Budget line
Where possible, domestic government financing of core activities is preferable to ensure scale and sustainability. Domestic government financing could come in many forms depending on the structure of the government’s health financing system, with common models including the establishing of a domestic budget line for hepatitis funded out of taxation or the inclusion of viral hepatitis into social health insurance systems. Some government budget line is critical to ensure the operation and governance of a viral hepatitis program, whereas health insurance can cover diagnostic and treatment-related costs. For a budget line approach, governments must decide if they can finance this within the existing budgetary envelope through reprogramming or integration of activities, or whether new ways of raising funds need to be considered. For an insurance approach, governments must consider the level of coverage and eligibility requirements that they can afford. In both cases, the decision will require working closely with units outside the Ministry of Health including the treasury, ministry of finance or social security entities in order to make the case for funding. This process can take a significant amount of time and requires high level leadership and advocacy from the Ministry of Health.
Social health insurance/public health insurance schemes
What is it?
Either the national government or sub-national government offers health insurance coverage to beneficiaries by pooling risk across a large population. Health insurance may not cover the full costs involved and may require a contribution from beneficiaries.
How is it applicable to hepatitis?
Hepatitis can be included in the insurance package.
Advantages:
- Reduces financial risk to all stakeholders
- Can increase the predictability of health care expenditures for individuals
- Increases the ability to pay for low-income patients
- Increases the demand for health products and services
Challenges:
- Coverage can be limited in the informal job market
- Insurance pool is limited and so hepatitis coverage must compete within this
- Often still requires government subsidisation
Case study
In 2016 Mongolia took the decision to include HBV and HCV medicines in their national health insurance, which covers 98% of the population. Individuals seeking treatment in both the public and private sectors are reimbursed, with about 60% of the cost for HCV treatment and 80% of the cost of HBV treatment reimbursed. For HCV treatment the amount that is currently reimbursed (USD $265) is fixed so the proportion of out-of-pocket expenses to the patient will decrease as prices fall.
Source: WHO Global Hepatitis Report, 2017.
Excise Taxes
What are they?
An excise tax is an indirect tax charged on the sale of a particular good. An excise tax could be added to the sale of tobacco or alcohol or both which would not only generate revenue but also act as a public health instrument to reduce consumption of goods that have a negative effect on health.
How is it applicable to hepatitis?
Given the link between alcohol and liver disease a tax on alcohol could prove to be an effective public health tool.
Advantages:
- It can improve public support for the tax as people know it is going towards something that is needed such as health care
- It can reduce the public’s dissatisfaction towards the tax
- It can protect resources as it provides a barrier to the financing being reallocated
Challenges:
- There is no guarantee the revenue would be spent on hepatitis.
A hypothecated tax on alcohol would address this challenge and help to ensure that all revenue would be spent on the hepatitis programme.
Case studies
Taxes on alcohol and tobacco
A number of countries have already implemented taxes on alcohol and tobacco with an increasing number of policy makers identifying them as an effective policy measure. Two country examples highlighting the impact that alcohol and tobacco taxes can have on the health system are below.
Thailand: the Health Promotion Act of 2001 established a tax on tobacco and alcohol which has resulted in US$120 million being raised annually for health promotion efforts.
Philippines: In 2012 the Philippines raised taxes on tobacco and alcohol and after 3 years $3.9 billion in additional revenue was raised, 80% of which went towards financing the extension of their health insurance to the poorest 40% of Filipinos. In this way they are using the revenues raised from these taxes to assist in their efforts to reach Universal Health Coverage.
Source: Marten, R et al. Sugar, tobacco, and alcohol taxes to achieve the SDGs, The Lancet. 2018, Volume 391, Issue 10138, 2400 – 2401
Global solidarity levies
This is an innovative financing mechanism which has been used globally by UNITAID but the principles of which could be applicable on a smaller scale. UNITAID uses an airline solidarity levy which is a tax on airline tickets charged to passengers taking off from airports in the countries that implement the scheme. This accounts for a significant proportion of UNITAID funding (64% 2006-2013, amounting to $1.3 billion) and shows that a small levy passed on to consumers has the potential to generate significant income.
