Healthy Ageing 4: GCOA-EMHN Meeting in Bangkok Last October

This is the continuation of my earlier article, GCOA-EMHN Policy Dialogue in Bangkok last month, on the Global Coalition On Aging (GCOA) - Emerging Markets Health Network (EMHN)  Policy Dialogue on Aging, held on October 23, 2013 at Plaza Athenee Bangkok, Thailand.

There were about 16 of us from eight different countries. The resource speaker was Dr. Anindya Mishra, a faculty member of the Indian Institute of Technology (IIT), Roorke India. He gave  a 30 minutes presentation entitled “Social and Economic Challenges of Ageing in Asia: Special Focus on India.”

Among the points raised by Dr. Mishra in his presentation were the following:

·         Elderly in India, 8.95% of population in 2011, 108.33 M individuals

·         Healthcare (HC) for elderly is problematic, no geriatric specialists, there is shortage of qualified medical staff especially in rural areas

·         Most female elderly are widows or without children, have feelings of social isolation

·         Government HC programs compete with other sectors, that HC for elderly are sidelined, there is minimal public spending

·         There is a cultural expectation that children should take care of their elderly

·         Rise of old age homes, but there is not much choice in Homes for Elderly

·         Two options for the elderly – be independent from children, or continue the culturally prescribed care

·         On cultural expectation, forcing children to take care of their elderly alienates them

·         Migration of many young people to the big cities or other countries leave ageing parents behind, they develop an “empty nest” syndrome

·         Absence of emotional support and caregivers, the elderly are vulnerable to crimes and abuse by other people

·         Emigrant elderly, if they join their kids to their new work elsewhere, difficulty in adjustment with new culture, values and language

·         Active and healthy ageing must be promoted

Market Responses include (a) People saving, preparing for elderly/ ageing life; (b) retirement communities are growing; middle and upper class are looking for retirement homes someday, Indian real estate companies now are slowly developing retirement communities. Estimated demand of 312,000 elderly homes, there is a supply of only 10-15,000 new homes a year.

Key challenge is that the State cannot shoulder the entire responsibility  and hence, civil society, hospitals and philanthropic organization can step in

An open forum immediately followed. Among the key messages that arose from the participants were the following:

1. The one-child policy in China, other government-sponsored population control policies are  wrong.

2. Governments healthcare policy of one or single payer system like in UK is problematic too, not only clouds personal responsibility, also heavy fiscal burden.

3. Ageing is sometimes used by the government to further intervene in the pricing of private players in the sector. One example is the expanded senior citizens discount under RA 9994, where senior citizens (60 years old and above), rich and poor alike, must be given 20 percent discount in their food purchases in formal restaurants, in their purchases of medicines, vitamins and supplements, hospitalization, and so on.

4. Free market principles and healthcare competition can better respond to the ageing problem in many countries. Give the adult children and the elderly more options for their healthcare and retirement. A single provider system like government will not be able to provide flexible solutions to emerging problems.

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See also:

Healthy Ageing 1: The Caregiver Village, February 13, 2012 
Healthy Ageing 2: World Congress on Healthy Ageing, March 08, 2012 
EMHN 10: Forum on Asia's Ageing Societies, Bangkok, October 08, 2013 

Healthy Aging 3: GCOA-EMHN Policy Dialogue in Bangkok, October 24, 2013

Healthy Aging 3: GCOA-EMHN Policy Dialogue in Bangkok

Yesterday morning, the Emerging Markets Health Network (EMHN) and the Global Coalition On Aging (GCOA) jointly sponsored a "Policy Dialogue on Aging", here at Plaza Athenee Bangkok. There were 16 of us from 8 countries  -- China, Hong Kong, India, Japan, Malaysia, Philippines (me), Canada and USA. The forum was led and moderated by Cathy Windels, the President of The Policy Workshop in New York, who represented GCOA, and Wan Saiful Wan Jan, CEO of IDEAS in Malaysia, which handles the EMHN project.

Six participants from five countries: Barun from India, Chris and Cathy from the US, Harsha from Sri Lanka, Shoulong from China, Marc from Japan.

Hiroshi Yoshida also from Japan, speaking.

After Cathy's introduction, the resource speaker, Dr. Anindya Mishra, from the Indian Institute of Technology (IIT) presented a paper on Social and Economic Challenges of Ageing in Asia: Special Focus on India.

I will make a report about the meeting soon.

It was just a half day meeting and sharing of ideas on the issue of rising aging population in Asia and the rest of the world. The healthcare, public finance and civil society responsibility issues are big.
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See also:
Healthy Ageing 1: The Caregiver Village, February 13, 2012 
Healthy Ageing 2: World Congress on Healthy Ageing, March 08, 2012 
EMHN 10: Forum on Asia's Ageing Societies, Bangkok, October 08, 2013

EMHN 10: Forum on Asia's Ageing Societies, Bangkok

This coming October 23, 2013, or a day after the Economic Freedom Network (EFN) Asia conference on October 21-22, same venue Plaza Athenee Bangkok, the Emerging Markets Health Network (EMHN, http://emhn.org/) and the Global Coalition on Aging (GCOA, http://www.globalcoalitiononaging.com/) will jointly sponsor a small, half-day Policy Dialogue on “Free Market Perspectives on the Challenge of Asia’s Aging Societies”.

