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Philippines’ Universal Healthcare – A Promising System Plagued by Inconsistent Quality of Service Delivery

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Over the years, governments across emerging markets have realised how critical universal healthcare coverage is for their population. While some countries have taken the challenge head-on, others have followed a wait-and-watch policy to see how such systems are being implemented, and gradually adopted a system that is based on the good practices of several healthcare plans.

In recent years, several Southeast Asian countries have adopted different forms of universal healthcare plans for their countries. Universal healthcare-related policies and delivery mechanisms were largely based on existing healthcare systems, a result of gradual development (based on local factors and priorities). Therefore, while theoretically universal healthcare exists (wherever applicable), it differs in terms of the actual benefits (e.g. quality and range of services and monetary advantage to patients).

We review these plans across a few Southeast Asian countries, to understand their infrastructure and design, and available opportunities for healthcare service providers, medical device manufacturers and pharmaceuticals companies. As part of this series, we start with Philippines, where about 80% of the population is currently covered under the universal healthcare plan, called PhilHealth.


This article is part of a series focusing on universal healthcare plans across selected Southeast Asian countries. The series also includes a look into the plans in The Philippines, Cambodia, VietnamIndonesia, and Thailand.


The Philippines is a lower-middle income country with a population of about 97 million. In spite of a strong focus on healthcare services, inequality in terms of healthcare access to various socio-economic groups and regions remains a persistent issue. Achieving universal healthcare access for all its citizens is a key objective of the government’s National Objectives for Health (2011-2016) program, and the government aims to fulfil three primary goals through this program – 1) financial risk protection; 2) better health outcome; 3) responsive healthcare system.

The first step towards universal healthcare was the launch of Medicare (1969), which provided health insurance to formal sector (public and private) employees. Coverage was extended to the poorer section of the population and the informal sector with the creation of PhilHealth (Medicare was merged with it) in 1995.

As of 2013, more than 80% of the country’s population was covered under the national health insurance program PhilHealth. The government aims to provide 100% coverage by 2016.

Philippines UHC

For a private sector healthcare player (pharmaceutical company, medical device manufacturer, or healthcare service provider), a country with 100% insured population presents strong incentives in form of greater access to diverse sections of the population with varied service and product needs, which will inevitably drive sales. However, to maintain the effectiveness of universal healthcare coverage, the government needs to work beyond simply the numerical (on paper) coverage of its population under the health cover to ensuring informal sector participation in the scheme, consistency in service delivery at primary care level, and adequate coverage of diseases.

The long-term success of social health insurance (and related with it, the prospects for healthcare sector stakeholders) will be determined primarily by how PhilHealth has been designed and what emphasis is being laid on infrastructure.

We take a closer look at these two critical aspects of the universal healthcare program.

INFRASTRUCTURE
Key Stakeholders
  • The Department of Health (DOH) is responsible for developing programs and policies, monitoring standards, and provision of specialized and tertiary level care
  • DOH is represented at the regional level by centres for health and development (CHD), which link national programs with local government units (LGU); provincial administration (including hospitals and primary care) fall under each LGU
  • LGU administers healthcare services through Health Boards at the provincial (led by the governor), city (led by the mayor), and municipal (led by municipal mayor) levels
  • Barangay (village) is the smallest administrative unit with primary health station/health centre
Healthcare Service Delivery
  • Public hospitals account for about 40% of approximately 1,800 hospitals in the Philippines
  • Based on the range and quality of services offered, hospitals are classified into four levels:
    • Level 1: general hospital with maternity ward, dental clinics, 1st level X-ray, secondary clinical laboratory with consulting pathologist and blood station, and pharmacy
    • Level 2: Level 1 facilities + respiratory units, ICU, NICU, HRPU, tertiary clinical laboratory, and 2nd level X-ray facility
    • Level 3: Level 2 facilities + plus teaching/training, physical medicine and rehabilitation, ambulatory surgery, dialysis, tertiary laboratory, blood bank, and 3rd level X-ray
    • Level 4: Specialty hospitals with treatment facilities for health conditions such as bones, heart, lungs, etc.
  • Current hospital infrastructure:
    • Level 1: ~ 352
    • Level 2: ~ 276
    • Level 3: ~ 41
    • Level 4: ~ 51
    • Private Hospitals: ~ 1,120
KEY CHALLENGES
Overlaps in the referral system

