Role of State and Private Role of State and Private Sector in Health Policy Sector in Health Policy and the dynamics of and the dynamics of

Policy Agenda SettingPolicy Agenda Setting

Nayyar R. KazmiNayyar R. Kazmi

Depending on where you live, the state may, for Depending on where you live, the state may, for example:example:

• • regulate the number of children you have (China)regulate the number of children you have (China)• • decide whether or not divorcees are allowed a decide whether or not divorcees are allowed a

second child (allowed in Shanghai but not in the second child (allowed in Shanghai but not in the rest of China)rest of China)

• • prohibit private medical practice (Cuba)prohibit private medical practice (Cuba)• • determine the age at which sex-change therapy is determine the age at which sex-change therapy is

allowed (presently 13 years in Australia)allowed (presently 13 years in Australia)• • determine whether or not emergency determine whether or not emergency

contraception is available over-the-counter (not contraception is available over-the-counter (not available in the USA but available in the UK)available in the USA but available in the UK)

The main justifications for state The main justifications for state involvement are:involvement are:

• • market failuremarket failure

• • information asymmetry between information asymmetry between consumer and providerconsumer and provider

• • need for care uncertain and often need for care uncertain and often costlycostly

• • to achieve social equity of access to to achieve social equity of access to carecare

Reinvention of government Reinvention of government and Health Sector Reformand Health Sector Reform

Prevailing neo-liberal economic thinking Prevailing neo-liberal economic thinking was brought to bear to understand was brought to bear to understand the root causes of the malaise in the the root causes of the malaise in the health sector and greatly influenced health sector and greatly influenced prescriptions on the appropriate role prescriptions on the appropriate role for the state. Two theories stand out: for the state. Two theories stand out:

1. public choice and 1. public choice and

2. property rights.2. property rights.

Public ChoicePublic Choice

deals with the nature of decision making in deals with the nature of decision making in government. It argues that politicians and government. It argues that politicians and bureaucrats behave like other participants in the bureaucrats behave like other participants in the political system in that they pursue their own political system in that they pursue their own interests. interests.

Consequently, politicians can be expected to Consequently, politicians can be expected to promote policies which will maximize their chances promote policies which will maximize their chances of re-election while bureaucrats can be expected of re-election while bureaucrats can be expected to attempt to maximize their budgets because to attempt to maximize their budgets because budget size affects bureaucrats’ rewards either in budget size affects bureaucrats’ rewards either in terms of salary, status or opportunities to engage terms of salary, status or opportunities to engage in corruption. in corruption.

As a result of these perverse incentives, the public As a result of these perverse incentives, the public sector is deemed to be wasteful and not concerned sector is deemed to be wasteful and not concerned with efficiency or equitywith efficiency or equity

Property RightsProperty RightsProperty rights theorists explained poor public sector Property rights theorists explained poor public sector

performance through the absence of property rights. performance through the absence of property rights. They argue that in the private sector, owners of They argue that in the private sector, owners of property rights, whether owners of firms or property rights, whether owners of firms or shareholders, have strong incentives to maximize shareholders, have strong incentives to maximize efficiency of resource use as the returns to efficiency of resource use as the returns to investment depend upon efficiency. investment depend upon efficiency.

In contrast, such pressure does not arise in the public In contrast, such pressure does not arise in the public sector; staff may perform poorly at no cost to sector; staff may perform poorly at no cost to themselves, resulting in a poorly performing systems themselves, resulting in a poorly performing systems overall. overall.

They have few reasons to do well because they cannot They have few reasons to do well because they cannot benefit personally from goal performance, unlike in a benefit personally from goal performance, unlike in a business. business.

Both theories draw attention to the incentives which Both theories draw attention to the incentives which motivate state officials and how these influence the motivate state officials and how these influence the policies that they pursuepolicies that they pursue

Market ReformsMarket Reforms

Role of state redefinedRole of state redefined– Provision of Internal MarketsProvision of Internal Markets– DecentralizationDecentralization– Stewardship Role of the StateStewardship Role of the State

Private SectorPrivate Sector

The private for-profit (or commercial) sector is The private for-profit (or commercial) sector is characterized by its market orientation. It characterized by its market orientation. It encompasses organizations that seek to encompasses organizations that seek to make profits for their owners. Profit,or a make profits for their owners. Profit,or a return on investment, is the central defining return on investment, is the central defining feature of the commercial sector.feature of the commercial sector.

