LIMITATIONS OF INDIAN PUBLIC HEALTH SYSTEM

Introduction

The public health system in India despite growing investments in every

national 5-year plan (1.1% of GDP in 2012) and even after over 65 years of
its functioning, has not yet delivered universal primary healthcare to the
citizens of India. Around 70% of the Indian population spend money for
primary healthcare services from their own pockets. This article argues
that it is necessary to urgently reform the content of public health system
and make it more pluralistic. Medical pluralism in India is specially relevant
because of the richness of India's Medical Heritage which offers a unique
opportunity to integrate across 5 traditional systems of healthcare. A new
national policy 2015 to replace the last policy formulated in 2002 is on the
anvil. This policy can usher in a new regime of integrative healthcare.

The Indian public healthcare system has 3 tiers. The 3 tiers operate
through a large number of Government, that is, taxpayer financed, primary
secondary and tertiary healthcare institutions and a larger number of
private (for-profit) institutions and a much smaller number of private (not
for profit) organizations. At the base of the pyramid of the health system,
are the primary healthcare institutions in the form of dispensaries and
small-sized general hospitals. A substantial number of them are in the
government-sector, but they have a larger presence in the private sector.
Higher up the pyramid are the secondary institutions (like district and
private hospitals) and at the top are the tertiary services provided by few
well-equipped medical college hospitals and mostly by corporate super
specialty establishments.

Experts have identified a host of operational issues and gaps that plague
the public health system. These relate to inadequate infrastructure,
financing, human resources (HRs), drugs, HR policies, health information
system, insurance and governance.[1] It is therefore in need of radical
reform. The government is aware of the gaps in the functioning of the
public health system as is evident from official reviews prepared by the
Planning Commission. While the gaps do get addressed from time to time,
through various schemes, the reform happens in the typical piece-meal
fashion that characterizes government interventions. The officially
declared goal of the public healthcare system is free and universal primary
healthcare. However, even after 66 years around 70% of the population do
not receive satisfactory or free primary healthcare and they are therefore
forced to seek help from private providers and thus pay out of their own
pocket.[2]

Public health experts in recent times have observed that safe drinking
water, sanitation, nutrition, lifestyle, and the environment are key
determinants of health and that the health system must address these basic
needs. In practice however, the health system does not appear to have any
influence, mechanism or programs, to address these key determinants of
health because water, sanitation, nutrition, environment are domains
managed by ministries other than the health ministry.
Skewed funding and poor integration denies the public of
advantage of synergy arising out of the richness of India's medical
heritage

The “content” of India's postindependence health system is mono-cultural.

It is almost wholly based on western bio-medicine. In fact 97% of the
national health budget, since 1947 has been allocated to Allopathy.
Postindependence, the idea of integrating and mainstreaming seven other
legally sanctioned health systems with Allopathy has been mentioned in
the introductory paragraphs, of all national 5 years plan and policy
documents. In practice the eight systems of healthcare viz., Allopathy,
Ayurveda, Siddha, Sowa-rigpa, Unani, Yoga, Naturopathy, and Homeopathy
function in silos. The seven AYUSH systems receive only 3% of the national
health budget and the departments of AYUSH across all Indian states
operate with this meager funding.[3] The AYUSH department despite their
limited funding, operate a parallel national health service, unconnected to
the mainstream 3 tier health system, with around 24,000 dispensaries and
3000 small general hospitals, across 30 states.[2] The AYUSH public health
services are planned and managed by the departments/directorates of
AYUSH at the center and states. The planning and administrative
machinery for AYUSH is distinct from the Departments of Health and
Family Welfare that plan and administer the mainstream public health
system, and thus AYUSH services are not aligned to national health
priorities. They are mostly at the level of primary care.