The guest speaker will be Professor Anindya Mishra of India, who has written on health care for the International Policy Network (IPN) in the past.  He will present a paper, not just a powerpoint, then an open forum and sharing of ideas and observations about the issue. All participants – from China, Hong Kong, India, Mongolia, Philippines, Thailand, US, other Asian countries -- are free marketers, so it will be a fast and dynamic discussion, covering not just healthy ageing but also universal health care (UHC) policies in many Asian countries. 

EMHN is a new policy centre or think tank designed to help emerging markets address their health challenges by exploring the potential of markets and the private sector. It is a new project of the Institute for Democracy and Economic Affairs (IDEAS, http://ideas.org.my/) in Malaysia and was created to  January this year, the network has produced this book, published in India.

GCOA is a new international coalition focused on engaging public policy discussions to help people have active and healthy ageing. It is encouraging policy dialogues in many parts of the world, as an estimated number of 450 million people worldwide will be 65 years or older just 20 years from now, a big number.

Minimal Government Thinkers, Inc. is a member of the EMHN. Our first regional meeting was held in Penang, Malaysia in early September 2012. This will be the second meeting of the network, its friends and allies. Thanks to GCOA and good friend Cathy Windells, President of The Policy Workshop, for organizing this event with EMHN partners and friends.  

The event is a small group discussion and by invitation only, not open to the public.

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See also:
EMHN 6: Fake Medicines in Asia, February 15, 2013
EMHN 7: Free Trade Improves Public Health, February 26, 2013 
EMHN 8: Brand Protection and Safe Medicines, March 06, 2013 
EMHN 9: Private Sector Role in India UHC, April 10, 2013

EMHN 9: Private Sector Role in India UHC

Another bright and sensible paper from one of our international partners, the Emerging Markets Health Network (EMHN). In a new paper published this week, Indian economist and a friend, Debashis Chakraborty of the Indian Institute of Foreign Trade in Delhi, argued that "PPPs have the potential to help India achieve its healthcare ambitions, although the government should refrain from using its power to dominate the partnership, and will have to allow private partners greater scope both to plan and manage."

In his new seven-pages paper, The private sector’s role in achieving Universal Health Coverage in India, Debashis further argued these points:

• India’s current public healthcare spending and infrastructure is insufficient to achieve universal health care (UHC). Majority of all healthcare in India -- 93 percent of all health facilities -- is provided by the private sector. 

• Indian government attempted to achieve UHC since independence in 1947, but private sector role did not grow well, until the National Health Policy of 2002. From 2004, the government provided incentives to the private sector to cater for the poor, and since then, public private partnerships (PPPs) have become the norm.

• There are several examples of successful PPPs providing care to below poverty line patients,  but there are also many examples of failure. Failures stem from insufficient autonomy granted to the private players by the government.

Debashis showed several tables but Figure 4 caught my attention. Despite high per capita health spending of $8,362 in the US, $4,065 in Japan, $3,368 in the EU, $990 in Brazil, $604 in Mexico, compared to just $54 in India and $77 in Indonesia and the Philippines -- all in 2010 -- out of pocket (OOP) spending  on healthcare for those countries remained high, more than 50 percent of total health expenditure, except the US.

Why is this so, especially in the case of India? Debashis made a good observation:

The poor performance of several PPP initiatives begs the larger question of whether the government considers PPPs as a ‘private initiative supported by the public sector’ or a ‘public initiative supplemented by the private sector’. This distinction is crucial, because if the former is the underlying motive, then the government role will be reduced in the long term to a mere facilitator, and efficiency will automatically be augmented with increasing operational flexibility of private partners. 

However, if the government views itself as the dominant partner in PPPs, they will always prioritise their own political requirements and agendas over the efficient running of the PPP. This could fatally undermine the viability of many PPPs.

And that is one more reason why government role in healthcare should be limited and more focused, so it can optimize its delivery. I believe that government should focus on controlling (a) infectious and communicable diseases, and (b) pediatric diseases like childhood cancer, more childcare especially for those below six years old.

This implies that government should step back on non-infectious, non-communicable diseases (NCDs) for adults. These diseases are mostly lifestyle related. People can buy private health insurance on top of the basic health insurance provided by the government.

Nice work again and congratulations, Debashis. EMHN is doing well with your bright contribution to the network.
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See also:
EMHN 5: Free Trade and Markets in Healthcare, January 17. 2013
EMHN 6: Fake Medicines in Asia, February 15, 2013
EMHN 7: Free Trade Improves Public Health, February 26, 2013 
EMHN 8: Brand Protection and Safe Medicines, March 06, 2013

EMHN 8: Brand Protection and Safe Medicines

Our international health network has produced another good paper, Fake medicines in Asia The importance of brands to medicine quality. Authored by a good friend Philip Stevens, this six pages long paper is able to argue that corporate brand protection and brand competition coupled with rule of law, are the best way to protect the public from counterfeit and/or substandard medicines.

