IPN Health Blog

Note to Oxfam: Foreign aid undermines democratic accountability

I recently received an interesting email from Jerry Norris at the Center for Science in Public Policy.

Like us at the CFD, he was somewhat taken aback by the recent Oxfam paper attacking private healthcare provision:

The Oxfam study, "Blind Optimism", challenges so-called myths about private health care in poor countries. It is a contemporary re-statement of the decades-old argument for universal health care.  This ignores the fact that as post-colonial nations emerged from Africa and the Sub-continent of Asia in the early 1960s, everyone of them had embedded in their new Constitutions the provision for free, universal health care.

 

The problem in bringing this provision into reality was that while everything was free, the governments had little or nothing to offer. Into this vacuum, the donor community found a ready receptacle for aid to the point where today some 55 of the poorest countries in the world have more than 50% of their government budgets provided by external assistance. Another 10 are at 75%!

This removes politicians from accountability to their own citizens for the enforcement of universal health care provisions. It is replaced with a dependence on non-tax revenue from overseas governments.  In the absence of fiscal support from citizens, state elites retain power by converting their governance structures to wholly owned subsidiary organizations of foreign aid agencies. 

 

Still, people in all societies have an insatiable desire for choice. As economies in developing countries improved, growing numbers of their citizens migrated to non-governmental or private provision, expressing in the process, a willingness to pay--if a service could be provided.

 

These citizens are not blind. Oxfam is railing against this evolution without understanding that it has been a participant in the failure of developing countries to sustain their Constitutional provisions for universal health care. By placing a greater reliance on aid agencies than on a general taxation of their own citizens, these countries have subordinated their sovereign responsibilities to the kindness of strangers.

Oxfam's 1950s ideology

Oxfam, a state-funded pro-aid lobby group, released a major report yesterday slamming the World Bank for supporting private sector healthcare in less developed countries. (Blind Optimism: challenging the myths about private health provision in poor countries)

Its objections, according to Andrew Jack's report in the FT, are that private care boosts inequality of access, costs more and contributed to a brain drawn of trained health workers.

The study might have more credibility if it wasn't so wilfully selective of evidence.

To determine the level of private coverage, it cited World Bank Demographic Surveys, but then selects only 15 of the 21 countries they cover.  Oxfam only counts visits to private doctors, ignoring visits to private clinics and hospitals. It also ignores the private drug shops where the poor get most their care.  This is how Oxfam arrives at a figure for private health coverage that is ten times less than the reality.

Oxfam seems to be arguing that donors should place all their eggs in the public sector basket.  But we know public sector health does not produce better quality care.  A 2006 study of 278,000 children in 45 countries found "no evidence that nations . . . with relatively large public health systems perform better or worse than those with larger private systems”. 

We also know that that "free" public sector health tends to be captured by more affluent, urban dwellers, at the expense of the poor in rural areas.

It is strange that in this day and age Oxfam should be advocating monolithic state health provision, when this approach has failed to deliver after many decades of trying and plenty of money. This is hardly surprising - monopolies rarely benefit consumers, whether they be in supermarkets or mobile phones. 

Surely the answer to the healthcare problems of the developing world lies in diversity of provision, with as many players as possible brought to the table? Even countries that are deeply concerned with 'social solidarity' favour this approach (the Netherlands, Germany, France etc).

Fortunately, most journalists have seen this paper for the bit of ideological advocacy that it is, and have not covered it (except the FT).  Obviously Oxfam's massive press office needs to be working a bit harder!

April Harding over at the Center for Global Development has more.

MSF monopoly confusion

The bien-pensant MSF have a new book out confusingly entitled "The global politics of pharmaceutical monopoly".

The author, Ellen T'Hoen, is presumably referring in her title to the temporary product "monopolies" granted by pharmaceutical patents. She clearly thinks they are A Bad Thing.

But hang on a minute.  MSF and their buddies at Oxfam are amongst the most vocal supporters of monopolies in government-provided healthcare.  Why are state health monopolies (which are permanent, and encompass all kinds of different services) any better than pharmaceutical patents (which last 20 years from filing and only cover a single product)?