The official AYUSH budget has sub-critical allocation for extramural

research, education and for regulation of safety and quality. This is the
reason why the AYUSH systems during the last 60 years have hardly
generated any evidence-based clinical, pharmacological or pharmaceutical
outputs and also the reason why the regulatory system is ineffective.
The not for profit private sector in AYUSH is the public face of AYUSH.
While there is no data on its growth and performance, judging from its
visibility in the form of private dispensaries and secondary care hospitals,
it is perceived to be a more effective provider of AYUSH health services to
the community. The Indian public availing AYUSH depends on this sector
for quality health services. The limited evidence-based AYUSH research
available in the public domain is generated by this sector through mostly,
nongovernment funding.[4]

An overview of the Indian public healthcare system thus clearly suggests

that despite the fact that eight legally sanctioned health sciences operate
within the health system, due to their skewed funding and poor integration,
the public does not receive the advantage of synergy arising out of the
richness of India's Medical Heritage.
Go to:

THE WRITING ON THE WALL: INTEGRATIVE HEALTHCARE

APPEARS TO BE THE FUTURE FRAMEWORK FOR
HEALTHCARE IN THE 21ST CENTURY

All over the world there is evidence of growing public demand for making
available healthcare choices, based upon best knowledge and practices,
drawn from different healthcare systems.[5] In India also we see this trend
reflected in the actual health seeking behavior of communities wherein
people seek to combine or choose for different health conditions Allopathy
or Ayurveda, Siddha, Sowa-rigpa, Unani, Homeopathy or Yoga or a
combination. For emergencies and surgery Allopathy is the first choice, for
common ailments it is Ayurveda, Sidha, Yoga, Unani, Sowa-rigpa or
Homeopathy, for chronic conditions it may initially be Allopathy and then a
rebound to some other system, when there is insufficient relief. The public
demand for pluralism in healthcare is probably based on a realistic
assessment by “laypersons” of the inadequacy of any single system of
healthcare to solve all their contemporary health needs. Governments and
regulatory bodies also appear to have accepted the imperative for
pluralistic approaches in healthcare with the caveat that all new,
potentially useful healthcare interventions, must establish their safety,
quality and efficacy. An objective manifestation of the global acceptance of
medical pluralism is reflected in the creation of government-sponsored
national research institutes for complementary and alternative medicine
(CAM) in the United States (like National Center for CAM) and in Europe
Norway, (NAFKAM) Sweden and in the introduction of introductory
modules on integrative medicine (IM) in medical schools in countries like
the US and UK. It is probably this public assessment that is responsible for
the dramatic growth of the CAM movement and the nascent evolution of
different models of IM in both the public and private sector.

From the globally observed health seeking behavior trends, it is apparent

that the era of monoculture in healthcare is coming to an end. Integrative
healthcare appears to be the future framework for healthcare in the
21st century.
Go to:

THE LIMITATIONS OF SINGULAR KNOWLEDGE SYSTEMS

While the mainstream Indian public health system relies largely on one
single knowledge system viz., modern medicine, for its services, at the
frontiers of medical and life sciences the limitations of singular health
knowledge systems are being recognized.

The limitations of bio-medical sciences arise due to the reductionist

theoretical framework of science. This framework imposes methodological
limitations which permit only partial understanding of complex biological
phenomena at the cellular level. Thus, the understanding of life processes
which are essentially systemic remains incomplete. Even today, underlying
pathways for biological changes are hardly understood and therefore drug
actions established after expensive clinical trials, have unpredictable side
effects. Today, specially in the context of noncommunicable diseases, the
world of medicine is no longer looking for blockbuster drugs aimed at
single targets; it is looking for drugs that correct underlying physiological
imbalances that manifest as syndromes. Even for infectious diseases, it is
no longer looking for single molecules (that inevitably result in drug
resistance) but rather for combinatorial drugs. This suggests that our
understanding of life is still in its infancy, and intelligent ab initio design of
therapy is difficult. It is tempting to suggest here that the approach of
modern medicine which starts at molecular level and progresses toward
building systems, now referred to as systems biology, and the traditional
medicine's holistic understanding and approaches will intersect fruitfully if
expertise and research are managed carefully leading to new and
sustainable solutions and perhaps original contribution to the world of
medicine and life sciences.
In fact during the last decade on the knowledge plane, the tremendous
potential of trans-disciplinary research in health sciences (integrating in an
epistemologically informed manner Ayurveda and Modern biology) is
already beginning to be demonstrated. The pioneering work of[6,7] linking
the Ayurvedic phenotypes to genotypes has opened up huge possibilities
for new understanding of human physiology, new design strategies for
drug development, early detection of diseases and differential schemes for
clinical management. Similarly, in the context of community health,[8] it
has demonstrated that the traditional advice for storing drinking water in
copper vessels is probably the world's cheapest solution for microbial
purification of drinking water. In the context of management of chronic
diseases, a recent pilot clinical study from Pune published in rheumatology
(Oxford) 2013[9,10] and another study sponsored by National Institutes of
Health, USA[11,12] have concluded that the systemic, holistic management
of rheumatoid arthritis based on Ayurveda, is as effective as the best
biomedical treatment with specific drugs and has lesser side effects. The
work of IITs[13] on classical herbo-mineral-metallic preparations of
Ayurveda called bhasmas, reveal that bhasmas prepared by these reputed
institutions, in exactly the way prescribed in Ayurvedic texts using
rudimentary, home scale technologies, resulted in finished products that
were of nanoparticle sizes. It was further observed that such
microstructures as were produced through traditional technology could
not be easily produced through conventional chemistry procedures in
laboratories.

