The extreme gap between the rich and the poor has become headline news in countries around the world, with consensus from actors as diverse as the Pope, Christine Lagarde and President Obama that we need solutions to reverse the growing divide between the haves and the have nots.
In February 2014, backing a new IMF discussion paper, Christine Lagarde Director of the IMF underlined that ‘making taxation more progressive’ and ‘improving access to health and education’ have a key role to play in tacking inequality. Oxfam has worked for decades to promote universal access to quality health services, and in our new report ‘Working for the Many’ we consider evidence of how public services – especially health and education – impact on economic inequality.
First we consider a 2012 OECD study which quantifies the value of public services – the vast majority of which is health and education – to each quintile of the population, by converting that value into ‘virtual income’. The data shows that in OECD countries public services are worth the equivalent of a huge 76 per cent of the post-tax income of the poorest group, and just 14 per cent of the richest. So whilst public services benefit rich and poor equally in absolute terms, so that everyone is a winner, these services are strongly redistributive and help to mitigate the impact of today’s skewed income distribution by benefiting the poorest far more.
In fact, across OECD countries the virtual income gained from public services reduces income inequality by an average of 20 per cent. Similar calculations across six Latin American countries show the same impact – virtual income from health and education reduce income inequality by between 10 and 20 per cent.
Evidence from studies done across Asia, and more than 70 developing and transition countries shows the same underlying patterns in the world’s poorest countries. A 2007 study of healthcare systems in eight Asian countries and three Chinese provinces and regions shows that in all but one, healthcare had the same equalizing effect through progressive distribution of benefit. The more these governments spent on healthcare, the more progressive the distribution of income was and the more the healthcare system addressed economic inequality. This mirrors findings in the OECD study, that countries that increased public spending on services throughout the 2000s had an increasing rate of success in reducing income inequality. But those countries that cut spending during that time showed a marked decline in the rate of inequality reduction.
Whilst public services provide everyone with ‘virtual income’ and fight inequality by putting more in the pockets of the poorest; user fees and private services have the opposite effect.
User fees take money out of the pockets of the poorest and undermine the inequality-reducing potential of services. Health user fees cause 150 million people around the world to suffer financial catastrophe each year. That is approximately two per cent of the global population. And since Malaysia privatized portions of its health services and introduced user fees in the 1980s, out-of-pocket spending has risen, representing one-third of total healthcare spending in the country in 2009. A recent study in the USA showed that the poorest 20 per cent spend 15 per cent of their income on healthcare, compared to the richest 20 per cent for whom healthcare amounts to just 3 per cent of income. But despite this significant cost to the poorest, they still don’t get all the cover they need.
Private provision of healthcare further skews the benefit towards the richest. In three of the best performing Asian countries that have met or are close to meeting Universal Health Coverage – Sri Lanka, Malaysia and Hong Kong – the private sector is of negligible value to the poorest quintile of the population, and the benefits of private healthcare services are strongly regressive. They serve the richest far more than the poorest. Fortunately in these cases the public sector has compensated and allowed universal and equitable access to be achieved.
More recent and detailed evidence from a 2013 study of the Indian healthcare system finds that amongst the poorest 60 per cent of Indian women, the majority turn to public sector facilities to give birth, whilst the majority of those in the top two quintiles give birth in a private facility. Finally, comparable data from across 15 countries in sub-Saharan Africa reveals that just three per cent of people from families living in the poorest quintile sought care from a private doctor when sick.
Fees take more away from the actual income of the poorest people, and private services benefit the richest first and foremost. If governments are serious about closing the gap between rich and poor, and achieving Universal Health Coverage, the evidence points them towards free public services.
Read the full paper, ‘Working for the Few: Public Services Fight Inequality’
Emma Seery is Head of Inequality Policy and Campaigns for Oxfam GB
Giorgi’s shy innocent face stares out of a billboard in Tbilisi. The words ‘I have a right to live’ are printed across the frame. A famous Georgian journalist tenderly holds Giorgi’s hand, urging the country to hear their urgent call to action. 13-year-old Giorgi has just a few critical months to find a bone marrow donor to save his life.