Fake or substandard drugs are dangerous and can be fatal. Either the patient does not get well, allowing the disease inside the body to mutate and become more serious, or the drug causes several adverse reactions and trigger more diseases and complications. 

As the "cheaper medicines" mantra is all over the country and the planet, somehow it gives an opening to dirty businessmen to offer really cheap but fake or substandard medicines. They do this by introducing unknown or lesser known brands to non-suspecting patients and drugstores. Or they simply copy the logo, brand and trademark of some known drug manufacturers, innovator or generic, and sell cheap.

The chief government regulating agency is the Food and Drugs Administration (FDA, http://www.fda.gov.ph/ in the Philippines, http://www.fda.gov/ in the US, and so on). The big problem is that this small bureau is mandated to check on the quality of (a) drugs, medicines and vaccines for humans, (b) drugs, vaccines for animals and fishes, (c) food/drink supplements and vitamins, (d) food and juice ingredients, sauces, etc., (e) perfumes, shampoo, soap, detergents, body odor spray, etc., (f) poisonous substances like insecticides and pesticides, and many others.

I think these products constitute at least 10 percent of the total output of the economy. FDA therefore, should have pharmacists, doctors, dentists, chemists, physicists, biologists, engineers, on top of having lawyers and administrators. Is it possible to have such an agency with supposedly super-technical powers and capability to minimize or control mistakes in doing its functions? I really doubt it.

One way to minimize risks and threats to public health, is to devolve product quality to the manufacturers and traders themselves, via brand protection and competition. Like "Jollibbee or McDonalds burger yan", "Starbucks or UCC or Figaro coffee yan", "Pfizer or GSK or Unilab or Pharex medicines yan", "Mercury or Watsons or The Generics yan", and so on. Consumers hold on to the brand as generally safe and these companies do all they can to avoid not even a single, not one, case of food or drinks or drug poisoning. 

Thus, products of these brands will be given minimal regulations and approval process. The main regulator for these brands and companies is the fear of being blacklisted or boycotted or sued by consumers due to bad or unhealthy products. Since these are huge if not global brands, the thought of being put in a bad light scares them more than the peering eyes of a few inspectors from the regulatory agency. Then the latter can focus their energy and resources on new products and brands. Shrewd and opportunist businessmen can put up a company and sell bad products and services that can harm public health. When the company is blacklisted, they simply close down the company and put up a "new" one and create new schemes to fool the public.

The sub-topics discussed by the paper are:

* Limits of regulation
* Brand competition and drug quality
* Intellectual property and brand integrity
* Brands are not just for multinationals
* Rule of law in defending brands
* Technological solutions to fake medicines
* Malysia's meditag scheme
* 2D and QR barcodes
* Dangers of government-mandated technology

And the paper's brief conclusions are:

The most fundamental cause of the spread of fake drugs in Asia has been the inability of manufacturers to protect the identity of their products. This is largely down to a lack of functioning rule of law, which makes it very difficult for manufacturers to protect their trademarks and brands via the civil and criminal courts – thereby handing a free rein to counterfeiters. The extra regulation called for by many commentators may well entrench the corrupt relationship between criminals and certain drug regulators. 

Strengthening the rule of law is a vital but long-term process. In the meantime, the private sector should take advantage of its innovative capacity to experiment with different technological solutions to brand infringement. It is well placed to lead this process, as it has unparalleled access to the entire pharmaceutical supply chain, as well as the clear financial incentive to protect its revenue. Governments should encourage this process, but refrain from mandating specific technologies or systems.

This new paper is another good reference for both government administrators and healthcare advocates in the country or abroad. Markets work. And though there are indeed market failures, there are also market solutions to such failures. Government simply have to focus on only one thing: rule of law. Private players and enterprises should do what they say they are supposed to do, and not offer counterfeits or substandard if not entirely useless products and services. If they don't, existing  governmentregulations and the penalty system should be slapped on them. No exception and no one can grant an exception. The law applies equally to unequal people.
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See also:
On IPR Abolition 12: Patent, Mini-Monopolies and Trademark, September 20, 2011
EMHN 4: Free Trade, TPP and Public Health Protection, January 13, 2013
EMHN 5: Free Trade and Markets in Healthcare, January 17. 2013 
EMHN 6: Fake Medicines in Asia, February 15, 2013
EMHN 7: Free Trade Improves Public Health, February 26, 2013

EMHN 7: Free Trade Improves Public Health

Our regional and global health alliance, the Emerging Markets Health Network (EMHN), has republished a paper that was released February 2012 by the Free Market Foundation (FMF) of South Africa. MG Thinkers was a co-publisher of that paper.  See here,  Free Trade 24: Trade and Improving Health Outcome (February 15, 2012).

EMHN Executive Director, Philip Stevens, partnered with two young economists from South Africa, Urbach and Wills, in producing this econometric paper.

Here is the paper's Abstract::


A recurrent theme of the academic literature and wider public discourse is that free trade harms the poor by promoting economic inequality and insecurity, polluting the environment and making processed foods more widely available. All of these factors are deemed to be deleterious to health.

