@ Oxford University Press 1994HEALTH POLICY AND PLANNING; 9(2): 130-143

MICHAEL R REICH

Harvard School of Public Health, Boston, USA

An analysis of the politics of Bangladesh pharmaceutical policy in the 1980s shows how significant healthpolicy reforms in developing countries depend on political conditions both inside and outside the country.Bangladesh's drug policy of 1982 illustrates that governments can sometimes change public policy in waysunfavourable to multinational corporations, while the failed health policy reform of 1990 shows thatreforms unfavourable to powerful domestic interest groups can be more difficult to achieve, even con-tributing to a government's downfall. The case provides evidence of basic changes in how the interna-tional agenda for health policy is set, especially the growing role of non-governmental organizations ininternational agencies and national policy debates. Understanding the political patterns of policy reform inBangladesh has important implications for strategies to affect health policy in developing countries.

national contexts. Understanding these politicalpatterns of policy reform in Bangladesh has im-portant implications for strategies to affecthealth policy in developing countries.

Introduction

In the past decade, Bangladesh has received con-siderable international attention for its nationalpharmaceutical policy. The policy was rapidly in-troduced in 1982 as a major reform and achievedimmediate recognition for its radical objectives.The policy was hailed by some observers as in-novative and courageous, and was assailed byothers as repressive and counterproductive.Then, in the late 1980s, the same nationalgovernment failed in its efforts to introduce anew health policy, contributing to the regime'sdownfall in 1990 and leading to the drug policy'ssubsequent review and possible revision.

Pharmaceutical problems in Bangladesh

In the early 1980s, Bangladesh ranked as theworld's second poorest country, with average percapita income of US$130, and with about 95 mil-lion people in a land area of 144 000 squarekilometres,l giving it the highest population den-sity in the world. About 9OOJo of the populationlived in rural areas, with illiteracy at 70OJo of theadult population. Persistent health problemswere reflected by an infant mortality rate of 110per 1000 live births.

The Bangladesh experience illustrates severalpatterns in the political economy of health policyin developing countries. It shows how significantreforms depend on political conditions both in-side and outside the country -an intersectionbetween domestic and international politicaleconomies. Second, the case shows that govern-ments can sometimes achieve public policychanges that are unfavourable to multinationalcorporations, but that policies unfavourable topowerful domestic interest groups can be moredifficult to achieve, even contributing to agovernment's downfall. Third, the case providesevidence of fundamental changes in how the in-ternational agenda for health policy is set,especially the growing role of non-governmentalorganizations in international agencies and

At the same time, Bangladesh confronted mul-tiple problems in its pharmaceutical system,similar to those found in many developing coun-tries. The problems affected all aspects, in-cluding consumption, prescription, distribution,production, and government procurement.

From the perspective of consumption, a largeportion of the Bangladesh population hadlimited access to modern drugs, with estimatesvarying from 30% of the population2 to 85%.3 In1981, the national market consisted of aboutUS$75 million in allopathic drugs, less than0.1OJo of the total world drug market4 for about

Pharmaceutical ~

1.9OJo of the world's population.1 These figuresindicate that the Bangladesh market representeda tiny share of global pharmaceutical sales, sug-gesting that most multinational drug firms didnot put much emphasis on it in their corporatestrategies. The figures, however, underestimatethe level of consumption of pharmaceuticals percapita in Bangladesh, compared to other coun-tries, unless corrected for cross-national pricedifferences.5

In the early 1980s, the market in Bangladeshincluded about 3500 brands of pharmaceuticals,4with various problems in the patterns of phar-maceutical consumption. A market survey for1978 was reported to show that about one-thirdof the total value of drug consumption was ac-counted for by 'vitamins, iron tonics, cough andcold preparations, "tonics and restoratives","volume restorers", enzymes and digestants,antacids and psychotropic drugs'.6 One of thefew population-based studies of pharmaceuticalconsumption in Bangladesh showed 57 purchasesper 1000 people per week in a rural community(Matlab), with antibiotics the most frequentlypurchased category (28OJo); 95OJo of consumptionoccurred from pharmacy purchases. This studyreported that antibiotics were 'rarely obtained inthe correct dose and they were often prescribedfor illnesses or age groups for which they werenot indicated' .7 In addition, patients consumedthese products with little information on properusage or contraindications.

Problems also existed in the distribution system,with distinct differences between the puplic andprivate pharmaceutical systems. In the publicsystem, drugs were free but not widely available,while in the private system drugs were morereadily available but not affordable for perhapshalf the population. According to an interna-tional evaluation, the primary health care systemin Bangladesh provided only about 10OJo of theneeded drugs and covered only 'a small fraction'of the rural population.2 The range of publicsector problems included: poor logistics andstorage, problems in the motivation and supervi-sion of health workers, inadequate drug budget,leakage into the private system, poor diagnosticand therapeutic skills of health workers, and alow overall government health budget (aboutUS$1 per person in the early 1980s). Accordingto a 1990 government report,9 'Free health carehas in reality amounted to ~ health care whiledoctors are known to divert patients to privateclinics with which they are often directly con-nected' (emphasis in original). The report statedthat even when public hospitals had stocks ofmedicines, patients were commonly asked to pur-chase products from nearby private pharmaciesbecause of economic connections between doc-tors and the pharmacies.

