MM H MANAGING MARKETS FOR HEALTH The World Bank Group in collaboration with the University of Edinburgh and ACCESS Health International October, 2015

Transcription

1 MM H MANAGING MARKETS FOR HEALTH The World Bank Group in collaboration with the University of Edinburgh and ACCESS Health International October, 2015

2 SESSION Applying MM4H Approaches to Product Markets Dominic Montagu University of California, San Francisco (UCSF) The World Bank Group in collaboration with the University of Edinburgh and ACCESS Health International

3 MARKET STRUCTURE MARKET COMPETITION EUROPEANPHARMACY MARKETS TOOLS OF GOVERNANCE ORGANIZATION RULES AND REGULATION

4 A simple guide to the Organization of Health Markets

5 Balance of market vs structuring forces across sub-sectors MORE STRUCTURE Acute Inpatient (Hospital) Diagnostics, Elective Surgery, Specialist Services Primary Care;; Pharmacy Production & Distributio n Retail, OTC Pharmacy Source: Health Systems Characteristics, OECD (2010) MORE MARKET

6 MARKET STRUCTURE MARKET COMPETITION EUROPEANPHARMACY MARKETS TOOLS OF GOVERNANCE ORGANIZATION RULES AND REGULATION

7 Competition, Purchasing, and Information The World Bank Group in collaboration with the University of Edinburgh and ACCESS Health International

8 Entry and Contestability Competition within the Market Competition for the Market => Contestibility => Measurability

9 Heath System Inputs High contestability Medium contestability Low contestability High measurability Type I Production of consumables Retail - Drugs & equipment - Other consumables Unskilled labor Type II Production of equipment Wholesale - Drugs & equipment - Other consumables Small capital stock Type III Production of - Pharmaceuticals - High Technology equipment - Other consumables Large capital stock Medium measurability Type IV Type V Basic training Skilled labor Type VI Research - Knowledge Higher education Highly skilled labor Type VII Type VII Type IX Low measurability

10 Health System Outputs High contestability Medium contestability Low contestability Type I Type II Type III Medium measurability High measurability Type IV Non-clinical activities - Management support - Laundy and catering Routine diagnostics Type V Clinical interventions High tech diagnostics Type VI Low measurability Type VII Ambulatory care - medical - nursing - dental Type VII Public health interventions Intersectoral action In-patient care Type IX Policy- making Monitoring / Evaluation

11 Make or buy decision grid High contestability Medium contestability Low contestability Low measurability Medium measurability High measurability

12 contestability and measurability High contestability Medium contestability Low contestability Low measurability Medium measurability High measurability

13 Competition in Health Markets Source: When and How Provider Competition can Improve Health Care Delivery. Penelope Dash and David Meredith. McKinsey 2010

14 Competition in Health Markets Primary care Retail pharmacies Source: When and How Provider Competition can Improve Health Care Delivery. Penelope Dash and David Meredith. McKinsey 2010

15 Competition in Health Markets There are multiple tools available to work these levers Source: When and How Provider Competition can Improve Health Care Delivery. Penelope Dash and David Meredith. McKinsey 2010

16 MARKET STRUCTURE MARKET COMPETITION EUROPEANPHARMACY MARKETS TOOLS OF GOVERNANCE ORGANIZATION RULES AND REGULATION

17 The experience of pharmaceuticals in Europe

18 Europe 27 Countries 272 Wholesalers 2,019 Operating Stores 172,709 Dispensing Points 512,522,463 Inhabitants A complex market..but not equally complex everywhere

19 Europe Ownership limited to pharmacists Free Ownership but restriction on chains Completely Liberalized 27 Countries 272 Wholesalers 2,019 Operating Stores 172,709 Dispensing Points 512,522,463 Inhabitants Guess where drugs are more expensive.

