Why the MDGs need good governance in pharmaceutical systems to promote global health

As a broad concept, good governance implies a system which is consensus oriented, accountable, transparent, responsive, equitable and inclusive, effective and efficient, follows the rule of law, and is participatory [6, 7]. Corruption, which is defined by the World Bank as the “abuse of public office for private gain”, is assumed to be more likely when good governance is not present although establishing causality is not straightforward in practice [8]. We use the World Bank’s definition for our paper as we specifically examine why pharmaceutical governance is important for equitable and efficient access to medicines. While the focus of our paper is good governance in the public sector and in international agencies and development initiatives, we do acknowledge the obvious importance of examining this issue in the private sector as well. This includes additional exploration of industry-specific prevention measures in health governance mechanisms to improve transparency, anti-corruption and anti-bribery tools, industry regulation, and legal prosecution of illegal practices.

In order to better explore the relationship between health governance and corruption, there is a clear need for better data collection and agreed upon metrics to support research and evidence-based policymaking. In response, several organizations including the World Bank, Transparency International, and the World Justice Project have attempted to develop indicators and indexes to better assist states in improving governance, controlling corruption, assessing the rule of law, and minimizing potential negative impact from these factors in development projects. However, divergent institutional approaches, varying indicators across organizations, and a lack of robust research addressing the underlining relationship between governance and corruption, currently pose challenges to promoting anti-corruption activities, especially in the health sector.

In the past decade, available research has provided increasing evidence that greater vulnerability to corruption can lead to limiting access to medicines and health services [3, 9]. In Venezuela, for example, approximately two-thirds of hospital personnel surveyed were aware of theft of medical supplies and medications [10]. Similarly, in Costa Rica, 71 per cent of doctors and 83 per cent of nurses reported that equipment or materials had been stolen in their hospital [11]. One study in Uganda found that the resale of drugs represented the greatest single source of income for health care personnel [12]. Another study by Amnesty International on maternal health in Burkina Faso found that one of the primary causes of annual mortality in thousands of pregnant women (including during childbirth) is due to corruption by health professionals and poor healthcare delivery [13]. Poorer women may also lack access to critical health care services simply because they are unable to pay informal fees [13]. Collectively, these case studies identify key forms of corruption in the pharmaceutical and healthcare delivery infrastructure, often exacerbated by a lack of financial resources, poor remuneration of healthcare professionals, and the brain drain of healthcare workers [14]. However, identification and evaluation of health corruption may fail to explicitly measure key governance indicators leading to a lack of evidence regarding the direct relationship between lack of good governance and its impact on enabling corrupt practices.

Conversely, evidence has also shown that good governance can improve key development goals; a study from Transparency International demonstrated that increasing transparency, accountability and integrity in 48 countries had a robust correlation to better outcomes in health, education and water access [15]. Another example is program evaluation efforts by the Inter-American Development Bank (IDB) that conducted an external audit of public hospitals in Bogota, Colombia analyzing the current situation of hospital finances, highlighting problematic areas, creating action plans to resolve issues uncovered, and implementing a monitoring and evaluation process with dissemination of information related to this project through workshops. This external review provided Bogota’s Secretariat of Health with evidence that fraud was taking place, and in response measures were taken to reduce theft and improper billing in the hospital setting [15]. Another clear example of how good governance generates benefits is with pricing transparency. The public posting of medical supplies purchased by public hospitals by the city government of Buenos Aires, Argentina resulted in prices reductions within the first few months of this intervention. Arguably, the mere anticipation of price reporting/transparency helped lower prices. Unfortunately the price declines were not maintained over time, suggesting the importance of designing multi-prong anti-corruption strategies that reinforce these selective responses over time [16].

Despite this growing recognition of the importance of good governance in health, corruption continues to be reported in national and global health systems across a range of environments and has undermined progress in health services delivery and system strengthening at a time when investments in global health interventions continue to be strong but also heavily scrutinized [4, 17]. This includes a diversity of forms of health-related corruption in both the private and public sphere in high-income countries, developed country settings, and in multilateral initiatives. These forms of corruption have yet to be effectively addressed through a global governance framework specific to health-related corruption or pharmaceutical governance [4].

