Draft National Health Policy of India and Determining Cost-effectiveness Threshold

Abstract

1 The Seventh Asia‐Pacific Conference of the International Society for Pharmacoeconomics and Outcomes Research was held in Singapore this year from September 3, 2016, to September 06, 2016. “Pharmacoeconomics and Outcomes Research in Asia‐Pacific: Challenges, Opportunities, and Future Direction” was the theme of this conference. This occasion presented a perfect opportunity to discuss some of the challenges that are unique to Asian countries in terms of their health‐care and decision‐making processes. This is especially true for a country like India, the world’s third‐largest economy, whose new National Health Policy (NHP) is likely to decide the trajectory of its health‐care system over the next few years. In developed countries, the political debate over economic issues is often seen as a clash between free market principles and government control. Developing regulatory policies in such an environment is an ongoing battle between the public and private sector. Such battles are often seen spilling over in health‐care policy‐making. In India, the fundamental health‐care issues are at the bottom of the list of any political discourse; occasionally they surface to the forefront led by interest groups that have bigger political clout and their own special interest. Issues such as conditions of hospitals, doctors’ compensations, corruption within professional and accreditation bodies draw more public interest and attention than vital questions such as “why do some parts of the country still suffer from diseases like malaria or tuberculosis?” or “why is there a constant shortage of essential drugs in government hospitals?” or “why do drugs and treatment costs vary significantly within the same geographical region?” These kinds of vital questions rarely lead to any public or political discourse. The new government under Prime Minister Modi plans to offer universal health care under its recently released NHP draft.[1] One can sense the intentions of this government from this draft policy as it states, “It is a declaration of the determination of the government to leverage economic growth to achieve health outcomes and an explicit acknowledgement that better health contributes immensely to improved productivity as well as to equity.” While discussing the current situation of health care in India, this NHP draft further acknowledges several challenges that it needs to confront, including inequities in health outcomes, quality of care, growing disease burdens, increasing health‐care costs, inadequate investment and financing of health care, shortage of health‐care professionals, paucity of health services research, and poor regulatory framework.[1] Among all other objectives listed in this draft policy that the government wants to focus on, one of the important objectives – organizing and financing health‐care services – deserves special attention from economists, health outcomes researchers, and health‐care professionals, including pharmacists and policy makers. One cannot downplay the fact that all health services available under national programs in India are free to all its citizens and are universally accessible and moving forward, these services will most likely be expanded as stated in this policy draft, which will add a tax burden to society. Presently in India, the private sector provides 70%–80% of health‐care services, and it does not share any cost burden of providing free care and hardly has any regulations.[2] Implementing this policy as suggested, will require further infusion of approximately $50 billion (Rs. 312,500 crore) to reach the level of health expenditures of 2.5% of gross domestic product (GDP) to fund government’s proposed expansion. According to the government’s own estimates and as stated in its policy draft, over 63 million people are pushed to fall below poverty due to health‐care costs alone every year. Population coverage was expected to grow to about 370 million under the publicly financed health insurance schemes, of which nearly two‐thirds (180 million) of beneficiaries were below the poverty line category in 2014. Based on 2015 estimates, approximately 288 million (28.8 crore) people, less than one‐fifth of India’s population, were covered by health insurance. Among those who had some form of insurance coverage, 67% were covered by public insurance under Central Government Health Scheme, Employees’ State Insurance Scheme, and Rashtriya Swasthya Bima Yojana.[3] In 2014, India spent 1.04% of its GDP, about 4% of its total government expenditure, on health care, which, for a country being touted as the world’s third largest economy, is incomparable to the global standards. This spending, as a percentage of GDP, on health care is one of the lowest among countries of the Southeast Asian region. India’s spending is only a little higher than that of the Myanmar and is the lowest among BRICS (Brazil, Russia, China, and South Africa) countries.[4] Evidence further suggests that countries need to spend at least 5%–6% of their GDP to meet the basic health care needs of its population.[5] The Indian government in this policy draft has indicated its commitment to raise its share of health‐care expenditure to 2.5% of the GDP in next 5–7 years. However, the reality is, one of its major commitments of opening 3000 Jan Aushadhi Stores, aiming to provide generic medicines to people at an affordable cost, only managed to open 310 stores to this day.[6] The pricing of drugs in India is controlled through the National Pharmaceutical Pricing Authority. According to this draft policy, the government would like to include diagnostics and equipment under some form of price control. This draft policy has also suggested creating a regulatory framework modeled on the work of the National Institute for Clinical Excellence (NICE) of the United Kingdom. The NICE produces evidence‐based guidance and advice for health, public health, and social care practitioners, develops quality standards and performance metrics for those providing and commissioning health, public health, and social care services, and provides a range of informational services for commissioners, practitioners, and managers across the spectrum of health and social care. One of the most important roles of NICE is to conduct technology appraisals for assessing the clinical and cost‐effectiveness of the new pharmaceutical and biopharmaceutical products, including procedures, devices, and diagnostic agents, and to ensure that patients using National Health Service (NHS) in the United Kingdom have equitable access to the most clinically and cost‐effective treatments. Recommendations of NICE’s technology appraisals are based on clinical (how well the treatment work) and economic (does it represent the value for money) evidence. To consider technology to be cost effective, NICE has been using an implicit cost‐effectiveness threshold ranging between ₤20,000 and ₤30,000 per quality‐adjusted life year (QALY) gained for many years.[7] This threshold has always been challenged and even subjected to judicial review, instigated by drug companies such as Pfizer and Eisai, and inquiry by the House of Commons Health Select Committee.[8] However, it still remains the threshold for measuring cost‐effectiveness and the basis of resource allocation by the NHS in the United Kingdom. The other cost‐effectiveness thresholds that are currently in use include $50,000 EDITORIAL