Private and Public Solutions and interactions for the Access to DrugsAs seen from the perspective of

policy and experience

SEAM CONFERENCE 2001

Jorge Jiménez MD MPH & Gabriel Bastias MD MBA,Dpt. of Public Health Pontificia Universidad Católica de Chile

State versus Market Dichotomy

• Public versus Private• State versus Market• Public with Private• Unsolved issue?• Market failures vs Government

ineficiencies• Political and policy implications

State versus Market Dichotomy(2)

• most advanced defense for reform, as in the UK has been called a Quasi-Market approach when proposing the function separation of financing and provision.

• public sector in health tries desperately to find better ways and means to achieve its basic objectives and make reasonable use of scarce resources.

State versus Market Dichotomy(3)

• private providers for public services or social policies gain popularity or absolute rejection.

• Dichotomy depends on which side of the fence you were born

• Need to go beyond this dichotomy with innovative approaches

Dichotomy International

• WHO receives donations from the industry to use in some specific diseases

• Some applaud, Some express concerns• Public-Private-Partnerships in

international efforts in public health, with the recommendation of treating those as “experimental ventures” (Widdus, Bulletin WHO,2001,79(8))

International Trade and Patents: new scenario

2001• Roundtable on HIV/AIDS, Malaria and

Tuberculosis sponsored by the European Commission in Brussels: Lamy opens the game (28September 2000)

• WTO Qatar Ministers Meeting TRIPS agreement “can and should be interpreted and implemented in a manner supportive of WTO members right to protect public health and, in particular, to promote access to medicines for all” (November 11,2001)

• WHO: Bruntland, naturally applauds ( November 15,2001)

Patents and Registration of drugs: how fair, how

long...

Again: Private and Public interact

Initiatives from both sides welcomed

• PUBLIC• Generic Drugs

Programs• Health Systems

Development• Public

Procurement agencies

• PRIVATE• Drug

production• Distribution

chains• Insurance

Joint ventures: are they possible??

Public Side initiatives

•Generic Drugs Programs•Health Systems Development

•Public Procurement agencies

Generic Drugs Program: one story

• In Chile, as early as 1935 a list of essential drugs motivated by exccess and misuse

• It evolves to the National Formulary initiative of 1967 with a very succesful reality so far as 2001

National Formulary: basic principles

• List of generic active chemical compounds by a MOH Commission

• “Essential for provision of scientifically founded medicine”(sic)

• Mandatory use for public services: market quota

• Option for production by private industry and/or public industry

National Formulary: basic principles (2)

• Compensations for private sector: free prices if participation in National Formulary

• Government laboratory for production of generics

• Medical and Pharmacists Associations commitment to use the drugs of the Formulary

• Commercial strategy to assure quality and low price

Marketing always needed

National Formulary: from public to private

• Local Private industry entered strongly in the generic business and the State industry was privatized

• This Industry has gained important market shares in 18 countries of Latin America , especially in the Andean and Central Americas regions.

• Privatized Laboratorio Chile claims 30% of its production to be exported.

• Market share of generics grew to 50-60% ,today it continues to be 45%

National Formulary: from public to private

• Conclusion: An initially public strategy has been succesfully privatized, retaining the social impact and its market strength

• But it is under threat if licensing and patenting continues to be more agressive than needed

Health Systems Development

• Existence of healthcare network is crucial for distrution and final access to drugs

• This is mainly public, but increasingly has a private component around the world

• Access to drugs has the main limitant of infrastructure and technical capacity to deliver and control treatments: the case of TB, loss of 30 years !!

Procurement Agencies for NHS

• In the case of Chile, established in 1953, with NHS

• Classical functions of purchasing by bulk, storage, distribution,etc

• Classical failures of inefficiency and corruption

• Reforms needed and in the way

Procurement Agencies: Reforms XXI century

• No more monopoly: Public hospitals purchase both to private and public

• Electronic Procurement and intermediation

• Market share of Agency grows from 20 to 30% of public services, self financing

• Decreases in prices in the order of 20-25%

• source: Carikeo and others, WB paper,Case study

Private Sector: new models for distribution

• Besides it´s role in the Generic production, new approaches to distribution appear in a growing economy

• Drug store like chains in Chile go from 30 to 85% of market sales

• Commercial strategy accepts generics and brand names

• Presence in middle and high income sites, not a solution for the poor.

• Private distribution for vaccines?

Conclusions

Public and Private policies have each a distinctive but synergistic role

Public sector has the duty to preserve principles and act when there is no private solution available.

These interventions and programs have a long term development and need political and social support.

Conclusions(2)

State-Market Dichotomy tends to impede a more synergistic approach

After Brussels and Qatar, the world seems somehow more open to facilitate access to drugs for the vast majority of the people.

Conclusions (3)

Private Pharmaceutical distribution chains work very well at intermediate and high income levels but not in poverty areas.

Public solutions, including health systems development, drug procurement, sustaining distribution systems, generic drug use promotion, may when sustainable, become feasible in the hands of the private