The efficient and safe selection, procurement, storage and delivery of pharmaceutical commodities are essential functions in ensuring sustained global health outcomes, especially in resource-poor settings. Good governance approaches and absence of corruption in both the public and private pharmaceutical sector are crucial in maintaining adequate distribution of essential medicines for populations who lack access, preventing diversion/theft of pharmaceuticals, protecting against illegal pharmaceutical promotion (e.g. illegal off-label promotion), and ensuring that medicines are safe and not falsified [18, 19]. For instance, an example of industry conflicts of interest is apparent in a recent decision made by a USA Food and Drug Administration (FDA) Advisory Committee (with members that included those with ties to the manufacturer of the oral contraception products under review) to keep birth control pills Yaz and Yasmin on the market, even though they were associated with increasing patient adverse safety events.

In addition, with increasing prevalence and attention to non-communicable diseases globally (highlighted by the recent 2011 United Nations High-level Meeting on Non-communicable Diseases) that often require sustained pharmaceutical treatment, coupled with annual global pharmaceutical spending that is forecasted to reach USD$1.2 trillion by 2016, the integrity of the global pharmaceutical supply chain is clearly important to the future of global health [20]. Yet, despite this increasing need and rapid market growth, pharmaceutical good governance in individual countries has been markedly uneven globally.

When good governance is absent in the pharmaceutical system, access to and quality of medicines are affected [21]. Hence, good governance in pharmaceuticals should ideally be a guiding principle to the operation of the entire pharmaceutical supply chain and health delivery system. This is particularly important in the context of ensuring progress is made towards reaching the MDGs and as post-2015 targets are established. In fact, recognition that good governance must be an essential component of all programs focused on the health system is necessary within the context of promoting access to medicines as a human rights issue, a concept that has been reinforced by resolutions and reports issued by the UN General Assembly, UN Human Rights Council, and World Health Organization (WHO).

Importantly, there is no single “prescription” to entrench good governance in the pharmaceutical sector. The sector presents unique challenges: demand is often greater than the supply, there is significant uncertainty in how much of each product is needed, and the complex globalized drug supply chain comprised of both public and private sector actors has the potential for market failure at each step. It is clear, however, that these challenges cannot become excuses for inaction. Rather, multiple approaches and possible global efforts aimed at adapting to local requirements, while at the same time attempting to achieve some measure of harmonization in procurement and delivery for purposes of efficiency, must continue to be explored. These steps are necessary in order to enact effective change at the national and global level informed by examination of strengths and weaknesses of current pharmaceutical governance initiatives.

E-procurement as done in the Chilean procurement system is often cited as an effective tool to prevent corruption in drug procurement. Through the use of electronic bidding and information dissemination about procurement procedures and results, corruption has been curbed substantially. These anti-corruption interventions were even more effective when a wide range of suppliers competed for each product openly so that price competition was fostered and opportunities for collusion were reduced [22]. Such examples of innovative forms of governance and technology utilization should be encouraged and incorporated into future pharmaceutical governance initiatives and may have shared value among stakeholders.

Recognizing that good governance matters for improved health outcomes and return on development investments, global institutions like the World Bank, the WHO’s Good Governance for Medicines Programme (GGM), the Global Fund for HIV/AIDS, Tuberculosis, and Malaria (Global Fund), and the UK Department for International Development (DFID) through the Medicines Transparency Alliance (MeTA) have launched a number of initiatives in the past decade^b. These programs have used a range of approaches, with varying levels of success but are primarily focused on low to middle income country settings and public sector governance improvements. Each initiative has now been in operation for enough time that it is possible to provide a preliminary review of their impacts and draw lessons for future development^c.

