Free and Public

Let’s break the vicious circle of inequality in health and access to medicines By Leïla Bodeux Policy Officer, Oxfam-Solidarité

A recent Oxfam report states that by 2016, 1% of the world population will own more wealth than the rest of us combined. This economic injustice is intertwined with gender inequality, and also with inequality in access to education and health. Inequality in access to medicine is a key feature of this global inequality.

Medicine: A hugely profitable business: Medicines, so critical for saving lives and protecting public health, can also deliver eye-watering profits. In 2013 the 10 leading pharmaceutical companies had combined revenue of US $440 billion. The biggest pharmaceutical company in the world, Pfizer, generated US $50 billion of revenue and US $22 billion profit in 2014. Such profits flow from the prices set for some of the newer medicines. In 2014 Gilead Sciences set the US price of its new drug to treat Hepatitis C at US $1000 per pill, or US$ 84,000-110,000 per treatment, a price that generated sales worth US $10 billion in 2014 for this medicine alone. It is worth remembering that approximately 150 million people are infected with hepatitis C, 75% of whom live in Low- and Middle-Income Countries (LMICs), and that about 350,000 of these die each year.

New cancer medicines allow big pharma to charge more than US $100,000 per treatment. These astronomical prices have become unaffordable even in rich countries. The UK has refused to reimburse several cancer medicines due to exorbitant prices. An op-ed co-signed by 100 leading oncologists in the prestigious journal Blood in 2012 called for a reduction of cancer medicine prices, which they deemed economically unsustainable. These unprecedented prices turn life-saving medicines into a highly profitable business.

The collective wealth of billionaires with interests in the pharmaceutical and health sectors increased from US $170bn in 2013 to US $250bn in 2014, a 47% increase and the largest percentage increase in wealth of the different sectors on the Forbes list. The World Bank estimated that the economic costs of the Ebola outbreak to Guinea, Liberia and Sierra Leone was US $356m in lost output in 2014, and that this will increase to US $815m in 2015 if the epidemic cannot be quickly contained. The greatest increase in wealth by a single pharma-related billionaire between 2013 and 2014 could pay the entire US $1.17bn cost for 2014–15 three times over. With such huge amounts of money at stake, the pharma sector does everything in its power to ensure that rules and policies are in place to maintain the status quo.

When company lobbyists hijack the decision-making process: Large sums are spent by the pharmaceutical industry in lobbying health-related decision-makers. In 2013, the pharmaceutical and healthcare sector spent more than US $487 million on lobbying in the US alone, more than was spent by any other sector in the US. The same sector spent US $260 million on campaign contributions during the election cycle of 2012. In Europe, the pharmaceutical industry employs around 220 lobbyists and an army of lobbyists covers Capitol Hill. They aim to maintain monopoly controls that allow high prices for as long as possible.

The pharmaceutical sector also lobbies the governments of the US and the EU to expand companies’ intellectual property (IP) monopoly power through the negotiation of Free Trade Agreements (FTA)[1]. These FTAs seek to restrict governments’ ability to use policy tools that promote access to affordable medicines, which has been condemned by the World Health Organization’s (WHO) Director Margaret Chan.

Countries are also put under pressure to strengthen their IP rules outside trade negotiations.

This is the case with the US pressure to reform India’s balanced IP law, threatening to shut down the “pharmacy of the developing world”[2]. The “Pharma Gate” scandal in South Africa in 2014 revealed leaked emails showing that Pharmaceutical Associations based in South Africa and the US (PhRMA) hired a powerful US lobby firm to derail South African IP law reform that facilitated access to generic medicines.

Big pharma should focus on what it’s supposed to do: create useful new medicines to support public health at affordable prices: Pharmaceutical companies play a critical role in public health through creating medicines that save and improve the quality of life. But increasingly the industry has lost its way, concentrating on ‘blockbuster’ products, and spending money on marketing and lobbying for ever stronger monopoly rights. The current system, which is supposed to incentivize R&D by granting 20-year patents on innovative medicines, fails to meet the public health need for affordable medicines. R&D is invested where large profits can be made – often products are priced so that only a small proportion of the needs are met – while diseases that affect primarily poor countries are sidelined. Only 10% of the world R&D is spent on diseases that affect 90% of the world population. It is estimated that more than one billion people affected by neglected tropical diseases fail to get the treatment they need.

