Leveraging Private Pharmaceutical Sector Capacity Toward Achieving Sustainable UHC in Low- and Middle-Income Countries

By Kwesi Eghan, SIAPS Principal Technical Advisor, Pharmaceutical Systems Cluster

Universal health coverage (UHC) in low- and middle-income countries (LMICs) requires government-led public financing. However, the financing capacity of most LMICs is already stretched thin, between the demands for population coverage, quality service, reduced out-of-pocket payments, and other societal funding requirements.

To meet this challenge, mechanisms to improve domestic resource mobilization, innovative health financing, and leverage resources beyond the public sector are needed. The private sector in many LMICs finances substantial portions of the pharmaceutical sector through service provision and out-of-pocket payments. Pharmaceutical services and products are provided by a heterogeneous private sector through a wide range of for-profit and not-for-profit providers, including last-mile itinerant medicine sellers, licensed and unlicensed drug outlets, independent pharmacies and chains, public hospitals and clinics, private for-profit and not-for-profits (nongovernmental) clinics and hospitals, being central medicine stores, commercial wholesalers, and manufacturers. In some countries, the private sector serves the affluent, while in others, it is the only source of medicines for the poor.

Despite global and national progress toward UHC, according to the World Health Organization, more than one billion people still lack access and pay high out-of-pocket costs for health and pharmaceutical services. Actively involving the private sector can help reduce this gap in access.

The global drive for UHC provides yet another opportunity to actively partner with the private sector in health care. I adopt the private public partnership (PPP) working definition by Pieter Stolk et al., which states that PPPs, “are any informal or formal arrangement between one or more public sector entities and one or more private-sector entities created to achieve a public health objective or to produce a health-related product or service for the public good.” In a PPP, the partners invest and share certain risks, and they may exchange intellectual property or financial, in-kind, and/or human resources in any mutually agreed proportion for expected returns.

PPPs are not new to many high-income countries (HICs). Traditionally, most pharmaceutical research and development (R&D) has been carried out and funded by the private sector. To improve the economic viability of industry research ventures, public sector regulatory interventions, such as the passage of the Orphan Drug Act (US 1983 & EU 2000), have increased private sector investment in product development and manufacturing for rare, neglected diseases and for antibiotics whose prices have dropped so low that they are unattractive to manufacturers. Other innovative public-private funding mechanisms include involving academic institutions in pharmaceutical sector R&D and developing patent pools in HICs.

Several examples of PPP in service provision can be found. In the UK, the publicly funded National Health Service has private sector general practitioners and pharmacists who provide services. Public funds in Afghanistan are used to contract with private sector, not-for-profit organizations to provide a basic package of primary health services. Ghana’s National Health Insurance Authority accredits both public and private health facilities to provide a UHC benefit package. The chronic disease drug distribution units in the Western Cape and Gauteng province of South Africa are classic examples of PPP in the pharmaceutical sector.

The regulated network of licensed retail drug outlets known in Tanzania as accredited drug dispensing outlets, which train dispensers and upgrade facilities, is accredited by the national health insurance fund. This expands the reach of the public service to those living in rural and semi-urban areas.

Despite successes and in the face of varying perspectives, it is clear that challenges around capacity, quality of services, transparency, terminology (e.g., health market versus health system), operational cost, and scalability of PPP models and approaches exist.

The global drive for UHC provides LMICs with opportunities to review and update these models, reassess regulations, and apply quality assurance instruments, such as accreditation, credentialing, and business and commercial models (e.g., social marketing, franchising, and chains) to enable a more structured increase in private sector involvement. In their recent Lancet Series (June 2016) on the role of the private sector in health systems, McPake, Hanson et al., sum it up by saying that our collective goal should not be to arrive at some settled ideological position either for or against the private sector. Rather, the objective should be to ensure that whatever mix of public and private health provisions exists in a particular setting, the goal of UHC is met.