However, there has been little empirical evidence to  support these assertions, in particular the relationship  between free trade and health. This is an important relationship, as it tells us more about the effect of economic policies on human welfare than bald statistics related to GDP...


Contrary to much of the literature, our analysis finds that free trade does in fact promote better health outcomes, with the relationship particularly pronounced for lower-income countries. 

There are two mechanisms that might be responsible for this relationship. On the one hand, trade promotes economic growth, which in turn provides greater sums for individuals to improve their living conditions and for authorities to spend on public health measures such as sanitation and universal vaccination. Another mechanism is ‘knowledge spillover’, wherein international trade increases the global diffusion of both knowledge and products that improve health -- ranging from the basics of germ theory to modern pharmaceuticals and medical devices.


It's a better and cool explanation than the trade-paranoid argument. More trade means more options, more choices for the consumers including patients. Less trade means less options, simple. These two charts are self-expalanatory: more trade means more economic activities, more wealth for the people and thus, the average life expectancy is rising. The second chart shows that more trade, more economic prosperity  translates to less infant mortality.

See the full, 16 pages report here.
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See also:EMHN 3: Penang Workshop Report, September 10, 2012
EMHN 4: Free Trade, TPP and Public Health Protection, January 13, 2013
EMHN 5: Free Trade and Markets in Healthcare, January 17. 2013 
EMHN 6: Fake Medicines in Asia, February 15, 2013

EMHN 6: Fake Medicines in Asia

Our regional health group, the Emerging Markets Health Network, has produced a new paper, EMHN Briefing No. 1: Fake Medicines in Asia. Authored by Philip Stevens and Helmy Haja Mydin, the paper has argued that 

Fake medicines - which are either criminally motivated or the result of lax manufacturing standards - are a worsening problem, particularly in Asia. In some of poorer parts of the continent, up to a quarter of medicines fail quality tests. 

Evidence shows that cheap generic drugs are the most faked medicines in Asia, although there appears to be a particular problem with anti-malarial drugs in places such as Laos and Cambodia. China and India appear to be production hotspots. 

Producers and purveyors of fake medicines are exploiting the increasing globalisation of the pharmaceutical supply chain, poorly defined and  enforced civil and criminal laws, and a lack of an international definition
of what legally constitutes a fake medicine. 

Below is one of the graphics contained in the report. About 40 percent of the pharma crime incidents in 2011 occurred in Asia, followed by Latin America and Europe. I am just wondering why incidents in Africa constituted only three percent of the total. This could be a result of under-reporting of such incidents in Africa, or other factors.

The presence of counterfeit or substandard drugs is a problem here in the Philippines. One time, an anesthesiologist friend told me, a patient was lying on the operating table, surgeons were about to slice his tummy, so the anesthesiologists come first before them. The injected substance is supposed to make the patient feel numb and sleep, within minutes. But after giving the necessary dosage, the patient was still awake and numbness was light. He would be shouting in pain if the surgery would proceed. They realized that they got a fake or substandard anesthesia from one local pharma company that was purchased by the hospital. Right there and then, they scrambled to get another anesthesia as the surgery must proceed that day, otherwise the patient's condition will deteriorate.

So the doctors wrote tot he FDA in a confidential letter to complain about the product of this local company, and the latter knew about their letter, they must have a "mole" inside the agency. This company threatened to sue the doctors for criticizing their company. I offered to write about the story but the physicians were hesitant to give me full details as it is still under FDA investigation. 

The report did mention about the case of fake medicines in the Philippines.

How to solve this increasing problem? The usual solution by many groups is... more legislation, more government. The authors, and I agree with them, caution against this move. They wrote,

In countries where the rule of law is weak, the creation of new regulatory layers and tougher criminal sanctions may be counterproductive, as new powers for regulators create opportunities for bribery and corruption.   

To be effective, stiffer criminal penalties depend on an efficient and fair rule of law, something which does not exist in many Asian countries, particularly the poorer ones which have the greatest problem.

Stronger criminal penalties will likely drive activities further into the hands of organised criminal cells and will also likely result in further corruption, as the criminal cells seek to infiltrate law-enforcement agencies. The fake medicines trade is already showing worrying signs of mafiaisation, with organised crime groups such as Chinese triads and Mexican drug gangs all becoming implicated in the trade over the past decade. 

More effective solutions must address its fundamental cause, which revolve around the inability of legitimate manufacturers to protect the integrity of their brands. Legal reforms can go some way towards addressing these problems, as can innovative uses of technology. 

Protection of intellectual property rights (IPR) like patent and trademarks, enforcement of existing laws against such bad practices, or simply promulgate the rule of law, is the best thing that governments can do, not the creation of new and more regulations and laws.

Civil society groups concerned with or engaged in public health issues would better focus their energy more in battling this bigger problem of proliferating fake medicines, instead of circumventing or disrespecting IPR. As the report noted, the more faked medicines are the known branded generics more than the innovator drugs.