Three pharmaceutical companies (GSK, Johnson and Johnson, Novartis) made the greatest financial contribution to the Ebola relief effort, donating more than $3 million in cash and medical products. Although laudable, these same three companies together spent more than US $18 million on lobbying activities in the US in 2013. The non-existence of a treatment or vaccine for Ebola resulted from lack of R&D investment and the absence of a financially profitable market. The industry employs great scientists and researchers whose creativity is channeled to products for highly profitable markets instead of services for the vast numbers of people worldwide who are still denied the benefits of new technologies. Their plight should be the number 1 priority of all actors who have a part to play, including the pharmaceutical companies.

Winnie Byanyima, the head of Oxfam International, rightly put it in Davos: “Let the companies stop lobbying, and put the money into medicine!“. The Oxfam Even It Up campaign seeks to consign to the history books the statistic that 1 person out of 3 does not have access to needed medicines.

[1]The following trade negotiations are currently undergoing: EU-Thailand FTA, EU-India FTA, the Transatlantic Trade and Investment Partnership (TTIP), the Trans-Pacific Partnership (TPP).

[2]India’s balanced IP law allowed its generic industry to lower the price of Antiretroviral treatments by 99 % since 2000, bringing the cost of treatment to below $100 per person per year



Inequality and access to health care in Russia By : Daria Ukhova, inequality policy advisor, Oxfam GB; Oleg Kucheryavenko, Coordinator for Health Policy and Advocacy, Global Call to Action against Poverty

During 2014, we both had a chance to work on an exciting project of analysing inequality trends in Russia as part of Oxfam’s programme on Empowering Civil Societies in an Unequal Multipolar World (ECSM BRICSAM). Through the project, we’ve got to work on the issues of both economic inequality and inequality in access to healthcare in Russia, which are central to Oxfam’s inequality campaign. This blog reflects some of our findings and learning from the project.

According to the 2013 representative population survey, Russians think that the two forms of inequality most strongly affecting the well-being of the country’s population are:

• Income inequality (72 per cent of respondents)

• Inequality in access to healthcare (47 per cent)

The income inequality percentage may not surprise outside observers, as Russia has witnessed one of the most radical increases in economic inequality in the last two decades following the collapse of the Soviet Union, and is now on par with other high inequality G20 peers like Turkey and Mexico. Inequality in access to healthcare may come as a bit more of a surprise, taking into account that Russia formally has universal health coverage and the right to free healthcare is enshrined in its constitution. Moreover, BRICS are now being looked at as important players in the global health arena.

So, what does inequality in access to healthcare actually look like in Russia? What are the main causes of inequality in access to healthcare? And how does economic inequality, ravaging the country is related to the inequality in access to healthcare?

Inequality in access to healthcare Russia has three key dimensions:

Key drivers of inequality in access to healthcare:

  • Under-financing. Currently, the share of healthcare budget in the total government budget stands at 9.4% (significantly lower than 15% recommended in Abuja declaration). Moreover, the share of healthcare budget has been gradually reducing in the recent years. According to the Ministry of Finance, government spending will be cut by 22.9% in next three years. The document also suggests that private expenditure may rise from the current value of 40% of total expenditure on health.
  • Ineffective healthcare financing model. Compulsory health insurance model introduced in Russia after the collapse of the Soviet Union and the parallel collapse of the Soviet Semashko model of healthcare financing has proved to be ineffective in the accumulation and allocation of public funding. Private health insurance companies through which insurance is being implemented have financial interest as their primary goal– they raise money from penalties imposed on healthcare providers. Moreover, the financial principles of: ‘money follows the patient’ and ‘money per treated patient’ adopted by the Ministry of Health in 2007 lead healthcare providers to have economic interest to manage patients. For example, GPs do not send patients to other providers even if necessary because in this case money will follow the patient .This means that some GPs who are un-trained as ophthalmologist may treat cataract with eye drops when the patient needs surgery. Providers are also interested in big numbers of ‘treated patients’, who preferably have chronic conditions leading to long-term treatment. Therefore, the public interest clashed with the one of healthcare providers.”.
  • Understaffing. While Russia is often cited as one of the global leaders in terms of the number of medical staff (43-44 doctors per 10,000 citizens), these numbers are based on the number of medical university graduates rather than reflecting the reality. For example around 8% of medical staff quit the profession annually (22-25,000 medical staff) and 40% of doctors are at, or nearly at, pension age, but continue working despite lack of training opportunities to upgrade the old knowledge. Moreover, understaffing in some regions reaches the level of 73% (e.g. Arkhangelsk). Medical staff continue quitting the profession, as the salaries of medical staff remain unacceptably low. In some regions staff salary only slightly exceeds a living wage.
  • Lack of access to affordable medicines. Overall, only certain categories of population such as disabled people, patients with certain diseases including TB, HIV, cancer and military veterans are entitled to get medicines for free in Russia. But even for these groups access to free medicines is severely limited. Currently, only 3.3 euro per patient per month is allocated for treatment of cancer patients. Availability of funding for medicines is also very uneven across different regions. In some regions the funding gap between actual and required financing is 90%. In our study, about 60% of Russian oncologists have to refuse writing a free prescription due to insufficient funding. Consequently, patients were either deprived of treatment or had to buy medicines themselves. Out of 300,000 patients in need of HIV medication, only half is estimated to have real access to the medicines. Over half of the private expenditure on healthcare is for retail purchasing of medicines and other healthcare products.

