Healthcare Spending I – Blog Post #453 by Asrar Qureshi

Dear Colleagues!  This is Pharma Veterans Blog Post #453. Pharma Veterans welcomes sharing of knowledge and wisdom by Veterans for the benefit of Community at large. Pharma Veterans Blog is published by Asrar Qureshi onWordPress, the top blog site. Please email to asrar@asrarqureshi.com for publishing your contributions here.

Healthcare spending is a composite of spending on doctors’ consultations, diagnostic procedures, medicines and hospitalization expenses (if needed). No data is collected for spending of consultation and diagnostics, although it has become quite a big expense. In fact, for a regular patient, this expense may be many times more than the cost of medicines. The spending on medicines is recorded through monitoring the sales of Pharma companies. IQVIA is an international company which collects Pharma market data, compiles it, publishes it, and sells it at cost.

IQVIA recently published market statistics for Q4, 2020 which covered the entire year 2020 also. IQVIA, as you know, is the new name for IMS which became IMS-Quintile for a short while before becoming IQVIA. Pharma people all over the world recognize IMS/IQVIA as an authentic source for pharmaceutical markets statistics in various world markets. Pharma companies follow their market shares and rankings on this platform.

Year-on-Year growth has been reported at 10.5% and the market size has reached 501 billion rupees. This is mainly retail market; the institutional purchases are not included.

Considering that we are a country of 220 million people, our consumption of medicines per capita comes to 2277 rupees per year, or 190 rupees per month.

A comparison with some developed countries may be interesting.

US had the highest spending on Pharmaceuticals, 1011 USD (161,760 rupees) per capita per year. Among European countries Sweden was at the bottom with 351 USD (56,160 rupees) per capita per year.

Other developing countries like Pakistan have similar patterns. The physicians have devised various ways to maximize their income and the diagnostic lab charges are also unregulated. Only the prices of drugs are regulated. Price regulation does have some benefits, and these should be extended to other arms of healthcare.

The overall spending on healthcare in Pakistan is among the lowest in the world. We know that our households do not keep any budget for healthcare and a health problem is almost always an emergency. It looks nice to say that we should keep a healthcare budget, but it is not practical. How much should it be, for example. How can we know what will happen? A better solution to this is Health Insurance which is now available in most countries of the world.

Health insurance offers various packages, from outpatient treatments to hospitalization, it covers the full spectrum. The sum total of facilities offered is much bigger than the premium, which is usually nominal.

Health insurance is the solution to keeping a budget for healthcare. The health insurance premium is a fixed amount that can be paid, and one could be worry-free about healthcare. Several corporates also buy health insurance for their staff which is a beneficial thing.

I have had the opportunity to use both corporate and personal health insurance. There are several problems associated with this system which should have been cleared by now but are still persisting.

One, the health insurance is not accepted universally. Only selected hospitals accept it. It means that the insured people must present at a certain hospital even if it is far from their place.

Two, the behavior of hospital staff towards insurance patients is discriminatory. They consider insurance patients as if they are somehow non-paying and would not extend the same benefits to them which are given to paying patients.

Three, the hospitals tend to overcharge which is most likely in connivance with the insurance company staff. For the same procedures done against cash payment, the insurance claims are inflated unreasonably. One example would illustrate this. I had herniorrhaphy on one side in 2009 as a private paying patient. I got special concession due to my doctor brother and I paid only 10,000 rupees. I got the other side herniorrhaphy done through insurance and the bill was 210,000. I paid only 5000 and the rest went to insurance company. Even when we adjust for inflation over time, this bill is exorbitant. This factor shall correct itself when more and more people use health insurance.

Four, only few companies are offering health insurance and even they are doing it halfheartedly. This should be aggressively marketed to get more clients. With increased competition, the packages and services shall improve.

Health insurance is the only viable option for health cover for masses. Vietnam is probably a unique country where they achieved the target of bringing 100% population under health insurance cover in 2018. India has over 300 million people under health insurance. Pakistan has less than 10% or around 20 million people under health insurance, most of which is in corporate sector.

The concept of buying insurance privately is almost non-existent here, which should be examined.

To be Continued……

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