Many firms pursue additional objectives Many firms pursue additional objectives related, for example, to social, related, for example, to social, environmental or employee concerns but environmental or employee concerns but these are, of necessity, secondary and these are, of necessity, secondary and supportive of the primary objective which supportive of the primary objective which concerns profitconcerns profit

Private Sector- ContdPrivate Sector- Contd

A wide range of industry-funded think A wide range of industry-funded think tanks, ‘scientific’ organizations, advocacy tanks, ‘scientific’ organizations, advocacy groups (such as patient groups) and even groups (such as patient groups) and even public relations firms working for industry public relations firms working for industry are actors engaged in the health policy are actors engaged in the health policy arena. For example, the tobacco company arena. For example, the tobacco company Philip Morris established the Institute of Philip Morris established the Institute of Regulatory Policy as a vehicle to lobby the Regulatory Policy as a vehicle to lobby the US federal government and delay the US federal government and delay the publication of a report by the publication of a report by the Environmental Protection Agency on Environmental Protection Agency on environmental tobacco smokeenvironmental tobacco smoke

Why Private Sector a Powerful Why Private Sector a Powerful entity in Policy Processentity in Policy Process

Power is the ability to achieve a Power is the ability to achieve a desired result. Resources often desired result. Resources often confer power and, on that basis, the confer power and, on that basis, the power of some industries and firms power of some industries and firms may be obvious to you.may be obvious to you.

Of the top 100 ‘economies’ in the Of the top 100 ‘economies’ in the world 49 are countries, but 51 are world 49 are countries, but 51 are firms when measured by market firms when measured by market capitalization.capitalization.

How is the Private Sector How is the Private Sector involved in the Policy Making involved in the Policy Making

ProcessProcess Self regulationSelf regulation

– Self-regulation concerns efforts by Self-regulation concerns efforts by private companies to establish their own private companies to establish their own rules and policies for operating within a rules and policies for operating within a specific domain. For example, rules specific domain. For example, rules governing how to design, categorize, governing how to design, categorize, produce and handle particular goods produce and handle particular goods and services are routinely adopted by and services are routinely adopted by groups of companies and industriesgroups of companies and industries

Co-RegulationCo-RegulationCo-regulation presents a ‘third way’ Co-regulation presents a ‘third way’ between statutory regulation and self-between statutory regulation and self-regulation. It may be viewed as public regulation. It may be viewed as public sector involvement in business self-sector involvement in business self-regulation. The idea is that public and regulation. The idea is that public and private sectors will negotiate on an agreed private sectors will negotiate on an agreed set of policy or regulatory objectives. set of policy or regulatory objectives. Subsequently, the private sector will take Subsequently, the private sector will take responsibility for implementation of the responsibility for implementation of the provisions. Monitoring compliance may provisions. Monitoring compliance may remain a public responsibility or may be remain a public responsibility or may be contracted out to a third partycontracted out to a third party

Agenda Setting- Key TermsAgenda Setting- Key Terms

Agenda setting Process by which certain issues Agenda setting Process by which certain issues come onto the policy agenda from the much come onto the policy agenda from the much larger number of issues potentially worthy of larger number of issues potentially worthy of attention by policy makers.attention by policy makers.

Feasibility A characteristic of issues for which there Feasibility A characteristic of issues for which there is a practical solution.is a practical solution.

Legitimacy A characteristic of issues that policy Legitimacy A characteristic of issues that policy makers see as appropriate for government to act makers see as appropriate for government to act on.on.

Policy agenda List of issues to which an Policy agenda List of issues to which an organization is giving serious attention at any one organization is giving serious attention at any one time with a view to taking some sort of actiontime with a view to taking some sort of action

Agenda Setting- Key TermsAgenda Setting- Key TermsPolicy stream: The set of possible policy solutions or Policy stream: The set of possible policy solutions or

alternatives developed by experts, politicians, bureaucrats alternatives developed by experts, politicians, bureaucrats and interest groups, together with the activities of those and interest groups, together with the activities of those interested in these options (e.g. debates between interested in these options (e.g. debates between researchers).researchers).

Policy windows: Points in time when the opportunity arises for Policy windows: Points in time when the opportunity arises for an issue to come onto the policy agenda and be taken an issue to come onto the policy agenda and be taken seriously with a view to action.seriously with a view to action.

