Background
Understanding the relationship between international trade and health is critical to managing access to medicines in the global public health “ecosystem” [
1]. Dependence on international trade is likely to increase, especially in those low and middle income countries with limited local production of health technologies and this is particularly so for health commodities related to non-communicable diseases [
2,
3].
There have been long-standing debates focused on aligning trade policies with human rights and improving access to essential health technologies, but these have been limited primarily to the global intellectual property rights (IPR) regime and those discontented with it [
4‐
7]. Despite efforts to identify appropriate indicators and mechanisms to continuously monitor for any potential public health risks associated with trade policies, there is a general lack of empirical evidence on how international trade, particularly the cross-border movement of health technologies, enhances or deteriorates population health [
8].
In recent years, countries in the European Union (EU) have been repeatedly accused of blocking legitimate trade of Indian-manufactured generic medicines by detaining these consignments while in-transit to low-income countries [
9]. In Cuba, the trade embargo imposed by the United States has been reported to risk many lives [
10]. Similarly the Israel’s blockade of Gaza strip has been often reported to have caused chronic shortage of medicines at healthcare facilities in Gaza [
11]. The global economic crisis led to increase in mortality rates due to poor quality of care in Greece [
12].
Nepal receives nearly 60% of its overall imports of all commodities – including most medicines and health commodities – from India [
13]. Under the provision of Articles 6 and 7 in the 1950 Indo-Nepal Treaty of Peace and Friendship and its subsequent versions, there is an open border between the two countries allowing free movement of people and trading goods [
14]. In the spring of 2015, Nepal was struck by devastating earthquakes that left the country – with already a weak public health system - in a dire need for rehabilitation health care [
15]. What then soon followed after the earthquakes was an unfortunate blockade of the India-Nepal border for several months [
16]. There were media reports on disrupted supply of petroleum, gas and essential medicines, affecting civilians’ lives and also forcing hospitals to shut all services expect the emergency services [
16]. Public health programs such as vaccinations were affected in districts bordering with India. However, this was not the first time the border was completely shut. In the 1990s, a border blockade lasted for one and half years.
We have previously described the background to the 2015–2016 blockade faced by Nepal which resulted from a domestic conflict and a diplomatic standoff with India [
17]. However, its impact on health has never been documented. Prior research has focused on the negative impact of multi-year economic sanctions on morbidity and mortality in various countries with little or no attention paid to comparisons with pre-sanction conditions (see ‘Research in Context’ below). In this paper, we explore the impact of this blockade on the Nepalese population’s access to many health care commodities which Nepal imported from India, by analyzing real-world trade data on unit prices and volumes before, during and after the blockade. This is the first empirical study on the impact of the India-Nepal blockade on medicines access using quantitative time-series trade data.
RESEARCH IN CONTEXT |
Evidence before this study
|
In the 1990s, critics began to argue that economic sanctions indiscriminately and unjustly targets poor and innocent elements of society. We searched PubMed, Web of Science and GoogleScholar without date restrictions for English language sources on February 4th and 6th, 2017, using several search combinations with the terms ‘Trade’, ‘border’, ‘blockade’, ‘embargo’, ‘medicines’, ‘access to medicines’, and ‘access to health commodities’ to find articles on primary assessment of impact of border blockade on access to healthcare commodities. Previous research has explored the negative impact of long-lasting (i.e., multi-year) economic sanctions on the public’s health in Cuba, Haiti, Iraq, Yugoslavia, Iran, Syria and the occupied Palestinian territory. However this evidence is primarily focused on the impact of such sanctions on human behavior and psychology as well as morbidity and mortality, and relies on case studies, media reports and other qualitative forms of information. Furthermore, several articles encompass the debates focused on aligning trade policies with human rights and improving access to essential health technologies, but have been limited primarily to the global intellectual property rights regime. When the literature focuses on specific medicines, it emphasizes medicine shortages and increased retail prices within the impacted country, with no comparisons to the pre-sanction period. |
Added value of this study
|
Using comprehensive import-export data (2011–2016), we studied the relatively short-lived trade sanction of several months (September 2015 to early-February 2016) and focused on the time course of medicine trade before and after the sanctions. Although Nepal relies upon India as its largest trading partner, we found that the unit price of a “basket” of all retail medicines increased as the blockade took effect and trade volume decreased. For most of the blockade, the increase in unit price was far in excess of what the pre-sanction trade relationship between price and volume would have predicted. While one could also have predicted that such a short-term (5 month) trade blockade imposed by India in late 2015 would also have little impact on medicine prices and, by implication, medicine access, the amount of extra money Nepal paid for this diminished supply of medicines, even over this relatively short time period, indeed had significant opportunity costs. Nonetheless, for some medicines, e.g., insulin, various antibiotics, there was little obvious impact of the trade blockade on unit price. One might have predicted that Nepali earthquakes of April–May 2015 would impact quantities and prices of medicines exported into Nepal from its largest traded partner India, but that was not the case. |
