What are the elements that need to be considered in determining a nation’s healthcare spending to ensure maximum benefits?

  • Employ healthcare economics to assess effectiveness of drugs to maximise benefits

Tomorrow’s Medicine brings you highlights from the Singapore Healthcare Management Congress 2015.


The US spends almost 15 per cent of their GDP on healthcare – the highest in the world. The world average is 6.2 per cent, while Singapore currently spends less than 5 per cent of its GDP on healthcare.


Prof Kenneth Lee, Head of Pharmacy Discipline, Monash University Malaysia and one of the pioneers in pharmacoeconomics and outcomes research in Asia, remarked, “This money has not been spent wisely. There is a lot of wastage.”


Prof Lee cited some numbers: In 2009, the US spent 16 per cent of its GDP on healthcare. Their life expectancy was 79 years. In the same year, Australia spent eight per cent. Australia’s life expectancy was 82. Singapore spent only four per cent with a life expectancy of 82 years.


Back in 1992, Australia and New Zealand were the first countries to utilise healthcare economics data in their budgeting and they were soon followed by other countries. Prof Lee himself was recently appointed by Malaysia’s Ministry of Health as one of the advisors for health technologies economic evaluation.


Healthcare economics come into play when you want to assess the true value of a drug to maximise healthcare benefits.


The value of a drug is not its cost - value here means safety, efficacy (does it work?), effectiveness (does it work in real life?), cost-effectiveness and affordability.  


However, cost-effectiveness is not the sole criteria for decision making. A cost-effective drug doesn’t mean a cost-savings, or effective drug.


Prof Lee explained, “Many new pharmaceuticals, for example a new vaccine, are considered cost-effective yet are not cost-saving. They can be initially very expensive, but the long-term benefit is great. Hence proper justification is required.”


Here, governments need health technology assessment, a form of policy research that evaluates consequences of the application of a health technology.


It is an evidence-based decision making that assists in long-term healthcare budgeting and increases transparency in decision making.


“Listing of pharmaceuticals is an interplay between many factors: safety, cost effectiveness, political pressure and clinical needs, among others. And each jurisdiction or government will have to make their own decision based on these factors.”


For example, β-interferon for treatment of Multiple Sclerosis is only marginally effective but the “rule of rescue” was decided to supercede other criteria. And many a times, what is really important in the end is the budget impact by introducing that piece of technology.


Prof Lee concluded, “If you want to spend extra money on a new medical technology, really make sure it’s worth the extra benefits.”