Several other examples can be cited about the potential and scope of
Integrative research. These leads if pursued consistently and boldly have
the potential to create new paradigms in modern science, technology, and
medicine.
Go to:

MODERNIZING INDIA's HEALTHCARE: INDIA CAN BE A

WORLD LEADER IN THE NEW EMERGING FIELD OF
“INTEGRATIVE HEALTHCARE”

Integrative healthcare thus needs to be viewed as a modern 21 st century

agenda. Casual observers wonder how modernity can be advanced by
combining modern western biology and biomedicine with traditional
Indian health sciences. The reason for doubt is because the mainstream
schools of sociology have posited the modern and traditional as opposites.
In fact historical analysis of European modernity as a case study, clearly
reveals that the roots of modernity lie in tradition (just as the roots of the
present lie in the past) and that in effect modernity is evolving tradition.
Due to the recent history of colonialism, the colonized nations were led to
believe that they needed to import modernity from their colonizers. But the
colonial era is long over and in modern, independent nations it is essential
for civil society and polity to realize that modernization of all societies
must derive inspiration from their own traditional roots. While import and
knowledge exchange, across different cultures, is desirable in a globalized
world, neglect of one's own knowledge traditions, when they are of
contemporary value is suicidal.

India can be a world leader in this new emerging field of “integrative

healthcare” because we have over the last century or so assimilated and
achieved a reasonable degree of competence in biomedical and life sciences
and we possess an incredibly rich medical heritage of our own.

Outline of health sector reforms for 21  century healthcare

st

India has over the last 200 years successfully borrowed the modern
western model of a3 tiered institutionalized structure from western
nations. We have, however, not yet modernized our own heritage. Casual
observers wonder how modernity can be advanced by combining modern
western biology and biomedicine with traditional Indian health sciences.
The reason for doubt is because the mainstream schools of sociology have
posited the modern and traditional as opposites. In fact historical analysis
of European modernity rooted in classical Greek tradition, clearly reveals
that the roots of modernity lie in tradition (just as the roots of the present
lie in the past) and that in effect modernity is evolving tradition. Due to the
recent history of colonialism, the colonized nations were led to believe that
they needed to import modernity from their colonizers. But the colonial era
is long over and in independent nations it is essential for civil society and
polity to realize that modernization of all societies must derive inspiration
from their own traditional roots. While import and knowledge exchange,
across different cultures, is desirable in a globalized world, neglect of one's
own knowledge traditions, when they are of contemporary value is
suicidal.

Hence, the task of modernizing India's public system is still incomplete.

Today, the Indian public health system is at crossroads. Despite massive
investments over the last almost 65 years, it has not delivered even
universal primary healthcare.[1] Health seeking behavior studies reveal
that the citizens of the world also recognize the limitation of a mono-
cultural health system and are therefore exercising alternative choices.[14]
The moot question before the Indian polity is, should the country further
increase investment into a singular system of healthcare or should at this
point of time India innovate and diversify its health system by evolving a
new integrative healthcare system in the 21st century.

It make sense, in the 21st century fora national government sensitive to

social realities of public health seeking behavior which is already exercising
pluralistic choices, to expand the scope of the wholly western medicine
content of health care and refine it by deriving strategies, content and form,
from our own traditional knowledge systems. India has had rich experience
in managing healthcare for centuries in the longest surviving, and evolving
health tradition in the world. Over 6500 species of medicinal plants, around
300 animal products, 70 metal and minerals are available in AYUSH
systems.[15] The Traditional Knowledge Digital Library, computerized by
Council of Scientific and Industrial Research has already documented
around 200,000 herbal formulations alongside their therapeutic
indications. The total global estimate of Allopathic formulation is of the
order of 4000. India possesses an estimated 100,000 medical manuscripts
on medicine and surgery which includes sophisticated knowledge of
pharmacology, pharmacy, diagnosis, therapies, prevention, and wellness.

