Can you achieve different outcomes by doing the same thing?

The short answer to the question is – I don’t know/ Depends.

Here is the context:

I had to chance to attend a talk organised by Cambridge Health Network on primary care in the UK (Primary care, the holy trinity: quality, commissioning and the front line). Full disclosure – my knowledge about the UK health system is very limited.

Most of the challenges faced in developed countries like UK seem alarmingly similar to the ones faced in the developing countries like India. Specially, with regards to primary care, every stakeholder – including the Department of Health, jobbing GPs, CCGs, provider networks, quality commissions, etc. – mentioned the following as the challenges:

1. Quality of care

2. Long patient waiting times

3. Role of GPs

4. Increase is the use of specialists even for simple cases

4. Poor infrastructure in the premises (I think they use the word ‘poor’ with a good measure of indiscretion)

It is oddly unsettling that all of these challenges are very similar to those in India.

With advent of protocol driven healthcare, and algorithms replacing the need for triaging, the method they have adopted is use of technology. This again is strangely similar to what is being done in developing countries, BUT with a distinct difference. UK seems to be trying to keep its patients away from hospitals (while keeping the quality of care consistent with standards) whereas countries such as India are trying to move towards institutionalised care (and ultimately, Universal Health Coverage).

So the question, once again, can you achieve different outcomes by doing the same thing?

One nice gentleman summarised the ideal model of healthcare in this way:

First Level of Care: Self-help (through technology and telemedicine)

Second Level of Care: Family & Community (through technology and networks)

Third Level of Care: GPs and Surgeries

Fourth Level of Care: Hospitals

Final Level of Care: Super speciality hospitals

Based on what I learnt from the audience in the room, this model of care is inevitable and there are a lot of companies working on the first and second level mentioned above (The Hurley Group and DrThom).

A bit of policy humor (or why I wont use government drugs)

Dispensing with those ghastly p and R-squared values, and other such professional writing etiquettes and verisimilitudes, I am going to write about my learning from my work related to public drug procurement in this post.

Just for laughs, I am going to put my thoughts in a way that I usually would in an academic journal/ policy brief but will also include what I am actually thinking (italicized).

Learnings:

1. Autonomous administrative structures may accord for faster decision making, faster vendor payments, merit-based staff recruitment and perceptibly improved outcomes

(If you free up people who sometimes try to work (bureaucrats) from the people who pretend to think about trying (politicians), then things get done faster and better)

2. Length of payment cycles has an inverse correlation with the (positive) variance of procurement price compared to national and international reference prices

(Pay your bills on time to get your stuff at cheaper rates!)

3. The political structure of a state has some pronounced effects on procurement. Contexts of the states need to be well evaluated before embarking on a particular procurement model/ changing the existing practices

(Red tape is NOT the tape that holds a nation together. If a Health Minister insists that his wife’s brother-in-law should be awarded majority of the supply contracts then setting-up an autonomous agency would probably help the public interest. )

4. Eliminating wastage of drugs, caused by mishandling or expiry, is necessary to optimize expenditure and ensure availability. The current investment in storage infrastructure is negligible. Regional warehouses/ drug depots and drug stores in the hospitals need to comply with storage norms

(Medicines should NOT be stored in unused lavatories, assorted fungi should NOT be growing inside IV bags, employees should NOT store their lunch with ELISA Kits & high-value antibiotics in the refrigerators)

5. Real-time stock monitoring and scientific methods of demand estimation and forecasting are critical to minimize wastage, optimize expenditure and ensure availability

(Adding 10% to previous year’s demand is not estimation, its mental retardation)

6. Analysis of time series data of L1 – L6 bidders for all the drugs in a state’s essential drug list data indicates formation of supplier cartels.

(If you notice that most of supply contracts are going to the health minister’s wife’s brother or transport minister’s son-in-law or cabinet secretary’s nephew, you need to wake up)

7. The procurement agencies should mandate external quality testing protocols, preferably double-blinded, and ensure that material dispatches occur post quality testing.

(How much of weed must one smoke to accept an internal quality certificate provided by the manufacturer as the quality standard? In case you are wondering, there are some weird states that only do quality testing on those batches only if adverse drug reactions are reported – Essentially, the first response and the last option are the same! )

Understanding public drug procurement in India

When I started my work on access to medicines in 2010, I wanted to answer a few critical questions (listed below).