Implications of all the available evidence
|
Besides media and health advocacy organizations often document the health-related experiences of local populations during trade disruptions, there is little empirical evidence on the impact of trade disruptions on access to health commodities. Trade policies cannot be separated from population health, and governments and health professionals must facilitate appropriate and effective policy coherence between the two. This study demonstrates what it means for one country to be, in effect, dependent on a single exporter. In principle, nations will engender public health risk if they are not regularly importing biomedical commodities from other nations worldwide and are most vulnerable if they have no or limited local production. |
Discussion
India is the main supplier of all medicines to Nepal. Between 2011 - mid 2016, generally over 95% of Nepal’s imports of all retail dosage medicines (both prophylactic and therapeutic) were from India and this is the commodity with the largest number of unit price outliers (November 2015–January 2016). Specifically, during the 2015–2016 time periods prior to, and after, the earthquakes and blockade, over 90% of the weight of retail dosage form medicines originated in India with correspondingly much smaller amounts from the EU-27 and Switzerland (Additional file
1: Figure S4). The sole exception is the blockade month of October 2015 when total exports of retail dosage form medicines into Nepal fell to very low levels and the EU-27 contributed about 40% of this total weight. This overall pattern is similar to the export of retail antibiotics of various types (Additional file
1: Figures S5-S6). We note the relative lack of export data for the EU-27 with regard to penicillin and streptomycin (Additional file
1: Figure S5), although when monthly comparisons are available, India is clearly the predominant supplier, as it is for medical dressings (Additional file
1: Figure S7).
While media and health advocacy organizations have often documented the health-related experiences of patients and local populations during trade disruptions, there still appears to be little quantitative evidence on the impact of trade disruptions on access to medicines at such times.
Using time series and residual analysis, we found that there was no significant reduction in the volume of medical commodities exported from India to Nepal during the earthquake period (See Figs.
1,
2 and
3), but during the blockade, the impact on volume and price was substantial. The unit price of retail dosage medicine increased as the blockade intensified but the three consecutive (i.e., monthly) residuals that are statistical outliers during the blockade (Additional file
1: Figure S2) are unusual.
We note that the use of time series regressions that analyze residuals for ‘outliers’ is a method commonly used with various degrees of sophistication in disciplines as diverse as econometrics [
24‐
26], public health [
27,
28] and climatology [
29].
The earthquake primarily affected northern regions of Nepal [
30,
31], so the movement of medicines and other health commodities across the southern India-Nepal border was not disrupted. Rather, during the earthquake, India supplied medicines and other essential commodities to Nepal through its India-Nepal border as a humanitarian crisis response [
32]. However, the only spike in Indian exports to Nepal during the earthquake was the influx of medical dressings in May 2015 which we infer is a ‘marker’ for this humanitarian response. See Fig.
3.
Notwithstanding, the relatively brief border blockade several months later had a serious impact on volume and price of retail dosage medicines at the India-Nepali border and this clearly had consequences in-country [
33,
34]. Using our modeling technique, we found that the impact of the blockade was immediate on imports of retail dosage medicines into Nepal from September 2015–March 2016, which were about 46% less than same period in 2014–2015 (Additional file
1: Table S2). The lower trade volumes for retail dosage medicine imports into Nepal led to considerably increased trade prices for medicines for several months, far in excess of what would have been predicted prior to the blockade (See Table
1). One might be surprised at this from a political and human rights viewpoint, given that Nepal relies on India as its primary trading partner. Compared to what one would have predicted the unit import price to be for “retail medicines in dosage form”, Nepal paid in excess of USD 22
.3 million more for the medicines it imported during the 5 months September 2015 – early-February 2016, USD 15
.9 million of which was paid for between November 2015–January 2016.
To put this in context, these 22
.3 million U.S. dollars has an opportunity cost that could have financed basic yearly healthcare for 557,500 people based on Nepal’s 2014 annual per capita healthcare spending of USD 40.00 [
35], and this is about half the population of Nepal’s largest metropolitan area, Kathmandu. Put another way, Nepal could have purchased enough doses of pentavalent (DPT-HepB-Hib) vaccine, at GAVI-negotiated prices [
36], to provide a complete vaccination course to 3
.2 million children i.e. four times Nepal’s annual birth cohort.
Importers may have been unable to negotiate lower prices given smaller purchase volumes during the blockade. Health commodities at times were flown into Nepal from Indian or via South-east Asian cities [
37]. Moreover, reports suggest that over 400 trucks containing medicinal products and raw material awaited border clearance for over 1–2 months; this not only have implications for medicine availability but also risked the degradation, deterioration, or transformation of these inappropriately stored medicines [
37].
