Regulatory innovations rely on consumers and the power of the network

Shortfalls in healthcare quality are not the exception but the rule in many countries. A recent paper in Health Affairs described “huge quality gaps” and “low levels of provider training” in a major Indian state.

These shortfalls are due to yawning regulatory gaps in health markets of low- and middle-income countries (LMICs). I recently mapped out existing programs currently addressing regulation in ways that have been identified in the literature as innovative. For this research, which served as my capstone paper in the Johns Hopkins Bloomberg School of Public Health MPH program, I primarily used the Center for Health Market Innovations, since it is a comprehensive database containing programs addressing health markets in LMICs.

Regulatory mechanisms can broadly be categorized under two headings, bureaucratic or “command and control” and market-based control. Due to the high cost of enforcement, lack of adequate human resources and the presence of a large and unidentified informal sector, the command and control approach is failing in most LMICs.

Market-based approaches include self-regulation - delegating accreditation of medical providers to professional bodies that are technically proficient in a given profession. But too often, self-regulation devolves into regulatory capture, in which restrictions are imposed not to ensure quality and maintain standards but rather to promote member interests.

A more promising market-based approach is accreditation. Recently gaining momentum in many LMICs, accreditation is differentiated from licensing by its voluntary nature, and it functions by creating market incentives for providers to offer quality services in order to warrant consumer loyalty and business expansion. Accreditation is only one of a series of new approaches to improving the regulation of healthcare in market-based health systems.

Gaps in regulation identified from both, the literature and experts in the field, guided the framework for the selection of programs. These included networks/partnerships and use of Information Technology. Programs not in the process of expansion or currently implementing on a nation-wide level and programs with no reports submitted to CHMI were excluded. The results are presented below:

Program Country Implementing Body (Main) Innovative approach to regulation Accredited Drug Dispensing Outlets (ADDO) Tanzania Tanzania Food and Drugs Authority (TFDA) Accreditation for informal providers (drug sellers); Regulatory partnerships; Consumer disclosure National Agency for Food and Drug Administration and Control (NAFDAC) Nigeria National Agency for Food and Drug Administration and Control Government and private partnership for regulation; Consumer disclosure Shasthya Sena (Health Force) Bangladesh International Centre for Diarrhoeal Disease Research, Government, private and civil society partnership for regulation Unique Identification Mobile Verification (UIMV) India PharmSecure Government and private sector co-production of regulation of counterfeit drug market; Use of information technology; Consumer empowerment Human Resources for Health Information System (HRHIS) Uganda Uganda Ministry of Health Consumer disclosure; Improved monitoring standards through the use of information technology Table 1: Tabular display of regulatory innovations in low-and middle-income countries.

Key themes of these programs include:

  • Using consumer power to achieve regulatory goals. All these programs allow consumers to access information about the quality of the commodities they purchase (PharmSecure program) and identify ‘quacks’ (HRHIS), or publicly disclose information concerning unregistered drugs (NAFDAC) or accredited providers (Shasthya Sena & ADDO).

  • Identifying, training and creating networks of trained providers linked to the formal sector with referral linkages. Some form of self-regulation will ensure the integrity of their brand.

  • Relying on stakeholders besides government in implementing regulations. In India, pharmaceutical companies are tackling the issue of counterfeit drugs by serializing all exported pharmaceutical commodities.

What is working?

The success of these programs in controlling cost and improving the quality of health services and commodities available to the public is mixed. ADDO, NAFDAC and HRHIS document some positive impacts. Nigeria’s NAFDAC program reported a decrease in the percentage of circulating counterfeit drugs from 41% in 2001 to 16.7% in 2006, and estimated that counterfeit drugs were much less likely to be in circulation at the end of the decade.

Shasthya Sena reported less impact. Village doctors may not have been given sufficient financial incentives to follow protocols. This raises questions about the potential of achieving large gains in regulating the informal sector without first addressing financing.

Supporting this argument is the fact that, pharmacies participating in ADDO were more likely to appropriately prescribe medicine for malaria symptoms, possibly in part because they had a strong financial incentive for participating: those accredited are eligible to receive micro-finance loans.

More innovative mechanisms in 2013?

Very few innovations are improving regulatory efficiency in LMICs. The few that do exist are showing that the consumer voice is a strong force in regulating the informal health sector. These programs, however, only provide information which consumers can use to make informed decisions. Avenues through which the public can voice complaints and dissatisfaction, and seek redress are greatly needed. In addition, it is evident that providing financing to informal providers is a strong component of getting them to adhere to set regulations.

A new initiative, the African Medicines Regulatory Harmonization, promises to provide quicker access to essential medicines at affordable prices through improved procurement practices, greater medicine control by strengthened National Drug Regulatory Authorities, improved procurement and cost-effective regulation for government.

This is heartening, but more needs to be done to build on these promising initiatives, by learning from what’s worked—and what hasn’t—in order to better ensure access to quality healthcare services and commodities for the poor.