1. Is the procurement price solely determined by the procurement process? Is it influenced by or immune to market externalities?

2. Some states follow a system of centralized rate-contracting and decentralized purchasing (Maharashtra) while others have centralized rate-contracting and purchasing (Tamil Nadu, Punjab, Odisha, Kerala). Does decentralized purchasing offer the states the theoretical advantages of faster decision making, promoting bottom-up planning etc.?

3. Kerala (Kerala Medical Services Corporation), Tamil Nadu (Tamil Nadu Medical Services Corporation) Punjab (Punjab Health Systems Corporation) and Odisha (State Drug Management Unit) have a system of centralized procurement. What are the finer differences between the four models and do these differences reflect in the efficiency of the models?

4. Tamil Nadu’s model is widely publicized as an efficient model for procurement in the Indian context by WHO, DFID, High Level Expert Group on Universal Health Coverage etc. Is the TNMSC model only replicable in specific scenarios? If yes, what are the critical success factors?

5. Kerala and Odisha have adopted (with changes) Tamil Nadu’s model for drug procurement with varying outcomes. What changes led to the varying outcomes?

I tried to answer questions 4 and 5 in the paper I wrote for the Economic and Political Weekly (EPW) last year. [Link to the paper]

Here is a paper I recently wrote for the British Medical Journal (BMJOpen) that (partly) answers questions 1, 2, 3 and 4 by comparing the procurement processes and prices of Tamil Nadu, Kerala, Odisha, Maharashtra and Punjab. [Link to the paper]

More on my learning from the comparison in the next post.

Questioning the validity and merit of replicating a successful model in the context of public drug procurement in India

Most states are attempting to copy the Tamil Nadu Medical Services Corporation’s model of centralised tendering and purchase of drugs. A study of the Kerala Medical Services Corporation and Odisha’s State Drug Management Unit shows that imitating the original model without factoring in the local context and building up the processes does not lead to success. While Kerala has adapted the Tamil Nadu model and even added innovations, Odisha’s experiment has had dismal results.

Read the full article I wrote for the Economic & Political Weekly here.

Karunya Community Pharmacy

This is a blogpost I wrote for the Center for Health Market Innovations (CHMI). The original post can be accessed here.

Our visit to the Indian state of Kerala was to understand about the state’s drug procurement system, Kerala Medical Services Corporation (KMSCL). KMSCL is an autonomous drug procurement agency that is responsible for the procurement and distribution of drugs to all the public health centers in the state. During this visit, we were introduced to a novel initiative, Karunya Community Pharmacy, that KMSCL undertook in its ongoing endeavor to improve access to essential medicines.

The fact that drugs constitute a high portion of the out-of-pocket (OOP) expenditure on health has become common wisdom. In India, the proportion of drugs accruing in the health expenditure ranges from 16-65%, varying by state. The literature also shows the catastrophic impacts that OOP expenditure on health can cause to people. Various recommendations have been provided to the government to address this problem at a micro level by increasing access to essential and affordable medicines to individuals and households; and at a macro level by keeping a check on the increasing prices of drugs and modeling efficient supply-chain systems to make drugs available.

Karunya Community Pharmacy is a retail outlet that sells branded generics at steep discounts ranging from 20 to 60 percent. Karunya Pharmacy is an initiative by KMSCL and it is a pure for-profit chain of pharmacies. It is a business model that competes on equal terms with other retail pharmacies. The advantage Karunya may have over other pharmacies is cheaper prices through bulk procurement for the entire state and taking advantage of the streamlined procurement practices of KMSCL. The need for it’s existence has been necessitated by two factors: a) the strong nexus between government doctors and pharmaceutical sales representatives that results in a positive push for branded medicines and a negative push for pure generics (not unlike other Indian states); b) Kerala populace’s preference for higher quality products (unique to this state).

The modus operandi adopted by the pharmacy was to leverage the bulk discounts enjoyed by the KMSCL through centralized pooled purchasing of branded generics directly from the manufacturers. The reduction in the prices due to the bulk discounts and lack of middle-men margins are significant. The future plan for this initiative is to increase the number of pharmacy outlets to about 2,500 stationing them at all government district hospitals, taluk hospitals and community healthcare centers in the state. Karunya Community Pharmacy also plans to stock specialty drugs for the treatment of cancer, renal disease, hypertension where the discounts would impact the beneficiaries the most. In short, this community pharmacy would act as the sole carrying and forwarding agent for a majority of the pharmaceutical manufacturers.