  • Despite a highly decentralized healthcare delivery system, there are overlaps in the referral system in which district hospitals also act as the entry point into the country’s healthcare system. This may result in overcrowding of district hospitals, under-utilization of primary care centres, and loss of efficiency (patients being referred back to their local villages)

Variance in quality of healthcare service delivery

  • Provision and quality of services largely depend on the LGU administration, where local funding plays a crucial role. Healthcare is one of several areas that fall under the administrative regime of an LGU; it has been observed that healthcare prioritization varies by LGU, implying that the quality of healthcare service delivery by LGU, leading to variance in service levels across the country

 

DESIGN
Beneficiary Classification
  • PhilHealth members are classified into four groups
    • Group 1: Formal sector employees
    • Group 2: Self-employed professionals, members of the agricultural sector, and members of the informal sector
    • Group 3: Retirees and pensioners who are at least 60 years old and have made 120 monthly contributions to PhilHealth
    • Group 4: Poorest segment, belonging to the lowest 25% of the Philippine population and families listed in the National Household Targeting System for Poverty Reduction (NHTS-PR)
Healthcare Insurance Financing
  • PhilHealth is mainly funded through government taxation, and employer and employee contribution
  • Premium is fixed at 2.5% for formal sector employees (Group 1)
  • Group 2 members fall under the individual paying program – those with less than P 25,000 monthly income pay P 2,400 as yearly premium, and those with over P 25,000 cut-off pay P 3,600 annually
  • Group 3 and 4 are not required to pay any premium
Payment System
  • Hospitals work under fee-for-service system, and are paid by PhilHealth for a defined set of services; reimbursements are paid directly to service providers
  • DOH has identified 25 health conditions under case-payment (covers total cost per case) for PhilHealth cardholders
Benefits
  • A defined set of services at pre-determined rates are covered by the PhilHealth scheme, and patients are required to pay out-of-pocket beyond the rate ceiling; coverage includes cost of medicines, supplies, and diagnostics during hospitalisation
  • Outpatient consultations are not covered under PhilHealth; only a handful of health conditions, such as asthma, gastroenteritis, upper respiratory tract infection, and pneumonia qualify for treatment under the insurance plan
Co-payment (Reimbursement) System
  • The PhilHealth system does not work on the principle of fixed-percentage co-payment system; patients (irrespective of the beneficiary group it belongs to) are required to pay the balance if the cost-of-service goes beyond a pre-determined ceiling for a particular service
  • Ceiling rates may vary for the same service; higher ceiling rates are applicable for patients visiting specialty level hospital facilities
  • For the 25 health conditions under the case-payment system, baseline benefits can range from 50% to 100%; DOH is also implementing a zero co-payment policy for beneficiaries under the sponsored program (Group 4 beneficiaries) for the 25 disease defined under case payment
Reimbursement System for Drugs
  • Drugs, listed in the Philippine National Drugs Formulary, and required during hospitalisation are covered under PhilHealth; minimum ceiling rates (for single confinement period) for medicines according to the hospital level are the following:
    • Level 1: P2,700
    • Level 2: P3,360
    • Level 3: P4,200
KEY CHALLENGES
Enrolment and recognition of actual beneficiaries by group

  • Enrolment of population representing the informal sector into PhilHealth is a challenge, as due to their irregular income levels, beneficiaries under this category do not enrol or pay the mandated premium
  • Also, identification of the poorest segment of the population, forming the sponsored category, is a grey area as the system is unable to ensure clear distinction between the entitled population versus those from other groups