These consumption patterns resulted in partfrom problems in prescription (as well as fromproblems of illiteracy, drug labelling andpoverty). In Bangladesh, as in most Third Worldcountries, all drugs could be purchased without aprescription. Prescribers included physicians andpharmacists but also compounders and drugsellers, with drug sellers largely unregulated; andpatients commonly engaged in self-prescription.Most prescribers lacked adequate training andadequate or impartial information, relyingheavily on drug companies and detailmen. Drugsellers rarely were trained pharmacists, and theyhad strong economic incentives that affected theselection of products sold. Many physiciansowned or had economic interests in pharmacies,which created incentives to prescribe moremedicines and not always appropriate medi-cines.8 In addition, physicians prescribed with

Inadequate supplies in government facilitieswere due in part to drug costs. One study foundthat drugs represented a high-cost input formedical services compared to labour, and thatdrug costs substantially reduced the public sec-tor's price advantage over the private sector .5For a government clinic to supply the desiredlevel of drugs would require the approximateequivalent of salaries for two paramedics for oneyear.

In the private sector, most dispensing was doneby drug sellers at the 14000 licensed pharmacies.

)olicy and politics 131

a strong tendency to polypharmacy, in which a'shotgun' approach was adopted with a series ofdifferent medications for each medical visit, andwith no fear of malpractice control throughlitigation or regulation. In one reported case, athree-year old girl with shigellosis received aprescription for 16 different medications, mostof which were unnecessary for her condition, andthe family sold some land in order to purchasethe prescribed drugS.8

132 Michael R Reich

In the early 1980s, maximum retail prices were declared guidelines of Government to provideset by the Ministry of Commerce rather than the basic needs of life to the majority of the peopleMinistry of Health, but with little effective en- through austerity and to improve the economy offorcement of price controls at the retail level.4 the country, wastage of foreign exchangeBangladesh thus had no effective public controls through the production and/or importation ofover drug prices or dispensing practices in the unnecessary drugs or drugs of marginal valueprivate market. have to be stopped'.lo The report then appended

a list of drugs to be removed from the market,based on the committee's evaluation of allregistered and licensed pharmaceutical productsmanufactured and imported in Bangladesh. Thisreport became the basis of the new nationalpolicy.

Pharmaceutical production also presented prob-lems. Among developing countries, productioncapacity varies from those with no manufactur-ing capacity at all, especially in Africa, to thosewith some domestic formulation (such as Kenyaand the Dominican Republic), to those with anability to produce most intermediates, exportdrugs, and carry out research and development(including Egypt, Indonesia, Brazil, Argentina,Mexico and India). In the early 1980s, Bangla-desh belonged to the middle category of coun-tries with some capacity for formulation but withlittle else. Eight multinational firms manufac-tured 75% of all products (by value), 25 medium-sized local companies produced an additional15OJo of the market, and 133 small companieswere reponsible for the remaining 10OJo.4 Thegovernment provided no effective quality controlsupervision for local manufacturing processesor for final products sold on the market. In theearly 1980s, Bangladesh imported about US$30million of raw materials and about US$12-15million of finished drugs.4

The Bangladesh Drug (Control) Ordinance of1982 was issued soon thereafter, on 12 June. Thepolicy applied WHO's concept of essential drugsto both private and public sectors for phar-maceuticals in Bangladesh (an essential drugs listhad been used since 1978 for procurement bythe government's Central Medical Stores). Thepolicy's basic strategy was to exclude all non-essential drugs from the country, rather than topromote essential drugs in the public sector whileallowing the coexistence of a broader privatemarket. The policy created a restricted nationalformulary of 150 essential drugs and 100specialist drugs, with 12 at the health post level,45 for primary health care, and the full list at ter-tiary hospitals. The act banned about 1700 drugsfrom production or sale in three categories: 299harmful drugs that were to be destroyed withinthree months; 127 drugs that required reformula-tion within one year, due to unnecessary, un-scientific or harmful ingredients; and 1240 drugsthat did not conform to the 16 basic principlesand had to be withdrawn within 18 months.11The ordinance also included measures to pro-mote local manufacture and to restrict foreignfirms within Bangladesh. For instance, if pro-ducts were produced by local firms, multi-nationals were not allowed to import similardrugs. The policy also imposed restrictions ontransfer prices, requiring that they be similar tointernational competitive prices.

Finally, problems existed in government procure-ment practices. The high percentage of importsplaced a high demand on the government healthbudget and on the limited foreign exchangeavailable. These limitations created conflicts inallocating scarce government resources for drugsversus other expenditures, among various drugs,and between imported versus domestic drugs.

The drug policy

On 27 April 1982, Bangladesh's new militarygovernment formed an Expert Committee onDrugs, consisting of eight members. Two weekslater, on 11 May, the committee presented itsreport, with 16 criteria unanimously agreed uponas guidelines to reorganize the country's phar-maceutical sector. While 'keeping in view thehealth needs of the country' , the report stated itsoverall objective as follows: 'Consistent with the

Bangladesh's new drug policy arose within a par-ticular political context. On 24 March 1982,Lieutenant-General and Army Chief of StaffHM Ershad had overthrown the government andseized power, declaring martial law later thatday .12 To explain his actions, Ershad declaredthat 'economic life has come to a position of col-

Pharmaceutical policy and politics 133

lapse, the civil administration has become unable legitimacy through its support by internationalto effectively function, wanton corruption at all agencies and non-governmental developmentlevels has become a permissible part of life. ..organizations (NGOs).[the] law and order situation has deteriorated to~ alarming state. ..[and there has been] bick.er- The new drug policy received an immediate andIng fo~ power among the ~embers of th: rulIng hostile response from the pharmaceutical in-party. Ershad convened hls expert committee on dustry. Domestic firms in the Bangladesh phar-drugs about four weeks later. maceutical industry association (Bangladesh

