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FIFARMA Healthcare Sustainability Working Document
FIFARMA Healthcare Sustainability Working Document
DEMAND HURDLES……………………………………………………………………………………………………………………….05
SUPPLY HURDLES………………………………………………………………………………………………………………………….07
CONCLUSION………………………………………………………………………………………………………………………………….16
REFERENCES…………………………………………………………………………..……………………………………………………...17
Attainment of universal health coverage (UHC) has become a priority for Latin America (LA)
governments, but increasing coverage unavoidably comes with rising healthcare costs and the
challenge of fostering efficiencies.
LA Ministries of Health (MoHs) have made efforts to manage the rising healthcare costs and attain
financial sustainability, but despite these efforts the four largest markets based on 2018 Gross
Domestic Product (GDP) in the region – Argentina, Brazil, Colombia and Mexico – remain behind the
Organization for Economic Co-Operation and Development (OECD) average in Total Healthcare
Expenditure as % of GDP and the Pan American Health Organization (PAHO) / World Health
Organization (WHO) Public Health Expenditure as % of GDP target, which are viewed as benchmarks
for sustainability.
Universal health coverage (UHC) has become a the ‘Plan de Beneficios de Salud con Cargo a la
priority across governments in Latin America (LA) and UPC’ (PBSUPC) guarantees access to basic healthcare
the largest economies in the region based on 2018 services to patients with subsidized affiliations [3].
GDP – Argentina, Brazil, Colombia and Mexico – have Even in markets such as Argentina, which traditionally
made significant strides to improve healthcare for had a fragmented network of public hospitals
patients over the past 30 years. For example, in 1988, providing services to the entire population, the
Brazil approved a landmark reform to create a unified Ministry of Health (MoH) announced in 2016 the
public tax-based system (‘Sistema Unico de Saude’) creation of the ‘Cobertura Unica de Salud’ (CUS) to
which increased the percentage of the population improve access and quality of services for the
covered from 50% to 100%, bringing healthcare to uninsured [4]. These efforts to increase the percentage
millions [1]. Fragmented healthcare systems like those of the population covered and improve access to
found in Argentina, Colombia and Mexico have also pharmaceuticals and services have significantly
taken steps to guarantee the right to health by creating improved health outcomes and increased average life
solidarity schemes with benefit packages that serve as expectancy of patients in the region [5].
a safety net for the informally employed and Although coverage for the entire population has
unemployed. For example, in Mexico ‘Seguro Popular’ almost been achieved in Argentina, Brazil, Colombia
was created as a public insurance scheme for the and Mexico, the road to equitable access has proven to
informally employed and unemployed [2]. In Colombia, be challenging as LA MoHs attempt to balance
2
constrained budgets with the increasing demand for gion – in terms of total healthcare expenditure as per-
services and the rapid rate of innovation that, in some centage of GDP (Figure 2). Gaps between the PAHO /
cases, comes with a high price tag. In the face of rising WHO targets and OECD average, and Argentina, Mexi-
costs, LA MoHs have made efforts to promote efficient co, Colombia and Brazil levels suggest that the
allocation of resources and increase healthcare spend- healthcare systems are underfunded, and challenges
ing to attain financial sustainability. However, despite exist that have to be overcome before the region be-
these efforts, key countries in LA have not achieved the comes sustainable. Inadequate financing in light of ris-
PAHO / WHO public health expenditure as % of GDP ing costs of care and inefficient resource allocation are
target that was defined as part of the ‘Strategy for Uni- only some of the key hurdles.
versal Access to Health and Universal Health Coverage’ This working document aims to outline LA’s key hur-
in 2014 (Figure 1) [6, 7]. Additionally, key countries in dles to healthcare sustainability as well as propose a
LA remain behind the Organization for Economic Co- set of solutions that mutually benefit both LA MoHs
Operation and Development (OECD) average – which is and the pharmaceutical industry.
also viewed as a benchmark of sustainability in the re-
3
4
LA MoHs face common healthcare sustainability issues: rising cost of innovation, increase in demand
for healthcare services, epidemiological shift with an unfinished agenda on communicable diseases,
constrained or stagnating healthcare budgets, inadequate healthcare expenditure as percentage of
GDP, healthcare system fragmentation, inadequate use of resources and weak prevention programs.
