Priority-Setting Institutions for Health: Building Institutions for Smarter Public Spending

FOR IMMEDIATE RELEASE

Washington, D.C. (May 11, 2012) – Developing countries and global health donors could save many more lives and avert more suffering and disability by allocating healthcare funds in a manner that is fairer and more cost-effective, according to new working group report from the Center for Global Development (CGD).

Healthcare budgets in rich and poor countries are often allocated in ways that are not cost effective as a result of political pressures and bureaucratic inertia. The problem is especially severe in developing countries, where annual per capita spending on health is often less than the cost of a single clinic visit in rich countries, the report says.

As a result, poor people frequently go without low-cost, highly effective treatments while scarce funds are spent on costly procedures with modest benefits, and sometimes on treatments that are actually harmful, says the report, Priority-Setting Institutions for Health: Building Institutions for Smarter Public Spending.

For example, in Egypt, one out of five children are stunted due to poor nutrition but 20 percent of public spending on health is used to send patients overseas for treatment. In India, six out of ten children are not fully vaccinated against common childhood diseases, while public funds are spent on open-heart surgery.

“People who decide how to spend health budgets hold the lives of many others in their hands,” says Amanda Glassman, director of the CGD global health program and co-author of the report. “They lack institutions and processes to make fair, evidence-based recommendations on how to help as many people as possible with the resources available.”

The CGD working group report draws on the knowledge of dozens of experts from diverse backgrounds.  It finds that because health spending involves limited resources and potentially limitless need it is critical that policy makers establish systems and institutions to identify and fund healthcare priorities.

The working group—which includes policy-makers; practitioners; academics, and experts from industry, regulatory authorities, aid donors, and technical agencies—is urging much wider application of a solution already being used by a handful of countries, including Britain, Poland and Thailand.

These countries have established health technology assessment agencies staffed by experts who weigh cost-effectiveness and other factors and decide which medical interventions should receive higher priority in the allocation of scarce public and donor money.

The world’s leading agency for this work is the UK’s National Institute for Health and Clinical Excellence (NICE), which, through its international division, has provided support to a number of low and middle income countries (LMICs) looking to strengthen their capacity in health technology assessment.

Kalipso Chalkidou, director of NICE International and co-chair of the working group, says “poor and rich countries alike are faced with the challenge of allocating finite resources across a range of national priorities, new and existing technologies and unmet need.”

“NICE International was delighted to be involved in this report and welcomes its conclusions,” she adds.

In the UK, NICE applies local and international evidence and values to inform resource allocation decisions made by the UK’s National Health Service.

The report group recommends much wider use of health technology assessment facilities, broadly modeled on NICE, and a global facility to support and encourage the approach.

“A global health technology assessment facility should be created to provide sustained technical and consultative support to global funding agencies and developing country governments,” the report says.

Glassman acknowledges that the report recommendation will not be without controversy, especially in the United States. During the 2009-10 U.S. health care reform debate, NICE came under sharp criticism from some conservatives, who denounced it as a “medical rationing board.”

“Rationing is unavoidable when we are talking about healthcare and public funds,” says Glassman.

“Because the demand for healthcare is potentially infinite, funding will always fall short. The question is: how can available resources be allocated to do the most good for the most people?”

The report finds that most developing countries, where resources are most scarce, follow an ad hoc approach to allocation of scarce public and donor funds. As a result, for example:

• In India less than half of all children ages 1 to 2 are fully vaccinated – but open heart surgery is subsidized in public hospitals.
• In Colombia only six out of ten children are fully immunized – but the use of Avastin as a treatment for breast cancer is subsidized by the government. The use of Avastin for breast cancer was rejected by the United States as unsafe and in the UK as cost-inefficient.
• In Egypt one out of five children are stunted due to poor nutrition but 20 percent of public spending on health is used to send patients overseas for treatment.
  

Country level health technology assessment institutions need to be improved – and, in some cases, created – to address these problems.

To improve current allocation practices, the report calls for a global health technology assessment facility tasked with providing peer-to-peer expertise and know-how in economic evaluation, budget impact analysis, and deliberative processes as a basis for priority setting. 

These kinds of assessment institutions could also help countries avoid wasting money on repeating health technology assessments done by others and  instead carry out joint evaluations for adaptation and deliberation in each country – which would be both cost-effective and efficient.

CGD president Nancy Birdsall praised the report, noting the pragmatic recommendations. “This report offers a way to save more lives with the resources we have available,” said Birdsall. “In 2010 the rich world spent more than $28 billion on health in developing countries. The official donors and governments in the developing world have responsibility to spend it smarter.”

The report, Priority-Setting Institutions for Health: Building Institutions for Smarter Public Spending is available on the CGD website.

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The Center for Global Development: CGD works to reduce global poverty and inequality through rigorous research and active engagement with the policy community to make the world a more prosperous, just, and safe place for all people. As a nimble, independent, nonpartisan, and nonprofit think tank, focused on improving the policies and practices of the rich and powerful, the Center combines world-class scholarly research with policy analysis and innovative outreach and communications to turn ideas into action.

NICE International: NICE International is the international division of the UK’s National Institute for Health and Clinical Excellence (NICE). It contributes to better health around the world through the more effective and equitable use of resources. It does this by providing advice on the use of evidence and social values in making clinical and policy decisions. NICE International applies rigorous analytic methodology to, put patients and the public first, respond to the needs and priorities of decision makers at all levels, emphasize an understanding of the social and cultural context, encourage transparent and inclusive decision making processes.