Year in ReviewMon, 09/23/2019 - 10:14
Mexico is the midst of an obesity epidemic that cost the country MX$240 billion (US$12.43 billion) just in 2017 and is now linked to the three main mortality causes in the country: heart disease, diabetes mellitus and malignant tumors. Furthermore, the country has subdued but failed to vanquish an old foe: infectious diseases, such as measles, rubella, dengue, Chagas and tuberculosis, continue to affect the poorest parts of the country.
This complex situation is what the new administration had to contend with when it entered office in December 2018. President Andrés Manuel López Obrador campaigned on the promise of universal healthcare access, a complicated issue that mystified previous administrations. “The government should provide access to healthcare services to all, no matter their personal beliefs, socioeconomic status, living conditions or ethnicity,” says Oliva López, Minister of Health of Mexico City (SEDESA). Throughout López Obrador’s early tenure, his administration has sought to achieve this goal by eliminating unnecessary spending in many areas and addressing corruption, which he perceives as the major setback for every economic sector in the country.
While the goals seem beneficial, their implementation, and the focus on austerity, has created confusion and uncertainty among players in the public and private sectors. Beyond the hit on investment in healthcare, the austerity measures are proving a hinderance to delivering healthcare to those who need it. “About 60 percent of healthcare services are provided by the public sector so budget cuts will have a deep impact. Moreover, demand continues to grow alongside the population. These trends will impact the sector on two fronts: quality and wait times,” says Guillaume Corpart, Managing Director of Global Health Intelligence. The public sector also is Mexico’s largest buyer of medications and medical supplies, so budget reductions hit these manufacturers and their supply chains.
It is obvious that the country’s healthcare sector will continue to experience change throughout the coming years. Under these circumstances, the sector is looking for strategies to adapt and to continue growing. While some are investing in technology, analyzing new payment strategies or looking for new alliances, many in the sector agree that the key to adapting to these changes is innovation.
One complex reality in Mexico is that it faces an epidemiological duality. “Mexico is an interesting market. Part of it behaves as an emerging market and another as a mature one because the change in the population pyramid is more common to mature markets,” says Américo García, Director General of Mexico and Latin America at Apotex.
Infectious diseases continue to affect millions of Mexicans. In 2018, 24.5 million people suffered from an acute respiratory infection, 5.4 million from gut infections and 4.3 million from urinary infections, according to the General Direction of Epidemiology. However, thanks to modern medicine patients can be cured of most of these diseases, which has led to lower mortality rates stemming from this category of diseases. In 2017, the only infectious diseases to rank among the Top 10 mortality causes in the country were influenza and pneumonia. Together, these two diseases accounted for 21,892 deaths in 2017, which was also several times fewer than deaths from chronic diseases. Heart disease, the leading cause of death that year, represented 141,619 deaths.
However, modern medicine has also allowed individuals to live longer. Along with the widespread availability of processed foods, these factors have led to the growth of a different foe: obesity. Today, 72 percent of Mexico’s population is either overweight or obese. The World Health Organization (WHO) estimates 85 million people are obese or overweight in Mexico. Obesity is a risk factor for many diseases and is linked to the three main causes of death in the country: heart disease, diabetes mellitus and malignant tumors. These diseases are increasingly taking more lives and will continue to do so unless drastic changes are made.
The country’s diverse economic and geographical distribution complicates the provision of healthcare services and plays a role in the epidemiological profile of different regions in the country. The difference in disease prevalence is fueled by the variation in risk factors that affect each population. “We arrived at the conclusion that cervix cancer is more associated with poverty and limited access to healthcare. Colon cancer, on the other hand, is heavily linked to obesity and overweight,” says Abelardo Meneses, Director General of INCan.
DIFFERENT RISK, DIFFERENT STRATEGY
To address Mexico’s complex epidemiological profile, the current administration wants to migrate to a comprehensive healthcare system that understands the reality of the country. “Focusing on the population’s right to healthcare services forces us to go beyond medical treatment. Health does not equal the absence of disease and should not be the responsibility of healthcare providers only,” says López. “Guaranteeing the population’s right to access healthcare services requires an analysis of the social determinants or conditions that generate well-being and allow people to have a fulfilling and fruitful life as individuals, families and societies.”
Every administration enters office with a different vision of how the country should be run. However, President López Obrador had the goal of completely reshaping the country through the solution of what he considers to be Mexico’s largest problems: corruption and irresponsible spending. For many sectors, including healthcare, these policies translated into significant budget cuts that have impacted care providers by limiting the number of medicines, medical devices and equipment they can acquire. They have also curtailed the number of doctors, nurses and residents. By May 2019, healthcare professionals from the country’s major public institutions at 13 different states had protested the lack of medical supplies and what they called unjustified firings. These problems only make the administration’s goals of increasing access to healthcare even harder.
For that reason, some propose that an efficient provision of healthcare requires the support and collaboration of other players besides the government. “Individuals will need an increased number of healthcare services and current public infrastructure has been surpassed by existing needs. This gap in services needs to be addressed both by public and private institutions to ensure access to quality healthcare services by the entire population,” says Paulino Decanini, Executive President of SiSNova. This cooperation will be increasingly necessary as healthcare costs continue to increase.
Unlike acute sickness, chronic diseases require medical attention and medication throughout the patient’s entire life. These costs add up. IMCO states that obesity-related diseases like diabetes can cost between 73 and 87 percent of all healthcare expenses. The growth of these diseases will place a heavy burden on the finances of the public sector, which provides care for 61 million Mexicans. The sector is already strained for resources – Mexico is ranked second among OECD countries in terms of the lowest investment in healthcare. The shortages of medications, medical supplies, doctors and other professionals translate into long wait periods at public institutions and unfilled prescriptions.