EMHN is a project of the Institute for Democracy and Economic Affairs (IDEAS) in Kuala Lumpur.
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See also:
EMHN 2: IDEAS Forum in Penang, Malaysia, September 01, 2012
EMHN 3: Penang Workshop Report, September 10, 2012
EMHN 4: Free Trade, TPP and Public Health Protection, January 13, 2013
EMHN 5: Free Trade and Markets in Healthcare, January 17. 2013

EMHN 5: Free Trade and Markets in Healthcare

Our regional network, the Emerging Markets Health Network (EMHN) has published a new book, hooray!

It was formally launched last week, January 11 at the Indian Institute of Foreign Trade in Calcutta. Among the major arguments of the book are: 

* Free trade is a powerful agent of improved health, via higher incomes and ‘knowledge spillovers’ 

* Asian governments stand to benefit from enormous savings if they properly open their health sectors to international trade 

* Intellectual property provisions within international trade regimes have little bearing on access to medicines by the poor, and recent attempts by government to expropriate the property rights of foreign pharmaceutical companies are motivated more by industrial policy than concern for patients 

* New technology rather than new regulation is the most sensible answer to stemming the global trade in fake and spurious medicines.

A longer discussion about the book is found here. 

Details of the launch are found here. Photos below lifted from that link. Upper photo includes the two editors, Debashis Chakraborty (left most) and Philip Stevens (right most).

The book has seven chapters from eight contributors including the two editors, and me. The book should be ready for sale and distribution in the next few weeks. The publisher made only a few copies for the book launch.

My paper is 14 pages long including tables and references. I am posting below the first two pages :-)
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Universal Health Care and Private Provision in the Philippines

Bienvenido “Nonoy” Oplas, Jr.

I. Introduction

The pursuit of universal healthcare (UHC) or “Kalusugan Pangkalahatan” in Filipino, of providing each of the nearly 100 million Filipinos, access to good healthcare when they need it, is a noble goal. It is a goal that is shared by all stakeholders in the country.

The big question is how to attain it at the most efficient and least costly way, both to the government and households and taxpayers. The dominant thinking is to follow the European and North American models of universal healthcare, in which government takes the dominant role in the healthcare system, and most costs are underwritten by the public purse.  This explains the rising budget for the Department of Health at the national level, and health spending at the Local Government Unit levels. This is not sustainable as the Philippine government is still heavily indebted, even though the debt/GDP ratio has improved compared to a decade ago.

EMHN 4: Free Trade, TPP and Public Health Protection

Our new global health network, Emerging Markets Health Network (EMHN) has a new website, http://www.emhn.org/. We are composed of independent and private think tanks in emerging Asian countries that believe in greater role for market competition in the provision of healthcare for the people, rich and poor alike.

Last month, EMHN Executive Director and a good friend, Philip Stevens, wrote an article published in WSJ Asia. Philip argued that free trade -- freedom to trade by producers from different countries and freedom to choose by consumers from different countries -- is consistent with protecting public health especially in encouraging the emergence of more powerful, more disease-killer new medicines. The opposition by Oxfam and other left-leaning NGOs to data exclusivity purportedly to protect public health is not valid, Philip argued.

Enjoy reading, cheers.
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http://online.wsj.com/article/SB10001424127887324407504578186882937216070.html#articleTabs%3Darticle

December 18, 2012, 11:41 a.m. ET

Free Trade Is Good for Health

The TPP can improve access to food and medicine. But Oxfam won't tell you that.

By PHILIP STEVENS

Last week, trade negotiators for the Trans Pacific Partnership (TPP) sat down in Auckland to hammer out a deal. This new multilateral trade agreement between the U.S. and ten Asian and Latin American countries could be the largest of its kind since the collapse of World Trade Organization talks in Geneva in 2008, so it's perhaps not surprising that it's coming under a barrage of left-liberal criticism. Oxfam and others now claim the TPP is bad for health.

These development NGOs argue the free-trade pact will impose onerous new forms of intellectual-property protection on essential medicines that go beyond those agreed by the WTO's Trade Related Aspects of Intellectual Property (TRIPS) 1995 agreement. And that this will make it difficult for the world's poor to access cheap drugs. But this is a misperception NGOs are amplifying, ignoring altogether the positive story about free trade and health.

First off, Oxfam's claim that the TPP will reduce access to essential medicines for poorer TPP countries like Vietnam or Peru is factually untrue. The U.S. government has stated that the TPP will respect flexibilities in the TRIPS agreement agreed in Doha in 2001 that allow developing nations to override pharmaceutical IP rights in a number of circumstances, including health emergencies.

Next, the vast majority of drugs on the World Health Organization's list of essential medicines to treat the most common infectious diseases are off-patent. So IP rules are simply irrelevant to drugs for many conditions prevalent in the poorest countries.

The same is true for common medicines used to treat the most prevalent non-communicable diseases faced by slightly wealthier TPP countries such as Malaysia. So many medicines for diabetes, hypertension and asthma are completely outside the scope of any free-trade agreement.

Still, NGOs raise the specter that the TPP will sidestep traditional patent rules by imposing punitive new periods of "data exclusivity" for essential medicines. Data exclusivity is a form of intellectual property that allows manufacturers of new drugs to retain the right to valuable data generated during clinical trials. The idea is to prevent generic manufacturers from using it to make copies until a fixed period elapses—typically five years in most countries.

