Assessment of medicine pricing and reimbursement systems in health insurance schemes

Recently, universal health coverage (UHC) has become key aspiration for low and middle-income countries. The 2013 World Health Report gave leverage to this policy objective. UHC has been defined as “ensuring that all people can use the promotive, preventive, curative, rehabilitative, and palliative health services they need, of sufficient quality to be effective, while also ensuring that the use of these services does not expose the user to financial hardship” (WHO, 2013). Thus, UHC captures three issues, that is, proportion of the population that has access, the type of service/comprehensiveness of services for which access is created and financial protection for households. More and more African countries are shifting their priority towards UHC.

One of the major challenges that health systems face in developed and developing countries alike is cost escalation. In the case of developing countries, the challenge is demonstrated in the form of mismatch between revenue and expenditure for health care thus limiting access for a substantial part of the population and leaving them to cater to their health care needs in the form of out-ofpocket (OOP) payment. One major cost driver in the health sector is pharmaceuticals. Globally, pharmaceutical expenditure is rising. Studies show that medicine expenditure consumes 20% to 60% of health spending in low and middle-income countries (LMIC) compared to 20% in Organisation for Economic Co-operation and Development (OECD) countries (WHO, 2015). Evidence from high-income countries (HICs) shows that they have been using variety of pricing and purchasing (reimbursement) methods to contain this soaring pharmaceutical expenditure (Nguyen et al., 2015). In HICs, most payments for pharmaceuticals are made by the state or insurance schemes, which give them an edge to influence prices. In LMICs, on the other hand, more than half and sometimes up to 90% of expenditures on medicines are out of pocket (Bigdeli, Laing et al., 2015) hence; it has not been easy to implement pricing and purchasing policies with significant results. As a result, there is limitation of evidence on the implementation and effects of various medicine pricing and reimbursement measures. LICs also lack adequate global experience from which to draw lessons.