The repercussions of the first pilot in Thiruvananthapuram have been very significant, driving three private pharmacies out of business within two months of operation, according to the MD of KMSCL, Biju Prabhakaran. The State had also announced its ambitious plans of having several such outlets in all the districts near the public hospitals. While it is an interesting and a good endeavor, its continuation requires political support and addressing the protests from the retail pharmacists and industry lobbies. This model has the potential to revolutionize the pharmaceutical retailing business in India if executed tactfully.

Decoding innovation in healthcare service delivery

The organization I represent, ACCESS Health, has been associated with an initiative called the Center for Health Market Innovations (CHMI). It is an interesting compendium of healthcare models across the world that many deem innovative (albeit there are no set inclusion/ exclusion criteria). The initiative provides profiles of about 1,135 innovative models with interesting data if one is interested in investigating any trends (Link here; look for the “Download database” link). The innovations are categorized into five buckets – Organizing Delivery; Financing Care; Regulating Performance; Changing Behaviors; Enhancing Processes. I have had considerable involvement with this initiative at ACCESS Health and below are my thoughts on models that others believe are innovative.

This is how I would define innovation in this context: any model that can decrease the cost of conventional service delivery (significantly or marginally) or increase the access to care (both physical reach and financially) or both.

Based on my experience, I believe that any healthcare service delivery innovation can be safely classified into the below three vectors or a combination thereof:

1. Cheaper Supplies: This is obviously a no-brainer. No points for guessing! Supplies here primarily mean medicines but also include equipment. Usage of generic medicines, efficiently estimating and forecasting their demand, optimum procurement, scientific inventory management and distribution and last but not the least influencing patient behavior to promote the use of generic medicines. Here is a classic example of a model doing just this (Link Here)

2. Cross-subsidisation: Using the user-fees generated from a relatively affluent patient population to finance care for the not-so-affluent patient population. While there are straight forward models that utilize this method, like LVPEI or SEVA, a few models that use some form of social/ community insurance to finance care also fall under this category. In the latter case, cross-subsidization is achieved through risk pooling (assuming, no adverse selection).

3. Task Shifting: Training un-skilled/ semi-skilled people to perform tasks that would have otherwise been carried out by people who are more expensive to deploy. For example, using nurses to carry out preliminary screening instead of doctors or using people who have at least 10 years of formal education to perform paramedical duties. This is the most common method used to reduce cost and increase patient turnover. (Check here and here)

Thoughts anyone?

Reaffirmation of my faith in the government

For the past few months, I have been visiting various government health facilities in Bihar, Uttar Pradesh, Odisha and Kerala for quite a lot of reasons. It was a phenomenal experience meeting with medical officers of public health facilities; district magistrates; epidemiologists; drug procurement directors; health secretaries; public health experts; folks from international aid agencies and so on…

These visits have been emotionally draining in ways that I did not anticipate. I promised myself that I would never willingly do this again but, as always, you never say never!

Much has been written about India’s corruption, red-tape and whimsical policy making (Read this editorial from The Economist). The reason I am writing this post is to let everyone know that despite all the muddle at the top, there is still light at the end of the tunnel. Allow me to present my argument in the form of a couple of incidents that I have witnessed. These incidents involve government employees who have taken great personal and professional risks to perform public service. (It goes without saying that they shall not be named for their own benefit and also to honor their trust in sharing their stories with me).

As a part of the National Rural Health Mission, the government has allotted a certain sum of “untied funds” to each public health facility in the country. Recognizing that bureaucratic hassles in mobilizing funds from district headquarters to facilities, these “untied funds” were given to mitigate this problem and promote bottom-up planning. As is the case with any government monies, these funds were bound by an elaborate set of guidelines. I met the Medical Officer In Charge (MOIC) of a block I visited in Uttar Pradesh who said that the main problem they faced was that the patient referral system (particularly the transport) was in a pathetic state. Absentee ambulance drivers, dilapidated ambulance vehicles and lack of funds for fuel has led the referral system to this sorry state. Identifying this as an important local need, the MOIC wanted to use the untied funds to hire an ambulance driver, if not on a yearly basis at least whenever there was an emergency need. Unfortunately, the guidelines did not allow him to do so and him doing it anyway would have been career suicide (Read here for the news coverage on the NRHM Scam in UP & the CBI Enquiry of the same). The MOIC went ahead and did it anyway but he masked the ambulance expense under other overheads – This was at a time when every signatory authority in the state was terrified about the CBI scrutiny. He just said this “I simply could not sit and do nothing while the patients in critical condition died in my hospital”