Inadequate monitoring of service delivery

  • PhilHealth mainly provides in-patient benefit with low financial protection due to the ceiling system
  • Due to apparent lack of check on the fees charged by hospitals, even higher ceilings do not benefit patients, as hospitals raise their cost of services; consequently, the actual number of people availing its services appears to be significantly low
    • For instance, in 2011, PhilHealth’s share in the country’s total healthcare expenditure was only 9.1% vis-à-vis out-of-pocket share at 52.7%; the rest 38% was government’s expenditure on healthcare other than PhilHealth

Opportunities for Healthcare Companies

Healthcare Service Providers

  • Significant Public Private Partnership (PPP) opportunities in exist in Philippines’ healthcare sector, to raise the level of services and to extend the coverage

  • Currently, only a 700-bed orthopaedic centre is being operated under the PPP model, and according to Philippine’s Health Secretary, there is significant opportunity for the PPP model in all DOH managed hospitals

  • The only roadblock for the adoption of PPP model is the perception of it being a move towards privatization of healthcare services (given that private sector already dominates the healthcare space in Philippines)

Medical Device Manufacturers

  • Public hospitals (especially those under LGU administration) usually are short of resources for the procurement of medical devices (mostly imported), which constraints them in providing patients with critical diagnostic services; this remains an area of concern as available devices will be inadequate to meet the 100% population coverage target of PhilHealth

  • At the same time, the demand for devices remains robust, and growth is expected on account of increase in the number of people under coverage as well as greater availability of healthcare services across the country. In order to further boost demand, medical device companies could explore ways to finance the purchase, so as to motivate hospitals to purchase equipment

  • The DOH has also hinted that critical equipment, such as CT scans and MRI machines, can be procured under a PPP model, providing an alternative option for device manufacturers to widen their presence

Pharmaceuticals Companies

  • In the current scenario, scope for pharmaceuticals companies is limited to medicines used for inpatient treatment. Sales potential is likely to increase as the government introduces zero co-payment policy for 25 health conditions for the sponsored category beneficiaries

  • Also, with the proposed widening of treatment coverage to include conditions such as hypertension and diabetes (was expected to come into effect in October 2013) which affect about 20% of the adult population, sales prospects is likely to improve

A Final Word

Philippines’ universal healthcare plan, PhilHealth, provides a strong foundation for access and quality enhancement of healthcare services to its population. With coverage of about 80% of its population currently, the country’s healthcare policy has tried to provide equality of service delivery to its citizens, and covers a range of common diseases and inpatient treatments. While there are obvious concerns around inadequate hospital facilities and diagnostics equipment, issues with accurate entitlement of benefits and inadequate monitoring of service delivery, the country’s healthcare administration is working with private partners to strengthen the system and focus on providing quality healthcare to its citizens.

From the perspective of healthcare industry participants, hospital services companies perhaps have a higher potential for growth in view of the shortage of hospital facilities across the country, while drugs companies must continue to rely on limited access to inpatient treatment facilities, providing drugs for the most common diseases (perhaps, also the cheaper product variants of their portfolio).

by EOS Intelligence EOS Intelligence No Comments

Global Pharmaceutical Market Scenario – Challenges, Action Plan and Potential Outcome

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Global pharmaceutical companies have suffered considerably on the face of patent expiry and lack of robust product pipeline in the last four-odd years. It is estimated that drug companies have on average seen a 20% decline in their revenues during 2009-2013 period.

The ‘patent-cliff’ is around the corner and major drug companies can expect a less challenging period in the next few years. However, there is a different kind of challenge emanating from generic drug manufacturers consolidating their position and governments across the world focusing on cost reduction and value realization in health care.

