Everybody demands it immediately, but supply is limited because we live in a real world. COVID-19 proves it. So how do we provide healthcare to everyone? Can we?
It's almost a cliché now that COVID-19 has accelerated the exposure of underlying deficiencies of society. Healthcare has especially been one of those areas that had direct sunlight exposure to its nether-regions due to the pandemic. And although there are endless episodes highlighting the limitations and faults within the system, the most embarrassing feature has to be the current vaccine distribution fiasco.
Never mind the near-weekly criticism of vaccine hoarding by rich countries. The politicians have to get re-elected somehow. But hoarding amongst rich countries is also a sight to behold. Even one of the most immigrant-friendly developed nations in Canada is curiously mum on vaccine hoarding accusations yet is getting very concernicus over potential export restrictions by the EU that may affect their own vaccine supply. Hey, I live in Canada so frankly, more power to Trudeau's government to get the shot in my arm ASAP.
And how about that AstraZeneca vaccine pricing discrimination accusation that just surfaced, where South Africa seems to be paying more than twice as much per vaccine dose than EU countries? According to the Wall Street Journal, at Oxford University's insistence AstraZeneca pledged to "provide the vaccine at-cost during the pandemic" and distribute the vaccine without discrimination to country or region. It's been almost a week since accusations first surfaced, but still no comment from AstraZeneca nor the Serum Institute of India, the latter which has a production agreement with AstraZeneca and has publicly stated a price cap of $3 USD per dose (another link here). I understand from experience that business circumstances can and do change especially in uncertain times as these, but this is just bad PR handling.
Just yesterday, a teenager came knocking at my door asking for a UNICEF donation. According to this young man, the COVAX initiative can somehow magically vaccinate 30 people in Africa against SARS-CoV-2 with a $15 USD donation. You can see plainly from the per-dose cost above that this is impossible. I do not know if these figures were fed to him by someone else or he had exaggerated facts on his own to sell a better story, but fudging the facts to make someone feel better about their small donation will do more harm than good in the long run. We've already seen many blowbacks from dishonest non-profits in the past. It should be on UNICEF to make sure the hard, unvarnished truth is spoken by its legions of volunteers and wins those donations legitimately.
There is also cacophony within each nation regarding vaccination programs - whether it be due to the inherent bottleneck in production capacity or government ineptitude to effectively plan, administer and communicate. The US, EU, Canada are all loud with frustration and anxiety over how and when. Many countries still don't have a SARS-CoV-2 vaccine approved, and still more countries don't have the resources to roll out an effective vaccination program even if they had the access and stocks were available.
Eventually supply will catch up to demand for this sliver of healthcare. But only after hundreds of millions more are infected and millions more die from COVID-19 - and most certainly disproportionately affecting less powerful and resourceful regions. If the point of healthcare is to prevent illness and death, that's not exactly meeting the goal. Not to mention that this result would be so far removed from equal access to healthcare that the concept is literally incredible.
Now I admit that COVID-19 is a hyper-exaggerated situation far removed from normal times. But pandemics of this magnitude will happen again and again, likely with higher frequency given the elevated threats of global warming and globalization. And the issues of unequal distribution are just being covered by mainstream media due to the pandemic. These issues have always existed and persisted in healthcare. Drug shortages, rural neglect, drug pricing inequalities etc. are all issues that have been festering for decades.
So how can we make equal access to healthcare happen (in an international context)?
One thing that can reliably not be relied on is politics. Although I have repeatedly said in past articles that policy must be a key driver in addressing many issues in healthcare, the primary incentive for so many elected officials is to keep their constituents happy so they can be re-elected. There is no way in a supply-constrained scenario that any politician would commit political suicide by willingly giving up constituent life-saving supplies. If we're speaking about national and intra-country politics this would be a different story. But international affairs are a whole different ball game where zero-sum is still the de facto ideology of geopolitics.
So we must turn to industry. But here we run into a little problem. I've long preached about the rigidity of structural P&L expectations in established companies and how this collective stakeholder psychology is hamstringing companies from fundamentally innovating their way into the next generation. It's why the natural cycle of business happen and also provides the opportunity for disruptive innovations to break into the scene.