We need to utilize our heritage. In the short run, it is necessary to shed

unrealistic demands for immediate presentation of a large amount of
clinical evidence about AYUSH systems. This is unrealistic because while
limited evidence is certainly available, comprehensive clinical and
pharmacological evidence is simply not available. The reason evidence is
not available is that the State has for the last 200 years not invested in the
creation of such evidence. The budget estimates for 2014–2015 of AYUSH
Department of Government of India suggest that even in 2014 the
extramural research budget of AYUSH is < Rs. 15 cores/year and managed
by bureaucrats ignorant of its potential. The demand for evidence is
however, well-intentioned. It can only be met when clinical research begins
to get supported in a sustained way.

Today, the integrative agenda needs to build on the National Rural Health
Mission (NRHM) 2005 policy framework. We need to select prioritized
interventions, selected by AYUSH experts for introduction into the newly
named National Health Assurance Mission and into the 3 tiered public
health system. Thus, the first step towards extending the social reach of
healthcare in India is to urgently reform the existing 3 tiers of the public
health system by infusing AYUSH content and HRs. This is a complex
exercise as can be seen from the fact that although NRHM had the plan and
strategy of co-location and co-posting, it has not worked because no
homework was done to bring about the integration of health content
derived from the different Indian systems of medicine.[16] The lesson to be
learnt from 9 years of NRHM is that a new national integrative, public
healthcare system not only needs logistical moves like co-location and co-
posting but serious clinical exercises for identifying specific AYUSH
interventions, orienting medical personnel in their use, developing
protocols and cross referral guidelines and such operational details. The
AYUSH interventions have to be selected for health services at primary,
secondary and tertiary levels.

In parallel, an integrative public health system will simultaneously require

radical reform in medical education, medical research, regulations, and the
legal framework for medical practice. In the 21st century, an integrative
model for public health needs a 10-year budget, a detailed action plan, and
strategy, in order to achieve this complex goal.

A second radical step toward modernization of health care in India is to

invest in and use its heritage to restore two more traditionally available
tiers at the bottom of the pyramid to enrich the health system and
demonstrate the efficacy of a uniquely Indian, participatory public health
system. These community-based and supported layers were existing until
the beginning of the 20th century and are still functioning in eroded fashion.
They have been overlooked and neglected in India since the country
embraced the western model of public health.

The two new participatory tiers needed are noninstitutional tiers. They will
add millions of new health providers to the public health system at zero
recurring cost. These tiers are to be managed, as was the case for centuries,
by millions of households and traditional community-based health
workers. Traditionally, the Indian households were carriers and providers
of healthcare to the family. The household was a repository of region-
specific, self-help health practices based on the use of ecosystem-specific
natural resources. Till recently, the Indian households possessed
knowledge of at least a 100 home herbal remedies, nondrug health
practices and food and nutrition. The homes had competence to manage
common ailments, preventive health practices, and healthy ethnic diets.
Every home also knew how to achieve microbially free drinking water with
zero energy. The creation of this household tier to the public health system
will require critical investment in a creatively designed, Information and
Communications Technology enabled health education strategy, for
reaching millions of rural and urban households. The second additional tier
to be introduced in a modern Indian healthcare system is also a
noninstitutional tier managed by community-based and community
supported traditional health workers. These workers are based in the
villages of India. The country still has an estimated 1 million community
supported traditional health workers viz., mid-wives, herbalists,
bonesetters, and vishavaidyas. This is a larger HR than the recently created
ASHAs who are government supported. The momentum of these part-time
traditional health workers needs to be restored. The first step for
restoration is to certify, accredit, and enrich the knowledge and skills of
existing folk healers. Pilot experiments for certification and accreditation
have already been demonstrated as recently as in 2013. The community
support base of the 1 million traditional health workers needs to be
reinforced and care taken to avoid making them dependent on government
support for their services to the community. The next step will be to
motivate a new generation of folk healers to replace the older and ageing
currently available generation. Tremendous sensitivity is involved in
creating two community supported tiers. This is because while the
government needs to invest in their revitalization, the action programs for
developing these two tiers cannot be executed by the government. They
will entirely have to be led by nongovernment actors.
The role of economic evaluation and
priority setting in health
care decision making
including the cost
effectiveness of public
health, and public health
interventions and
involvement
Health Economics: 8 - The role of economic evaluation and priority setting
in health care decision making.
 