Giorgi is part of a campaign run by leading Georgian journalists, and supported by Oxfam, to ask the Government to urgently invest in the healthcare sector, and save the lives of children affected by leukaemia. For Giorgi, the journalists’ crusade is his last hope. Giorgi’s mother, Jakhia, explains,
“We have no money. We only receive 125 lari (£48) per month from the state, which is barely enough to feed my family. We have nothing to sell, and I don’t know how we’ll cope,” she says wiping away tears.
Although the Georgian government provides chemotherapy and medicines to children affected by leukaemia, there are currently no facilities in the country to facilitate bone marrow transplants and no database to find donor matches. Giorgi’s mother may be forced to seek refugee status abroad to pay for her son’s transplant which costs around 100, 000 euros (£85, 000)– an insurmountable amount for the majority of Georgia’s population.
Giorgi’s story is representative of hundreds of people across Georgia who are struggling to access affordable health care. The health system in Georgia requires families to take drastic measures to save their children’s lives.
In Gori, the former home of Stalin, Maya, a young single working mother largely dependent on social benefits, is unable to afford the cost of her post cancer treatment. Rising food prices are also having an impact on her family and pushing health care even further out of reach. Maya looks sadly out of the window of her small dilapidated ex Soviet apartment, which she shares with fourteen other families “Sometimes I go to bed hungry at night so I can pay for medicine for my daughter.”
Elsewhere, people like Elguja, who used to be an actor, have no choice but to buy low quality cheap medicines. Elguja who turned blind at 22, says, “My pension is 125 lari (£48) each month but medicine costs 100 lari (£38). I have to buy cheap medicines but it makes my asthma worse. You can’t imagine what it’s like when you can’t breathe, especially at night.” Elguja often has pain in his eyes but cannot afford the high costs of eye medication. “I miss being able to see people’s eyes on stage,” Elguja wistfully remembers, “The eyes are the window to the soul,” he waves his walking stick like a wand as if he is playing the part of a blind man in a play.
For Giorgi, Maya, and Elguja, the new Government’s pledge for universal free healthcare for Georgia’s population, and the promise to establish a transplant centre for children affected with leukaemia offers hope. Oxfam is working to raise awareness amongst young people about their health rights and have a say in the future health care system. For young Madea, who is taking part in the project, it gives her a chance to have a voice, “Healthcare is the most important thing, especially for children as they are the future of the country. We often have meetings with municipality representatives to have a say in the healthcare system and lobby for changes.”
Meanwhile, Giorgi’s message ‘I have a right to live’ remains on billboards across the capital, a stark reminder of the urgent need for healthcare reform in Georgia. I hope that Oxfam’s campaign gives Giorgi, Maya and Elguja a second chance.
Caroline Berger is the Oxfam Regional Digital Media Coordinator for the CIS
As world leaders prepare to gather for the 66th World Health Assembly on May 20, social movements are questioning the market-friendly version of universal health coverage (UHC) it is promoting.
One organization, Jan Swasthya Abhiyan (JSA), is denouncing India’s emulation of this UHC strategy, as contained in the country’s 12th Five Year Plan, which uncritically endorses the private medical sector and focuses on health insurance schemes. In a recent paper – JSA proposes an alternative UHC model.
Public financing for whom?
In the past five years there has been an impressive roll out of government-funded insurance schemes in India that are supposed to improve the country’s public health system. In theory, treatment covered under these schemes can be provided by any accredited facility. But in practice the majority of providers are found in the largely unregulated private sector which already accounts for 80% of outpatient and 60% of in-patient care according to the National Sample Survey Organisation (NSSO), making India one of the most privatized systems in the world. India’s healthcare system is increasingly dominated by big hospitals chains (e.g. Apollo Hospitals) with an infamous track record of expensive services and unethical practices. As it is, health insurance schemes mostly channel public monies for private profit. For example, from 2007 to 2013 the state of Andhra Pradesh allocated a total Rs.47.23 billion to facilities accredited under the Arogyasri scheme, of which Rs.36.52 billion went to private facilities.
