Public health is best left to markets

Game-changing inventions taken out of entrepreneurs’ hands; slower innovation in healthcare technology and fewer ground-breaking treatments for patients worldwide: All these are possible outcomes of a combative report from the influential United Nations High Level Panel on Access to Medicines, which takes aim at the market-based system of drug development.

The panel argues that medicines would be cheaper if governments replaced markets in drug development, with a greater coordinating and resource-allocating role for the United Nations.

It also proposes stripping companies of their intellectual property rights to ensure developing countries can access drugs at minimal cost.

The panel’s views are too pessimistic. Far from triggering some kind of public health Armageddon, the global spread of markets into the healthcare sector in recent decades has allowed us to live longer and healthier lives today than ever before.

Since 1960, global average life expectancy has risen by 36 per cent, while India’s rose from 42 to 68 years with the gap between rich and poor narrower than ever. Around the world, cancer death rates are plummeting. Infectious disease, recently a global scourge, is largely under control.

Much of the credit must go to the growth of global healthcare markets, which have created new technologies and knowledge and spread them worldwide on the back of free trade.

Five years ago, hepatitis C was an incurable condition treated in two ways: a 48-week course of injections with nasty side-effects, or a liver transplant. In 2013, the launch of new drug, sofosbuvir, revolutionised treatment meaning most patients could be cured within 12 weeks.

This has made sofosbuvir hugely profitable. Dozens of other companies are now racing to release cheaper and better hepatitis C cures to tap into this market, with five new treatments expected by 2018. Competition is expected to push down prices.

Competition for market share has seen companies recently develop a host of remarkable medical technologies, including vaccines against malaria and dengue fever, handheld devices to screen blood, portable ultrasound scanners, needle-free diabetes care, and transformative cancer drugs.

Developments in precision medicine will soon see medicines tailored to individuals. What the UN Panel’s report won’t say is that the most serious public health failings have come from governments rather than markets.

World Bank figures show only 0.7 physicians per 1,000 people in India, well below the three to four typically seen in high-income countries. Africa is worse. India only spends 4.4 per cent of total government expenditures on health – well below the 15 per cent recommended by the WHO.

Rather than attempting to replace markets in health with a bureaucracy, the UN panel should acknowledge the power of markets to achieve social goals, and working with the private sector as a partner, not treating it as an enemy.

Data shows that governments have generally achieved cheaper prices for HIV drugs when they are procured from companies via multilateral bodies such as the Global Fund, rather than when the IPRs of the developers are overridden to allow state control over production and prices.

Collaborations between the inventor of sofosbuvir, Indian generics manufacturers and the public sector in dozens of countries have seen the treatment made available to around half the world’s population infected with hepatitis C.

New, private-sector developed vaccines are now reaching patients in the world’s poorest regions thanks to industry partnerships with the donor-funded Global Alliance for Vaccine and Immunization.

Among them are the world’s first 5-in-1childhood diseases vaccine, the cervical cancer vaccine, and the brand new dengue fever vaccine, currently being rolled out in several Latin American countries.

The UN should be looking to embrace the market-based system of drug development, rather than replace it.

The writer is Visiting Professor, Indian School of Business, and director, research, Aequitas Health Consulting, New Delhi