20 Case Study: Estonia

21 Estonia Following independence from Russia, Estonia made significant policy reforms that regulate health care provision and community pharmacies Shift from centralized-specialist oriented health system to primary care health system Transition from state-owned pharmacies to privatized community pharmacies Increase in number of pharmacies as community pharmacy chains entered the market Consumers reported higher frequency of pharmacy visits (utilization) and higher levels of perceived quality and patient-centered care after reforms

22 Retail Pharmacy Market in Estonia: Post-independence Soviet Period pre OPERATIONAL AUTONOMY 0% 100% State-owned Privatization of pharmacies CUSTOMER COMPETITION 0% 100% PRICE INFLUENCE Administered Market ENTRY BARRIERS Very High 0 SOCIAL FUNDING 100% 0 Generic prescribing Ownership restricted Entry of to pharmacists pharmacy chains;; ownership National health open insurance to nonpharmacists reimbursement for for medicines CONTRACT CONDITIONALITY No conditionality No conditionality

23 MARKET STRUCTURE MARKET COMPETITION EUROPEANPHARMACY MARKETS TOOLS OF GOVERNANCE ORGANIZATION RULES AND REGULATION

24 Health Services Western, Kenya Madhya Pradesh, India

25 From Chaos to Structure MARKETS FOR HEALTH

26 Tools of Government And actors within the health sector FINANCE Professional associations TAX VOUCHER R&D LOANS GRANT Non-profit associations Providers S D Consumers Business associations PUBLIC INFORMATION REGULATION Community & patient groups

27 TOOLS USED IN RETAIL PHARMACY MARKET WHO RECEIVES FUNDING? HOW MUCH? ON WHAT BASIS? FINANCE WHO IS ELIGIBLE? Essential medicines R&D Registration costs Retailers / Pharmacies S D Consumers SOCIAL REGULATION Packaging requirements ECONOMIC REGULATION PUBLIC INFORMATION Communicating value of treatedness REGULATION Finance and regulation policy tools deployed in retail pharmacy market

28 GOVERNANCE REGIME IN RETAIL PHARMACY MARKETS Regulatory priorities REIMBURSEMENT MECHANISM Money-follows-customer Consolidated ownership Electronic Responsiveness reimbursement system To regulators Private insurance To consumers R&D FINANCE Risks of consolidation Self Interest ELIGIBILITY MECHANISM All pharmacies? Gvt Pharmacies only? All clients? Monopoly behavior Provider induced demand Resistance to market forces Consumer protection SOCIAL REGULATION Retailers / Pharmacies S D Inefficiency Consumers Lack of transparency ECONOMIC REGULATION PUBLIC INFORMATION Awareness Direct-to-consumer adverts? REGULATION Imbalance between regulators and network Finance and regulation policy tools deployed in retail pharmacy market

29 Chains Franchises Associations A Few Market Organization Systems Network Type Example Defining Attribute Informal association Drug vendor associations Networking; political or regulatory protection Professional association Medical, nursing, hospital associations Set industry standards; political lobbying; business representation; training; selfregulation Joint-business association Indian pharmacy association Collective bargaining with suppliers or purchasers Business format franchise Pharmacy franchises eg: Doc Morris in Ireland and Germany, Generics Pharmacy/Philippines Focus on services with limited variation, and often restriction on chain ownership Social franchise Greenstar/Pakistan; LivingGoods/Uganda; Sun Quality Health/Myanmar Subsidized chains of existing providers; quality and equity focus Chain Clicks/SA, Netcare/SA, Apollo/India, Ranxbury Lab/Kenya Profit maximizing; often, but not always, quality leader

30 MARKET STRUCTURE MARKET COMPETITION EUROPEANPHARMACY MARKETS TOOLS OF GOVERNANCE ORGANIZATION RULES AND REGULATION

31 Benefits of increased market structure The Value of Organization Direct Service Provision Quality Channel for subsidy Communication Standards Decrease transaction cost Self-Regulation TAX VOUCHER Providers Facilitate Gvt. Regulation R&D S FINANCE D PUBLIC INFORMATION REGULATION LOANS GRANT Consumers Professional associations Non-profit associations Business associations Community & patient groups

32 Direct Provision of Goods Direct Service Provision Quality Channel for subsidy Communication Standards Decrease transaction cost Self-Regulation Facilitate Gvt. Regulation Non- Networked Providers Providers Programmatic Changes Networked 1.Guideline adoption 2.Commodity promotion 3.Pro- Poor Policies 4.Efficiency Linkages increase speed of information spread New techniques New regulations New products Organizing the atomized retail sector

33 Quality Direct Service Provision Quality Channel for subsidy Communication Standards Decrease transaction cost Self-Regulation Facilitate Gvt. Regulation Associations Franchises Chains Information Sharing CME Standards Setting / enforcement Mission driven Training Standards Commodity Supplies Standards Self-regulation Commodity Supplies