Patents are responsible for most modern medicines.  State healthcare monpolies, by contrast, are responsible for thousands of deaths by hospital infection, waiting lists, archaic technology and mismanagement. Britain's creaking National Health Service is a depressing example.

MSF need to spend a little less time banging on about patents, and spend a little more time advocating for decent healthcare systems.  After all, the very reason they exist is to provide healthcare where governments have failed to do so. 

The problem with World AIDS Day

Today is the 20th annual World AIDS Day.  The challenge for AIDS activists and campaigners is to pique the interest of editors and journalists to ensure coverage of what has become a predictable event: the UN or some other body claiming we are on the brink of a global catastrophe, and that only billions more dollars of donor funding can prevent the biggest humanitarian crisis of all time from getting worse.

Except this year, many people from within the global health community are beginning to rebel against this formula, detailed in this provocative piece from the Associated Press.  As people such as Roger England point out, AIDS is undoubtedly a a great tragedy, but so too are the myriad easily preventable diseases that kill even more people - such as diarhoea or pneumonia.

Why don't these diseases have their own UN agency and billions of funding?

It is also becoming increasingly clear that the UN has not been the careful custodian of the billions of dollars entrusted to it for HIV palliative care.  Aside from the numerous scandals that have surrounded Global Fund grants, it may be that the whole WHO 'public health' treatment model is storing up many problems for the future, such as unsustainable levels of drug resistance.

Treatment for all by 2010 may yet turn out to be a reality. But at what cost to wider public health?

Biotechnology: Listen to the Science, Not the Cynics

Yet another piece in The Guardian yesterday from Mark Lynas (“a freelance writer working full-time on climate change”).

The subject: biotechnology’s role in improving nutrition and health.

The gist of Lynas’s argument:

• GM means ‘sealing corporate control of the food chain’.
• The ‘biggest factor’ in food prices is people in China and India eating too much.
• Also to blame is US and European ‘addiction to the car’.
• People make this even worse by having children.

Presumably, therefore, governments should grow and distribute food, people in Asia should not become inconveniently rich so quickly, we should all stop driving and impose a global One Child policy. Right?

The origin of the author’s ire is soon revealed. GM, he explains, is wrong because of the implication that it could help tackle hunger when, in fact, companies are patenting their discoveries and might therefore sell their products.

He explains:

“I doubt these companies have any intention of giving out free seeds to the world's poorest farmers”

So there we have it. No free seeds.

In spite of claiming that he is “not arguing that these companies are somehow bad or evil” and “not raising scare stories”, this is exactly what Lynas is doing.

It’s a familiar argument – the evils of profit must face large global regulation, or else we will see ‘superweeds, bacteria or viruses run rampant and breed’.

As explored in many scientific discussions and more than one government report, the scaremongering on GM crops is unfounded and unscientific.

Mark Lynas is correct on one count – GM is not a one-stop solution to the food crisis. To tackle the food crisis we primarily need governments to cease placing huge tariffs and export bans on vital food stuffs.

However, GM can help, and in evaluating its potential we should examine evidence produced by scientists, rather than the sentiments of a pseudo-scientific columnist with an ideological opposition to technologies developed by private companies.

Compulsory licenses for ARVs not as straightforward as some suggest

It has recently been announced that Canada will finally begin exporting generic drugs under a compulsory license to Rwanda. The drug in question is an ARV called Apo-TriAvir, made by Apotex of Canada.

Five years after the compulsory license was first signed, the first pill might now start rolling off the production line.

 

The minister of health in Rwanda, in justifying the award to Canada, said "[we] could have imported generics from elsewhere [but] we wanted to bring Apotex in as a quality generic manufacturer."

 

Neither Apotex nor Rwanda mention that this has been made possible by the Government of Canada's $100 million subsidy.

What all this goes to show is that the production of high quality generic medicines that meet acceptable regulatory standards is a costly and time-consuming business.  As Apotex found out the hard way, it's difficult to turn a profit even with a generous government subsidy and guaranteed buyer.

Why, then, do health activists continually push compulsory licenses as the answer to the health problems of the developing world?  Surely it's nothing to do with ideology?

Wealth and health

The BBC covers today a new report from British pressure group, Save the Children, which claims that economic growth does not necessarily translate into a healthier population.

