Revolving Drug Funds and User Fees. (MDS-3: Managing Access to Medicines and Health Technologies, Chapter 13)
(2012; 24 pages)

Many governments, nongovernmental organizations, and community health programs have implemented user fees to fund or partially fund the cost of pharmaceuticals or other health services. Many different forms of revolving drug funds (RDFs) exist. Their common element is that fees are charged for medicines dispensed. In the context of the Bamako Initiative, community pharmaceutical schemes often have costrecovery objectives that include the financing of health education, immunization, and other aspects of primary health care. During the 1990s and early 2000s, the debate over user fees intensified within the context of a global call for increased access to medicines: evidence supports arguments from both sides, and opinions still differ about the feasibility of creating and sustaining an equitable cost-recovery system based on user fees (Meessen et al. 2006). Supporters assert that RDFs can raise substantial revenue, improve pharmaceutical availability and quality of care, promote equity by making pharmaceuticals more accessible to the poor while charging those who can afford to pay, reinforce decentralization through local control of resources, and encourage efficiency in pharmaceutical management and medicine use. Others caution that collection costs may exceed revenue collected, no improvement may occur in pharmaceutical availability or other quality measures, user charges are a form of “sick tax” that substitutes for public spending, people are dissuaded from seeking essential health care, and incentives are created for overprescribing. Note that some critics judge RDFs separately from health system user fees (for example, Save the Children 2002). Planning and implementing an RDF require simultaneous commitment to public health goals and sound business management. A number of steps are involved— Feasibility: Determine whether the concept of an RDF is politically acceptable, economically viable, and realistic in terms of managerial requirements. Organizational structure and legal status: Decide which RDF functions will be centralized and which decentralized. Seek government or legal endorsement for such issues as retention of revenue at the facility or district level. Community involvement is often essential for the acceptability, credibility, and accountability of RDFs. Pricing and exemptions: Establish policies that ensure access to services and also maintain the financial integrity of the RDF. Determine fee collection mechanisms as well as fee levels. Consider willingness to pay and cost data in setting pharmaceutical prices. Financial planning: Ascertain initial capitalization requirements and recurrent costs. The availability of government and donor subsidies helps determine the RDF’s cost-recovery objectives. Supply management: Consider management requirements because weaknesses in any area can threaten the RDF’s service performance and financial viability. Public communications: Tailor target audiences, messages, and media to each stage of RDF implementation. Monitoring and supervision: Put in place recording, reporting, supervisory, and other measures to monitor effect on patients, financial performance, pharmaceutical availability, and medicine use. Establishing and sustaining RDFs have been difficult in practice. Improved pharmaceutical availability, equity, and efficiency are more likely with local control and retention of revenue; reliable supply of low-cost essential medicines; locally appropriate fee schedules; protection mechanisms to ensure equitable access; continued or increased levels of government funding for health; businesslike orientation to personnel, financial management, and supply management; strict measures to ensure accountability; and implementation in phases or through a well-conceived pilot approach.
The WHO Essential Medicines and Health Products Information Portal was designed and is maintained by Human Info NGO. Last updated: December 1, 2019