Data exclusivity is rapidly surpassing patents as the most important form of intellectual property for medicines, as the 20-year term of a standard patent is increasingly eaten up by lengthy testing and regulatory requirements that drive up R&D costs. After jumping though these hurdles, an innovative medicine typically has around only seven years patent life to recoup costs and make a profit.

Absent radical reform of the drug approval system—which is unlikely to happen any time soon—data exclusivity is then the best assurance innovators have that their investments will reap a return. Otherwise, launching a new drug could become so expensive that patients may not have access to new medicines. That's why such considerations are now included in modern trade deals.

Despite what Oxfam thinks however, the chances that the TPP will lengthen the exclusivity period are very low. The five years of exclusivity for new standard chemical drugs is enshrined in U.S. law, so Washington cannot ask for more in trade negotiations.

Five years is also the standard to which other TPP countries like Vietnam and Malaysia subscribe, so it isn't clear they'll push for more. In any case, the TPP will probably only apply data exclusivity to new drugs, meaning that existing drugs remain unaffected.

Yet in the end, intellectual property and the NGO community's fulminations against it are a sideshow in the wider story about trade and health. These activists and their intellectual backers like to view free trade as somewhere between an agent of imperialist economic repression and a sinister vehicle for America's fast food industry, but the reality is that there have been few more powerful forces for improving health in the history of humanity.

Prior to the 1950s, the majority of the world's population lived a precarious life as subsistence farmers. Since then, the opening of global markets, first by the General Agreement on Tariffs and Trade and then by the WTO, has transformed the health prospects of millions by raising incomes. That, and not IP flexibility, made decent food, sanitation, and new medical technologies available.

That's how the Asian countries involved in the TPP—Malaysia, Singapore, Brunei and Vietnam—have witnessed startling improvements in the health prospects of their citizens since the middle of the last century. Singapore signed GATT in 1973, and by 1993 there were no import duties for any product except alcohol, tobacco and automobiles, a situation that largely persists today. Singapore now surpasses many European countries for life expectancy, with Malaysia not far behind.

Each of these countries has reaped enormous welfare dividends by opening their borders to free trade. With poorer countries such as Vietnam now joining the party, millions could benefit from the TPP—provided they are not put off by scaremongering NGOs.

Mr. Stevens is executive director of the Emerging Markets Health Network at the Institute of Democracy and Economic Affairs (IDEAS), Malaysia.

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See also:
EMHN 1: Forum on Promoting Markets in Healthcare, IDEAS-Malaysia, June 23, 2012
EMHN 2: IDEAS Forum in Penang, Malaysia, September 01, 2012
EMHN 3: Penang Workshop Report, Seotember 10, 2012

Fat-Free Econ 23: Penang Workshop on Markets in Healthcare

* This is my article today in TV5's news portal,
http://www.interaksyon.com/business/42796/fat-free-economics-healthcare-as-right-responsibility
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PENANG, Malaysia – Healthcare is a right and an entitlement, a public good that must be provided by the government at the highest quality and at the lowest or zero cost possible. And some people can sit back as this high social expectation and low personal obligation is supposed to be provided by the government.

That is a formula for high disappointment and social conflict, both in the present and in the future. While it is true that healthcare is a right, it is also a responsibility, a personal and parental, guardian, and civil society responsibility, with or without government assistance. Rights without responsibilities, entitlements without obligations, will encourage politically noisy but economically lazy citizens. And society cannot progress in such condition.

Our seminar on “Promoting Markets in Healthcare” ended Sunday. Participants from independent think tanks from China, India, Indonesia, Malaysia and the Philippines exchanged notes on how civil society and the private sector can optimally provide healthcare to the public at the least politics, least coercion and taxation possible. The event was sponsored by a new global think tank, the Emerging Markets Health Network based in London, and the Institute for Democracy and Economic Affairs based in Kuala Lumpur. Both are espousing free market and more individual freedom philosophy.

There were several presentations made by speakers from different countries. Liew Chin Tong, a member of the Malaysian Federal Parliament, observed that the federal government is acting like a businessman in healthcare, banking and many other sectors as the government owns many hospitals, including “private” ones. He said the role of the government is to be an enabler, to provide equal opportunity to the people especially the poor, and not as businessman.

Frank Largo, a fellow Filipino who chairs the Department of Economics of the University of San Carlos in Cebu City, said that while healthcare is often an emotional issue, not every case is an emergency, and there is a big role for market and civil society players and providers especially in non-emergency cases. That there is a big gap between curative and preventive healthcare, and that there is bias among many academics, especially health economists, for more government intervention in healthcare.

Dr. Debashis Chakraborty, an economics professor at the Indian Institute of Foreign Trade noted the role of public-private partnership in India in the provision of various healthcare services, the inefficiencies or even absence of government healthcare service in many rural and far flung areas. This provides big opportunity for civil society and market players in non-state provision of healthcare.

Philip Stevens, the founder of EMHN, noted that the National Health Service of the UK government is a healthcare monopoly and is showing various forms of inefficiency like long waiting period for patients, and lack of innovation, which is a common practice in situations where no competition exists.

