|Public-private roles in the pharmaceutical sector: Implications for equitable access and rational drug use (WHO/DAP, 1997, 115 p.)|
|3. Essential state responsibilities|
Concern for public health and welfare requires a degree of regulatory control over drug quality, safety, efficacy, and use [57,64,118]. An example of how increasing deregulation may have a negative impact on health and welfare is described in Box 3.
Table 3. Essential state functions in pharmaceutical markets
· Development and routine review of national drug policy, including elements of policy on:
- government financing of drugs (how much of what?)
· Legislative, regulatory, and
programmatic initiatives for policy implementation
2. Drug regulation
· Licensing and inspection of
importers, wholesalers, pharmacies and other drug outlets
3. Professional standards
· Setting educational standards
for pharmacists, doctors and other health professionals
4. Access to essential drugs
· Subsidizing the costs of
essential drugs for the poor
5. Rational use of drugs
· Ensuring availability and
dissemination of unbiased information
Drug regulation depends on the existence of a legislative framework which defines which organization has the authority to regulate and over which areas it has regulatory control. Within this legislative framework the appropriate regulatory authority must then issue specific regulations to cover both public and private sectors and should specify the sanctions to be taken in the event of failure to conform. Effective enforcement of sanctions is imperative if regulations are to have credibility.
Self-regulation by industry or coregulation involving industry and consumer groups is increasingly promoted as a means to complement public sector regulatory capacity. However, such approaches can be fraught with difficulty. Considerable effort is still required to find the best blend of regulatory inputs.
Box 3. China: when government lets go of the reins [21,25,67,107,138]
During the period 1960-1983 China established a Cooperative Medical System which brought at least basic health care services to almost the entire population. Rural doctors were paid on a work points system by the local commune. The commune also purchased some care from higher-level facilities for its population.
As the system of communal agriculture in China broke down, so did the old ways of financing and providing health care. By the end of the 1980s the Cooperative Medical System had collapsed in about 90% of Chinese villages. About three-quarters of finance for health care in China came from user fees. Rural doctors generally no longer saw themselves as government employees but as independent private practitioners. At the same time, government controls on higher-level facilities were relaxed; hospitals were given greater managerial autonomy and control over their own finances.
The impact on health and health care
The reforms in China have had an extremely negative effect on access to health care services, particularly in rural areas. It is now estimated that 700 million Chinese have no prepayment or insurance coverage and must thus pay out-of-pocket for virtually all health services. Household surveys have documented a large number of untreated sick people. For example, a national household survey in 1988 showed that 25% of the rural population who needed referral to a hospital were not admitted, largely due to financial problems . Health care expenditures also appear to be a major factor in causing poverty. In a survey of 1013 poor households, nearly 50% of them cited illness as the principal cause of poverty .
The declining financial accessibility of health care services has also affected health status. Immunization coverage began to decline towards the end of the 1980s and there have been several recent unexpected outbreaks of immunizable diseases. Both child and infant mortality declined steadily until the 1980s, but the decline in these indicators then stopped and even showed a slight upward drift. This is despite recent rapid macroeconomic growth.
The impact on the pharmaceutical sector 
Prior to 1980 health stations stocked only a small number of essential drugs. Since that time, rural doctors have been granted the right to prescribe all drugs except narcotics and major tranquillizers. They have not been provided with extra training to match these new powers.
Health stations in poorer counties often appear to stock more drugs than those in wealthy ones. This probably reflects economic necessity; drug sales are the easiest way to make money. Health facilities have the right to manufacture drugs and an increasing number of small health stations are producing traditional remedies in order to generate revenue.
Several studies have reported inappropriate drug use - the use of injectables rather than oral preparations, and the use of second-line and third-line drugs where simple ones would do.
Ensuring an effective regulatory framework for the pharmaceutical sector is a major challenge for governments. Many countries have a legislative framework but inappropriate or outdated regulations. Equally or more commonly, regulations exist but enforcement agencies do not have the capacity to implement them. The issue of regulatory capacity is discussed further in Section 7.