Summary on Financing There is no simple answer to the dilemmas that low- and middle-income countries face in financing their health care systems in general and their pharmaceutical sectors in particular. The most fundamental difficulty lies in their relative lack of resources. Even so, different financing alternatives can be more or less effective. In particular, financing choices can have a huge impact on the distribution of the financing burden and on the degree of financial protection a country provides to its citizens. However tempting it may be for countries to rely on out-of-pocket payment for medicines, that method does poorly in many respects—especially in equity terms. It creates access barriers, fosters allocative inefficiency, and offers no financial protection, problems that particularly affect low-income citizens. Using general tax revenue, however, is very difficult in a country that lacks such revenue. Classic, payroll-tax-supported social insurance may not be feasible in a nation with a relatively small formal sector. Donor financing also has its drawbacks in the form of added administrative complexity and the external pressures placed on national decision making. This summary makes it clear that low-income countries, and often middleincome countries as well, will continue to face shortfalls in their systems for financing pharmaceuticals. That realization leads to a number of conclusions. First, regardless of the approach that is adopted, nations need to work to implement their pharmaceuticals financing arrangements in an efficient and corruption-free manner. That means, for example, fighting fraud in claims processing under any social insurance system and putting in place controls and incentives to promote rational drug use (see case study J, “Drug Coverage in Ghana’s National Health Insurance Scheme”). We would also urge reformers who move to new financing arrangements to pay particular attention to equity concerns. Financing, as we said at the beginning of this chapter, is a crucial determinant of who gets what. Any attempt to provide financial protection and diminish access barriers through insurance or community financing requires careful attention to a variety of program design details. Do premiums vary with income? Are special arrangements in place for the poorest citizens? Do remote and backward districts get additional, compensatory assistance? Finally, because funds inevitably are scarce, nations need to pay great attention to using whatever funds are available in the most efficient and effective ways possible. Doing that requires them to pay attention to the operation of the pharmaceutical sector itself—and to the functioning of the other four control knobs, which is the subject we consider next.
118
Pharmaceutical Reform