However some medicines, namely various antibiotics and retail insulin in dosage form, showed little major change in trade volume across the blockade boundary (See Table
1). This result for insulin is, in principle, encouraging. In fact, during the study period, the majority of retail insulin by volume exported into Nepal originated from India (Additional file
1: Figure S8) but this data cannot tell us if the insulin was manufactured by Indian companies or made under license in India for multinationals [
38]. We note, however, that diabetes and NCDs in general do have a lower funding profile and health system response in Nepal compared to infectious diseases so perhaps the unchanging, but low volume of insulin trade during the blockade is not surprising. In 2010, only 0.7% of Nepal’s total budget was for non-communicable (NCD) prevention and control, and its overall per capita health spending (5
.6% of gross domestic product) is one of the lowest in the world [
3]. Diabetes receives a tiny fraction of this budget despite its growing burden and associated complications [
3].
There are several limitations to our analysis. The overall retail ‘Medicaments, therapeutic, prophylactic use, in dosage form’ commodity basket in the Comtrade dataset probably contains hundreds of different medicines. Therefore, we are unable to say which medicines were contributing to the excessively high unit prices for the blockade months. Data on “retail insulin” is not dis-aggregated by type (i.e., pen, vial, analog, human). Also, Comtrade data is voluntary and it is merely “recommended” that medicines that are donated as part of humanitarian aid are included.
Any increases in India-derived medicine prices represents a lower limit of the increase in patient prices in Nepal as some of the Nepali in-country supply-chain costs (taxes, margins, mark-ups, and delivery costs) would be higher than usual during the blockade in part due to acute shortage of fuel [
16,
34,
39]. We do not have data on availability and prices of any of these Comtrade biomedical commodities in the public- or private-sector health facilities inside Nepal during the blockade so trade data are only surrogate indicators of in-country access.
Previous research has explored the negative impact of long-lasting (i.e., multi-year) economic sanctions on the public’s health in Cuba, Haiti, Iraq, Yugoslavia, Iran, Syria and the occupied Palestinian territory [
40‐
46]. Academics do not need long-term evaluations of economic sanctions to understand its health impacts. For instance, in Iraq, during just 4 months, the sanctions showed a greater influence on the hazard of dying than did any of the traditional risk factors. Among Iraqi children, the sanctions period accounted for a four-fold increase in the risk of a child dying [
47].
Health cannot be separated from trade, and governments need appropriate and effective policy coherence between the two. Impacts on health from a political disaster such as the border blockade can be reduced through sustainable diplomacy [
48]. Although the blockade was relatively short-lived, health ministers should be communicating with Prime Ministers and/or foreign affairs and home ministries to manage health effects of trade blockade. Therefore, in general, it is imperative for the health sector to engage in broader health-related trade aspects beyond the current focus on the IPR regime [
4‐
7], and be able to facilitate corrective policy measures. However there appears no special provisions to protect trade of health-related commodities during such diplomatic border blockades. One suggestion would be to establish some sort of “express cross-border fast track” that provide immunity to health-related trade from any such diplomatic blockade.
Healthcare professionals must not think that trade is too complicated and perhaps does not affect them. In fact, health professionals are well positioned to sense subtle fluctuations in supply of health technologies and therefore should familiarize themselves with health-related trade in their local context. This would empower them to become more vocal about their role in ameliorating the health effects of any trade disruptions. The general public, even less aware of the connection between the trade and health systems, has a role to play as well. During such disasters, the public’s general reaction is to overstock and hoard medicines, creating shortages. Therefore, public awareness and not overstocking medicines can help remove pressure on an already-constrained supply chain. In this regard, a surveillance system on trade volume and flow of medicine (e.g., those on the WHO Essential Medicines Lists) should be built and made publicly available for monitoring and research.
This manuscript is based on a ‘natural experiment’ which is likely to happen more frequently than supposed, so it is certainly possible that, given the appropriate dataset, one could look at other ‘economic shocks’, as it were - although they are likely to also be retrospective in nature. It may also be possible to look prospectively, most usefully for land-locked countries with no or limited local production of relevant commodities and only 1–2 key trading partners. More generally, this work sheds some light on what it means for one country to be, in effect, dependent on a single exporter. In principle, and irrespective of a trans-border blockade, nations will engender public health risk if they are not regularly importing biomedical commodities from other nations worldwide and are most vulnerable if they have no or limited local production [
2]. When the number of suppliers declines, the ability of individual suppliers to raise prices can be increased. Several policy solutions could be investigated. For one, Nepal’s government procurement policy might be improved to obtain medicines from its suppliers at the lowest possible price or, more generally, to achieve the best value for money. Vigorous competition among suppliers can help governments attain this objective.