Contents - FIP

Health service development
In the two decades after World War I industrialised countries like the US, France, the UK
and Canada typically spent in the order of 3 per cent of their annual GDPs on health care.
Today the equivalent figure for ‘developed’ nations across the world is about 10 per cent,
although in the case of the US approaching 17 per cent of that country’s relatively high
national income is presently accounted for by health sector outlays. Public spending on
health care in America has for some decades been – at about 8 per cent of GDP – comparable
as a proportion of national wealth with that recorded in, say, the UK, Sweden, Australia
or Japan. It is the additional spending made via private insurance schemes and direct
out-of-pocket payments which is atypically high in the US.
Within these totals 1-2 per cent of GDP (that is, in the order of 15 per cent of all health
spending) is currently devoted to medicines, vaccines and allied product costs and
pharmaceutical service provision. In regions such as Europe there have been historically
stable contrasts between the relatively high overall pharmaceutical sector costs seen
in ‘Mediterranean’ model countries like Greece and Spain (which have had low prices
for patent protected medicines, balanced by relatively expensive generic/off patented
branded products) and the lower overall (despite higher unit prices for newer medicines)
spending observed in North Western Europe.
These differences may now be reducing, in part because of the impacts of the ‘Euro crisis’
and the impacts of global economic restructuring. Yet the fact that they endured for
approaching half a century serves as a reminder that efficiency in the pharmaceutical
sector and health care generally is a function of far more than securing low average drug
prices and labour costs. It is still the case across the world that combinations of low prices
for innovative medicines coupled with relatively high (if still comparatively affordable)
off-patent medicine costs and lower wages for groups such as nurses compared to higher
rewards for successful doctors and pharmacy business owners can be indicative of health
system failings.
Health spending in regions like western Europe and north America began to accelerate
after World War II, when many more advanced nations consolidated their health
insurance and allied schemes to in effect provide universal coverage. The principles
upon which systems such as the UK NHS (which was functionally established in 1948) are
founded differ from, for instance, those characteristic of the Bismarckian thinking underlying
German health care funding or the national and private insurance based models
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