Prof. Yu Hui of the Chinese Academy of Social Sciences and director of China Research Center for Public Policy, and Prof. Feng Xingyuan of the China Academy of Social Sciences and vice-director of Unirule Institute of Economics, made a joint presentation, “Development of Private Hospitals in China and Lessons for Other Countries”. Below are some of the presentations.

But while there are explicit announcements by the Chinese government to encourage the development of more private hospitals and other healthcare providers, the entrenched interests in the public health sector is making this far from attainable.

They suggested (a) competition for the sector, (b) equal inclusion of private hospitals in the Social Medicare Insurance scheme, (c) privatization of some state-owned hospitals, and (d) mobility of healthcare providers in terms of fair promotion, especially among health professionals in the private sector.

Dr. Chua Hong Teck, director of the Healthcare and Low Income Households, Performance Management and Delivery Unit under the Office of the Prime Minister, presented lots of data about the healthcare system in Malaysia (see below).

Healthcare is the fastest growing sector in the Malaysian government. This is a result of high expectations by both the public and policy makers, that healthcare should be provided to all citizens at the highest quality and at the lowest cost, free for the very poor, as much as possible. This is not happening of course, as the presence of private hospitals is rising, implying there is rising demand and expectations on public healthcare that are not met and provided.

The lower table shows that the number of beds in private hospitals was rising from 2000 to 2011,but the number of health professionals for the same period was declining. This implies one thing: physicians and other health professionals in private hospitals are over-worked or simply more efficient, producing more health services at lower manpower input, while those in public hospitals are underworked or simply bloated. I could be wrong but this is the most proximate explanation that I can see.

Dr. Chua said the following are the challenges for the non-state sector in healthcare: (a) enforcement of Private Healthcare Facilities Act of 1998 with regulations of 2006, (b) financing of these services and management of these facilities, and (c) ability to co-exist and compete with the public healthcare system.

I do not believe that it is possible to have real competition between private and public healthcare providers as favoritism is inherent in the latter. For one, the former is taxed while the latter is subsidized. Second, the former is regulated while the latter is the regulator.

High spending in public healthcare is among the major deficit generators and debt creators in many rich countries now. If a service is provided for free or at highly subsidized rates, expect the demand to be larger than the supply always. The result of such a wide gap between demand and supply is (a) healthcare rationing like long waiting period for non-emergency cases, or (b) generally poor quality delivery or provision of a service, or (c) continued bleeding of fiscal condition with sustained high borrowings to finance the system, or (d) all of the above.

If we recognize that healthcare is a right and a responsibility at the same time, then it should be recognized that those who want good quality healthcare must pay for it as much as possible. This will open up the discussion on the importance of preventive healthcare, that people own their bodies, not the government. So if people will abuse their body, no amount of government healthcare subsidy and borrowings will remedy the situation.

And secondly, recognize the need to deregulate private and civil society health insurance schemes. Government health insurance system like PhilHealth in the Philippines can be retained but people should not be coerced and obliged to become mandatory members and contributors to it. It should co-exist with private and civil society health insurance schemes in order to encourage more competition, more innovation, and more efficiency at least cost possible to the public.

The case of infectious diseases on certain occasions like the spread of leptospirosis during heavy flooding, and pediatric diseases like childhood cancer, can be a separate case where taxpayer-financed healthcare is justified.

Removing or reducing the fat and bureaucracies in government healthcare system is the way not only to help address the bleeding public debt problem in the Philippines and in many other countries, but also to inculcate the age-old dictum: rights and responsibilities, entitlements and obligations go together.
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See also:
EMHN 1: Forum on Promoting Markets in Healthcare, IDEAS-Malaysia, June 23, 2012
EMHN 2: IDEAS Forum in Penang, Malaysia, September 01, 2012
EMHN 3: Penang Workshop Report, September 10, 2012

Fat-Free Econ 8: Drug Price Regulation is Wrong, May 04, 2012
Fat-Free Econ 9: Drug Pricing Bureaucracy is Not Cool, May 11, 2012
Fat-Free Econ 18: Healthcare Corruption and Physician Entanglement, July 30, 2012
Fat-Free Econ 22: Three Years of Drug Price Control Policy, August 30, 2012

EMHN 3: Penang Workshop Report

* This is my article in the online magazine yesterday,
http://www.thelobbyist.biz/perspectives/less-gorvernment/1349-healthcare-competition-and-government.
I also wrote a longer version in interaksyon.com.
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Penang, Malaysia – The seminar that I attended here on “Promoting Markets in Healthcare” ended yesterday. It was another learning experience listening to various speakers and fellow participants from free market think tanks and groups from India, China, Malaysia, Indonesia and the Philippines. The activity was sponsored by a new global think tank, London-based Emerging Markets Health Network (EMHN) and the Kuala Lumpur-based Institute for Democracy and Economic Affairs (IDEAS), and was held in Red Rock Hotel.

The focus was how to free from politics, or how to minimize political interventions and the various inefficiencies associated with it, in the delivery of healthcare to the public, with greater role to be assumed by civil society and the private sector. In short, healthcare provision at the least politics, least taxation and borrowings possible.

