BMI View: The recently proposed reforms to Ghana's National Health Insurance Scheme (NHIS ) to ensure sustainability are largely overambitious. We note positive reception to the NHIS, our forecast of rapid GDP growth, and our expectation that the government will pass some reforms, are the main drivers behind the future success of the NHIS. The system will continue to benefit the wider population by improving access to medicines; although this is generally not positive for multinational drugmakers, which will be subject to drug price reductions due to the government's public procurement policy.
Ghana's National Health Insurance Scheme (NHIS) is on course to go bankrupt as early as 2013, according to a recent report by the World Bank. The report detailed that in order for the health system to maintain operations and continue providing healthcare access to the wider population, a number of reforms are necessary and more public resources and healthcare financing is required.
Over the last few years, BMI has monitored the rising concerns by various public figures regarding the NHIS as unsustainable. We note that in June 2011, managers of the NHIS were asked to generate new strategies for attracting more funds to the scheme, according to chairman of the Parliamentary Select Committee on Health, Alhaji Mohammed Mubarak Muntaka. He added then that the dependence on the present premium, and actuarial and government support was not enough to sustain the scheme. The chairman of the National Development Planning Commission (NDPC), P.V. Obeng, asked managers to work with financial institutions to reduce delays in releasing funds for the scheme. Similarly, in November 2010 the NHIS's chief executive, Sylvester Mensah, expressed concern that the future of the scheme could be in jeopardy, and that if spending continued to grow it would become unsustainable by 2013.
BMI estimates government and private contributions to the overall healthcare market in 2011 at approximately 60% and 40% of total spending on healthcare, valued at US$1.02bn (GHS1.58bn) and US$0.71bn (GHS1.09bn) respectively. BMI calculated pharmaceutical spending at 18% of the total healthcare market in 2011, which we project to grow to 22% by 2016. We expect pharmaceutical sales to increase by a compound annual growth rate (CAGR) of 10.5% and 17.4% in US dollars and local currency respectively over the 2011-2016 period, from US$0.311bn (GHS0.48bn) to US$0.511 (GHS1.07bn) in 2016. BMI notes that in Ghana, where spending on medicines was, prior to the NHIS, mainly out-of-pocket, the health system has a strong influence on the pharmaceutical sector and medicines uptake. Pharmaceuticals are an important determinant of health outcomes and a major financial driver of a national health system.
|Increasing Demand For Pharmaceuticals|
|Ghana's Pharmaceutical Market Size (US$ And Local Currency)|
The NHIS suffers from several pharmaceutical-related problems, including inappropriate charging for medicines, fraud, overprescribing, and irrational use and prescribing patterns. Additionally, one of the main inefficiencies of Ghana's health system regarding pharmaceuticals is medicines payments. Pharmaceuticals account for about half of NHIS spending, and the NHIS accounts for about 44% of total pharmaceutical spending, according to the report. NHIS coverage of pharmaceuticals has made medicines affordable to enrollees and increased their financial protection, as drugs are one of the biggest elements of out-of-pocket spending. Therefore, policy changes in this area have critical implications for the sustainability of the NHIS, as well as its performance in terms of health outcomes and financial protection.
BMI maintains that the generally positive reception to the healthcare service and forecasts for Ghana's rapid GDP growth in coming years will ensure the cost of the scheme is supported in the longer term. However, although we are confident the government will pass reforms necessary to ensure the continued success of the NHIS, we believe the recently reported pharmaceutical reforms for the system are largely overambitious. Below we detail the pharmaceutical reform options for the NHIS:
• Establish more rational reimbursement methods, including capitation for basic primary care medicines, reference pricing, or other modern reimbursement methods.
• Improve information systems and introduce incentives for the rational use of medicines.
• Update the drug list, based on medical appropriateness criteria.
• Reduce expenditure on generic medicines through pooled procurement.
• Consider appropriate co-payments.
• Provide consumer and provider education.
The introduction of the National Health Insurance Scheme (NHIS) during 2003-2004 was intended to give more autonomy to drug purchasers across the country where all public health facilities had to purchase medicines from the public healthcare sector and use a 10% fixed mark-up to account for costs incurred in regional medical stores (RMS) and service delivery points (SDPs). The introduction of the NHIS was generally not positive for multinationals, which were then subject to drug price reductions and reduced profit margins due to the government's procurement policy. The scheme was, however, beneficial for patients, giving them wider access to medicines and medical services by paying a monthly levy as part of the national insurance system.