Sustainable financing for essential medicines must be viewed in the context of overall health care financing. Most low- and middle-income countries rely on a diverse set of health and drug financing mechanisms which can contribute in the payment of medicines. Nevertheless there are still opportunities in many low-and middle-income countries for both better and more public spending on health and essential medicines.
“The inequities are striking. In developed countries, a course of antibiotics to cure pneumonia can be bought for the equivalent of 2 or 3 hours’ wages. One-year’s treatment for HIV infection consumes the equivalent of four to six months’ salary. And the majority of drug costs are reimbursed. In developing countries, a full course of antibiotics to cure a common pneumonia may cost one months’ wages. In many countries one-year’s HIV treatment - if it were purchased - would consume 30 years’ income. And the majority of households must buy their medicines with money from their own pockets.”
WHO Press Release WHA/13, 22 May 1999
Increased public funding for health and medicines is important for high public health impact and strong potential for equity and solidarity, and for support to the disadvantaged. It does not mean that low- and middle-income countries should reallocate funds from prevention or other health priorities - but that additional new public funding should be brought to the health sector. One example is the Global Fund to fight AIDS, Tuberculosis and Malaria that offers an opportunity of additional new public funding to those countries where public funding is increasing very slowly or not at all.
Out-of-pocket spending is a result of failure by the government to allocate sufficient financial resources for medicine supplies essential for treating prevailing diseases for the majority of the population. Patients therefore have to buy all medicines they need from the private sector.
Cost sharing with patients should be seen only as a transitional measure towards long-term aims, such as universal health insurance. User charges or co-payments for medicines in public health services do not always lead to increased supply of medicines and can result in decreased utilization of public health services. In addition they can further impoverish already disadvantaged populations. User charges should complement rather than replace government allocations for curative health services and essential medicines provision.
While virtually 100% of the population has health insurance of some form in most high-income countries, median coverage is 35% in Latin America, 10% in Asia, and less than 8% in Africa. Additionally the inclusion of medicine reimbursement in health insurance varies greatly. Coverage of newer and high-cost essential medicines through well developed social security schemes is necessary. Advantages of pre-payment are that the healthy part of the population subsidizes the sick and, through income-related premiums, the wealthy citizens can subsidize the poor. It reflects the solidarity principle that health care should be provided according to need and financed according to the ability to pay.
Donor assistance and development loans such as bilateral aid and development loans/grants from development banks continue to provide for many countries sources of health sector financing, which can include funding for essential medicines, such as HIV/AIDS-related therapies and combination treatments for medicine resistant malaria. Yet it is debatable whether development loans should be used for consumables, such as medicines.
Donor funding for and donations of medicines can have an impact on health progress in low-and middle-income countries in the short-term. In the medium-term these donations should be targeted at specific diseases and planned as additional supplies integrated into the national medicine supply system. But in the long-term, self-sufficiency is the only viable means to tackle increasing disease burdens.
Other financing mechanisms which are being pursued include targeted use of debt relief funds, tax incentives in high-income countries, in-kind funding in the form of medicine donations, and solidarity funds.