Politics stream: Political events such as shifts in the national Politics stream: Political events such as shifts in the national mood or public opinion, elections and changes in mood or public opinion, elections and changes in government, social uprisings, demonstrations and government, social uprisings, demonstrations and campaigns by interest groups.campaigns by interest groups.

Problem stream: Indicators of the scale and significance of an Problem stream: Indicators of the scale and significance of an issue which give it visibility.issue which give it visibility.

Suppor:t A characteristic of issues that the public and other Suppor:t A characteristic of issues that the public and other key political interests want to see responded tokey political interests want to see responded to

What is Policy AgendaWhat is Policy Agenda

the list of subjects or problems to which the list of subjects or problems to which government officials and people outside government officials and people outside of government closely associated with of government closely associated with those officials, are paying some serious those officials, are paying some serious attention at any given time . . . Out of attention at any given time . . . Out of the set of all conceivable subjects or the set of all conceivable subjects or problems to which officials could be problems to which officials could be paying attention, they do in fact paying attention, they do in fact seriously attend to some rather than seriously attend to some rather than othersothers

Obviously the list of problems under active Obviously the list of problems under active consideration varies from one section of the consideration varies from one section of the government to another. The president or prime government to another. The president or prime minister will be considering major items such as minister will be considering major items such as the state of the economy or relations with other the state of the economy or relations with other countries. The Minister and Ministry of Health will countries. The Minister and Ministry of Health will have a more specialized agenda which may have a more specialized agenda which may include a few ‘high politics’ issues, such as include a few ‘high politics’ issues, such as whether a system of national health insurance whether a system of national health insurance should be established, as well as a larger number should be established, as well as a larger number of ‘low politics’ issues such as whether a particular of ‘low politics’ issues such as whether a particular drug should be approved for use and, if so, drug should be approved for use and, if so, whether it is worth being reimbursed as part of the whether it is worth being reimbursed as part of the publicly financed health care systempublicly financed health care system

Why Issues Get onto the Ploicy Why Issues Get onto the Ploicy AgendaAgenda

Agenda Setting in Politics-as-usual Agenda Setting in Politics-as-usual CircumstancesCircumstances

Hall ModelHall Model Kingdom ModelKingdom Model

Agenda Setting in Politics-as-Agenda Setting in Politics-as-usual Circumstancesusual Circumstances

what made its way onto the policy agenda what made its way onto the policy agenda was more a function of long-term changes in was more a function of long-term changes in socio economic conditions that produced a socio economic conditions that produced a set of problems to which governments had to set of problems to which governments had to respond eventually even if there had been no respond eventually even if there had been no systematic assessment of potential policy systematic assessment of potential policy problems. From this perspective, countries problems. From this perspective, countries with ageing populations will have to respond with ageing populations will have to respond eventually to the implications for retirement eventually to the implications for retirement pensions, health services, long-term care, pensions, health services, long-term care, transport, and so ontransport, and so on

Hall ModelHall Model

This approach proposes that only when an issue This approach proposes that only when an issue and likely response are high in terms of their and likely response are high in terms of their legitimacy, feasibilitylegitimacy, feasibility and and supportsupport do they do they get onto a government agendaget onto a government agenda

Legitimacy is a characteristic of issues with which Legitimacy is a characteristic of issues with which governments believe they should be concerned governments believe they should be concerned and in which they have a right or even obligation and in which they have a right or even obligation to intervene. At the high end, most citizens in to intervene. At the high end, most citizens in most societies in the past and the present would most societies in the past and the present would expect the government to keep law and order expect the government to keep law and order and to defend the country from attack.These and to defend the country from attack.These would be widely accepted as highly legitimate would be widely accepted as highly legitimate state activitiesstate activities

Feasibility refers to the potential for Feasibility refers to the potential for implementing the policy. It is defined by implementing the policy. It is defined by prevailing technical and theoretical prevailing technical and theoretical knowledge, resources, availability of skilled knowledge, resources, availability of skilled staff, administrative capability and existence staff, administrative capability and existence of the necessary infrastructure of of the necessary infrastructure of government. There may be technological, government. There may be technological, financial or workforce limitations that suggest financial or workforce limitations that suggest that a particular policy may be impossible to that a particular policy may be impossible to implement, regardless of how legitimate it is implement, regardless of how legitimate it is seen to be.seen to be.