How the market evolves for global drug majors from this year onwards will primarily depend on how well they strike a balance between their business priorities and the concerns and expectations of other key industry stakeholders such as governments and consumers. From the drug companies’ perspective, product pipeline (awaiting approvals) looks healthy again. Also, instead of focusing on single (or few) mega drugs, drug companies are developing products targeting niche segments such as cancer treatment, neurological disorders treatment, infectious diseases, etc.

Another important realization of the last few years has been the need to cater to diverse expectations of consumers in developed as well as emerging markets. Consumers in mature markets are increasingly demanding a demonstration of value whereas there are still untapped consumers in cost-conscious emerging markets who are in need for the basic drugs for regular ailments.

Pharmaceutical companies must also monitor closely countries where the drug market is still under-developed and governments are working towards greater access to healthcare and better regulatory frameworks. This may help drug producers in gaining smooth access to the market as far as new products are concerned, clinical trials, and may also provide opportunities to collaborate with governments in raising overall healthcare standards in the country.

Global Pharmaceutical Market Scenario

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The ASEAN Pharmaceutical Market – Measure of Attractiveness

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The ASEAN region, home to more than 600 million people, has historically been an attractive market for international pharmaceutical companies. With the exception of Indonesia, all other countries in the ASEAN region rely heavily on pharmaceutical imports, with Myanmar importing up to 80% of its annual demand. Relative attractiveness of each country in the region also depends on several other factors, as highlighted in the following illustration.


Market Attractiveness of ASEAN Region Countries for International Pharmaceutical Manufacturers

by EOS Intelligence EOS Intelligence No Comments

Will Pharma Tweet Louder? 6 Rules of Doing it Right on Social Media

Initially considered to be exclusively a tool for common people to connect with friends and share their private pictures, social media platforms have now gained the status of a potent communication channel eagerly used by companies across the world. While the expansion of social media is influencing the way businesses are conducted today, pharma and healthcare industry has been somewhat slow and reluctant to use it to its fullest potential.

By 2012, Facebook user base crossed 1 billion mark, increasing by 200 times since 2005, while Twitter recorded tremendous growth, reporting 200 million active users sharing 400 million tweets per day. While some industries such as consumer goods, retail, and hospitality have been benefitting from engaging with their customers through a range of social media platforms, other sectors, including pharma and healthcare, have been slow to join the ‘social crowd’.

Points of concern

There is a reason why healthcare-related sectors were late on the social media map. Creating an open platform for communication on health and drugs aspects, raises a range of concerns: the FDA regulations, patient confidentiality, cyber security, unavoidable off-label use discussions, uncontrolled negative comments, and risks of providing wrong medical advice that could lead to lawsuits. The FDA in particular, plays an important role here, through its Division of Drug Marketing, Advertising and Communications (DDMAC), which lays out the rules of the content that can and cannot be communicated, what content must be included and the manner in which the communication must occur. The fears associated with social media activity monitoring by the FDA, typically originate from three problems:

  • Lack of clarity and formal guidelines – in 2011, the FDA published draft guidelines, and it is yet to develop definitive rules on social media policy. The FDA is acting slow, and there is no clarity on dos and don’ts for social media engagement, yet the authority regularly scans the social space to monitor risky communication, while pharma companies find the rules of the game ambiguous

  • User-initiated off-label use discussions – a common issue in pharma social media platforms is user questions and discussions on off-label use of drugs, i.e. using a drug in a different way than described in the approved drug label or leaflet. This is considered unsolicited content and companies must respond and correct such a content occurring in public forum as these discussions might encourage dangerous experiments with drugs by patients or might be confused with recommended and approved use of a drug

  • Adverse event reporting obligation – the FDA obliged pharma companies to immediately report any adverse drug effect or reaction they learn about. Social media give platform for large numbers of patients to share their experience with adverse drugs effects, and the companies are afraid they will have to report it, which may cause investigations, bad press, and might lead drug being banned from sale

Similar fears are faced by non-US pharma companies too, as the FDA’s local counterpart authorities introduce similar regulations on communication via social media, which at times can be even stricter than the American ones.