An example would be a multinational pharma company with an average EBITDA of 18% of revenue and 15% R&D cost suddenly announcing a transformation of the P&L to shrink EBITDA to 10% of revenue and R&D to 7%. Both are actually perfectly viable P&Ls of successful multinational pharma companies with revenues in the double-digit billions. The former just happens to be an "innovator" while the latter is a generic manufacturer. But if one tried to abruptly switch the P&L structure to the other, the board would have a field day firing anyone and everyone that conceived an idea of such a stupendous stupidity. The very smart people in C-suites that value their jobs and reputations also know this. And if they - the "C's" tasked with planning, brining plans up to the board and executing the plan - can't suggest this type of change, no one can.
But we see from the example above that once a P&L structure is entrenched, as long as the enterprise is profitable, stakeholders will generally go with the flow. So the key becomes designing a model and founding a healthcare business that would be profitable by addressing the still unmet demand of healthcare in those areas that are left behind. Fundamental innovations in production, distribution, administration can all be feasible and viable. As long as the people starting these enterprises have their heads on straight and doing it for the right reasons, addressing healthcare inequality does not necessarily have to be the sole domain of non-profit social enterprises.
May I point out some holes in healthcare supply that are actually opportunities in disguise?
The pharma industry so far only has two established models of success: innovator or generic manufacturer. Innovators play the high-risk, high-reward game afforded by exclusivity from patent protection. As long as there are diseases that need curing, innovation of treatments will continue. The value of generic manufacturing peaks the second after patent expiry and continually diminishes as time goes by. But as long as the supply of patents awaiting expiry are in queue, generics will continuously go loop after loop after the newest generic candidates. But what about the drugs which value is no longer sufficient for the P&Ls of the generic companies? It's not like the diseases that those drugs treat have gone away. The demand is still there, but supply has dried up. I find it hard to believe that a species as enterprising as the human race would leave something of value unexploited.
And also, the over-globalization of supply chains has exposed significant operational vulnerabilities as well as serious national security risks. I tried to source heparin for a client late last year and was amazed how unbuffered the raw material supply chain was, how all the raw material came from China or India, and how an acute shortage could so suddenly drive up the price of such an old but essential drug 2- to 3-fold. And even then supply was an issue. People are dying in the name of seeking efficiency, and preventing it can be another opportunity in this industry. Maybe policy makers should think of subsidizing certain essential drugs to secure stable domestic production. Or at the very least subsidize domestic compliance costs as a compromise. Drugs are turning out to be just as fundamentally important to national security as farming. But I digress...
Diagnostics is another interesting story with glaring deficiencies. In terms of in vitro diagnostics (IVD), the market for routine clinical chemistry even in the US is around $2 USD per capita. Basic clinical chemistry tests that are so routine that you don't even ask why. And $2 USD per capita per annum is really not that much money except for a handful of the most impoverished countries. Why, then, do only eight countries (US, Canada, Japan, EU-5) comprising of less than 11% of the global population account for almost 70% of the global clinical chemistry market? That is 6 billion people, or a potential $12 billion USD market that no one seems to be interested in addressing. Is it a distribution issue? A reagent-rental oriented business model issue? All I can see is that solving this puzzle can unlock a potentially lucrative market.
Although far from the healthcare panacea as some idiots proclaim, a profit-motivated industry is more than capable of solving a whole lot of problems, especially international problems such as this because in modern society, money knows no borders. The increase in philanthropic efforts to address global health issues is also a boon as it actually fills in for the fundamental ineptitude of geopolitics to address supply-limited global emergencies.
Look, a whole lot of much smarter people than me haven't been able to "fix" this issue and not for the lack of trying. But so far I have not seen any feasible innovations that escape the business model and P&L framework of the status quo. This will take a whole lot of effort from a whole lot of people before we can make a dent in the issue. So join the party. I'm sure as heck working on solutions for several of these issues.
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