S18: Sick Giant

• Gray market: Why did informal economies thrive? How did they work?
• Why are drug prices so high? How can health policies encourage ethical drug pricing?
• Pharma and public health: How did China manage its healthcare system?

• Western missionaries introduced Western medicine and education in the early 19th century, which led to Traditional Chinese Medicine (TCM) being supplemented – rather than replaced – by Western healthcare practices.
• By the time the Communists prevailed, China suffered from low life expectancy and high illness rates.
• At the end of the civil war, most healthcare was delivered by TCM practitioners, with Western medicine being uncommon.

• “Mass campaigns” promoted self-reliance and low-cost public health initiatives using abundant human resources.
• Healthcare principles from 1950: serve workers, farmers, soldiers; prioritize prevention; unite TCM and Western medicine; use mass mobilization.

• The 1952 Patriotic Health Campaign started due to “poisonous insects” and claims of American germ warfare.
• The campaign urged public responsibility for eliminating pests, waste, and ensuring clean water and food.
• China established a central committee and launched programs for injections and destroying germ-carrying animals.
• By 1953, a basic disease prevention system was in place.

• In 1956, Mao Zedong started a campaign against schistosomiasis, a tropical disease caused by parasitic flatworms called schistosomes. It affects the urinary tract or the intestines.
• The campaign used mass mobilization, science, and agriculture to boost development.
• Its main goal was to accelerate agricultural growth.
• The campaign’s success led to the Great Leap Forward.

The overall health of the population improved significantly:

• Infant mortality dropped sharply.
• General mortality rates declined.
• Life expectancy at birth more than doubled.

• Improvements were due to public health campaigns, education, and the introduction of health insurance and trained medical practitioners.
• By 1975, health insurance covered most rural dwellers, and 1.8 million barefoot doctors were trained.
• China’s main causes of death shifted from infectious diseases to chronic diseases like cardiovascular issues and cancer between 1949 and 1978.

• Health policy financing moved away from central government funding towards market-based approaches and local governments became the primary public financiers of healthcare.
• The 1994 tax reform centralized lucrative taxes with central and provincial governments, but transfers to poorer provinces were insufficient to equalize healthcare resources.
• Local governments were given fiscal responsibility but only low-revenue, hard-to-collect taxes, leaving them with insufficient funds for services like healthcare subsidies.

Urban Healthcare System:

• Insurance coverage for the urban population declined significantly from nearly three-quarters in 1993 to barely half by the late 1990s, and 49 percent by 2002.

Rural Healthcare System:

• The Commune Medical Scheme (CMS) collapsed due to the demise of communes and government withdrawal from financing healthcare, leading to a precipitous fall in villages participating in the scheme.
• Insurance coverage for rural residents was very low, standing at only 7 percent by 2002, and even lower (3 percent) in the poorest western provinces.
• Public subsidies for rural health dropped significantly between 1978 and 1988.

• The 2002-2003 SARS was initially unreported or under-reported, but it highlighted the need for substantial investment in the public health system.
• China created a national network for reporting infectious diseases and emergencies, including Chinese Center for Disease Control.
• Thousands of disease prevention projects were launched, including free screenings and vaccinations.

• 2002: Lu Yong (b. 1968) was diagnosed with chronic myeloid leukemia (CML).
• His doctor recommended “Glivec,” a drug from Novartis, which cost 23,500 yuan per month.
• 2004: Lu earned about a generic version of Gleevec from India online, at 1/6 of the original price.

Cast of characters:

• Cheng Yong
• Liu Sihui
• Lü Shouyi
• Zhang Changlin
• Peng Hao
• Cao Bin
• Pastor Liu

• Imatinib is a targeted cancer drug. It is also known as Glivec (pronounced glee-vec).
• Imatinib is a type of cancer growth blocker called a tyrosine kinase inhibitor (TKI). Tyrosine kinases are proteins that cells use to signal to each other to grow. They act as chemical messengers.
• Imatinib targets different tyrosine kinases, depending on the type of cancer.

• Many drugs have two names: a brand name and a generic name.
• The brand name is given by the company that makes the medicine.
• The generic name is the name of the active ingredient.
• Companies get patents for new medicines, giving them exclusive selling rights.
• After patents expire, other companies can make generic versions.

• Aspirin, in any formulation or dose, increases the risk of bleeding.
• While Aspirin is effective as an anti-inflammatory, few people can tolerate the stomach upset when given at these high doses.
• Most of aspirin sold in the US is enteric-coated or safety-coated: it has a smooth coating that protects it from stomach acid, allowing the drug to be released in the intestine instead of the stomach, to prevent gastrointestinal bleeding.
• The coating is an inactive ingredient in generic versions of Aspirin.

Scenario:

• Total population = 1 billion
• Branded efficacy = 90%.
• Standard generic efficacy = 70%.
• Lower-efficacy generic efficacy = 60%.
• Budget is the same for all options (set equal to the cost of providing the standard generic to 800 million people).

As a public health official, which policy should our health system adopt, and why?

• A: Generics for 800 million (70% efficacy) — 80% coverage.
• B: Branded for 700 million (90% efficacy); 30% untreated — 70% coverage.
• C: Targeted mix — Branded to 200 million (20%, highest-risk, 90% efficacy) + lower-quality generics to 630 million (60% efficacy) = 83% covered; 17% untreated.

Unavoidable trade-offs among three goals:

• Improve health
• Lower cost
• Better care

• Who are the main players of China’s pharmaceutical sector?
• How big is China’s pharmaceutical market? What’s its potential?
• What are the sales channels – selling, marketing, and distribution? What are the hurdles to market access?
• How are drug prices set?

• The Chinese market is large, with many hospitals needing physician education on diseases and treatments.
• Major companies nearly octupled their sales representatives in China between 2002 and 2011.
• Sales reps are the primary way to communicate this information, as doctors prefer in-person interactions.
• The “one product, one rep” model is used for important brands in major hospitals.

• Xi’an Janssen was one of the first multinational pharmaceutical companies in China, founded in Xi’an in 1985.
• It pioneered pharmaceutical marketing in China, training the first generation of medical representatives and creating a strong company culture.
• Over-the-Counter (OTC) products like Daktarin and Motilium, became synonymous with common medicines.

• GSK was accused of bribing hospital staff, doctors, and officials to boost drug sales.
• These bribes allegedly raised drug prices by one-third.
• Investigators claimed GSK paid $450 million in bribes through middlemen between 2009 and 2013.
• Doctors reportedly received 7-10% of drug proceeds as an incentive.
• A Chinese court fined GSK $492 million and sentenced five defendants to prison.

• Purdue Pharma, formerly owned by the Sackler family used aggressive marketing to promote OxyContin.
• From 1999 to 2020, nearly 841,000 people died from drug overdoses in the US, with prescription and illicit opioids responsible for 500,000 of those deaths.
• Purdue was fined for misleading the public about OxyContin’s addictiveness; the company filed for bankruptcy in 2019.

• There’s a lack of price information and transparency.
• It’s difficult to compare the value (quality vs. cost) of services.
• Providers have more information than consumers (asymmetric information).
• Government plays a significant role as a buyer and regulator.
• Insurance coverage can lead to increased service use (moral hazard).

Cost:

• National health expenditures are rising rapidly, with a large portion financed out-of-pocket.

Quality:

• Significant variation in provider training, and poor enforcement of laws.
• Overuse of pharmaceuticals and IV solutions is common.

Access:

• Most modern healthcare facilities and government spending in urban areas
• Access particularly challenging for the poor and migrant workers, with considerable variations across provinces.