Clearly the lack of publicly funded health service makes people’ income the decisive factor in a person’s chances of getting healthcare in Russia. Private expenditure on healthcare of the richest 10 per cent of the Russian population is now eleven times greater than that of the poorest 10 per cent. The combination of lack of investment in health service and rising economic inequality will continue to exacerbate inequality in access to healthcare, which, in turn, will lead to further perpetuation of income inequality at the country enters into this vicious circle.



Public health challenges for the BRICS may impede growth By Oleg Kucheryavenko, Coordinator for Health Policy and Advocacy, Global Call to Action against Poverty and Chairperson, Working Group on Access to Health in BRICSAM Countries in ECSN Program

This is the first of two posts  on access to health service in BRICS countries

Jim O’Neill of Goldman Sachs turned the spotlight on the four emerging economies when he dubbed them the“BRIC” countries in 2001. The acronym was extended later — to BRICS — to include South Africa.  Although such a grouping may be useful from economic point of view, it sounds awkward and artificial when it comes to global health policy.

While health economists see strong potential roles for the BRICS in the development of universal health coverage, these countries vary greatly in terms of their patterns of disease, healthcare systems, financial interest in the pharmaceutical trade, and engagement in the global arena for healthcare. Although many might be looking to the BRICS for leadership, it is still not clear if these countries have sufficient shared interests or the coordinating mechanisms and processes needed to collectively and cohesively influence or promote global health policy.

The BRICS are also nowhere near economic parity. Russia and Brazil are far ahead in per capita income, outdistancing both India and China by significant margins – nearly $14,000 compared with China’s $6,629 and India’s $1,592; data and figures which were released in 2013 by the IMF. Notwithstanding, the countries in question have for the most part fallen short of successfully addressing inequalities in healthcare. Inequality in the BRICS has come under scrutiny of late, particularly due to their falling behind on Millennium Development Goals.

Despite diversity, the BRICS countries face a number of similar public health challenges, including inequitable access to healthcare and affordable medicines, soaring health costs, rising non communicable and infectious diseases such as AIDS and tuberculosis.

These factors were illustrated by recent findings of a study conducted by Oleg Kucheryavenko, which noted that limited access to healthcare for a significant number of people in Russia is an issue of concern to all social groups, non-governmental organizations and political parties. Inequality has not been given much attention by policy makers.

The Russian healthcare system is characterized by significant differences in demand from the various socioeconomic classes. Social groups with a higher incomes request healthcare more frequently than those with lower incomes. This inequality is reflected by a widespread health service based on cash payments: high-income persons pay 2.5 times more for a visit to a healthcare institution than those with a low income. However, poor people spend 1.5 times more of their household budget on medical care than well-off people.

Since 1990, the material and human resources of the health sector have been reduced. Beds have decreased by 12%, the number of doctors has dropped by 46%, and nursing staff by 10%. Yet, Russia is still among the top countries of the world in terms of the number of doctors and hospital beds per 1000 persons.

While global growth in expenditures for health care is rising, Russian spending continues to decline, which hinders government’ ability to subsidize the most in need. Russian state healthcare expenditures are several-fold lower than the ones in the countries of the European Union; in Hungary, the Czech Republic, and Poland – 6% of GDP, in Germany – 11%.

Russian spending on the health and social sector has slipped as EU and US economic sanctions have taken hold. Cutting public expenditures meant less spending for social services. Moreover, the Russian parliament approved a fragile budget that includes a reduction in healthcare spending by 25% in 2015. These decisions have put the country’s relative position of strength among the BRICS in serious jeopardy.

Between 1995 and 2011, private spending by Russians on health surpassed state spending by 2.1 times. Over half of this private spending is for retail purchases of medicines and healthcare products. Expenditures for paid health care services and unofficial payments amount in total to 87.9% of personal expenditures.