Medication shortages at public institutions are not expected to abate soon. The mid-2019 medication tender reduced maximum prices by 8 percent, which will hurt the already small margins of bidders. Moreover, in a move that shocked the entire pharmaceutical industry in Mexico, the tender was open to countries with which Mexico does not have free trade agreements (FTAs). “These countries manage lower prices, which forces local manufacturers to lower their own prices, reducing their margins,” says Corpart. The tender also had no bidders for 62 percent of products, which “will create a shortage of medications at public institutions that will force patients to head to the private sector,” says Rafael Maciel, President of the Mexican Association of Generics (AMEGI).
ROAD TO INTEGRATED HEALTH
Different sectors of the healthcare industry can contribute to increasing access to healthcare services, medications and supplies. A major concern for both patients and doctors is the lack of access to innovative medications. This is a problem common to emerging economies. “In developed countries, about 10 percent of the population has access to innovative medications. In emerging countries, these are only available to 1 percent of the population,” says Ana Longoria, President and Director General of Novartis Mexico. Leaving patients without access to new treatments creates significant problems for patients, who may receive a less-effective medication or no medication at all. While medicines can enter the Mexican market as soon as they are approved by COFEPRIS, this certification only makes them available at the private sector. Making a medicine available in the public sector requires a much longer process that often takes years and does not guarantee availability. Big Pharma aims to address this problem through innovative payment methods that would allow the public sector to pay not for the medication, but for positive outcomes only. “A way to fix this is through innovative access models in which the public sector pays only for results. We are talking with local authorities to introduce these models, which forces us to ensure that the medications we sell benefit the patient,” says Longoria.
To provide as much medication as possible to a larger number of patients, public institutions have focused on the acquisition of generics, which can be up to 80 percent less expensive that the patented medicine. In 2019, the federal administration budgeted MX$79.42 billion (US$4.16 billion) for the acquisition of medications, according to SHCP. Between 2012 and 2018, COFEPRIS approved 590 generic registries to address 71 percent of the most common mortality causes in Mexico. This strategy saved public institutions MX$26.1 billion (US$1.37 billion), according to the former Commissioner of COFEPRIS, Julio Sánchez y Tépoz. Now, generics “amount to 86 percent of prescriptions in the public sector,” says AMEGI’s Maciel. Due to their lower costs, generics have expanded to the private sector and now, nine out of every 10 medications sold in the country are generics, according to data analytics firm IQVIA.
This predilection for generics has allowed the country to develop into the world’s 25th-ranked pharmaceutical manufacturing industry. In 2017, the country’s production was valued at US$4.74 billion and is expected to reach US$9.48 billion by 2025, according to ANAFAM. Investing in generics will facilitate the administration’s goal of increasing access to care while keeping budgets in check. Mexico’s budget for medication at public institutions totals MX$79.42 billion (US$4.16 billion) for 2019.
Another heavy expense in healthcare are medical devices, whose acquisition may pose a problem considering budget cuts. To address the provision of care with smaller budgets, technology developers are changing their approach to the healthcare sector. “Today, our focus has evolved from products and services to solutions. Instead of just focusing on technology, this new approach has broadened our vision by putting patients front and center and integrating our products and services to offer a holistic solution,” says Carlos Jiménez, Director General of B. Braun Mexico.
Other developers have invested in technology to improve efficiency and eliminate redundancies as a long-term strategy to keep costs down. For instance, a report from McKinsey states that incorporating AI in healthcare can save companies US$113.7 billion when improving service operations and eliminate risks valued at US$23.5 billion. Technology can also be a tool for the administration’s goal to increase access to healthcare services. “Technology can allow greater access to specialists to more individuals, which will be increasingly useful given the rise in chronic-degenerative diseases,” says Marcos Pascual, Commercial Director of ANAFARMEX.
Another area that could contribute to increasing healthcare access is insurance. However, healthcare insurance has failed to penetrate the Mexican market due to its high costs. “Private health insurance is too expensive for most Mexicans,” says Eduardo Lara, Head of Health, Latin America at Reinsurance Group of America. For that reason, only 8.62 million people had a health insurance policy in 2017, according to AMIS. There is, however, a significant area of opportunity for insurance products. In 2018, 52 percent of health expenditure was made by the public sector, 44.5 percent was made out of pocket and only 3.5 percent was made by private insurance. The high percentage of individuals who pay out of pocket points to a population that can afford to pay for healthcare but has been unable or uninterested in acquiring an insurance product.
To address this problem, insurers are developing innovative solutions that target overlooked segments of the population. For instance, some companies are developing less-expensive policies that address only one particular disease. Another strategy is incorporating technology to increase efficiency. The growing trend of mixing technology and insurance, now called InsurTech, allows companies to use data analytics, artificial intelligence, blockchain and machine learning to improve their operations and improve patient retention. While this trend has not yet penetrated the Mexican insurance sector, insurers are increasingly aware of its potential. “Even though the Mexican insurance industry has been very traditional and cautious to adopt changes, now it is understanding that digitalization could be a fast way to improve the relationship with the end consumer,” says Lara.
While austerity policies will continue to curtail the healthcare sector, millions of Mexicans will still require care. In that sense, cooperation with the private sector can play an important role in increasing access. “We believe Mexico has major challenges regarding chronic-degenerative diseases and disease transmission. However, we believe austerity does not have to be a barrier to achieving the required quality standards in products,” says Ana Riquelme, Executive Director of the Mexican Association of Innovative Industries of Medical Devices (AMID).