Aushad Shilpa Samity, or BASS) purchased full-page advertisements in the Bangladesh press tooppose the drug policy. International firms didthe same, arguing that the new policy woulddiscourage foreign investors, would result inmore harm than good for public health, andwould not achieve the goals of increasedavailability of medicines. Ultimately, the interna-tional industry argued, the policy would result indecisions by companies to halt all pharma-ceutical production, including that of essentialdrugs, and to leave Bangladesh. Attacks on thedrug policy continued from The Pulse, a medicalnewspaper in Bangladesh, which denounced thepolicy as 'unimaginative, ill-conceived andhasty', releasing 'evil forces' in the market, put-ting additional burdens on the common man,'delaying recovery from diseases' and 'prolong-ing suffering of the patients'.17

A key architect of the new drug policy was DrZafrullah Chowdhury, hero of Bangladesh'sindependence war, a recipient of the RamonMagsaysay Award, and a grassroots develop-ment worker. In 1972, Dr Zafrullah had foundedthe Gonoshasthaya Kendra (or People's HealthClinic) outside Dhaka to provide. home healthservices to the rural poor through village-levelfemale health workers, with support from severalUK-based agencies, including War on Want,Christian Aid and Oxfam, and from NOVIB, aDutch donor. Then, in 1979, with external aidand loans from Bangladesh banks, he establisheda company to produce essential drugs forprimary health care at low prices.13.14 Underthe government of President Ziaur Rahman(1975-1981), Dr Zafrullah pushed for a nationalpharmaceutical policy based on essential drugs,but without success.

Pressure on Ershad's government also camefrom foreign governments, which asserted thatthe policy would discourage private investorsfrom entering or staying in Bangladesh. Am-bassadors from the United States, West Ger-many, the United Kingdom, and the Netherlandsindividually visited the Health Minister and theChief Martial Law Administrator to express theirdispleasure.18 In addition, the US ambassadorhelped to arrange for a visit of experts from thePharmaceutical Manufacturers Association andfrom companies in July 1982. The importance offoreign aid in Bangladesh (providing about 80OJoof the government's development budget in theearly 1980s15) gave these official complaints addi-tional significance for the new government.

Ershad's rise to power created favourablepolitical conditions and incentives for the enact-ment of a new pharmaceutical policy. First, thepolicy embodied a populist strategy of basicneeds (through reduced prices of essential drugs)to appeal to Bangladesh's rural poor, who con-tinued to be bypassed by development effortsdespite nearly US$13 billion of aid funds com-mitted in the country in the first decade after in-dependence in 1971.15 In addition, the drugpolicy created a political alliance with one sectorof local inaustry and with a number of promi-nent left intellectuals, symbolized by DrZafrullah's reputation as a development activistand a freedom fighter. Even some individualswho opposed the Ershad government, such as thePresident and Secretary General of the DhakaUniversity Teachers Association, publicly an-nounced their support for the drug policy.16 Thepolicy articulated a vision of self-reliance andpriority provision of basic national needs and anattitude of proud defiance against the multi-nationals -a stance of economic nationalism.Finally, the policy generated international

The Bangladesh Medical Association (BMA)quickly emerged as a vocal opponent to the newdrug policy. The BMA reportedly agreed withthe policy's ultimate objectives but not with itsformulation process, criticizing the committee'slack of consultation with the BMA.19 The BMAcriticized the methods used to review all drugs

134 Michael

on the market in a two-week period and also at-tacked the involvement of foreigners from NGOsin design of the drug policy. According to DrZafrullah Chowdhury, however, one person inErshad's expert committee on drugs (HumayunKMA Hye) was also a member of the BMA'spharmaceutical subcommittee, and the othersubcommittee member was consulted in theformulation process, although the GeneralSecretary of the BMA was not officially con-sulted because of his connections with a multi-national pharmaceutical company.IS Followingthese conflicts, the BMA refused to discuss thepolicy's implementation after its announcementin June 1982.

For consumption, the drug policy had two im-portant and immediate consequences.24 First, iteliminated the importation, sale, and productionof drugs declared to be dangerous or useless.While groups differed in their assessment of thecosts (and desirability) of removing so manydrugs from the market, most groups agreed thatthe policy succeeded in achieving this goal to alarge degree.

The World Health Organization and interna-tional consumer groups, on the other hand,praised the drug policy. WHO Director-GeneralHalfdan Mahler supported the policy during avisit to Dhaka in September 1982, stating, 'I takethis opportunity of congratulating our hostcountry on its courage in starting to put its drughouse in order along the lines recently endorsedby the World Health Assembly' .3 Internationalconsumer groups provided more active and con-sistent support for the policy. In 1986, the Inter-national Organization of Consumers' Unionspublished a document that commended the drugpolicy and the government leader who supportedit, 'General Ershad of Bangladesh is one of thefew leaders to have acted on this internationalconsensus of health experts'.20 Praise came aswell from international medical journals,especially Tropical DoctO'.Z1 and the Lancet .22

Second, the policy reduced the cost of essentialdrugs within Bangladesh (with savings to con-sumers, government, and foreign exchangereserves) by decreasing import prices and thevalue of imported finished products. Significantcontrol was achieved over increases in drugprices during the 1980s. Overall retail prices ofdrugs rose by only 20-25% between 1981 and1991, due primarily to two factors: controls overtransfer prices and sources of raw materials, andincreased competition among manufacturers.2SResponsibility for setting maximum retail pricesfor drugs shifted to the Drug Administration,and some prices increased (reflecting the Taka'sdepreciation) while others declined (reflectingdecreased material costs).