8.1 The uses of economic evaluation

Economic evaluation is used to varying degrees in different countries. How widespread its use is,
and the purposes for which it is used, depend to a great extent on the country’s dominant health
system, whether public, social insurance or private insurance based. In developing countries, this
also depends on the extent to which the country is in receipt of aid from international bodies.
Morris, Devlin, Parkin and Spencer (2012) classify the reasons why economic evaluation is used in
health care decision making as:

 To maximise the benefits from health care spending.

 To overcome regional variations in access.
 To contain costs and manage demand.
 To provide bargaining power with suppliers of health care products.
Of these, the most widespread is to contain costs and manage demand through a system which
controls the introduction of new technologies, particularly those that are high cost technologies,
through technology assessment. High cost does not necessarily mean that their unit cost is high;
technologies are seen as expensive if the overall cost of using them in their target patient
population is high. As a result, technology assessment has been dominated by pharmaceuticals.
Many countries now use some form of economic evaluation in deciding whether their national
health systems should fund particular pharmaceutical products. Broadly, the issue is whether the
system will reimburse patients or service providers if they use a drug.
In England, the assessment of new health technologies takes place within the National Institute for
Health and Care Excellence (NICE). This was established in 1999 to address geographic variations
in access by providing national-level guidance on the effectiveness and cost effectiveness of
different interventions in the NHS. NICE therefore has an equity goal in ensuring that everywhere
in the NHS provides any new technologies that are cost-effective; however, by implication it also
means that any new technologies that are not cost-effective will not be adopted.

NICE produces guidance in three areas: public health, health technologies and clinical practice.
Public health guidance concerns the promotion of good health and the prevention of ill health and
is intended not only for the NHS, but also for local authorities, the wider public sector and the
voluntary sector. Health technology guidance concerns the use of new and existing medicines,
treatments and procedures within the NHS. Clinical practice guidelines concern NHS treatment and
care for people who have specific diseases and conditions.

NICE provides a large amount of information on all of its work and how it is carried out, which is
available on its website www.nice.org.uk including details relevant to the evaluation of public
health interventions. The other countries of the United Kingdom have arrangements that differ to a
varying extent from those in England. Details may be found on the websites of their national
health services, and for Scotland: www.scottishmedicines.org.uk
 

