the hospital to take a look at you. That’s why those who can afford just go to the US, Hong Kong or Singapore to make sure.

The biggest tragedy in local health care is that many of our people don’t get it at all. Our A-team of doctors are mostly in Metro Manila, Cebu and Davao. Those who are further away may never even see a doctor in their lives. Yet, DOH and local doctors dislike medical missions conducted by foreign-based Filipino doctors.

 Universal health care, you said? In our dreams!

Boo Chanco’s e-mail address is bchanco@gmail.com. Follow him on Twitter @boochanco

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