Globalisation in the Health Sector


Abstract: Globalisation in the Health sector is not a new phenomenon. It started about two hundred years ago. The qualitative change in the overall health of mankind is achieved through globalisation of modern medicine. But ideologically the new globalisation is contrary to this concept and destroyed many of the earlier gains. The establishment of the WHO had helped to strengthen global cooperation against diseases. The world nations pledged that they will work together to make primary health, drinking water and preventive health care measures available to every one of the world citizens. But the “new globalisation” emerged as a formidable force that completely changed the democratic visions described above. A new brand of rightist economists came out with new formulas to overcome the economic recession in developed countries during the late 70’s. This article examines the hazards inherent in the “new globalisation” policies.

Keywords: modern medicine, public health sector, infectious diseases, economic recession, preventive health care measure, third world countries, developed countries, policy making

Globalisation in the Health Sector is not a new phenomenon. It started about 200 years ago. The qualitative change in the over all health of mankind is achieved through globalisation of modern medicine. But ideologically the new globalisation is contrary to this concept and destroyed many of the earlier gains.

Global Spreading of Diseases and the Globalisation of Modern Medicine

Diseases, especially infectious diseases do not confine to a particular area. Cholera and Small pox, two infectious diseases born in India are deadly diseases that had spread to Europe and killed many millions there. It is argued that syphilis, a sexually transmitted disease, was brought to Europe by Columbus and his companions from America. Lately, we have the example of HIV virus that has spread through out the world from Africa.

In the 19th century itself, the concept that diseases spread globally and should be combated globally was recognised. Modern medicine originated in Europe in the 19th century. The awareness that many of the deadly diseases spread through water, air and insects and the discovery of many of the disease causing germs, all happened during this period. This gave a new dimension to the concept of public health.

Public Health

The spreading of democracy in Europe during the 19th century along with the twin factors of discovery of disease causing germs and the way they spread globally inspired a deeper awareness of the concept of public health. The studies of Chadwik and Frederik Engels bring out the close relationship between diseases and living situations of people. An individual falls sick because of his/her life situations. So, in order to heal a person his/her life situations should be changed. Since an individual is not capable of doing this (eg: distribution of drinking water in a city), governments. should take up such activities using the public funds. As a result of this awareness, that the governments in America and Europe had taken up various programmes for waste disposal and drinking water supply public funds. Scientific treatment for diseases also began during this period. The concept that a disease is not the fault of an individual but the creation of social situations was recognised and thus treatment of a sick person as the responsibility of the society was accepted, and as a result, free government hospitals emerged.

The globalisation of public health

       Since diseases do not have any national boundary, it was understood that the activities of public health should be done globally, and international co-operation in the field of health became very essential. Thus, along with the knowledge of modern medicine the concept of public health also became wide spread.

After the II World War, WHO came into existence. This helped to strengthen global co-operation against diseases. WHO played a significant role in completely wiping out small pox from the face of the earth and also in reducing the rate of prevalence of many of the diseases. The introduction and spread of ORS, scientific and inexpensive treatment for diarrhoeal diseases, could save the lives of millions of children.

The slogan ‘Health for all by 2000’ was accepted in the WHO forum held at Alma Atta in 1978. The world nations pledged that they will work together to make primary health, drinking water and preventive health care measures available to every one of the world citizens.

The New Ideology, The New Globalisation

The ‘new globalisation’ emerged as a formidable force that completely changed the democratic visions described above. This process which started during the 70’s gained momentum after the collapse of the socialist nations.

A new brand of rightist economists came out with new formulas to overcome the economic recession in the developed countries during the late 70’s. Their arguments could be consolidated thus: investment is most essential for economic growth and in order to increase the investment, investors should get more profit. Accordingly, economic policies should also be changed.

1. Lower the tax rate of wealthy investors.

2. Reduce government expenditures – especially in the health, education and other social sectors.

3. Stagnate the wages of workers, and allow the companies to terminate the services of the workers according to their wish.

While accepting the argument that such policies will widen the economic disparities between the haves and have nots and the poor will become poorer, they counter argued that such a situation will be only temporary, and when the pockets of the rich overflow, it will trickle down to the poor people.