The World Bank has addressed good governance in a number of ways and was an early pioneer of measuring good governance in the pharmaceutical system by developing a tool to determine vulnerability to corruption in 2002. Currently, procurement practices are monitored on a grant-by-grant basis whenever medicines purchases are required [23]. Still, in 2007-2008, fraud and corruption were identified in procurement for a major project in India [23]. This led to unintended negative consequences. For example, policy discussions were significantly hampered as well as investments in health systems projects. However, more positively, these findings of fraud and corruption solidified efforts by the World Bank to improve its country-client procurement practices [21]. The World Bank, however, is less focused on anti-corruption interventions in the pharmaceutical system per se but rather on broader health systems strengthening projects, which may have a less discernible result in terms of their specific impact on good governance in the pharmaceutical system.

GGM, at the time of this writing has been in place in 36 countries; it emphasizes strengthening rules and procedures within the supply chain and on instilling a long term government commitment to good governance [24]. The program begins by assessing a country’s pharmaceutical system’s vulnerability to corruption, using a tool based on one that was developed by the World Bank. Based on the results, a plan to strengthen good governance is established and then implemented in partnership with the national government. This model uses a fairly rigid structure in the early stages of the project, measuring all countries on the same criteria, but flexibility increases as countries move through to the policy change stages. Following a reassessment of countries (using the same vulnerability to corruption methodology), it was found that the improvements in good governance were made predominately in registration, drug selection and procurement and were less apparent in areas such as clinical trials and marketing practices.

In its pilot phase (2008-2010), MeTA was put in place in seven countries (the Philippines, Zambia, Jordan, Kyrgyzstan, Peru, Uganda and Ghana) [25]. Phase II (2012-2016) is in place in the same countries, although entry and exit criteria have been established to accommodate any future changes. MeTA emphasizes the disclosure of information as a way to improve transparency, accountability, and ultimately access to medicines. The premise of MeTA is that transparency is essential for addressing corruption and that the movement towards greater transparency would be more effective with communication between representatives from the public sector, private sector and civil society. This resulted in the requirement for a number of disclosure surveys early in the MeTA process and the establishment of a multi-stakeholder group to lead the program in each country. Beyond these core principles, MeTA’s structure is very flexible, the establishment and implementation of work plans is flexible and elected changes are often unique to each country recognizing the need for unique local requirements. Results from MeTA included the completion of baseline surveys and data disclosure, as well as drug pricing policy changes.

The Global Fund is a grant-making organization for projects targeting the Big Three diseases (HIV, TB, and Malaria), supporting projects that will, in the long term, prevent infections and improve access to treatment [26]. Given that procurement accounts for 40 per cent of spending in Global Fund grants, ensuring that the products are of good quality and were purchased for the best possible price is essential for the Global Fund’s programming [21]. This has led to the establishment of Voluntary Pooled Procurement (VPP), allowing countries with weaker systems to purchase quality assured medicines through the Global Fund. Additionally, all purchases are submitted to a database with documents demonstrating that medicines are of good quality. While these measures have not completely prevented corruption in the granting process, it must be recognized that funds that have been identified as embezzled in subsequent investigations represent a very small proportion of the total grant portfolio. In 2010 the Global Fund’s own Inspector General identified embezzlement in a number of countries, but the total amounted to USD$34 million out of a total budget of USD$3 billion. With recent changes in leadership there have been assessments of the Global Fund’s procedures, and a comprehensive restructuring of the granting process as well as a restructuring of its procurement processes [27].

In addition to this discussion, a recent U4 Issue Paper [21] identifies and assesses key global good governance initiatives in the pharmaceutical sector. It outlines a number of “good enough” lessons, which can guide future program development. We highlight a few of the key ones here:

However, given the diversity of approaches to good governance in the pharmaceutical system, systematic comparisons across initiatives are inherently limited. Activities are based in different institutions with distinct visions of how good governance ought to be implemented, engaged different sets of stakeholders who were involved at various degrees of commitment in different initiatives, and measurements were made using different indicators. Still, there are some core lessons that can ideally guide more effective governance work in the pharmaceutical system for the future.