Game worth the candle

Ignoring the risks by pharma companies can unfold a range of undesirable scenarios, a fact that has kept many drug makers hesitant of engaging in social media for quite some time. But this does not mean that pharma and healthcare organizations are still not present in social media at all. To the contrary, pharma companies, healthcare providers, device manufacturers, and health insurers have started to listen and engage with users through social platforms, though many of them still do it cautiously and have still not been able to unlock the social media’s full potential. These players have started to understand that with careful moves, the benefits will outweigh the risks:

  • generate engagement and discussion around health issues, which contributes to the positive reputation and brand image, and obviously – increase sales,

  • get quick, cheap, first-hand information on drugs’ effects on a large scale, which brings valuable insights that are not available from regular clinical trials whose scale is always smaller,

  • gather information invaluable in building marketing strategies, including pointers on price perceptions, drug availability as well as patients’ opinions about competitors’ drugs.

Who’s doing it?

Though it was estimated that in 2011, 90% of the pharmaceutical industry was still inactive on social media, currently, this has changed (though today’s participation share is unknown). Several pharma-sponsored communities are now active across Facebook, Twitter, YouTube, Google Plus, on one or multiple platforms, with a differing level of interactivity and different weight being put on inbound versus outbound marketing. Some of the examples include:

  • Roche’s Accu-Check Diabetes Link, a diabetes-support community with information, discussions, and blogs

  • GSK’s Alli Circles well-being, weight loss, and health community

  • Novartis’ CV Voice for cystic fibrosis patients and Chronic Myelogenous Leukemia own community-based site CML Earth

  • Pfizer’s community ‘getold.com’ targeting the expanding elderly group of the American population

  • Sanofi US’ Diabetes support community

  • Soon-to-be-launched Boehringer Ingelheim’s Facebook-based game, where players create and operate their own pharmaceutical firm, and discover imaginary medicines through virtual laboratory

Getting it right

It appears that the healthcare industry is finally attempting to catch up on the social media revolution in spite of a slow start. From primarily information dissemination, it is now moving towards real time engagement between physicians, patients, and other stakeholders. Soon, developing a social media policy will no longer be an option for pharma companies. But this should not be seen as a burden, but rather as an immense opportunity for the pharmaceutical companies to develop trust, build brand image, and impart health education. Drug makers that want to be successful on their social media path should consider 6 basic rules of online presence for pharma companies:

  1. Take your risks seriously – social media engagements, especially in pharma domain, always raise privacy, legal, and confidentiality concerns among the participants and monitoring bodies. Extra cautiousness in operating online communities is of utmost importance, including constant monitoring of the content being added by individual users and patients. Social platforms also pose risk of incorrect drug information or unfair accusations that might damage your image, but it can be flipped to an advantage, using the platform to quickly clarify and avert unwanted comments, provided that you have a dedicated, competent staff handling your social media

  2. Control your speakers – given the high risks and ambiguity of formal guidelines, there is a need for internal policy or guideline book listing dos and don’ts for online communication, content approval process, crisis management practice, confidential information sharing policy for employees running social platforms on behalf of the company

  3. Know your target audience – the social media pharma-related content must stay relevant and target focused groups to have the right impact. Patients with a particular disease or ailment look for relevant, detailed information, and they typically already know quite a bit about the problem. Expertise must be shown along with dedication to creating high quality content, that is useful, new, and (ideally) entertaining

  4. Get the objective right – social media is not another advertising board. The primary aim of the social media presence is to generate engagement as well as share and manage knowledge by facilitating interaction and discussions. This must take precedence over advertising

  5. Be transparent – transparency is always appreciated by consumers and patients. The link with the company must be clear, users working for the company must disclose their affiliation, and negative comments, unless unjustified or vulgar, cannot be censored

