MUNENE: Innovation central to tackling healthcare cost - Daily Nation

Innovation central to tackling the challenge of healthcare cost

Monday June 11 2018


Surgeons perform brain surgery at Embu Level Five Hospital on January 26, 2018. Quality management of the pharmaceutical supply chain is a must if we want to reduce cost of medicines without sacrificing quality. PHOTO | FILE | NATION MEDIA GROUP 

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Universal health coverage (UHC) and the accompanying concern of healthcare affordability are  tough nuts to crack. Affordability and financing are, perhaps, the two most difficult components that need to come together before we can achieve UHC.

Medicines are the most commonly employed intervention in healthcare. They also make up the costliest component, taking up at least of 40 per cent of total healthcare costs. There are many factors determining the cost of medicines — largely manufacturing, supply chain and marketing costs.

Manufacturing costs include those of inputs, ingredients, personnel and facilities. Supply chain costs comprise the cost of getting the medicine from the manufacturer’s warehouse to the patient.


In a free market, pricing of medicines is subject to demand and supply forces just like any other commodity. This means the final price to the patient is not arrived at by a pre-determined markup. The price is determined by the position the medicine brand wishes to occupy in the market.

Innovator products (original brands of a drug) have the convenience of being the first to select their position in the market. As generic products enter the market, they also select their position, often at a lower patient price than the original brand’s. Hence, a variance of even 800 per cent amongst the brands is not uncommon.

A large marketing budget enables a drug company to push higher uptake of its brands amongst many competing ones. In Kenya, competing brands can be as many as 100 for the same medicine.

A common myth is that generic medicines are fake drugs. This is incorrect, and often contributes to unnecessary high spending on medicines. There are quality generics and every country’s medicine regulator controls the quality of the medicines made and imported in their territory, whether innovator brands or generics.


Is it possible to achieve cost containment in a free market? This is where innovation comes into play.

First, we need to identify where the costs lie. Secondly, we need to see if we can reduce or collapse some of those cost contributors. For instance, if a product changes hands many times between middlemen before getting to the patient, the more costs are loaded onto the final price.

Further, convolution of any supply chain makes it more difficult to trace the quality journey of the product. Quality management of the pharmaceutical supply chain is a must if we want to reduce cost of medicines without sacrificing quality.


Basic care packages include essential medicines that are reimbursable by the payer. There is a need for coding of medicines and mapping them to diagnoses to promote better oversight of the reimbursement by payers. This will also promote quantification and forecasting of the country’s healthcare needs for planning.

Effective ICT solutions have been demonstrated to reduce overall healthcare costs. From supply chain monitoring and traceability, to electronic medical records, to control of reimbursement fraud, innovative ICT solutions can be used to promote efficiency.

The patient’s health-seeking behaviour also contributes to rising costs. It is encouraged to remain with one primary care provider, who acts as a point of reference. This helps in having a repository of one’s medical records in one place where trends become evident, leading to better care and avoidance of unnecessary use of medicines and other interventions.


Another patient factor that affects their healthcare journey and has an impact on costs is lack of involvement in their own care. Patients can question their provider, ask to see certification and demand clarity in matters affecting their health. Paternalistic tendencies amongst healthcare providers lead to passive disempowered patients.

It has been proven that educating patients and involving them in self-care reduces their lifetime healthcare costs.

Dr Munene is the CEO, Pharmaceutical Society of Kenya. [email protected] Twitter: @psofkenya