Getting it right
Health is a right, and priorities should be based on citizens’ needs. What the majority of Indians lack is comprehensive primary care, but current health insurance “packages” only insure beneficiaries for ailments that require hospitalization. They cover a very small portion of the burden of disease, excluding out-patient treatments for tuberculosis, diabetes, hypertension, heart conditions, and cancer among others. Evidence from the first such scheme in India – Arogyasri – suggests that it consumed 25% of the state’s health budget but addressed only 2% of the burden of disease.
Who inverted the pyramid?
This situation ends up distorting the very structure of the health system by starving primary care facilities to the benefit of more profitable secondary and tertiary care. In 2009-2010, direct national government expenditure on tertiary care was slightly over 20% of total health expenditure, but if one adds spending on the insurance schemes the total would be closer to 37%. In Andhra Pradesh, following the implementation of Arogyasri, the proportion of funds allocated for primary care fell by 14%.
A good health system is like a pyramid: the largest numbers should be treated at the primary level where people live and work. We need to flip the inverted pyramid that has been created and offer a new roadmap predicated on public funding and provisioning of a public system that reprioritizes primary health care, and is comprehensive, integrated and accessible to all.
The health insurance schemes in place fail to address another key issue: access to medicines. Paradoxically, India is the largest producer of drugs in the developing world and at the same time the country where the WHO estimates the greatest number can’t afford the medicines they need. Since the Patent Act was amended in 2005, domestic pharmaceutical companies can’t produce cheaper versions of new drugs, which are now sold by multinationals at prices well beyond the reach of most patients. Poor regulations also means more than 50% of the average family spending on medicines is on irrational or unnecessary drugs and diagnostic tests according to the NSSO. Clearly, the pharmaceutical sector must be reigned in, and all essential drugs should be made available, free of cost, at all public facilities.
Addressing public health gaps
The task of achieving health for all in India will not be easy. Current public health services are marked by poor access, low quality and limited choice. Besides rampant corruption, poor management results in mismatches between demand and supply of services: facilities aren’t distributed optimally; equipment and funds fall short of requirements and don’t flow efficiently. Labour shortages can be partly explained by disinvestment in medical education and flawed deployment mechanisms. Although programs such as the National Rural Health Mission have made some inroads to improve services, much remains to be done. The problem is largely one of unresponsiveness to citizens coupled with unreliable technical estimates of costs and disease burden, leading to ill-informed prioritization.
It is necessary to recast the UHC debate and propose alternatives to strengthen the public health systemto address these problems and to build integrated, comprehensive services with strong mechanisms of accountability. Key to these changes are the following:
Over the short term, we also need to explore alternate ways of harnessing private resources for public health goals. Given the sheer size of the private sector, it is not possible to entirely ignore it while planning for equitable access to public services. It’s not a monolithic entity either; some segments such as charitable, faith-based and other not-for-profit healthcare facilities that work in less developed parts of the country can fill certain critical gaps in the public system. Under clear terms and conditions, other private providers such as general practitioners or small and medium-sized hospitals could be in-sourced to complement available public health services. Importantly, there should be no transfer of assets and resources into private hands and kickback statutes should be put in place to ensure there are no referrals with conflict of interests.
All the possible mechanisms for harnessing the private sector should be seen as supplementary (and often interim) measures, and not as a substitute for very significant scaling up and strengthening of the public system both in terms of quality and accessibility.
There is a need to reclaim public systems, to strengthen and expand them. Moving toward health for all requires major transformations in health care, but also in a wide range of social determinants of health – food security and nutrition, water supply, sanitation, working conditions, housing, environment, education and more. We need to build broad-based alliances for social change to redefine the relationship between people and their public systems.