WHO describes a sustainable healthcare system as healthcare resources. The increase in demand and
‘a health system that ensures equitable access to healthcare resource consumption is driven by:
essential medicines, vaccines and technologies’, while INCREASE IN THE NUMBER OF PATIENTS COVERED
‘raising adequate funds for health to ensure people can The increase in the population covered is multifactorial
use needed services, and are protected from financial and driven by two factors:
catastrophe or impoverishment associated with having Push for UHC – Since 1990 the World Health
to pay for them’ [11]. Organization (WHO) has urged countries in LA
Given the rapid increase in population and towards UHC and, as a result, countries have
continuous increase in healthcare demand, the LA implemented a series of healthcare reforms with
region faces a situation where healthcare systems the aim of increasing equity and coverage. Four of
cannot provide the services required by law to meet the major markets in the region – Argentina, Brazil,
the needs of the population being covered. To change Colombia and Mexico – have made meaningful
this situation, new strategies to meet the growing progress towards UHC and the entire population is
demand are needed. However, the first step to almost covered. Endorsement by LA MoHs of the
identifying sustainable solutions is to understand what 2030 Sustainability Development Goals put forth by
the challenges are. the United Nations (UN) in 2015 suggest that
Healthcare sustainability challenges in LA can be attainment of equitable access to healthcare
classified in two categories: demand and supply services will continue to be a priority in the
hurdles. healthcare agenda of MoH in the LA region [12].
Populations in LA continue to have growing needs hurdle of having to provide care to a higher
for new technologies and services to treat both number of patients [13].
6
Despite these challenges, the pharmaceutical SUPPLY HURDLES
industry continues to be a heavy investor in A reduction in government funds coupled with
research and development. It is estimated that the lagging technological advances leads to a reduced level
pharmaceutical industry spent nearly USD 149.8 of resources for the general population. The following
billion globally on R&D in 2015 [21]. Of all sectors, supply hurdles have been identified:
the pharmaceutical industry has consistently CONSTRAINED OR STAGNATING HEALTHCARE
invested the most in R&D, even in times of BUDGETS
economic turmoil and financial crisis. Compared
Healthcare budgets across LA markets have
with other high-technology industries, the annual
remained largely constrained or stagnant over the past
spending by the pharmaceutical industry is 5.5
few years. For example, in Mexico the 2019 national
times greater than that of the aerospace and
budget proposal increases government health
defense industries, 5 times more than that of the
expenditure by 0.53% in absolute values, but given the
chemicals industry, and 1.8 times more than that of
inflation rate there is a real reduction of 3.2%
the software and computer services industry [22].
compared to 2018 [27, 28]. While in Argentina, the
However, innovation cannot continue to happen
2019 national budget proposal increases government
without regulatory and access healthcare
health expenditure by 29.4% in absolute values, but
framework that protects and rewards innovation.
given the inflation rate there is a real reduction of 2.2%
Economic Turmoil & Inflation – Some LA markets have
compared to 2018 [29, 30].
faced an economic recession and devaluating
INADEQUATE HEALTHCARE EXPENDITURE AS % OF
currencies over the last 5 years. In the face of
GDP
inflation, costs of goods tend to increase, but in
In the ‘Healthy Nations, Sustainable Economies:
countries like Argentina and Peru the cost of
How Innovation can Better Ensure Health for All’
healthcare is rising at a faster rate than inflation
report, the Group of Twenty (G20) Health and
[23, 24]. In Venezuela, the Pharmaceutical
Development Partnership highlights that
Federation of Venezuela estimates that the country
underinvestment in healthcare can seriously impair
is suffering from an 85% shortage of medicine due
growth and economic performance and presents a
to the economic crisis, which has forced
major long-term challenge for public budgets [31].
Venezuelans to go looking for medicines on the
In 2015, health expenditure as percent of GDP was
black market. Even if they find the right medicine,
6.2% in Colombia, 5.8% in Mexico and 8.9% in Brazil
these are often smuggled from Brazil or Colombia
compared to the OECD average (excluding Mexico) of
and sold at hyperinflated prices that most patients
8.9% [9, 10]. The gap is larger when comparing the
cannot afford [25, 26].
public healthcare expenditure as percent of GDP,
7
which was 4.4% in Colombia, 3.0% in Mexico and 3.9% poorest patients. Overall, fragmented health systems
in Brazil compared to the PAHO / WHO target of 6.0% are less efficient, and provide fewer resources to those
and OECD average (excluding Mexico) of 6.6% in 2015 who need care the most, leading to health inequities
(Figure 3) [8]. It is expected that expenditure as a throughout a country [32, 33].