Among the speakers yesterday were the following.

Liew Chin Tong, a member of the Malaysian Parliament. He noted that the main role of a government is to provide equal opportunity to the people, to be an enabler of the less privileged so they can improve their lives later on. But the Malaysian federal government has been acting like a big businessman, owning many banks and hospitals, even private hospitals with substantial share ownership in them.

Frank Largo, the head of the Economics Department of the University of San Carlos (USC) in Cebu City. Frank has a unique role because he teaches Economics not only to Econ majors, but also to Nursing and Pharmacy majors who are required to take a subject on health economics. He said that while there are lots of emotions involved in the discussion of health policies, not all health cases are emergency. That the gap between curative and preventive healthcare is big, public resources is heavily focused or biased on curative health.

On a side note, Frank’s graduate Economics students organized a forum about the Cheaper Medicines Law in USC about two years ago, and I was one of the speakers there. I talked about “Property right and policy left” of the law.

Prof. Yu Hui of the Chinese Academy of Social Sciences (CASS) and Prof. Feng Xingyuan of the Rural Development Institute and Vice-Director of Unirule Institute of Economics, made a joint presentation entitled “Development of Private Hospitals in China and Lessons for Other Countries”.

In their presentation, they showed some data like as of 2011, there were 457,000 private healthcare providers including private hospitals or 48 percent of total. But these private enterprises comprise only 10 percent of total hospital beds.

Below are some data regarding the dominance of government hospitals despite public pronouncements of encouraging private hospitals and other healthcare providers, as well as the reforms they think should be done.

Dr. Debashis Chakraborty, a Professor of Economics at the Indian Institute of Foreign Trade in Delhi said there is an important role for public-private partnership (PPP) in providing healthcare services.

Philip Stevens, the founder of EMHN, narrated how the UK government healthcare monopoly, the National Health Service (NHS), is one proof of the problem of centralizing and politicizing healthcare provision. Long waiting period for patients, insufficient supply of certain medicines in some government hospitals, lack of innovation and cost-cutting measures, are among the ills that plague the NHS and other government-nationalized or centralized healthcare systems.

Dr. Chua Hong Teck, Director of the Healthcare and Low Income Households, Performance Management and Delivery Unit (PEMANDU) under the Office of the Prime Minister, presented a number of interesting of data on Malaysia’s healthcare system.

Government healthcare expenditure is growing at an average of 11 percent per year, with the Ministry of Health (MOH) spending alone rising at 12 percent per year on average. Since 2009, total healthcare spending comprises about 5 percent of GDP and 55 percent of it is from public sources.

The number of beds in private hospitals is rising from eight percent of total beds in 2000 to 24.5 percent in 2011, but the number of health professionals is declining from 67 percent of national total in 2000 to only 29 percent in 2011. This suggests to me that health professionals in private hospitals are over-worked or simply are more efficient, while those in government hospitals are underworked or bloated.

Tables below, healthcare spending is led by MOH at 43.7 percent of total, followed by out of pocket (OOP) or private spending at 35.6 percent, then the Ministry of Higher Education (MHE) at six percent, and the other agencies have small or minimal shares. The Ministry of Defense also has its own hospital and they treat not only its own personnel and their dependents, but even ordinary citizens can go to their facilities and get free or subsidized healthcare.

As of 2011, 42 percent of all dentists, 40 percent of all pharmacists, and 33 percent of all nurses, are working in the private sector healthcare providers.

Can healthcare, especially those provided by the government, national and local, be depoliticized? Can real competition happen between public and private healthcare enterprises?

From my observation in the Philippines and other countries, the answer I think is No. Government being a regulator and a player at the same time already gives undue advantage to public health institutions. Besides, they get subsidies from taxpayers while private enterprises are being taxed.

When a commodity or a service is provided for free or at highly subsidized rate, we can expect that the demand will be larger than the supply, always. For instance, someone who has a headache might demand a CT scan or MRI tests to find out if there are other hidden causes of the headache. And why not demand, it is free or heavily subsidized anyway. This will put heavy pressure and use on the facilities and personnel of the public healthcare sector, resulting in high costs, healthcare rationing like long waiting period for non-emergency cases patients, or poor quality delivery or provision of a service.

Healthcare competition among different service providers – national government, local government, civil society and charity organizations, corporate and for-profit businesses – will result in better health service provision to the public at lesser cost. Competitors are always under pressure to give value for money to their clients as the latter have the option to opt out and go to another service provider.

On another note, I enjoyed the food and local cuisine here. There are many food shops and stalls almost everywhere, selling Malaysian, Chinese or Indian food. Our local hosts told us that if one is busy, it is much cheaper to eat outside than do groceries and cook food in the house.

The food competition in Penang and other parts of Malaysia, and almost elsewhere in the planet, is perhaps the best and solid proof that depoliticizing an important service like healthcare is best for the public, whether in the short- or long-term.
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See also:
EMHN 1: Forum on Promoting Markets in Healthcare, IDEAS-Malaysia, June 23, 2012
EMHN 2: IDEAS Forum in Penang, Malaysia, September 01, 2012