To start, there is consistent evidence from all initiatives that country ownership, meaning in this context that the government where the initiative is taking place be genuinely committed to understanding what policy, institutional, and cultural reforms are needed to make good governance happen. It is also clear that multi-stakeholder engagement is critical to success. For example, the active participation of relevant stakeholders in both GGM and MeTA allowed for strong results in terms of establishing a dialogue and developing relations and trust between previously disparate groups (public sector, private sector, and civil society). In both of these programs, the inclusive development of national plans to improve governance was key, allowing those with the closest ties to specific issues to help shape and have ownership of the changes made. Granting institutions, like the World Bank and Global Fund, have strengths in these circumstances as funding can be tied to the completion of necessary changes and because of their broad membership and partnership with non-state actors. For example, the Global Fund’s new strategy specifically states in relation to one of its stated goals that, “alignment with national strategies and systems is a key principle of aid effectiveness, which contributes to enhanced country ownership, lower transaction costs, greater financial transparency, increased mobilization of multiple partners (including civil society) and sustainability – and ultimately better impact [28]”.

Conversely, changes in government, a lack of cooperation across relevant ministries, and unbalanced representation of stakeholders (for example low participation from civil society groups) are real challenges. This dependency on commitment from political leadership makes establishing sustainable programs and policies more difficult and any future initiatives must recognize that simply changing policies on paper is likely to be insufficient. It further indicates that governance initiatives must be supported with adequate transparency and rules in relation to participation of stakeholders, the establishment of formal and truly accountable cooperation mechanisms among parties, and work plans to address possible programmatic or government changes. Cultural shifts in how good governance is perceived may also be necessary for changes to be effective even if accompanied with needed changes in political commitment/leadership.

The pharmaceutical system operates as a part of an overarching and much more complex health system and this is clearly recognized by the initiatives. As noted in the case of the World Bank, pharmaceutical good governance is commonly viewed as a component of health systems strengthening programs. Cross-cutting consensus on the direction of the program and making it possible to adjust for individual country contexts is critical. It is unfortunately too common for global institutions to evade the examination of uncomfortable but critical political issues in the health sector, such as state, regulatory and policy capture as well as the global policy context. The resulting reality is that systemic change takes time, capacity, and broad commitment to implement initiatives and to determine results from them. More focused efforts on specific issues (e.g. drug registration, national formulary inclusion, or public sector generic substitution policies) can result in more rapid changes but may not result in the deeper systemic shifts necessary to improve overall system performance. The MeTA and GGM both allow for significant flexibility in how policy changes are determined, although there is more structure in GGM. Global Fund grants are driven by country ideas and the World Bank also shapes its programs based on the issues identified in countries.

Another crucial area of needed improvement in pharmaceutical governance initiatives is monitoring and evaluation. It appears that monitoring of the results from these initiatives has been relatively weak and may be influenced by the difficulty in adequately defining causal relationships between good governance reforms and health outcomes. There is an implicit assumption in the programs that by strengthening the pharmaceutical supply chain and thereby improving its governance, decreased corruption and improved access to medicines will result. The difficulty comes in identifying whether this has occurred and if access has improved, and whether it can be attributed to the improvements in good governance instead of other external factors.

In addition, procurement and quality assurance are two components of the supply chain where causality between reforms and health outcomes may be easier to establish. Quantitative-driven results can be measured in terms of reported pricing, the number of inspections and the prevalence of falsified medicines (if such data is available), and information about stock outs/availability at point of delivery. It is also feasible to determine the impact of changes such as conflict of interest policies (i.e. in the selection of essential medicines or drug formulary decisions) and deign studies to evaluate their effectiveness on improving access and affordability. Yet, monitoring and evaluation is essential if these reforms are to have legitimacy as being necessary for the strengthening of the pharmaceutical system and improving access to medicines. As evaluation procedures are developed, they must consider how to structure indicators to be informative about their actual impact on the operation of the pharmaceutical supply chain, health services, and at least to some extent the final health outcomes. These measurements will unavoidably have limitations, but while there is currently a dearth of information on how to proceed with these steps, this work is necessary if good governance reforms are to be established and sustainable and if they are to be employed more widely for the global pharmaceutical system.