34 Channel for Subsidy Direct Service Provision Quality Channel for s ubsidy Communication Standards Decrease transaction c ost Self- Regulation Facilitate Gvt. Regulation Franchises Grant- driven Target public- health priorities Target at- risk populations Chains Standards Self- regulation Commodity Supplies

35 Communication Associations Large audience CME Participation on new regulations Regular meetings/ newsletters, etc Franchises Chains Focused audience Stronger ties Clear mission-link to communication Captive audience Strongest ties (command/control) Direct Service Provision Quality Channel for subsidy Communication Standards Decrease transaction cost Self-Regulation Facilitate Gvt. Regulation

36 Standards Direct Service Provision Quality Channel for subsidy Communication Standards Decrease transaction cost Self-Regulation Facilitate Gvt. Regulation Associations Franchises Chains Setting National / Professional definitional standards Educating to standards Enforcing (very weak) Standard-setting Encouragement Supplies Enforcing (weak) Standard-setting Command-control Brand promotion Enforcing (medium)

37 Transaction Costs Direct Service Provision Quality Channel for subsidy Communication Standards Decrease transaction cost Self-Regulation Facilitate Gvt. Regulation Transactions costs depend on how a transaction is organized: Spectrum of contract structure: Spot Markets Simple short-term contracts Long-Term Contracts Relational Contracts Vertical Integration Examples: Cough syrup;; band-aids Prescriptio n Medicine;; Delivery Referral lab;; medical gas supplier;; Long-term lease hospital chain specialist groups Hospital chain provider union Source: Rand Monograph on Transaction Economics

38 Self-Regulation Direct Service Provision Quality Channel for subsidy Communication Standards Decrease transaction cost Self-Regulation Facilitate Gvt. Regulation Associations Franchises Chains Standard-setting Mission-driven selfregulation Donor-mandated selfregulation Operational controls drive self-regulation Brand value

39 Government-Regulation Direct Service Provision Quality Channel for subsidy Communication Standards Decrease transaction cost Self-Regulation Facilitate Gvt. Regulation Networks can improve and facilitate government regulatory functions Associations Franchises Chains Training Standard setting / policing Self-regulation Communication Aligned social goals Self-regulation Communication Penalties above single-store assets

40 Chains PROS Standardized quality Improved efficiencies Encourages effective competition Lower costs to customers Increase in pharmacists and pharmacies Expansion of new services Increased accessibility CONS Profit driven and business focused Loss of the pharmaceutical environment Less personalized service - decrease in quality of care Opposition from Pharmacy Councils Possible decrease in pharmacist accountability Additional infrastructure investment Potential loss of services in rural areas Sources: Community Pharmacy Section, International Pharmaceutical Federation (FIP) Australia National Competition Council

41 Experience in India

42 India India has seen substantial growth in retail pharmacy chains starting in the mid-1990s due to liberalization of the economy and favorable regulations Increase in available financing and growing middle class has led to growth in pharmacy chains Regulations allows corporate-owned pharmacies to employ a signature pharmacist Individually owned pharmacies are facing pressure and are organizing to negotiate better drug prices and adopt modern practices

43 Retail Pharmacy Market in India: mid-1990 s-2007 early OPERATIONAL AUTONOMY 0% 100% CUSTOMER COMPETITION 0% 100% PRICE INFLUENCE Administered Market ENTRY BARRIERS Very High 0 SOCIAL FUNDING 100% 0 Discounts on Retail prices government set by state set-prices Small Entrance momand-pop retail of pharmacies;; pharmacy informal chains providers Individual Growth in ownership corporateowned to restricted pharmacists pharmacies or signature pharmacist CONTRACT CONDITIONALITY No conditionality No conditionality

44 MARKET STRUCTURE MARKET COMPETITION EUROPEANPHARMACY MARKETS TOOLS OF GOVERNANCE ORGANIZATION RULES AND REGULATION

45 Review Different Goods and Services have different inherent market attributes Significant Atomized Heterogeneous The Benefits of organized markets are: Structure Standard setting Self- regulation The Risks of organized markets are: Increased bureaucracy Monopolies Self- interest lobbying Product markets require active management to keep between the two extremes of too much organization and too little.