While the Bangladesh government persisted withthe main thrust of its drug policy, some changeswere introduced in response to complaints andpressure from industry and foreign governments.Soon after adopting the policy, the governmentestablished a Review Committee of six militarydoctors who submitted their report in August1982. Although never made public, the reportapparently criticized several aspects of the drugpolicy. 17 Subsequently, the government made a

number of concessions to industry in formalamendments to the policy, which included: per-mitting some banned products back on themarket, extending the time periods for im-plementation, introducing an appeals process,23and altering the list of allowed products.

For production, the policy succeeded clearly inpromoting domestic production and in pro-moting essential drugs production withinBangladesh. Nationally owned companies pro-duced 35% of all drugs (by value) in 1981, risingto a high of 67OJo in 1988, then declining to justover 6OOJo in 1989 and 1990.25 Similarly, essentialdrugs rose to nearly 80OJo of all local production(by value) in 1990 (for 73 items), up from 30OJo in1981 (for 45 items) (see Figure 1).a

R Reich

Accomplishments of the drug policy

Evaluating the Bangladesh drug policy is noteasy, due to the heated controversy that arosenationally and internationally. Various organiza-tions, including the Bangladesh government,foreign industry groups, international agencies,and consumer groups, have published reportsthat evaluate the policy and its consequences.While these reports have differed on manypoints, they also agreed on a number of specificaccomplishments and problems. This section,and the following, identify areas of agreementamong these evaluations as a method of assessingthe policy's consequences.

135Pharmaceutical policy and politics

,1005000 r ~ Essential drugs (E.D.)

-Other drugs

-E.D. as % of total production4000

--u;-tO

~

K 3000

"'~"'

~ 2000

0)::!

""ffi> 1000

80

60 cQ)eQ)

40 Q.

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990Year

Figure 1. Essential drugs within total local drug production in Bangladesh

Source: Drug Administration, Government of Bangladesh.Note: 45 PHC ED unti11987; then 73. Supplement kits.

All groups agreed that the new drug policy pro-vided a great boost to the local pharmaceuticalindustry. The Bangladesh pharmaceutical in-dustry association even reversed its initial op-position to the policy, and in 1986 purchasednewspaper advertisements in support of thepolicy when the Ordinance was being consideredfor ratification by Parliament. Even though 145local firms had a total of 864 products banned bythe policy ,26 the industry adapted to the new localcircumstances (and new benefits). The value oflocally produced drugs (in Taka) nearly doubledbetween 1981 and 1986, with an average growthrate of about 1411Jo a year throughout thedecade.2s One local company reportedly in-creased its production 60 times between 1981 and1985.18 UNICEF supported local productionthrough its local tenders purchasing products forDrugs and Dietary Supplement Kits, even thoughcosts were somewhat higher than internationalprocurement through UNIPAC (due in part toUNICEF tax exemptions) and despite someproblems in quality control of the product andpackaging, and in the capacity of local com-panies to fill orders on time.

million in 1981 to US$51.7 million in 1990,reflecting the local industry's restriction mostlyto formulation and its continued high depen-dence on foreign supplies.25

In sum, the local industry gained a much largershare of the domestic pharmaceutical market,and by the mid-1980s wanted to protect that newshare and protect the return on investments madeto produce essential drugs.27 In 1991, the topthree firms in pharmaceutical sales were allBangladeshi-owned, in contrast to 1981, whenthe top five firms in sales were all multinationalcorporations.2s The economic benefits of thedrug policy to the Bangladesh private sectorcreated an important source of political supportfor the policy's continuity.

Conditions also improved in the government'sprocurement procedures. As part of the drugpolicy, responsibility for local tendering shiftedfrom the Ministry of Commerce to the CentralMedical Store and a new system was establishedfor reviewing and deciding on tenders. About70OJo of governr:nent procurement came from theparastatal Essential Drug Company Limited,with the remainder through open tender .The new policy also had important trade and

foreign exchange consequences. The value of im-ported final products remained more or less con-stant in local currency (see Figure 2) and declinedin dollar value (from US$17.5 million in 1981 toUS$8.9 million in 1990). Imports of raw (andpacking) materials rose, however, from US$35.5

Internationally, the Bangladesh drug policyachieved political importance far beyond itseconomic significance. For some consumergroups, the policy represented what should bedone in all countries to control the private sector ,

136 Michael R Reich

Total productionD Finished drug imports"::::, Raw material imports

'(i;'I::

~

:§.."

~~.s:Q);:,

~

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

Year

Figure 2. Total local drug production and imported drugs* in Bangladesh

Source: Drug Administration, Government of Bangladesh.*Does not include UNICEF Drugs & Dietary Supplement kits.

especially multinationals, for pharmaceuticalsand other products as well. For the internationalpharmaceutical industry, the policy representedwhat should not be done in any country, espe-cially the adoption of an essential drugs list forthe private sector. And for the WHO, the policyrepresented concern that public controversy withthe private sector in specific countries could af-fect the organization's international credibility,particularly with major financial contributorssuch as the United States.

counter and, more commonly, under the coun-ter .17 A report by the International Organizationof Consumers' Unions recognized the existenceof a black market in banned drugs, but statedthat this problem appeared to be in decline.20 TheChairman of the Expert Committee, Dr NurulIslam, responded by pointing out the lack ofscientific basis for the criticism and by noting thecommon availability of all sorts of banned con-sumer goods in Bangladesh.3° No authoritativestudy seems to have been carried out to assesswhether smuggled drugs have increased ordeclined since 1982, although industry sourcesclaimed that these increased as a result of thedrug policy ,23.31 and the Bangladesh-lndiaborder is notoriously porous. (Experience inother countries with products banned as uselessor dangerous suggests that if a product is bannedwhile a strong demand persists, then smuggling islikely to increase, especially if effective bordercontrols do not exist.)