support refers to the elusive but important support refers to the elusive but important issue of public support for government, at issue of public support for government, at least in relation to the issue in question. least in relation to the issue in question. Clearly, more authoritarian and non-elected Clearly, more authoritarian and non-elected regimes are less dependent on popular regimes are less dependent on popular support than democratic governments, but support than democratic governments, but even dictatorships have to ensure that there even dictatorships have to ensure that there is some support among key groups, such as is some support among key groups, such as the armed forces, for their policies. If the armed forces, for their policies. If support is lacking, or discontent with the support is lacking, or discontent with the government as a whole is high, it may be government as a whole is high, it may be very difficult for a government to put an very difficult for a government to put an issue on the agenda and do anything about issue on the agenda and do anything about itit

Kingdon ModelKingdon Model

Lieutenant-General and Army Chief of Staff HM Ershad seized power in a Lieutenant-General and Army Chief of Staff HM Ershad seized power in a military coup in Bangladesh in 1982. Within four weeks of the coup he had military coup in Bangladesh in 1982. Within four weeks of the coup he had established an expert commit tee of eight to confront widely discussed established an expert commit tee of eight to confront widely discussed problems in the production, distribution and consumption of problems in the production, distribution and consumption of pharmaceuticals. Less than three months later the Bangladesh (Control) pharmaceuticals. Less than three months later the Bangladesh (Control) Ordinance of 1982 was issued as a Declaration by Ershad, based on a set of Ordinance of 1982 was issued as a Declaration by Ershad, based on a set of 16 guidelines that would regulate the pharmaceutical sector. The main aim 16 guidelines that would regulate the pharmaceutical sector. The main aim of the Ordinance was to halve the ‘wastage of foreign exchange through the of the Ordinance was to halve the ‘wastage of foreign exchange through the production and/or importation of unnecessary drugs or drugs of marginal production and/or importation of unnecessary drugs or drugs of marginal value’. The drugs policy was to be applied to both private and public sectors value’. The drugs policy was to be applied to both private and public sectors and created a restricted national formulary of 150 essential drugs plus 100 and created a restricted national formulary of 150 essential drugs plus 100 supplementary drugs for specialized use which could be produced at supplementary drugs for specialized use which could be produced at relatively low cost. Over 1,600 products deemed ‘useless, ineffective or relatively low cost. Over 1,600 products deemed ‘useless, ineffective or harmful’ were banned.harmful’ were banned.

The formulation of the drugs policy was initiated by a group of concerned The formulation of the drugs policy was initiated by a group of concerned physicians and others with close links to the new president, without external physicians and others with close links to the new president, without external consultation and discussion. The Bangladesh Medical Association was consultation and discussion. The Bangladesh Medical Association was represented by one member of its pharmaceuticals sub-committee, but its represented by one member of its pharmaceuticals sub-committee, but its General-Secretary was not officially involved because of his known General-Secretary was not officially involved because of his known connections to a transnational pharmaceutical corporation. The connections to a transnational pharmaceutical corporation. The pharmaceutical industry was not represented at all on the expert committee. pharmaceutical industry was not represented at all on the expert committee. It was argued that its presence would distort and delay policy change. Once It was argued that its presence would distort and delay policy change. Once the policy was on the agenda and had been promulgated, the industry, both the policy was on the agenda and had been promulgated, the industry, both domestic and transnational, launched an advertising campaign against the domestic and transnational, launched an advertising campaign against the drugs list.drugs list.

Among the physicians on the committee was a well-known doctor, Zafrullah Among the physicians on the committee was a well-known doctor, Zafrullah Chowdhury, who had established the Gonoshasthaya Kendra (GK) health Chowdhury, who had established the Gonoshasthaya Kendra (GK) health care project soon after independence in 1971. Among other activities, GK care project soon after independence in 1971. Among other activities, GK manufactured essential generic drugs in Bangladesh. Production had begun manufactured essential generic drugs in Bangladesh. Production had begun in 1981 and by 1986 GK Pharmaceuticals Ltd was producing over 20 in 1981 and by 1986 GK Pharmaceuticals Ltd was producing over 20 products. Later Dr Chowdhury was accused of promoting the interests of GK products. Later Dr Chowdhury was accused of promoting the interests of GK Pharmaceuticals through the committee.Pharmaceuticals through the committee.