Margaret Thatcher of Britain and Ronald Reagan of America were strong exponents of these economic arguments. Reducing the expenditure for the universal and free medical care that existed in Britain was one of the reforms enforced by Margaret Thatcher. In general, both followed a policy of encouraging private sector in the health field.

In the beginning of the 80’s the IMF and the World Bank also entered the stage as the proponents of the very same policies. The debt trapped Latin America and African countries were advised to enforce these policies. It was not only an advice but a condition for any further loans from WB/IMF to save their economies. Over and above these structural adjustments, they compelled these countries to devalue their currencies.

By this time the Thatcher-Reagan propositions and reforms had shown signs of failure their respective nations. But nothing of this sort disturbed the IMF and the World Bank. They forced the third world countries to change their socialist policies and open their markets for international capitalism.

Health was a major subject in the 1993 World Development Report of the World Bank. The report stressed the point that along with privatisation, user fees should be charged from the people using government hospitals in place of free treatment,

By this time studies of the experiences of the countries which enforced these policies under the pressure of IMF/WB had already been undertaken. Countries like Chile, Peru, Nicaragua, Costa Rica, Zambia and Kenya made structural changes in the 80s. All these countries experienced great set back to what ever progress they had made so far. Infant mortality rate had rather gone up in certain places. The number of users reduced drastically wherever user fees was introduced in government hospitals. Health care became inaccessible to a large section of the poor. The reduction of government investments in social sector, weakened the activities against infectious diseases. The number of TB patients increased.

The conditions of the socialist nations that enforced these structural adjustments and economic policies in the 90s were still worse. It was the first time in history that the general mortality rates increased in these countries during the peaceful period. A major part of the health sector in these countries was privatised. Poverty also increased manifold and it became unbearable for the people of these countries. The average life expectancy of men in Russia came down and is lower than that of the men in poor countries.

Both WHO and UNICEF criticised the negative effects of structural adjustment policies on people’s health. Certain UNICEF records show that many thousand children have died due to these policies. Unfortunately, the agenda for health policies at global level is decided by IMF and WB and not by WHO. Recently, India has also joined the bandwagon of the countries that are enforcing the directions of these organisations.

Throughout the 90s investment in the public health care sector in India showed a declining trend. It is most unfortunate that many states, including Kerala are enforcing user fees in different ways. Even states which are ruled by political parties that oppose globalisation are unconsciously becoming the exponents of this ideology,. In India, government investment in the Health sector is a meagre 27%. It is nothing when compared to the 80-90 percent investment by the European countries and 40-45 percent of America. Increase in the public investment in health sector is the real need of the day. There is no doubt that any policy that lowers the investment in this field, will have adverse effects on the people, especially the poor.

The expenses of medical treatment has also increased unbelievably during the structural adjustment period. In the year 1987, when a sick person in Kerala had spent an average of Rs.16.56 (at a time for medical expenses) in 1996 this increased to Rs.166.22. In the same period the expenses of a Keralite increased from an average of Rs.89 to Rs.549 in a year. While the rate of increase in public expenses was 130%, the medical expenses which was only 3.57% of the average family income, had gone up to 6.79%. Among the poorest, the increase in the rates was unbelievably high, from 7.18% to 39.6%. For such people, falling sick became a great catastrophe that landed them in perpetual debts and pushed them to sell their land or whatever other assets they possessed. (See details in Tables 1, 2, 3).

Entry of WTO

       The developed countries needed new markets to uplift the already sagging rate of their economic development. They eyed the purchasing power of the newly emerging and growing middle class in countries like India. But there were many laws and regulations which controlled the foreign investment and imports in these countries. The pressure tactics of the WB/IMF alone could not change these laws and capture these markets. At this stage, America came up with new directions to the General Agreement on Trade and Tariff (GATT), which was otherwise set up entirely for trade and tariff discussions.

The 1986 Uruguay discussions accepted the American claim that rules and regulations regarding Intellectual Property Rights and Service sector existing in the member countries will affect the international trade and so these should also be included in the GATT discussions. Since India and the third world countries did not take any strong stand to safeguard their interests during these discussions, the American pressure led to the emergence of a new agreement.