Problems also persisted in prescribing pat-terns.8.28 Even when patients were correctlydiagnosed by a physician, they still often receivedinappropriate prescriptions. These prescribingpatterns were related to continuing problems inthe availability of scientific information and inthe incentive structure of the dispensing system,neither of which was changed significantly by thedrug policy. According to informal reports,some physicians continued to prescribe banned

Problems with the drug policy

For consumption, major problems remained inaccess to pharmaceuticals that appeared on theallowed list.28 A sympathetic evaluation of thedrug policy by WHO, DANIDA (the Danish aidagency) and SIDA (the Swedish aid agency) in1984 concluded: 'The new policy has. ..not yetsignificantly improved the availability of essen-tial drugs to those most in need'.2 In 1988, agovernment representative publicly stated in aWHO publication that problems in access re-mained.29 A sympathetic evaluation in 1992stated that public sector health facilities still con-fronted acute drug shortages, due to govern-mental budgetary constraints, limited revenues athealth facilities, and inadequate supply controlsystems.2s

Problems also existed in completely removingbanned products from the market, both over the

Pharmaceutical policy and politics 137

drugs and would direct patients to specific pri- pathic sector may have contributed to an increasevate pharmacies where smuggled products were in products of dubious quality in the traditionalsold at inflated prices. The persistence of in- medicine sector .b On the other hand, the drugappropriate prescribing habits also resulted from policy represented the first official regulatorythe government's reluctance to introduce public control of traditional medicines in Bangladesh, in-education and physician education programmes cluding the development of registration criteria.25on 'rational' prescribing, and from the BMA'sresistance to incorporating such programmes in Problems in quality control among pharma-medical education. The controversy that erupted ceutical producers have been reported by variousover the policy's formulation contributed to sources. Manufacturers were reported to have in-problems associated with its implementation. adequate quality control facilities, with outdated

or non functioning equipment. DANIDA andSIDA reported that some local producers, espe-cially the small-scale manufacturers, 'are withoutany quality control system' .34 Problems were alsoreported of spurious drugs that resembledbanned products in name and packaging.23 Inone tragic case, a local company used apoisonous chemical, diethylene glycol, tosweeten pediatric paracetamol syrup, resulting inacute renal failure and the death of over 250children.35 In addition, serious problems havebeen found in tetanus vaccine produced inBangladesh, including reports of no potency inthree consecutive lots, lack of records ondistribution, and no national control authority tocertify vaccine safety or potency; in 1992, tetanusvaccine production was suspended and theimmunization programme returned to the use ofimported vaccine.36 These production qualityproblems could reflect a trade-off in theimplementation of the drug policy, betweenincreasing local production and maintainingproduct quality, as well as a trade-off betweenprice and quality for products manufactured bysmall companies.

Prescribing patterns based on appropriatemedical practice also created problems of accessto some specialized drugs not on the allowedlist.29 Examples of such products were diagnosticdyes used in cardio-catheterization and specificproducts for diabetes or cardiovascular diseases.In some cases, doctors doing specialized pro-cedures directly sold the products at high price~.In other cases, economically well-off individualsbegan importing their own drugs through infor-mal channels.

Reflecting these problems in access and prescrib-ing, an essential drugs project (sponsored byDANIDA and SIDA) was initiated in the early1980s to improve the processes of getting 'good'products to needy people, by building up thedistribution system, improving quality control,and changing prescription behaviour in thepublic system.32 However, the project was haltedin the late 1980s at the government's requestbecause it was perceived as externally imposedand not integrated into government systems, andtherefore not politically acceptable in Bangla-desh. UNICEF is currently implementing asimilar project, called Improvement in DrugManagement, which is intended to support thedrug policy's objectives, with particular atten-tion to problems of access in the public systemand problems of prescribing patterns.

Various evaluations concurred that the govern-ment has not exercised effective quality controlover producers, due in part to weak organizationof the Drug Administration.20.23.28 This govern-ment agency was responsible for the regulationof drug manufacturers and the drug market, yetit had only 35 inspectors for the entire country in1992.25 The introduction of a limited nationalformulary, reducing the number of products foranalysis and simplifying the analytic procedures{since, for example, combination drugs were notallowed), should have resulted in some improvedefficiencies in the Drug Administration but,overall, it did not receive sufficient capacity-building to administer the drug policy fully andeffectively.

Different groups also agreed that problems per-sisted in the quality of pharmaceutical productsavailable in Bangladesh, such as the inadequatecontrol of traditional medicines.2°.23 The numberof manufacturing units for traditional medicineincreased sharply in the 1980s23 and variousAyurvedic medicines of questionable value per-sisted in the market.33 Stricter controls overdrugs considered useless and harmful in the allo-