Amit Sengupta is a Research Associate with the Municipal Services Project and Associate Global Co-ordinator with the People’s Health Movement, a global network of 18 national chapters that includes India’s Jan Swasthya Abhiyanfor which he acts as National Co-convenor.
Madeleine Bélanger Dumontier is Communications Manager for the Municipal Services Project, a global research initiative that explores alternatives to the privatization and commercialization of service provision in the electricity, health, water and sanitation sectors.
Photo: Rajeev Chaudhury
On 1st April patients in India celebrated a victory in the battle for affordable medicines. The Indian Supreme Court rejected a patent on B crystalline form of Imatinib Mesylate (Glivec®/Gleevec®), a cancer treatment developed by the pharmaceutical company Novartis. This decision enables patients suffering chronic myeloid leukaemia to access generic versions of Glivec at $175 per month – nearly fifteen times less than the $2,600 charged by Novartis. As the court handed down their verdict, it became clear that India chose to prioritise protecting the health of citizens above the commercial interest of pharmaceutical companies.
Novartis has been trying to challenge the Indian Intellectual Property law since 2006 when its patent application for Glivec was first rejected. Novartis claimed that Indian Patent Law did not conform to the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). It is worth noting that no other company or country has ever sought to make this claim against India to the World Trade Organisation – the body responsible for settling such disputes. After much debate, the court turned down the Novartis case.
The case rests on the way the India intellectual property law makes use of many of the flexibilities of the TRIPS agreement, including how the patentability criterion defines innovation. Section 3D of the Indian law, which is condemned by Novartis and other pharmaceutical companies, prevents patents on new forms, uses, doses, formulations and combinations of known medicines or substances. Instead, to be granted a patent, the revised medicine must show significantly enhanced therapeutic efficacy.
In the Novartis case, although the company provided evidence of improved physical features of the medicine, it did not demonstrate improved therapeutic efficacy. Novartis presented some late evidence of increased bio-availability of the revised medicine but even that was based on comparison with the original molecule of imatinib which is actually no longer marketed as treatment. Moreover, increased bio-availability does not automatically mean enhanced therapeutic efficacy.
The claim by pharmaceutical companies that Indian patent law will stop innovation is without foundation. On the contrary, Section 3D encourages innovation (incremental or otherwise) by preventing companies like Novartis securing patent extensions for making trivial changes to their products – a practice known as ‘Evergreening’. Allowing companies to secure patents, and therefore profits, by making trivial changes to existing products acts as a disincentive for much needed R&D investment in new products to treat and prevent diseases.
Novartis, along with other companies are also claiming the court ruling will put an end to R&D investment by companies in India. They argue that the unlikelihood of securing patents removes any incentive for R&D investment. The reality is that other scientific and economic factors have proven much more important for R&D investment including the availability of a strong science base in a country, appropriate infrastructure and an industry-friendly tax system.
In short the court resolution means that more people suffering chronic myeloid leukaemia can be treated now. Novartis says that its patent on Glivec is protected in 40 countries. That means the rest of the world can now use generic versions of Glivec without worrying about patent issues. Developing countries need to learn from India in promoting the use of high-quality generic medicines so that patients can access treatment at affordable prices.
The story highlights the urgent need to review the dysfunctional intellectual property system and find new ways of stimulating R&D to produce new medicines that have real therapeutic value. In the interim, pharmaceutical companies should stop spending millions of dollars on litigation in their effort to secure patents for evergreening their products. Instead they should invest in R&D for new products that could make a real difference to people’s lives.
Mohga Kamal-Yanni is a Senior Health and HIV Policy Adviser at Oxfam GB
A new documentary film opening in UK and Irish cinemas this week tells the story of what its makers call “the Crime of the Century” – how available low-cost antiretroviral medicine was blocked from reaching Africa and other parts of the global south in the years after 1996. The film signals the dangers of the increasingly-perilous outlook for access to essential medicine in developing countries.