In another instance, I met the heads of procurement of two states – Both extremely smart and enterprising senior IAS Officers. Weary from fighting the system from within for years but carrying on nevertheless to create a positive change. Both these guys numerous court cases against them, received death threats and transfer requests because extensive negative lobbying of small-scale industry (SSIs) bodies and political parties. Imagine a situation in the government hospitals when IV Fluid bags have plants growing in it and a box of while tablets have been discolored due to a variety of fungi  growing in it. These people have brought the medicine situation in the state back from such a horrid nightmare and now they are accused of framing anti-industry policies when they raised the quality bar a bit higher. Let me tell you what I mean – the head of procurement in one state proposed that the minimum required annual turnover for tender eligibility be revised from 1 million rupees to 100 million rupees – Not outrageous when you expect a supplier to honor a Purchase Order of 50 million rupees in 60 days. As luck would have it, all the SSIs contested this in the state High Court and the case went on for 2 years (during which time the state did not purchase any drugs through tenders) after which the High Court ruled in the SSI favor. (This was eventually overruled by the Supreme Court only a couple of months ago).

All of this is to say that there are still a few good men left. Clearly, JP Narayan agrees with me (watch his speech here)

Opportunity areas in pharma distribution

I was speaking to the India office of one of the largest global logistics company last week to understand their presence in the life sciences/ pharma vertical which got me thinking about two particular opportunity areas:

1. Fully integrated third party logistics company

Many of the pharma companies that I spoke to so far mentioned that the lack of a fully integrated 3PL player was a challenge. The presence of such a company might not only enable in faster product launches but also create an ecosystem where smaller firms without deep competencies in sales & marketing might be encouraged to launch brands.

Agreed that many companies are actually banking on their distributor/ stockist base as a competitive advantage but this is not sustainable. With GST (Goods & Services Tax) going to be rolled out sometime soon leading to these layers consolidating, there will be a (theoretical) surplus of these distributors. None of the current players (distributors & stockists) are thinking that far ahead to align themselves with the market trends.

The company that I spoke to mentioned that unless there is an import/ export component to the distribution it doesn’t take on customers which is probably the reason why their major customers in the life sciences area are MNCs.

I personally think there is a great opportunity for a 3PL player in this industry. Thoughts anyone?

2. PPP for Public Sector Distribution

Since the large companies, including their last mile connectivity partners, have a widely established network of warehouses, transportation facilities in most of the states, there is an opportunity to have a play in the public sector distribution of medicines/ other medical consumables as well.

The PPP could be either be a full operating arrangement or even be structured as a Build-Operate-Transfer probably for 5 years which will not only lead to process streamlining and capacity building. While the obvious criticism to such an idea might be prohibitive costs for the government to engage with the logistics companies but if you throw in process improvement and capacity building into the pool, there is definitely a case for it. Thoughts anyone?

Importance of Strategic Alliances in Pharma | Part 2

In my earlier post, I have detailed out the current context in terms of global disease prevalence and the opportunity it presents to all the stakeholders in the healthcare ecosystem. Which brings me to my question – How does one address these issues of diseases with massive prevalence (and incidence) by tapping into enormous fund pools? – The answer, I believe, is Alliances. The linkages between academia, industry, philanthropic agencies, governments and investors (yes, investors too because for an economy to have a non-linear, paradigm altering growth it needs innovators and investors in equal parts) are extremely critical in creating wave after wave of new opportunities.

Industry – Industry linkages are the common norm in the pharma industry across the value chain (in research, development, manufacturing and marketing). Several instances keep popping up daily in the news (Here)

Also in my earlier blog post (here), I have written about interesting models where academia & philanthropic organizations (MEND); Academia & Government (OSDD by CSIR); Industry & crowd-sourced seed capital (Pink Army Cooperative) have come together to address these highly relevant issues.