8.2 Cost effectiveness league tables and threshold cost-effectiveness

As discussed in section 5.3.4, the results of an economic evaluation of an intervention are typically
expressed as an Incremental Cost-Effectiveness ratio (ICER). Section 5.3.5 discusses how this may
take the form of a cost per Quality-Adjusted Life Year (QALY) gained. However, this simply shows
what the cost is of buying a QALY using that intervention. This ICER does not in itself tell us
whether the intervention is good value for money. One way in which value for money might be
assessed is to see what the cost per QALY gained is of other interventions. When economic
evaluations were first conducted and published, it became routine to include such comparisons in
the form of a list of different interventions that had been appraised along with their ICERS. This
evolved into the suggestion that all interventions that have been evaluated might be compared in
the form of a ‘league table’, in which interventions are ranked from lowest to highest cost per
QALY gained (Mauskopf, Rutten and Schonfeld, 2003).
Problems with league tables include inconsistency in the methods used for different evaluations,
difficulties in transferability of results, the assumption that point estimates of ICERs determine
rankings, and the implication that all interventions in the table are independent alternatives. It is
also not clear how they should be used by decision-makers. It may seem reasonable to say that if
an intervention is more cost-effective than another that is already funded, it should also be
funded. But that simply raises the question of whether this comparator was itself cost-effective. In
general, it is not possible to make any such decisions without reference to a threshold, an actual
value which acts as the criterion for decision making - if an intervention’s ICER is below this it
should be funded, if above it should not. (This threshold is the same concept as the ceiling ratio
referred to in section 5.3.4.)
Various threshold values have been proposed. A commonly quoted value, especially in the United
States, is US$50,000, though this is entirely arbitrary.  NICE in the UK has an explicit threshold,
though a complicated one, which also has no basis in theory or evidence. There are two ways in
which such thresholds could be determined. One is the social value of a QALY approach,
establishing what value society places on each QALY gained, so that the cost of obtaining a QALY
by an intervention can be compared to how much society is willing to pay for one. The other is
the shadow price of a QALY, which is the value of the least cost-effective intervention that just
exhausts the health budget.
There have been some attempts to establish league tables. The WHO/World Bank have promoted
this, particularly in the context of developing countries, in the form of ‘generalised cost-
effectiveness analysis’. However, the most comprehensive attempt to use this as a means of
priority setting was in Oregon in the United States. Problems with Medicaid, the publicly funded
programme for poor people led Oregon to set up a Health Services Commission to develop what
became the Oregon Health Plan. One aspect of this was a systematic and explicit basis for deciding
which health services should be included, and which excluded, from the Medicaid benefit package
list. All possible interventions are classified into ‘condition-treatment’ pairs and a list is produced of
them in order of priority. They are funded in order of priority until the health budget is exhausted.
Originally, the ranking was determined by cost-effectiveness, but this was so controversial that it
was never used in practice. Rankings were determined by five-year survival and improvement in
symptoms and the type of service, whether curative or not, for example.

NICE’s threshold is not defined with respect to a single value and involves considerations other
than cost-effectiveness. It states that interventions with an ICER below £20,000 will be approved
and those above £30,000 are unlikely to be approved. Above £20,000 other considerations are
taken into account. However, although the other considerations are listed, it is clear neither how
they are factored in to decision-making nor how they are treated differently above and below
£30,000. This is entirely discretionary and there is no way to tell if it is applied consistently across
interventions. Also, NICE has on significant numbers of occasions approved interventions with
ICERs above £30,000 and occasionally not approved interventions with an ICER below £20,000.

8.3 Programme Budgeting and Marginal Analysis

Programme Budgeting (PB) and Marginal Analysis (MA) are two quite different planning tools that
have become accepted as a consistent approach called Programme Budgeting and Marginal
Analysis (PBMA). It is a pragmatic approach to resource allocation that attempts to divide decision
making about priorities into a manageable set of activities (Mitton and Donaldson, 2001).

8.3.1 Programme Budgeting

One of the aims of PB is to focus the process of setting and using budgets on the outputs of health
services, rather than the more traditional focus on the purchase of health care inputs. PB involves
assigning costs to health care programmes, defined in terms of the types of output produced,
which in practice is often organised by client or disease groups. The first stage in PB is to describe
current resource allocations in this way, by showing how much is spent in each programme. It is
therefore possible to see what budgets are currently being used for, rather than simply the
services that are purchased. The budgets include everything that is spent on the programme in a
particular time period, usually a year, including both revenue and capital, wherever it is spent.

PB may be undertaken at the macro level, which looks at the whole of expenditure, divided into
large programmes, for example disease groups, or at the micro level looking at expenditure within
these programmes, for example different care settings for a particular disease group, which
involves a finer level of detail of information about services.

In theory, PB is part of a comprehensive planning system for decision making based on the
intervention provided. However, in practice it refers only to the information that is provided, along
with suggestions as to how that information might be used.

PB has been used in many countries, at national and local level, and has also been used
internationally by the WHO. In the UK, a National Programme Budget Project was initiated by the
Department of Health in 2002. All CCG expenditures on hospital, community and primary care
services are mapped to 23 programmes of care based on medical conditions. Details of this can be
found on this website:

https://www.england.nhs.uk/resources/resources-for-ccgs/prog-budgeting/
This information can be used for accountability purposes, assessing whether explicitly stated
priorities are met. It can also be used as a basis for setting targets for changes in expenditure in
line with priorities. If collected over time, it can be used to monitor the extent to which such
targets are met.