  6. Understand that social media are not a lone island – social media activity and content must be aligned with overall marketing strategy and be used cohesively with all other marketing channels, ideally to complement each other. Social media cannot become a neglected child of the marketing department in a long run, it must be maintained actively and linked to other marketing efforts whenever possible (e.g. to disseminate important announcement teasers, generating traffic to blog entries, or provide interactive content as part of larger marketing campaign including traditional media)

Social media engagements by drug makers might seem only as a nice publicity stunt, but it is so much more than that. Pharma companies, as most players across many industries, finally started to realize that listening and engaging with conversation with the customer pays off in many aspects. Just as was the case in consumer goods or retail sectors, social media will continue to change the pharma industry on a large scale. Players who want to matter, should not allow themselves to stay behind, even considering the risks involved.

by EOS Intelligence EOS Intelligence No Comments

Essential Drugs in India – Is It All About Affordability?

For a pharmaceutical company, establishing a balance between production cost, profitability and affordability of the drug for consumers is a delicate matter, with natural temptation to push the aspect of affordability to the back seat in search for profit maximization. Large pharmaceutical corporations have often been criticized for not undertaking sufficient efforts to promote availability and affordability of essential medicines, especially in poor and developing countries. It seems that this criticism is slowly yielding positive results – several drugmakers, led by giants such as GlaxoSmithKline and Johnson & Johnson, are intensifying their initiatives oriented at ensuring the availability and affordability of their drugs in less affluent markets. These efforts are mirrored in the “Access to Medicine Index”, published in 2012 by Access to Medicine Foundation, that clearly indicates drugmakers’ response to rising social pressure to provide affordable drugs.

The drugmakers’ initiatives span a range of actions – differential and reduced pricing, technology transfers under license agreements, as well as donations. For instance Gilead, a US-based biopharmaceutical company, provides waiver of royalty payments to licensed manufacturing partners of its HIV medicines. Since 2011, it has also operated a five-year single-drug donation program, which involves donation of 450,000 vials of AmBisome (amphotericin B liposomal), for the treatment of visceral leishmaniasis in developing countries, including in India. Another example is Merck India, which has been selling its anti-diabetic drug, Januvia, at one-fifth of the US price since 2008.

But pharma companies are not alone in their efforts. Indian government has introduced a policy aimed at increasing the availability of essential drugs at affordable prices. In 2011, the government proposed to increase the number of drugs remaining under the purview of the National Pharmaceuticals Pricing Policy 2011 to 348, up from initial 74. This policy has been amended in 2012 to include 652 commonly-used drugs under 27 therapeutic areas. Introduction of this policy is expected to result in a price drop of 10% or more for about two-thirds of essential drugs available in the Indian market.

While these combined corporate and government efforts are likely to boost access to inexpensive essential drugs, Indian government actions might, ironically, have an adverse impact on the industry. Several pharmaceutical corporations operating in the Indian market are already averse to these new government policies, citing erosion in both top and bottom line results. There are at least two more negative repercussions potentially arriving from the government’s actions:

  • In a scenario, where the provision of price-capped drugs becomes unprofitable for the drugmaker, the pharmaceutical company may decide to discontinue the availability of these medicines in the Indian market. This took place prior to the introduction of the National Pharmaceuticals Pricing Policy 2011, when 27 of the 74 drugs under price control were discontinued. Such a scenario would render these price control efforts counter-productive, to say the least.

  • At the same time, quite possibly, small domestic generic drug manufacturers are likely to be tempted to raise the prices of their low-cost drugs closer to the designated price-cap level, which in their case would mean an increase in the average price of drugs. This would, without a doubt, negatively impact consumers, particularly in smaller tier II and tier III cities across the country.

Increasing social pressure to provide affordable drugs is forcing both corporations and governments to introduce efforts to control drug prices. While these price control measures are necessary to make essential drugs affordable to the Indian public, these efforts may backfire in the long run. Possible drug discontinuation and average price hikes ultimately point towards corporations placing profit maximization over consumer needs.

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