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News Article

Doulton Sees Growth for Mexican Healthcare

Wed, 09/07/2016 - 15:40

Latin America has a population of 500 million, with a pharmaceutical market of US$80 billion and it is expected to rise to US$150 billion in the medium term. Most of the economies in the region are growing, excluding Brazil, Argentina and Venezuela but economies such as Colombia, Mexico and Peru are implementing sensible policies to promote growth. Healthcare spending rises with GDP growth but out-of-pocket spending still outpaces public provision. All this means growth for the pharma industry and only by understanding where healthcare is headed, and the new rules it encompasses, can successful strategies be devised.

The Latin American healthcare system faces similar challenges to the developed world with funding running out in the face of an aging population, especially older populations such as Chile and Argentina, although the rest of the region has a positive demographic balance. Social security and public healthcare provisions differ widely from country to country and much criticism is leveled at the low spending and reduced priority for healthcare on the political agenda.

The amount of money that is spent is not the problem. Most healthcare budgets are fixed on expenditure and not on outcomes. Payer and provider are often the same entity, so money cannot flow to the most efficient provider. Healthcare decisions are taken from the patient and a dependency culture has been the unwanted result. The only system approaching viability is Colombia where the government has set strict rules ensuring the separation of payer and provider. In this case, the private sector is the funder, a separate provider comes from the private sector and the authorities simply oversee the process. In Mexico, healthcare coverage rose from barely 15 percent of the population to close to 90 percent in about 10 years, all managed by the private sector.

The Mexican system is suffering great fatigue not only because of duplication of coverage but also because of vested interests, lack of competition, aging population, decisions taken away from the patient and interference in the doctor-patient relationship. Hope is around the corner, however, with the creation of Seguro Popular, a funding agency today covering more than half of the population. The intention is to establish Seguro Popular as the unique funder for healthcare and purchase provision on a competitive, outcome-focused basis from the array of social security hospitals and clinics, as well as from the private sector. 

To improve health and reduce expenditure, healthcare should become a priority with the patient at the center. The patient should decide how his medical savings are spent or saved with strong advice from his primary care doctor. This engages the patient in seeking wellness as they have been shown to be more careful with their money. There are indeed other successful examples through medical savings in countries like Singapore, which has a healthy population, content doctors and government, while spending barely 4 percent of the GDP. Finland is also headed down the same road. In healthcare, the source of the decision represents a direct indicator of whether health will improve. Politicians should embrace the patient-centric model as it circumvents acrid criticism about healthcare rationing. Julio Frenk, as Health Minister and more recently Head of Harvard School of Public Health, tried to make the necessary changes to the social security system but faced great reticence from the sector, with its strong union and private interests. Therefore, he created Seguro Popular with the goal of making this institution the unique payer for medical services in Mexico but this has not been accomplished. However, the institution is able to buy services from the main public healthcare organizations including IMSS and ISSSTE, therefore reducing duplication. Another problem with the social security sector is the long distances patients have to travel in order to receive medical care. Today, Seguro Popular has surpassed IMSS as the institution with the largest number of affiliates so nearly 96 percent of the population now has some form of healthcare coverage. 

Mexico is a buoyant market, growing steadily if not spectacularly. The pharmaceutical market value is between ninth and 11th globally, worth close to US$20 billion, with US$14-15 billion in the private sector and US$2-4 billion in the public sector. The North of Mexico is closer than ever to becoming a developed market with sophisticated and highly competitive manufacturing centers, as evidenced by the continuous inward investment into new plants both for small and large molecule manufacture and related services.