One other instance of an alliance that I have recently come in connect with is that of Gilead Sciences (Sales ~ US$ 5.3 Billion (2009); Net Income ~ US$  2 Billion (2009)). It was among the first few companies to introduce a OD (Omne in Die – Once a day, every day) pill for HIV instead of multiple medications, often intravenous. With tiered pricing for low, middle and high income countries, innovative partnerships with distributors and generic drug manufacturers, Gilead has been able to reach over a million patients (of which about 70% of the patients were from the developing countries). This being said, it is not a surprise that over 84% of the company’s revenues were generated through its top three HIV treatments. (More info on Gilead’s Access Program here)

Bear with me while I emphasize this, in the late 90s and early 2000s, most of the companies have viewed the development of HIV therapies as necessary public service but unprofitable. This has changed due to increasing innovation in development of novel drug delivery mechanisms, lowering of cost and increased market reach. I would like to think this is the result of the aggressive lobbying by donor agencies & foundations but it ultimately happened because it was profitable.

Running a risk of sounding redundant – How does one address these issues of diseases with massive prevalence (and incidence) by tapping into enormous fund pools? – The answer, I believe, is Alliances.

Open Source Collaboration in Drug Discovery

All of us have known and witnessed Wikipedia as an excellent example of collaborative effort to accumulate the world’s knowledge in a re-usable format catering to even the most uneducated of its audience.

Consider a similar use-case in the Pharma industry, where the drug development costs are exorbitantly high to the tune of about a US$ 1 billion and above, often taking more than 10 years for a molecule to come from the lab to the patient. With phases of inconsistent investor interest/ confidence and also a pressing need for innovative therapies, it is important to bring out new novel molecules cheaply and quickly.

Additionally, against an extremely challenging backdrop of declining R&D productivity, a looming “patent cliff” in which more than US$ 150 billion worth branded drugs lose patent protection, industry consolidation – focusing even more on R&D has become an imperative. As Andrew Witty, CEO –  Glaxo SmithKline says “The pharmaceutical industry needs to do more with less and still be innovative”. Such challenges could not be more apt for open collaborations between pharma companies, academia and niche specialist firms for rapid innovation. (The importance of alliances in my previous post – here)

Here are a couple of such examples which are successfully functioning and sustainable (?, Let’s see):

Open Source Drug Discovery (OSDD)

In their own words “OSDD is a CSIR Team India Consortium with Global Partnership with a vision to provide affordable healthcare to the developing world by providing a global platform where the best minds can collaborate & collectively endeavor to solve the complex problems associated with discovering novel therapies for neglected tropical diseases like Malaria, Tuberculosis, Leshmaniasis, etc. It is a concept to collaboratively aggregate the biological and genetic information available to scientists in order to use it to hasten the discovery of drugs. This will provide a unique opportunity for scientists, doctors, technocrats, students and others with diverse expertise to work for a common cause”

Since its inception there are over 800 scientists across the world working on discovering novel therapies for Tuberculosis. Based on its business model, all these scientists are engaged in target identification, validation and screening to provide qualified leads. Post this phase, the OSDD involves the  industry through Custom Research Organizations (CROs) to optimize candidate drug and proceed for clinical trials.

The organization has been able to identify a few qualified leads (hits) in a little over 2 years – something that would have taken a pharma company at least 5 years and a lot of money to accomplish.

More details about the organization here

Medicine in Need (MEND)

This is another good example of industry academia collaboration in order to bring drugs quickly and cheaply to the market. The organization initially started off with a seed funding from Bill & Melinda Gates Foundation is now able to sustain itself through drug sales.

The organization functions through two related but independent divisions MEND Biotech Development (MBD) maintains wet-lab expertise in Boston and Pretoria and performs activities like drug delivery system design, assaying, stability testing, formulation development etc. and MEND Innovation & Translational Alliance Management Division (MITAM) that manages partnerships between pharmaceutical scientists, academia both from developed and developing worlds in order to discover novel therapies and delivery systems.

By their own admission, this is what they say about themselves – “Medicine in Need is a not-for-profit research organization devoted to the successful development and manufacture of affordable and effective vaccines and therapies with characteristics that allow their widespread use despite the daunting economic and logistical constraints of the developing world”

Pink Army Cooperative

(Cooperative is an interesting choice of word – more on this here)

This one is even more unique in the sense that it provides “personalized medicine” for breast cancer patients. It is an open-source biotechnology venture which operates in a not-for-profit basis.

As cost for gene sequencing has been drastically falling and immense computing power is now available at free or affordable cost (Google Exacycle), it would be theoretically possible to create personalize medicine and not declare bankrupcy!

An overview of this initiative is here