138 Michael R Reich

Finally, problems occurred in the implementa- tributed to efforts at broader health systemtion of key regulations of the drug policy. Con- reform in Bangladesh.troversy arose in the Drug Control Committeeover whether the policy was intended to restrictregistration to a limited number of essentialdrugs as an exclusive list or to provide preferen-tial treatment to essential drugs while allowingregistration of other 'non-essential' drugs.25 Thiscontroversy led to legal action that challengedthe restrictive interpretation of the registrationpolicy25 and contributed to administrative delaysin drug registration and appeals.3) Admini-strative problems also occurred in the imple-mentation of price controls. In one survey, actualmarket prices were found to exceed the officialprices in Dhaka by lO-30I1Jo, with even higherprices in more remote areas. These price controlmechanisms also resulted in complaints fromdrug manufacturers about inadequate profits,administrative delays in responding to risingmaterial costs, and inequities between largeand small producers with different quality

products.23,25

From drug policy to health policy

In late July 1990, the government of General HMErshad proposed a new health policy thatpromised radical changes in Bangladesh' s healthsystem. The proposed policy emerged from afour-member committee established in February1987 called the Health Care System Improve-ment Committee, which included Dr ZafrullahChowdhury of Gonoshasthaya Kendra. A separ-ate committee, formed under the additionalsecretary of the Ministry of Health and FamilyPlanning, was also convened in the late 1980s toconsider a national health and population policyfor Bangladesh, including 17 members with arepresentative from the physician's association.After discussion at the Cabinet level in 1990, thereport from this second bureaucracy-based com-mittee, which apparently recommended mostlyincremental changes, was 'suppressed', while thereport from the Improvement Committee, whichadvocated more transformative changes, wasselected as the basis for a national health policy.The Improvement Committee's approach tohealth policy was adopted even though someministers (according to later reports) were con-cerned that strong resistance could develop.38

Bangladesh's experience illustrates severallessons about pharmaceutical policy. First, itshows that pharmaceutical policy combineshealth policy and industrial policy, often withconflicting objectives, as has been shown forother countries.37 The Bangladesh drug policyprobably succeeded more clearly as industrialpolicy, in promoting the economic condition oflocal manufacturers through a hidden subsidy,than as health policy, where its impact on im-proving the health status of the local populationhas been ambiguous and difficult to measure.Questions could also be raised about its successas industrial policy, considering the quality prob-lems of domestically produced drugs and theoverall strategic desirability of promoting thepharmaceutical industry versus, say, the textileindustry in Bangladesh. Second, the experiencesupports two propositions about the use of statepower in pharmaceutical policy: that it is easierto exclude 'bad' products than to get 'good'products to people, especially in rural areas, andthat it is hard to get rid of all 'bad' products onthe market, especially when a strong demandcontinues from prescribers and patients. Finally,the experience shows how improvement in phar-maceutical policy can be limited by the existinghealth system and health policy. Indeed, increas-ing awareness about these constraints con-

The health policy proposal, as presented toParliament39 and published in the press,40 soughtto ensure preventive and curative health care forall citizens and make the public health systemmore accountable at all levels. The policyspecified 16 objectives, with particular attentionto the provision of health care, sanitation, nutri-tion, and family planning services for the mostdisadvantaged groups in society. The documentthen proposed 14 structural changes in theorganization of the public health system in-cluding: free services for the most vulnerablegroups and graduated fees for the better off;a new system of medical audits to improveaccountability for medical stocks and funds, andto evaluate the work of medical personnel; plusa decentralization of the health system, with fullauthority at the local, district and regional levelsfor enforcement. The document's third section,with 13 measures on manpower, proposed a banon private practice by all academic staff and

Pharmaceutical policy and politics 139

junior doctors (with various benefit increases as lawyers, doctors, teachers, road transportcompensation) and limited private practice for workers, and civil servants. The opposition thenSenior and Chief Consultants. called an indefinite strike (hartal) from 2

December .12 The next day, senior army personnelforced Ershad to resign, rather than resort towidespread military repression.

Ershad's political objectives for his health policyresembled those for his drug policy. He was seek-ing to: a) win support for populist proposals thatwould help the poor of Bangladesh, as an impor-tant material and symbolic constituency, toachieve international recognition from pro-gressive consumer and development groups; andb) to reform the health system so as to improvehealth care and also make the drug policy moreeffective. Ershad may also have been seeking toimplement a decentralized health system toestablish his political party (Jatiya Party) ingrassroots organizations and thereby allow himto hold on to power .12 He had tried a similarstrategy with the legal system, without success.

The attempt at health policy reform contributedto Ershad's downfall for various reasons12 -insharp contrast to the drug policy reform whichseems to have strengthened Ershad's regime.First, in 1990, the Bangladesh government con-fronted increasing domestic and internationalpressures on both economic and political issues,while in 1982, when the drug policy was enacted,Ershad was at the start of his rule and hopeswere strong that he might bring order toBangladesh and promote development.

Second, the proposed health policy affected theprivileges, powers, and income of the medicalestablishment more directly than the drug policydid. The health policy had important economicimplications for those doctors who depended onsubstantial income from private practice, whichhelped mobilize the BMA into active oppositionagainst Ershad; at the same time the policyalienated younger doctors who worked at theUpazilla level, proposing to make them account-able to the Upazilla chairman. The compre-hensive health policy thus managed to an-tagonize all segments of the medical profession,without creating a core group of physician sup-porters. The drug policy, on the other hand,created opposition from multinational corpora-tions that sustained economic losses (eventhough most foreign companies continued tooperate in the growing Bangladesh market), butit also created support from domestic companiesthat reaped great benefits (and coopted theirinitial opposition to the policy).