The WTO (World Trade Organisation), a permanent entity came into existence to ensure that the world nations enforce these agreements. Two of the items of the GATT will have adverse effect on the third world countries.

1. TRIPS (Trade Related Intellectual Property Right)

2. GATS (General Agreement on Trade and Service)

Intellectual Property Rights and the Cost of Medicine

According to the TRIPS agreement, the patent period for any medicine will be 20 years. Only product patent will be allowed. Process patent will not be allowed.

This will increase the cost of medicine. Companies could fix prices for patented medicines according to their own wish. A major section of the people of developing countries will have no access to modern medicine. Ivory Coast in Africa is a comparatively rich country. There are about 10 lakh HIV infected persons in that tiny land. AZT medicine needed for the treatment of HIV will cost 20 dollars for a month. The average income of a person in Ivory Coast is only $50. The company which has the product patent of this medicine monopolises the production of it and in each country it is the company that decides the price of the medicine. Their aim is to make maximum profit. When one of the medicines of the Glaxo company namely, Adichlover costs $316 per 800mg in Malaysia, the same medicine costs only $89 in India because, in India not only the patent owner but other companies also produce this medicine. This became possible in India because of the progressive patent law of 1970. According to this, patent period was only 7 years for medicines. Not only that, according to Indian Patent Law, process patent was given, not the product patent. Let us assume that a new medicine is invented in America. According to the American Patent Law, nobody can manufacture this medicine for 20 years. But according to the Indian patent Law of 1970, any company could produce this, the condition being that the process of manufacture should be different. With the help of our National Laboratories, we could invent different product processes for many medicines. As a result, within 2-3 years after the invention of any medicine we could produce the same in India. This helped us to keep the prices of these medicines comparatively lower than in other countries. The fact that some of the medicines with the patent period still not expired cost 5 to 10 fold in Pakistan, should open our eyes. During this period, the growth of Indian Medicine Companies reached great heights. At least a few companies became competent enough to sell their medicines in the international market.

As a part of the TRIPS agreement, India was forced to amend the Patent Law and remove the process patent law. This indicates that we will have to pay very high prices to newly invented medicines. Medicines which are yet to be invented for AIDS and cancer, antibiotics of new generation etc., will be unapproachable even for the middle class, it is feared.

The controversies over the enforcement of TRIPS agreement will be solved in the Appellate Dispute Settlement tribunal of WTO. It will be very difficult for the third world countries to get justice in such tribunals which is dominated by the representatives of the developed countries and multi-nationals. Compulsory licencing and parallel import are practices allowed according to the TRIPS agreement. By compulsory licencing it is meant that a country can take away the production licence of a particular medicine from a company if it is found that they work against the nation’s interest.

Parallel import means that when a company sells a medicine at different prices in different countries, a country is allowed to import the same from any country were it is comparatively low priced. Though provision is given in the agreement, those countries which follow these procedures are usually defeated in the legal battles in the WTO.

Since ages, WHO is working hard to make essential drugs available for world population. The procedures for this was accepted in the Assembly of the WHO, under the name Revised Drugs Strategy (RDS). The activities of WTO, defeat these directions given by WHO. Recently in a statement, the Director General of WHO, GrowhavlinBrunland said that while multinational medicine companies participate in the health related discussions of WTO, WHO is not allowed to participate. WHO has strong objections to such activities of WTO, he further stated.

Now, WTO is going to decide upon the procedures of the service sector (GATS). According to this the third world countries will have to open up their markets for Health Maintenance Organisation (HMO) of developed countries. Thus, many people have expressed their fear that, when the health sector is swallowed up completely by the corporates in these countries, it would widen the already existing disparities and ultimately destroy the public health.

We are losing one by one the victories we have won through long fights over colonialism. In the medical field this will lead to escalating medical expenditures and the death of children. The National Governments will show its political will to resist and defeat it only when the people unite for a fight against multinationals dominating the WTO.

Is a health activist. Has contributed extensively to journals.

Default image
Is a health activist. Has contributed extensively to journals.

Newsletter Updates

Enter your email address below to subscribe to our newsletter

Leave a Reply

Physical Address

304 North Cardinal St.
Dorchester Center, MA 02124