Adopting global best practices, greater support and investment for research and development, and decisive leadership are just a few of the elements needed to develop resilient healthcare systems capable of withstanding and responding to future pandemics and health crises writes Dr. Mothobi Godfrey Keele, Head of Government Affairs and Policy, Innovative Pharmaceutical Association of South Africa (IPASA).
We cannot improve health without combating the burden of disease. The decline in communicable diseases and shift to non-communicable diseases particularly in Sub-Saharan Africa is largely attributed to the interventions from innovative pharmaceuticals, which continue to play a pivotal role in addressing this burden.
This is the backdrop against which industry experts, business and thought leaders in healthcare, assembled at the 5th Annual BIO Africa Convention held in Durban this year. In a discussion on “Healthcare innovation in the age of pandemics,” from the perspective of innovative pharmaceutical companies, panellists – Prof. Tienie Stander, Managing Director of VI Research, Dr. Jacques Snyman, Director: Medical of Agility Holdings, Dr. McLean Sibanda, Managing Director of Bigen Global, and Prof. Alex van den Heever, Chair in the Field of Social Security Systems Administration and Management Studies at the Wits School of Governance – spoke on topics related to their areas of expertise, including intellectual property rights, the National Health Insurance (NHI), improving access by addressing ‘price myopia’, and advocating for alternative reimbursement models, respectively.
Some key takeouts to emerge from the discussion are highlighted here.
Pandemic places spotlight on intellectual property rights
The COVID-19 pandemic and related vaccine development and distribution highlighted a defining aspect of the work of innovative pharmaceutical companies, the importance of intellectual property rights. Intellectual property rights are governed by a treaty managed by the World Trade Organisation (WTO). The Trade-related Intellectual Property Rights treaty (TRIPS) waiver proposed by South Africa and India at WTO, sought to allow developing country manufacturers to export vaccines produced under the terms of the waiver to other developing countries without the restrictions that apply under the current TRIPS agreement.
This proposal generated considerable interest within the pharmaceutical industry and broader society. In June 2022, an agreement was reached at WTO to allow for “governments to authorise local manufacturers to produce vaccines or their ingredients, substances or elements and utilise processes which are covered by patents, without the permission of the patent holders during the pandemic.”
Dr. Sibanda’s presentation did not comment on the TRIPS waiver developments in favour of providing an intricate overview of the role that patents play within the pharmaceutical industry, how intellectual property (IP) is shared and considerations as to how South Africa’s patent system can be bolstered.
As a parting shot, Dr. Sibanda emphasised the significance of policy coherence on IP, referencing how debacles such as Varichem can unfold in its absence. The Zimbabwean drug manufacturer was forced to stop production of antiretrovirals (ARV) in 2012 to the detriment of the one million people, who were on the drugs in the country.
The restrictive nature of the National Health Insurance bill
The NHI is an attempt by the government to provide universal healthcare to all South Africans by reconfiguring the country’s two-tier (public and private) health system. While in principle this is both admirable and commendable, often the devil is in the detail and opposition to the proposal is fierce.
Prof. van den Heever unpacked how in its current state the bill remains unclear on some technical issues, and in his informed opinion, is likely to face constitutional legal challenges by provincial governments and private medical insurers due to the bill’s restrictive nature.
Improving access; what is ‘price myopia’
‘Price myopia’ is a term used by Prof. Stander, to describe the perceived over-emphasis placed on pricing in relation to drug treatments and general healthcare. Drug prices are affected by various factors, namely price inflation, which is the annual increase in drug prices, and utilisation inflation, which relates to supply and demand. As a drug is used more it becomes more costly. Utilisation cannot be controlled through pricing.
The key to this observation on price myopia is understanding that price does not equal profitability and more fundamentally that price is different from cost. For example, if the unit price of a Panado tablet is R2, the cost of the drug is calculated by factoring in the drug price, diagnosis, treatment and care. Put differently the cost of producing a drug or treatment is often significantly greater than its price.
Prof. Stander believes that instead of falling victim to price myopia, the focus should be on value and developing a value-based healthcare system, which is defined by obtaining the best clinical outcomes and patient experience (quality) at the lowest cost (both direct and indirect). Through value-based healthcare, we can potentially offset the inconvenient truth which pharmaceuticals have long known, which is that for innovation, a price must always be paid.
Addressing contradictions with an alternative reimbursement model
As a problem statement, Dr. Snyman referenced Rich Guarino’s evaluation of the complexities within the healthcare system. Summarised into four points these are:
- “The person ordering the service does not get the service
- The person receiving the service does not pay for the service (any third-party funder environment)
- The provider of the service does not determine what they get paid for the service
- The payer for the service determines the price but does not receive the service.”
To address these contradictions an alternative reimbursement model that prioritises value-based payment (VBP) is needed. A VBP system would allow for healthcare purchasers which as currently constituted include government, employers and consumers, along with the payers both public and private to hold physicians, hospitals and the general healthcare delivery system accountable for both the quality and cost of care.
If well executed a transition to VBP could usher in an improved quality of life for patients and greater patient satisfaction, reduce the current levels of risk and allow payers to control costs and perhaps most importantly, better align supplier prices with patient outcomes.