But efforts to introduce the new health policybrought unintended political consequences thatcontributed to the resignation of Ershad'sgovernment. When Ershad announced the newpolicy in a television speech in July 1990, theBMA declared an 'instantaneous strike' for 72hours and soon thereafter extended the strike to15 August. The BMA demanded that the govern-ment withdraw its policy proposal and declaredthat if the government did not comply then allgovernment doctors would resign on 15 August.In response to this threat, a compromise wasreached to form a committee to review theproposal.9

In the autumn of 1990, protests against thegovernment continued, building on two years ofopposition activity. Street protests by studentgroups broke out on 10 October, increasingviolence throughout urban Bangladesh, withrising military and police repression of politicalopposition, resulting in scores of deaths (figuresrange from less than 30 to more than 10012).During this period of disruption, several officesof the Gonoshasthaya Kendra were burneddown, perhaps in reaction to Dr Zafrullah'sassociation with Ershad. Then, on the morningof 27 November, the joint secretary of theBangladesh Medical Association, Dr ShamsulAlam Khan Milon, was killed, which galvanizedstrikes by doctors in Dhaka and elsewhere. Thatevening, Ershad imposed a national state ofemergency in the midst of strikes by journalists,

Third, in 1990, Ershad confronted an unstablepolitical situation, from eight years ofaccumulated enemies. Various factions in thestudent movement joined together in their op-position to Ershad and provided an increasinglymobilized resistance with growing support fromthe professional middle class. The BMA'salliance with this growing coalition againstErshad contributed to the legitimacy of themovement. The combination of economic

140 Michael R Reich

distress, political instability, and increasing in- Conclusionsterest group mobilization persuaded the military Bangladesh's contrasting experiences with itsto withdraw its support from Ershad. drug policy in 1982 and its health policy in 1990

illustrate a number of lessons about health policyreform in developing countries.The interim president who replaced Ershad was

the country's Chief Justice, and the president ofthe Bangladesh Medical Association rankedamong the six key advisors in the interim govern-ment41 responsible for the health portfolio.Among the interim president's first official ac-tions was to repeal the proposed health policy,the main concern of the BMA. The health ad-visor subsequently instituted a committee toreview the drug policy and also initiated a com-mittee to investigate Gonoshasthaya Kendra.16Following Bangladesh's parliamentary electionson 27 February 1991 (which one member of theNGO observer team called 'successful free andfair elections'42), a new government was installed.

First, the cases show how the health policyagenda in Third World countries is increasinglyshaped by an interaction of domestic and inter-national political forces. Ershad's introductionof the drug policy required consideration of bothdomestic and international factors. In order toachieve his domestic political goals, he had torisk antagonizing the international pharma-ceutical industry and several Western govern-ments. His domestic goals included populistpolitical objectives (providing lower priced drugsfor the poor), economic political objectives (win-ning support from the domestic pharmaceuticalindustry), symbolic political objectives (creatingthe symbol of an external enemy), and broaderlegitimacy (gaining domestic and internationalrecognition for his innovative policy).

The new government continued to give the drugpolicy official scrutiny, and on 4 March 1992established a 15-member review committee, in-cluding multinational and national commercialinterests but no consumer representatives.2sDomestic pressure to revise the drug policy camefrom the Bangladesh national industry, whichsought to loosen or remove price controls ondrugs. External pressure also increased, not onlyfrom multinational firms but also from a WorldBank unit, which in April 1992 sought to per-suade the government of Bangladesh to revise itsdrug policy in a more market-friendly direction,through deregulation, by removing price con-troIs, import controls, and product limitations.43UNICEF, on the other hand, sought to supportthe drug policy's main objectives and structure.

To achieve these objectives, Ershad collaborateddomestically with the respected developmentpioneer and freedom fighter, Dr ZafrullahChowdhury. Dr Zafrullah's collaboration, inturn, gave credibility to Ershad within the inter-national development community. The choice ofa national essential drugs policy gave Ershad'sgovernment high visibility at the World HealthOrganization, where the topic had become amajor issue in 1981 with the formation of aspecial programme reporting to the Director-General and with a dynamic leader seeking to im-plement the policy in developing countries.4s TheWHO programme had close ties with DANIDA,which was working in Bangladesh on phar-maceutical issues. The Bangladesh drug policyalso connected with an international network ofconsumer groups that came together in 1981 asHealth Action International 'to promote thesafe, rational, and economic use of phar-maceuticals worldwide'. Finally, the multina-tional pharmaceutical industry felt defensive onessential drugs issues in the international arena,which gave the Bangladesh policy heightenedvisibility around the world. In short, Ershad'sdecision to enact a drug policy in 1982 respondedto positive political incentives on both domesticand international levels.

In November 1992, the policy review committeesubmitted a revised draft policy to the govern-ment for review. Then in mid-January 1993,representatives from traditional medicinesystems (Homeopathic, Unani and Ayurvedic)challenged the policy process in court for ex-cluding them from the review committee and forrecommending a separate drug policy for tradi-tional medicines.44 The Bangladesh High Courtsubsequently decided to suspend the review com-mittee. Although no decision was reached aboutthe 1982 policy, observers expected that somerevision was still likely .

Pharmaceuticall

A second important lesson of the Bangladesh ex-perience is how political conditions can createopportunities for health policy reform. The drugpolicy reform shows that it is possible for a poorcountry, under certain political conditions, toexercise significant leverage over multinationalcorporations and impose severe regulatory con-trols, despite the many relative weaknessesof poor countries compared to these firms.National public interests, defined by the govern-ment in power, can sometimes take precedenceover multinational private interests.46 Ershadcould introduce the drug policy by declaration,because of his position as Chief Martial LawAdministrator, and could implement the policyquickly, because of his relatively strong controlover Bangladesh government and society at thestart of his regime. This high degree of power ,however, often declines over time. Subsequentbargaining and negotiation can loosen therestraints (as Ershad did in the summer of 1982),while the development of strong domestic consti-tuents (the private drug sector in Bangladesh) canprolong a policy's existence. In the long term,policy reforms may be reversed, since foreigncompanies may be reluctant to leave and maywait (and work) for a change in government or achange in policy (as seemed likely in Bangladeshin 1993). Drastic policy reforms created bypolitical conditions are susceptible to redesignand reversal by subsequent political changes.

