Sound Healthcare Policy Is Needed At Crisis-ridden WHO

The World Health Organization (WHO), the United Nations’ agency for international public health, is having its annual executive board meeting in Geneva in a few days’ time, from the 3rd to 8th of February.

WHO and healthcare policy

This is the meeting where the global public health agenda for the upcoming year will be set. This time, the meeting will be under intense public scrutiny, due to the looming public health crisis of the outbreak of the Novel coronavirus. Therefore, coordinating a response to such drug resistant transnational diseases should be a top priority since the world will be looking to the WHO for leadership in fighting them. Nevertheless, it seems that the WHO is stretching itself thin by allocating much of its limited resources to many other different areas ranging from youth violence to traffic safety, issues that should be left to the management of national governments. Another part of its agenda is devoted to discussing intellectual property rights in the field of healthcare. Apparently, WHO is pushing member states to weaken intellectual property rights in order to improve access to patented medicines owned by private parties. The main argument for such a measure is that intellectual property rights make medicines prohibitively expensive and prevent innovation in health technology. However, such a measure is not only time-consuming, but also a massive waste of resources for an organization so thinly spread in face of global health crises. According to WHO’s list of essential medicines, most of them are not protected by patents. Although improving access to basic healthcare is one of the core tenets of WHO’s mission, the primary issues plaguing many developing countries is the lack of reliable access to these treatments that are unaffected by patent rules.

Other burgeoning problems

The real reasons for this lack of access are mainly the lack of health insurance, shortage of healthcare workers, insufficient clinical infrastructure, mark-ups along the distribution chain of medicines and regulatory inefficiency. In many countries, having health insurance schemes, or similarly government-funded programs is the prevalent method by which the general populace access the healthcare they need without bearing the full costs. According to the book, The Impact of Health Insurance in Low- and Middle-Income Countries, published by the renowned Brookings Institution, the lack of a proper health insurance program affects poor families significantly because of the high out-of-pocket payments can very possibly lead them to financial ruin or go into debt. As a result, 150 million people each year in developing countries suffer financial catastrophe. The WHO has themselves found that there is a severe shortage of healthcare workers worldwide. According to them, we are short of 7.2 million healthcare workers, and this number is set to rise to 12.9 million by 2035. In addition to the manpower shortage, existing physical healthcare infrastructure is unable to reach much of the rural population in most developing countries like Vietnam or Philippines. A major contributor to healthcare costs is the prohibitive price of medicine. While there is some merit in the argument that intellectual property is a factor in rising medicine costs, the reality is that most medicine needed for treatments in developing countries are not patent protected. Instead, mark-ups along the distribution chain, which includes taxes and margins for distributors, contribute significantly to the price of all medicines. It is in this area that Singapore scores relatively well, with little import duties on pharmaceuticals. As my colleague Donovan Choy has pointed out separately on the Straits Times, Singapore owes much of its economic success to its adherence to a regime that takes intellectual property rights protection seriously.

Regulatory barriers impede healthcare goals

However, this problem is large in developing countries, likely due to the higher presence of corruption inflating these mark-ups. According to research done by the WHO on pharmaceutical pricing, the average public sector retail mark-ups are 40-123% globally. In addition, taxes and tariffs by the governments only serve to further increase medicine prices. Regulatory inefficiency and delays make it much harder for patients to access medicine because of the long waiting periods before the medicine can enter a market. Regulations imposed by national drug authorities add years of delay before pharmacies, clinics and hospitals can start peddling the approved medicines. In Indonesia, the delay can last an average of 1057 days. For sub-Saharan African countries, the time between the first submission of a drug or vaccine for approval by the regulatory authority and the actual approval itself can take anywhere from 4 to 7 years. These regulatory inefficiencies are not just constrained to developing countries. Even Taiwan, Singapore and South Korea face delays averaging 400-500 days. According to the WHO, much of this unwanted inefficiency is not caused by actual vetting of the medicines, but administrative backlog. These factors combined make the reality of accessing adequate healthcare for much of the developing world a very difficult one. However, a proper healthcare scheme can ensure a wide reach while maintaining fiscal sustainability.

Singapore’s healthcare model

If we want to find a healthcare system that is a model to follow, we need not look further than that of our own, right here in Singapore. Singapore’s healthcare system, although imperfect, is one of the best in the world in terms of getting prime value for every healthcare dollar (see more in a separately published piece by the Adam Smith Center here). Singapore’s health expenditure in relation to our GDP is almost a third of most developed countries’ health expenditure. Our system is a good example of one that incorporates a sustainable mix of social health insurance and market efficiency. We have programs such as MediShield Life to help lower income families avoid financial ruin while active management of hospitals that encourage competition promote operational efficiency. All in all, the access to healthcare worldwide, alongside fighting and preventing outbreaks of mass contagions, remain of the utmost importance for the WHO. By pushing for the weakening of intellectual property rights, WHO is not addressing the aforementioned concerns, but is instead wasting valuable resources and time. Furthermore, undermining intellectual property rights can actually prove to be counterproductive as it discourages innovation in the healthcare industry. Instead of spending time on political issues like that of intellectual property, focus should be placed on helping countries in the areas that will really improve healthcare access: reducing tariffs and taxes on medicine, encouraging the streamlining of regulations to reduce delays, and advising on market-oriented healthcare system reforms.

January 31, 2020

Terence Chong Terence Chong
Terence Chong is a student ambassador of Adam Smith Center, and a current undergraduate at Yale-NUS College.

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