percent of GDP will need to grow by at least by 2% to Patients also struggle to navigate fragmented
meet the demands of the populations in Colombia, health systems, which can lead to delays in diagnosis
Brazil & Mexico. and treatment initiation, and issues with continuity of
HEALTHCARE SYSTEM FRAGMENTATION treatment. These challenges are associated with late-
stage disease presentation and faster disease
Most markets in LA have a fragmented healthcare
progression, which can lead to higher treatment costs
system, where each subsystem has their own way of
due to complications, worse clinical outcomes and
financing and delivering healthcare. The problem is
higher mortality rates. Patients throughout LA have
that when these subsystems operate independently
low screening rates, delayed referrals, and sometimes
from one another, they create major gaps in the
provision of health services, often leaving out the will not even seek medical help because of these
barriers.
8
INADEQUATE USE OF RESOURCES WEAK HEALTHCARE PREVENTION PROGRAMS
Evidence suggests that between 10–30% of The LA healthcare model is based on treatment of
healthcare expenditure could be channeled towards disease rather than prevention of disease, with
better use [34, 35]. The main causes of wasteful disproportionate emphasis placed on resolving health
resources are: issues in a hospital setting and not enough training /
• Clinical care waste: Provision of unnecessary focus put on primary care. This ‘acute care’ model
or low-value care that makes no difference to combined with the increasing rate of non-
patients’ health outcomes communicable diseases is likely to lead to poor health
• Operational waste: Occurs when there are outcomes and pose a significant financial hurdle to the
unnecessary hospital attendances, inefficient region.
processes within hospitals (e.g., inpatient In Mexico, for example, if current trends in
admission for surgeries that could be diabetes and hypertension increase at a rate that is
performed on an outpatient basis), longer than unchanged, an increase of 5–7% of the health budget
necessary hospital stays, and less expensive would be required annually to meet the demand for
but equally effective alternatives are not used services. While in Argentina, a 2010 study found that it
• Governance-related waste: Fraud, abuse, would be possible to prevent an annual loss of 420,000
corruption, and high administrative costs can healthy life-years to cardiovascular disease and stroke.
all be signs that the health system is not being Avoidable costs would amount to USD 395 million per
managed as well as it could be year [36].
9
Cost-containment tools implemented to date by LA MoHs focus on controlling the cost of
pharmaceuticals, but do not address other hurdles to healthcare sustainability that have been
identified.
Additional mutually beneficial approaches to attain healthcare sustainability could be explored by
LA MoHs and pharmaceutical companies to address common local hurdles and provide access to
innovative therapies.
CURRENT COST-CONTAINMENT patient quality of life (QoL) and potentially higher costs
12
Multi-Stakeholder Coalitions – There is a need to can serve as a reference for the creation of
create healthcare coalitions that can serve as a additional local coalitions in LA.
platform for the pharmaceutical industry, LA MoHs, Implementation Considerations
private healthcare providers, patient associations, Successful coalitions require all members to be
and medical societies to discuss the challenges the transparent and committed to taking an ethical,
healthcare sector is facing in LA and co-create collaborative and innovation-driven approach to
healthcare policies to overcome identified hurdles fostering equitable, efficient and sustainable
and achieve defined common goals. Successful healthcare systems in LA.