~

reform raises broader questions about the rela-tionship between health policy and politicalchange. In Bangladesh, a military dictator usedpharmaceutical policy in order to create politicalsupport and regime legitimacy from interna-tional organizations and domestic constituencies.An authoritarian regime adopted what were in-ternationally recognized by some groups asdesirable policies and used them as 'soft options'to garner both domestic and international SUp-port.41 The case illustrates that health policyreform can produce political success withoutnecessarily leading to health success. Indeed, theeffective implementation of progressive drugpolicies may not be possible without more fun-damental structural changes in the health system;and seeking those changes can help underminethe political stability of a strong state or even amilitary dictator .

Third, the case shows the political limits of seek-ing radical changes in policy, illustrated by thefailure of the proposed health policy. The newhealth policy posed serious economic and powerimplications for physicians at a time whenErshad was much weaker politically andeconomically. The Bangladesh Medical Associa-tion became actively mobilized in seeking thepolicy's reversal and Ershad's removal. Thisexample supports the generalization found inrich countries that a government can change themethod of paying physicians only when thephysicians agree.47 The case raises the question ofwhether Ershad could have passed a differentversion of his health policy reform if he hadadopted another strategy -through greater col-laboration rather than sharp confrontation withthe BMA. The contrasting examples of the drugpolicy and health policy illustrate the importancefor policy makers of carrying out systematicpolitical assessments of proposed decisions to

The Bangladesh case suggests that some policiesconsidered desirable from a public health

>olicy and politics 141

strengthen the probabilities of enactment andimplementation.48

Fourth, the case of Bangladesh's drug policyreflects the expanding role of NGOs in shapingnational and international policy agendas in thehealth sector. From the early 1970s, networks ofnon-governmental organizations have grown in-ternationally and have assumed more influencein international agencies and national contexts.Examples include the movement for account-ability on pharmaceutical products and essentialdrugs, as well as activities on infant formula,pesticides, other banned and restricted products,and hazardous waste exports. Policy issues areno longer decided solely through interactionsamong governments or between different sec-tions of national or international organizations.The NGO international networks are affectingmany policy decisions, and the new influence isgenerating unease within international agencies,private corporations, and national governments.The Bangladesh case illustrates how, under oneset of political conditions, a national NGO leaderwith international linkages gained significant in-fluence in policy formulation (for both drug andhealth policies), and how such influence declined(with some backlash) when political conditionschanged with Ershad's downfall.

Fifth, the Bangladesh case of health polic~

142 Michael

perspective may be most effectively implementedby governments with strong state control.49 Anethical question for public health professionals iswhether to work with repressive governments toimprove health policies, if the policies will con-tribute to the government's political stability andthus to the continuation of repression. Whatlevel of health benefit justifies collaboration withrepressive regimes? Conversely, weak states mayfind it difficult to introduce and implementpolicies that would redistribute resources in thehealth sector to more vulnerable and politicallypowerless groups. A comparative analysis ofpharmaceutical policy reform supports the im-portance of strong states and suggests that thefeasibility of reform depends critically onpolitical conditions, especially political timingand political management of group competition.These factors assisted policy reform for themilitary coup government in Bangladesh, butalso for the democratically elected government inSri Lanka and the regime brought to power bypopular revolt in the Philippines.5°

Endnotes

a The original lists of 45 essential drugs for PHC included

15 products for village health care and 30 products forUpazilla level care. In 1987, the Upazilla list was increased to58, for a total of 73 essential drug PHC products. unfor-tunately, it was not possible to obtain production statisticsfor a single set of products (such as the original 45 PHCdrugs) for the entire time period, resulting in an inconsistentdefinition of essential drugs for PHC in Figure 1 andprobably inflating essential drug production value andpercentage after 1987.

b For example, according to anecdotal reports, some pro-

ducts banned by the 1982 drug policy were subsequentlymanufactured by traditional drug companies and sold inretail pharmacies along with allopathic products.

Finally, this analysis points to a number ofissues, particularly demand and distributionproblems which deserve consideration in theongoing review of pharmaceutical policy inBangladesh. The selling activities of small drugshops need greater policy attention, includingpossible incentives and sanctions to encourageappropriate prescription and sales behaviour .The prescribing patterns of physicians and otherhealth-care workers could be addressed throughsuch measures as changes in medical education,medical audits, and postgraduate educationoutreach. Consumer protection groups could bestrengthened, through NGGs, to promote theeducation of both prescribers and consumers ofpharmaceuticals in Bangladesh. The distributionof essential drugs to rural areas could beenhanced through incentive systems and cost-effective procurement. Also, while it may be con-troversial, innovative ways could be sought toaddress the consumption desires of the middleclass for specialized drugs not on the allowed listbut still considered within appropriate medicalpractice, for example, through the introductionof high duties and prices for non-list drugs,which could then be used to subsidize thedistribution of essential drugs to the poor, as aform of progressive taxation.

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Acknowledgements

The author appreciates the helpful comments on earlierdrafts by J Bertrand Mendis, Sadia A Chowdhury, Mush-taque Chowdhury, Zafrullah Chowdhury, Agnes Guyon,Ravi Rannan-Eliya, SWR de A Samarasinghe, and ananonymous reviewer for the journal.

Biography

Michael R Reich is Professor of International Health Policyand Director of the Takemi Program in International Healthat the Harvard School of Public Health. He received his doc-torate in political science from Yale University in 1981, andjoined the Harvard faculty in 1983.

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Correspondence: Dr Michael R Reich, Harvard School ofPublic Health, 665 Huntington Avenue, Boston, MA 02115,USA.