8.3.2 Marginal Analysis

Section 1 described marginal analysis as a general economics approach to optimisation. However,
in the PBMA context, Marginal Analysis (MA) means something specific. The idea is that once
programme budgets have been established, decision makers will want to maximise the
achievement of the aims of the programme given the budget allocated to it. This requires
economic appraisal of health care at the level of service provision.
MA is therefore the appraisal of the added benefits and added costs of a proposed investment in
health care, or the lost benefits and lower costs of a proposed disinvestment. Its basis is not a
comparison of the costs and benefits of all uses of resources but an evaluation at the margin of
different ways of using resources. MA can be used to analyse marginal changes between
programmes, though it is much easier and more common to apply it within programmes. Although
MA uses standard approaches to economic appraisal, it does have some distinctive features,
mainly the screening of new services for potential investments and of existing services for
potential disinvestments, often through an expert or stakeholder group.
 
8.4 Cost of illness and burden of disease

Cost of illness (COI) and burden of disease (BOD) studies are widely undertaken in many
countries. Although it would be possible to outline principles that would distinguish between these,
in practice there are no consistent definitions of them. The individual terms are therefore best
reserved for the titles given to particular projects rather than using them to describe a particular
type of study. Both aim to assess the overall impact of an illness - or in some cases all illnesses -
on society, with the term cost used in a broad sense to mean not just the costs in terms of the
resources used in dealing with a disease, but also the value of resources lost due to disease, and
the value of lost health.

COI/BOD studies are descriptive, and their aims are usually expressed in terms of the potential
uses of the information that they provide. First, by assessing the size of health problems, they
indicate one aspect of its relative importance, and are therefore an input to priority setting, both in
terms of the resources that should be devoted to health care and the resources that should be
devoted to health care research. Secondly, they provide useful background or baseline data for
economic evaluations of specific health care interventions, and are particularly valuable for
identifying different types of cost (including health deficits) that might be affected by an
intervention. Their aims are therefore similar in many ways to PBMA.

As with economic evaluation, there are different ways in which they can be measured, and there
are guidelines for good practice. Because of its basis in population health and illness, COI/BOD has
strong links with public health and epidemiology, and one of the key issues is whether the basis of
costing is incidence or prevalence. Factors that affect this choice are whether the disease is chronic
or acute and the practical availability of one or other measure.

On the economics side, COI/BOD studies tend to use a characterisation of costs that derives from
an older tradition of cost-benefit analysis that has been considerably modified for use in economic
appraisal of particular interventions. Costs are divided into direct costs, indirect costs and
intangibles. An important issue is whether valuation is based on ‘avoidable costs’, which essentially
means the value of resources used from a provider’s perspective or ‘willingness to pay’, which
essentially means market valuations by consumers.

Many COI studies are funded by organisations that have a special interest in particular diseases,
such as patient support and lobbying groups and pharmaceutical companies that have products in
that area. There are also some local examples that cover individual countries. However, the most
well-known, wide-ranging and ambitious example is the Global Burden of Disease study, which is
funded and promoted by the World Bank and the World Health Organisation as a key element of its
aid for health services in developing countries. One important feature of this project is the
development of the Disability Adjusted Life Year (DALY), also discussed in Section 5.5.1, to
capture the health impact problems in a way that would facilitate comparison of the size of a given
problem across disease areas and between countries. DALYs, like QALYs, combine length and
quality of life, but unlike QALYs they describe a deficit in health from a theoretical maximum of no
disability for life with a maximal life expectancy. Further details of this project are on this
website: http://www.thelancet.com/gbd
Although COI and BOD studies are widely carried out, they are controversial and, in particular,
many economists are highly critical of them (Byford, Torgerson and Raftery, 2000). It is alleged
that COI/BOD tells us nothing useful for policy or decision-making purposes. All that COI/BOD
gives us is information on the size of a problem, which is irrelevant for priority setting. Priority
setting should assess priorities based on effective and cheap solutions to problems rather than
how big they are. COI/BOD gives information about what would be the result of removing a
problem, but the more usual decision making context is of making marginal improvements to a
problem. It is alleged that COI/BOD distorts resource allocation rather than improves it, leading to
inefficiency and inequity. The argument that COI/BOD is an essential prerequisite for economic
evaluation studies is persuasive, but this purpose requires only a costing study, not an estimate of
global impact. Similarly, although COI/BOD might be used to set priorities for medical research, it
is still the case that these need to be evaluated according to the marginal costs and benefits of
research activities in different disease areas.