The report cites examples such as India, which still suffers high rates of child mortality despite having undergone a prolonged period of economic growth.

This report is saying nothing new. Reading between the lines, it is a fairly standard call for governments to redistribute wealth and intervene more heavily in the economy, in order to iron out the inequalities which they perceive to perpetuate ill health.

However, economic growth certainly does improve health of the individuals who are able to benefit from it, not least because it enables people to afford better sanitation and living conditions, which are key to addressing a large part of the disease burden in less developed countries. 

The point is not everyone is able to share in economic growth, largely because of counterproductive governance.  For example, if the poor do not have property rights, it makes it impossible for them to borrow capital to invest in their own businesses and education and climb up the economic ladder.  Meanwhile, the poorest countries erect massive, costly regulatory obstacles to entrepreneurship, meaning that only the politically well-connected and rich can start businesses and create wealth.  And so on.

Save the Children are right to point out that the poor are still suffering unacceptably poor health as a result of poverty.  Their diagnosis is way off the mark, because the redistributory measures they advocate would stifle economic growth and cut off the one mechanism that is vital for improving health.

It would be more constructive for Save the Children to talk about empowering the poor instead of clobbering the rich.

A prize turnip of an idea

After years of campaigning, activists have narrowed the debate about health care in poor countries to a single premise: Patents drive up the cost of medicines, so patents are bad.

As part of this campaign, activist groups such as Medecins sans Frontieres and Knowledge Ecology International regularly cite the fact that few drugs have been developed for several tropical diseases. On the basis of this, they claim that markets are incapable of providing drugs that people need.

It takes quite a distortion of the evidence to support this claim.  Nevertheless, the NGOs argue that the current market-based system through which drugs are developed needs to be dismantled, and replaced with a system where government experts decide what needs to be researched.  They would then allocate 'prizes' to drug developers who are able to develop efficacious medicines that meet the terms of the prize.

Without breaking into much of a sweat, I can think of three immediate objections:

• This would result in the immediate politicisation of drug research, with research being allocated to political rather than clinical priorities.  I can't see how this would be an improvement on the current system.
• the value of the prize will never be a true reflection of the market value of the invention, no matter how clever the prize awarding committee.  If the prize is too low, companies will be reluctant to compete for future prizes, leading to fewer new drugs. If the prize is too high, the new system will squander taxpayers' money and divert effort from other areas of research.
• Prizes were widely used in the Soviet Union to stimulate research.  Not only did the USSR produce very few novel drugs, but many scientists risked life and limb trying to escape to the West where their talents would be properly rewarded.

Can any readers think of any more objections, or even reasons why I'm wrong? The comments are open.

Ricardo to global health community - protectionism doesn't work!

In the ongoing battle to improve access to medicines in the poorest parts of the world, the global health community is resurrecting a ghost from the 1950s: the promotion and protection of local pharmaceutical companies, who can then supply home markets without the need for unreliable foreign suppliers.

This latest version of the hoary 'infant industry' protectionist trade policy comes with the backing of a medley of NGOs, UN agencies and even the World Bank.

It seems that the results of this protectionism are as suspect as the theory.  In this new paper from the CFD, author Roger Bate takes a look at the economics of subsidising local drug production, and finds that it gives rise to a whole host of unintended consequences. 

Most dangerously for patients, it seems that many local pharma cos  do not have the skills or capacity to manufacture drugs to international standards - raising the spectre of increased drug resistance or clinical failure (otherwise known as death).

It seems that trying to defy basic laws of economics -- such as comparative advantage and specialisation - -  not only costs more, but comes with a significant health risk. 

Not only that, handing the control of industry to politicians opens up all kinds of opportunities for corruption.

Surely it would make economic sense to simply import drugs from countries that have the skills to do it safely and cheaply?

Perhaps it is time to send these new protectionists back to Economics 101.

Freedom to trade in Hong Kong

I'm shortly off to Hong Kong to get ready for next weeks Ministerial Trade meeting.

International Policy Network will be keeping you up to date with events at our trade blog, www.freedomtotrade.org/blog.

Hopefully the forces of protectionism and vested-interest will not prevail in Hong Kong, although things are looking shakey at the moment.  But keep an eye on the Freedom to Trade Blog to understand what's really going on.