Revolving drug fund
What is it?
Governments purchase commodities in advance which are replenished as patients purchase treatment.
How is it applicable to hepatitis?
Treatments and diagnostics for both HBV and HCV could be purchased in this way.
Advantages:
- Efficiency in pharmaceutical management and medicine use
- Can make access for patients more geographically equitable
Challenges:
- It often requires an initial capital injection which may rely on an external funder
- Patients are required to make out of pocket payments
- The full cost of the system may mean collection costs could exceed revenue collected
Case study
Countries, including Nigeria and Cameroon, have decided to procure hepatitis drugs and diagnostics directly from generic companies and sell to patients at much lower margins than would be charged in the private sector. Revenues from sales are then channeled into purchasing more supplies. The Ministry of Health in Khartoum State, the Sudan, implemented a Revolving Drug Fund (RDF) in 1989. An evaluation of the RDF showed it fulfilled its purpose and highlights lessons learnt which could be used by countries or states looking to do something similar. The findings of this evaluation can be found here.
Public-private partnerships
What is it?
Public-private partnerships encourage collaboration across sectors and their objectives can include increasing awareness, contributing to co-payment of treatment through grants or loans and covering diagnostic investigations.
How is it applicable to hepatitis?
Companies could pay for their employees to be tested for hepatitis B and C. Those that test positive could then be referred for treatment in public health facilities.
Advantages:
- These partnerships are beneficial to the private sector as healthier people mean more productive people in the work place
Challenges:
- Generally only reaches a small population size
Case study
Public-private partnerships have been utilised in other health areas and could be successfully applied to hepatitis. The mining company Rio Tinto operates voluntary HIV testing in areas with a generalised epidemic which allows employees to either take steps to remain infection free or avoid spreading the infection and gain access to support and treatment. Through implementation of this they have achieved prevalence rates significantly lower than the wider community.
Shell has also used public-private partnerships in the markets in which they operate. In the Philippines, Shell has engaged in an ongoing public-private partnership in malaria control which is called Movement Against Malaria (MAM). In partnership with the Department of Health, local governments and international bodies such as WHO, Shell’s organisation in the Philippines set up this movement with the aim to eradicate Malaria in the Philippines by 2020. Through their work with MAM they have been involved in prevention and awareness activities and have built the capacity of health care workers.
Source: Rio Tinto Sustainable Development, 2015
Risk-sharing agreements
What are they?
Risk-sharing agreements between payers, such as insurance companies and government health care bodies, and pharmaceutical companies are put in place to diminish the impact on the payers’ budgets for new and existing treatments by putting in place either finance based or outcome based agreements. Finance based agreements could include price-volume agreements, expenditure caps, price cuts that are attached to forecasted spending and conditional discounts. Outcome based agreements link reimbursement to performance of the treatment and are also known as pay for performance.
How is it applicable to hepatitis?
Risk-sharing agreements are very applicable to viral hepatitis. Any of the different types of arrangements could be considered by countries. Specifically a pay per cure could be agreed for hepatitis C treatment so that the government is only paying for treatment for those that reach SVR with the pharmaceutical company covering the rest.
Advantages:
- Offsets risk amongst payers
- Increases access for patients
- Offers pharmaceutical companies an alternative to offering a discounted price
Challenges:
- They require a clear definition and agreement of outcomes
- There are few standard regulations for setting up this type of agreement
- Robust monitoring and evaluation systems need to be in place for outcome based risk-sharing agreements
Case study
In 2014 France not only negotiated a low price with Gilead Sciences for their hepatitis C drug Sovaldi, they also entered into a risk-sharing agreement. The terms of the agreement are that the price of the Sovaldi will go down if volume hits certain targets and pay for performance clause states that if treatment doesn’t work, France will get money back from Gilead. In return, France agreed to fully fund hepatitis C treatment for patients meaning no co-payments from patients are required.
Source: T Staton, France Strikes Big Hep C Treatment Deal for Gilead’s Sovaldi, FiercePharma, 20 Nov.2014, http://www.fiercepharma.com/story/france-strikes-big-hep-c-treatment-deal-gileads-sovaldi/2014-11-20