global examples of multi-stakeholder coalitions Incorporation of Multi-Decision Decision Criteria
include Access Accelerated and FIND (Foundation (MCDA) in HTA – Current HTA approaches in LA
for Innovative New Diagnostics). Access have overemphasized cost-effectiveness and ICER
Accelerated is facilitated by the International ratios. Too much emphasis on cost-effectiveness
Federation of Pharmaceutical Manufacturers challenges holistic decision-making in the region
(IFPMA) and brings together more than 20 given limitations that exist in defining relevant ICER
biopharmaceutical companies, governments, civil ratios and because it excludes important factors
societies and non-governmental institutions to such as innovation, societal burden, disease
support multi-sectorial dialogue and develop a plan severity, equity, etc. MCDA is emerging as a new
of action to improve access to vaccines, medicines decision-tool that can be incorporated to HTA to
and training for non-communicable disease in low- better reflect the complexity of the local reality by
and middle-income markets (LICMS). FIND is a considering multiple decision factors and
product development and delivery partnership that stakeholders. MCDA takes into consideration the
brings together R&D companies, academic different institutional contexts while fostering a
institutions, and MoHs / disease control programs comprehensive, consistent, transparent and
to develop, license and secure funding for flexible approach. While MCDA is a relatively new
diagnostics for infectious diseases in LICMS [31]. In concept, it is more than a theoretical decision-
LA, national coalitions have also been making tool. It has been successfully applied to
implemented, like the ‘Instituto Coalizão Saúde’ in various therapeutic areas and healthcare decisions
Brazil which brings together the MoH, private in countries around the world (e.g., orphan drug
providers, local associations, and the assessment in The United Kingdom, Sweden,
pharmaceutical industry to co-create innovative Denmark, The Netherlands and Scotland). In LA,
healthcare policies that contribute to sustainable while literature is sparse there have also been
development. These global and local partnerships examples of implementation (Figure 5). Examples
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of real-world application support MCDA is a LONG-TERM SOLUTIONS
valuable tool to foster a fair and transparent Integrated Health Models - This solution focuses on
decision-making approach that can address the building an integrated system that communicates
competing demands of patients, payers, the across subsystems to reduce both the duplication
pharmaceutical industry, regulators and policy of services and the administrative burden
makers [41, 42]. associated with fragmentation. An integrated
Implementation Considerations system provides the ability to better coordinate
Incorporation of MCDA in HTA requires stakeholder patient care through centralized health records.
alignment on (1) what technologies should be Integrated care models also allow for increased
appraised using MCDA, (2) what is the criteria allocative efficiencies due to an enhanced emphasis
against which technologies should be appraised, (3) on prevention and early diagnosis, thus reducing
how performance in a given criteria should be higher-cost future procedures and their associated
measured, and (4) weight given to each criterion to complications. Patients requiring additional
measure the overall importance on decision- innovative value-added services would have
making. Additionally, incorporation of MCDA in the greater access to meet their needs through
HTA process should come together with decision- enhanced centers of care using novel technologies
makers taking a patient-centric pro-innovation to promote innovation [43, 44].
mindset where clinical benefits and population
outcomes are valued.
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Implementation Considerations therapies effectiveness in the local setting; (3) local
Integrated health models require all subsystems of evidence generation could be coupled with the
the healthcare system to work together and creation of centralized registries to collect long-
communicate. Markets in LA have discussed plans term outcomes data, which could help track health
to integrate their healthcare system, but initiatives outcomes and serve as a data source for local
have yet to progress beyond the planning stages. economic models.
Local Evidence Generation - Promoting local R&D and Implementation Considerations
evidence generation could bring several benefits to Significant investments are needed in healthcare
LA healthcare systems: (1) R&D grants could attract infrastructure to replace aging facilities and / or
and maintain skilled workforce that could then construct new facilities that can enable the
contribute to propagating knowledge locally; (2) implementation of evidence generation programs
local clinical trials could provide confirmation of and centralized registries.
15
Across LA, demand for health services has the hospital as a gravitational center, putting greater
outpaced supply. Countries in the region lack the focus on health promotion, efficient resource
adequate clinical and technological resources and allocation, disease prevention, provider and patient
infrastructure to address this increased demand. education, integration of the patient into his / her own
To date, LA MoHs have responded to the increasing care and well-being, etc. This shift in paradigm from
demand by implementing access and cost controls. hospital-centrism and disease-centrism to patient-
However, these tools fall short in recognizing the full centrism has the potential to reduce waste, improve
value of innovation and could be a deterrent for population outcomes and patient quality of life.
innovation in the region which could lead to negative Through this working document, FIFARMA has
economic, humanistic and clinical outcomes. Instead, outlined a set of short-term (MEA, VAS, Multi-
the region needs to move to a value-based system that Stakeholder Coalitions, and incorporation of MCDA in
is patient-centric and prioritizes long-term HTA) and long-term (Integrated Health Models and
sustainability of the healthcare system over short-term Local Evidence Generation) mutually beneficial
cost-cutting. These value-based systems should look at solutions that LA MoHs and the pharmaceutical
patient care in a holistic way, integrating health industry can explore together to allow for productive
promotion, outpatient and inpatient care. They should movement towards sustainable value-based healthcare
overcome the expensive and inefficient model that has systems in LA.
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