Fresh from its much-talked-about premiere at the Sundance Film Festival in Park City, Utah, last month, Fire in the Blood opens at the Irish Film Institute (IFI) in Dublin and the Prince Charles Cinema in London later this week. The film will be released in cinemas across the UK on Monday 25th February. The film tells a harrowing story of inhumanity and heroism, with a highly compelling cast of characters. It details how it could come to pass that millions upon millions of people, primarily in Africa, were left to die horrible, painful deaths, while the drugs which could have saved them were being safely and cheaply produced and distributed just a short airplane ride away.
“I was curious to see what the reaction in the US would be”, says writer-director Dylan Mohan Gray. “So much indoctrination about the necessity of high drug prices has gone on there that the Big Pharma Research & Development (R&D) defence is very much a sacred cow… even those with profound reservations about how the industry behaves tend to grudgingly accept its validity. This is very easy for me to understand, since I was more or less that way myself when I began digging into all this.” Gray was, however, gratified to discover that the American audiences who waited in line to attend six sold-out screenings at Sundance had much the same reaction after seeing the film that he had had when he began to work on the story. “There is a very strong sense of betrayal when people find out what their governments have done in their name… and a very powerful conviction that the prevailing system of developing and commercialising medicine has to change”.
As the film points out, drug companies actually do very little basic research for drug discovery. “84% of drug discovery research is funded by government and public sources”, says Gray, citing the landmark work of Professor Donald Light, “Pharmaceutical companies fund just 12% of such research, while the lion’s share of their spending goes into marketing and administration.” These facts will come as little surprise to those familiar with the industry, but many have never really contemplated the repercussions of pricing essential medicines at levels only a tiny sliver of the world’s population can afford.
While the film tells the story of how multinational drug companies and the Western governments collaborated to keep low-cost generic AIDS drugs out of the hardest-hit countries at the height of the HIV/AIDS pandemic – at a cost of ten million or more lives – it also tells the fascinating story of the unlikely group of people which came together in order to try and break this blockade. Among this number were front-line doctors, HIV-positive activists, generic drugmakers, intellectual property specialists and individuals of global stature such as Desmond Tutu and Bill Clinton (both interviewed in the film). “That’s what really set this story apart for me”, says Gray. “It was a real-life David versus Goliath tale, full of incredibly interesting, daring, courageous mavericks who took on the world’s most powerful companies and governments to do what virtually everyone else at the time said was impossible (i.e. mass treatment of HIV/AIDS in Africa), and against all odds they won…”
While the inspirational story of how low-cost generic AIDS drugs, first and foremost from India, came to save millions upon millions of lives in Africa (and beyond) is at the heart of FIRE IN THE BLOOD, the film concludes on a distinctly alarming note. “The story this film tells was on the verge of being forgotten, something we can’t afford to let happen”, says Gray. The film details the tireless efforts of Western governments, working on behalf of industry, to impede and cut off supplies of affordable generic medicine from countries like India and Thailand to other parts of the global south, primarily by means of bi- and multilateral trade agreements which low- and middle-income countries are placed under enormous pressure to sign.
“The drug industry is stagnant, its pipeline is anemic and it has pinned all its future hopes on China and India”, notes Gray. “Almost all these companies are publicly-traded, which means their bosses have to keep turning profits quarter-by-quarter if they want to try and keep their jobs… as they see it, they simply can’t afford to take a humanitarian view on issues of access.” With the World Health Organisation having estimated that one-third of all deaths worldwide are attributable to treatable and preventable diseases, largely due to lack of access to medicine, the stakes could not be higher.
Meanwhile, for all its insistence that high prices are the only practical trade-off for an industry that spends so much money on R&D to find new and innovative medicines, Gray noted with a wry smile that the who’s who of senior pharma executives will be gathering in London for the industry’s can’t-miss event, the Pharma Summit, just a few days after FIRE IN THE BLOOD opens theatrically in the UK. “I was amused, but not surprised, to read that the theme of this year’s summit is Should pharma cut its losses and get out of R&D?”.
Araddhya Mehtta is a global heath campaigner for Oxfam GB.