Presentation (CTI)

OBJECTIVES: Recent calls for a rebalance of global pharmaceutical spending have centered around spending targets, such as the need for countries to spend 0.8% of GDP on “innovative” medicines. However, these claims require stronger theoretical and empirical grounding, as it is not clear that these figures correspond to “optimal” levels of spending for different countries (i.e., amounts that will maximize social objectives efficiently). This paper examines how a country’s healthcare and pharmaceutical spending could be determined given country attributes and social objectives at the global and local levels.
METHODS: A structured literature review was undertaken to characterize spending and investment in healthcare and pharmaceuticals in six high- and middle-income countries, and to uncover how they seek to optimize spending. Drawing from the literature and economic theory, we constructed indicators to assess whether a country is spending sub-optimally. We then developed a framework to assist policymakers in determining expenditure levels. These insights were validated via semi-structured interviews with external experts.
RESULTS: Using publicly available data, the indicators show that certain countries underspend on healthcare and pharmaceuticals over time or relative to peers. Drawing from the literature and interviews, we developed a framework anchored around two social objectives: addressing the health needs of a population and cultivating an environment to deliver innovation. The framework takes into account direct and indirect benefits of investment, such as productivity and economic growth, and accounts for attributes of different countries, such as the burden of disease, demography, wealth, and opportunity costs. This framework can help policymakers systematically assess the resources allocated to health and pharmaceuticals.
CONCLUSIONS: A one-size-fits-all target for healthcare and pharmaceutical spending does not comport with economic theory or expert viewpoints. Policymakers have distinct objectives and constraints when allocating funding. The structured framework in this paper provides a coherent approach to decision-making that is missing today.