Given the current trends in healthcare financing and the structure of informal payments for health care services, expenditures for prescription drugs are likely to increase. Our study, estimated that the private expenditures will rise from 331.9 billion RUB in 2013 to 1305.5 billion RUB in 2020, considerably outperforming state expenditures on health.

Increasing funding alone will not solve all the problems in the health care system. Current spending is both insufficient and ineffective. Without effective policy changes, additional funding is likely to have a negligible effect. A key change is to adopt a social policy based on recognizing health as a human right and not a commercial product. Adopting universal health coverage as a basis for health policy means that quality health services are publicly financed and publicly delivered to all who need it.

It is evident that the prospects for health care in Russia are directly interwoven with the nation’s future socioeconomic development. What happens in the future depends on the extent to which the government recognizes the inequality that is skyrocketing in society.


Cancer medicines and monopolies: perpetuating inequalities By Malini Aisola, Access to medicine coordinator, Oxfam India

Cancer, a global cause of death and suffering is on the rise. WHO estimates that cancers accounted for 8.2 million deaths in 2012 which is projected to increase to 11.5 million deaths by 2030. The majority of cancer mortality and morbidity (70% of deaths and 60% of new cases in 2012) is in developing countries. Weak access to prevention and to early diagnosis exacerbates illness in these countries. Moreover, the high cost of treatment pushes people deeper into poverty, resulting in a rising inequality.

A report on the pricing of medicines for cancer treatment by Ellen‘t Hoen discusses the unsustainability of the high prices of newer medicines. The report also provides evidence of a problem that is looming large not only in low- and middle-income countries (LMICs) but also in wealthy countries.

The report points out that while numbers of cancer deaths are reducing in wealthy countries because of access to early diagnosis and treatment, the incidence and prevalence is increasing in developing countries. In India it is projected that the number of patients with cancer will reach 1.1 million by 2020. When cancer medicines are priced out of the reach of most people living in developing countries, it compounds the challenges of accessing treatment, exacerbating illness and contributing to preventable suffering.

Even in rich countries the prices of newer cancer medicines are being questioned against a backdrop of escalating health care costs. For example, the recent decision to delist 16 medicines from the UK’s Cancer Drug Fund has elicited furious debate about the high price tag of treatments that deliver limited clinical benefits and equity in providing access to all patients under the NHS.

Access to anticancer medicines is aggravated the world over by intellectual property rights held by pharmaceutical companies and by companies’ pricing strategies. Multinational pharmaceutical companies holding the intellectual rights to new medicines justify high and often exorbitant prices as a necessary means to recover research and development (R&D) costs. However, this explanation is not possible to verify since transparency about costs is lacking. In addition, public funding contributes significantly to the development of new cancer medicines. The report contrasts the best estimates of Novartis’ R&D expenditure on imatinib (Glivec), $38-96 million, with the sales of the drug in 2012 which came to $4.7 billion. Pricing to maximise profits has proven to be very lucrative for pharmaceutical companies. The industry’s global oncology sales were worth $61.45 billion in 2012 and are expected to increase to $81.3 billion by 2018.

There is now a global consensus that the current R&D model that maintains monopolies and leads to high prices of medicines is broken. New ways of financing biomedical innovation that de-link the cost of R&D from the price of the product are being debated and piloted at the WHO.

Yet there is intense pressure on governments that are taking measures to increase affordability and access to medicines from the pharmaceutical industry and the governments protecting its interests. The current pressures on India are a prime example.

The US government, on behalf of the commercial interests of its pharmaceutical companies, is engaged in an intense effort to undermine India’s use of public health safeguards enshrined in India’s intellectual property regime. The industry seeks to force the introduction of TRIPS-plus provisions (such as data exclusivity and patent linkage) that will prolong monopolies on medicines and delay generic entry into the market. India has now been stopped from advancing a compulsory license for an anti-leukaemia medicine, dasatinib.

Experiences from the global fight for HIV treatment over the last decade have taught us that generic competition is the most robust and effective way of bringing down the price of medicines. If the US government is successful in imposing its demands on India, the generic supply of life saving medicines and the health of people living in India and other developing countries will be seriously threatened.

The Access to Cancer Treatment report presents evidence of the scale of the problem of access to cancer medicines and recommends how it may be tackled. What is clear is that we are at a tipping point where high prices for cancer medicines and the resulting lack of access to treatment are neither justified nor acceptable. The stage is set for the governments to act in favour of patients and to find workable solutions to what has become one the greatest challenges to equity and access to medicines in our time. Will we act?



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