With almost half of all Nigerians living below the poverty line and facing the dual burden of a high incidence of both infectious and non-communicable diseases (NCDs), Nigeria’s under-funded public health system is under immense pressure. Accordingly, international aid organisations and the private sector have a significant role to play in alleviating the burden on the state, and there is a strong need for stakeholders to work together to ensure that reliable and affordable health care reaches all segments of society.
There is a marked discrepancy in the availability and quality of services between private and public facilities and between urban and rural areas. Although the government has committed to universal health care provision, how this will be achieved and where the required funding will be found is as yet unclear.
While significant progress has been made in the reduction of life-threatening infectious diseases and performance on key health indices is improving, there is still a long way to go to meet the UN’s Millennium Development Goals (MDG), an objective that is incorporated into Vision 20:2020, the country’s long-term economic development strategy. Indeed, Nigeria ranks 153rd out of 187 countries on the UN’s Human Development Index, with some of the highest infant, child and maternal mortality rates in the world.
Though the sector faces its fair share of challenges, health care provision may be about to turn a corner, with some major initiatives proposed or in the early rollout phase that could dramatically reshape the regulatory regime and re-designate roles and responsibilities for more effective outcomes.
These include the recently signed National Health Bill (NHB) that is aimed at expanding private sector participation; a health insurance scheme that is intended to achieve 30% national coverage by 2015; and a new framework for drug distribution that is set to reduce the sale of counterfeit and sub-standard medicine in the local market. As ever, implementation and execution of these and other reforms will prove critical.
Nigeria’s public health care system is overseen and managed at three distinct levels. The federal government is responsible for tertiary care, which is mainly provided by university teaching hospitals and federal medical centres. Nigeria’s 36 states and the federal capital territory of Abuja are each responsible for their own secondary care facilities, mainly in the form of general hospitals, while the 774 local government areas focus on primary health care that is administered primarily through dispensaries. On the surface, the clear delineation of responsibilities by hierarchy should result in greater accountability and fit-for-purpose provision. Yet critics of this three-tiered structure argue that it can result in budgetary leakages, overlap inefficiencies and blame passing.
At N262bn ($1.6bn), health care has been allocated slightly less than 6% of the 2014 budget. While this ranks as the fourth-largest allocation by value after defence, education and finance (when including debt servicing), health care proponents and international health advocacy groups believe the amount to be far less than what is needed. In 2001 Nigeria was a signatory to the Abuja declaration, as a part of which it and other African nations pledged to commit 15% of their federal budget towards health needs, especially the combating of infectious disease and child and maternal mortality. In recent years per capita government expenditure on health has fluctuated between $21 and $29, a figure that exceeds the minimum WHO benchmark for developing countries of $14, but is still far below the global average of around $615.
The federal government has many conflicting spending priorities that make it unlikely that the 15% commitment will become a reality any time soon. Over the past year, additional spending has had to be allocated to the fight against Boko Haram in the north, while analysts contend that irrespective of the percentage allotment, designated funds do not always make it through the system due to inefficiencies in public finance and corruption. Government expenditure makes up around one-third of total health spending each year, according to the WHO. Nigeria receives about $2bn annually in health-related foreign aid, and non-governmental organisations (NGOs) with other private groups account for some 3% of annual spend. Individual out-of-pocket spending makes up the remainder.
Many of the most prevalent infectious diseases are common to sub-Saharan Africa. In turn, Nigeria, as the continent’s most populous country, has a large number of cases of widespread communicable diseases such as HIV/AIDS, malaria and tuberculosis (TB). According to British NGO Save the Children, around 30% of newborn deaths in Nigeria are attributable to infections. The prevalence of HIV among adults aged 15-49 is 3.2%, and there are an estimated 2.8m adults aged 15 and up living with HIV. According to the US Centres for Disease Control and Prevention (CDC), 97% of the population is at risk for malaria and the disease accounts for more deaths in Nigeria than anywhere else in the world.
Neglected tropical diseases (NTDs) are also endemic in low-income African countries, and trachoma, human African trypanosomiasis (also known as sleeping sickness), lymphatic filariasis, leprosy, onchocerciasis (river blindness), soil-transmitted helminths and schistosomiasis continue to take a toll on many of Nigeria’s urban slums and poorer rural communities.
Over the past decade, changing eating habits and an increase in sedentary lifestyles among an expanding middle class have contributed to a rise in the prevalence of NCDs like hypertension (high blood pressure), diabetes, cancer and chronic lung disease.
Famine has unfortunately become a significant issue in the conflict-stricken north-east region of the country. A state of emergency was declared in the states of Borno, Yobe and Adamawa in 2013 as residents were displaced, health practitioners fled for safety and basic health infrastructure was destroyed.
Facing an onset of NCDs on top of a significant infectious disease burden is a challenging proposition, although progress in addressing this is being made. “We are not there yet, but tremendous improvements have been seen over the past 15 years,” Dr Tolu Arowolo, a public health physician, told OBG. “Through nationwide programmes to conduct immunisations and distribute vaccines, infant and maternal mortality rates are improving, polio is close to being eradicated, and measles outbreaks and the prevalence of malaria, HIV and TB are all down.”
In July 2014, the Joint UN Programme on HIV and AIDS released a study showing that new HIV infections have decreased by 35% over the past three years, due in part to the fact that the number of treatment centres offering free antiretroviral therapy expanded from just 25 in 2001 to more than 800 at present. The incidence of malaria is also down, with strategies employed including the subsidised distribution of anti-malarials as well as the provision of insecticide-treated mosquito nets to vulnerable communities.
With rising levels of disposable income among some segments of society, there is greater demand for private coverage. “Public hospitals are overstretched and under-funded, which drives down quality and lowers standards. Private hospitals provide patients with a faster, more effective option,” Dr Abiodun Fatade, the CEO of Crestview Radiology, told OBG.
In recent years, the federal government has embraced the contribution of the private sector, reduced the role of the state and encouraged private-public partnerships in various sectors, such as power and telecommunications. It appears that there is an appreciation on the part of the authorities that greater private sector participation can help resolve some of the inadequacies of the public health system as well as help relieve funding pressures. Yet some industry observers contend that more could be done to provide support and foster a more conducive operating environment to stimulate private investment in the sector.
Investing in sector facilities is capital-intensive and often requires a long wait before returns can be realised. Nigerian banks charge high rates for loan facilities, and there are calls by some in the sector for the government to set up a special purpose lending vehicle for health-related start-ups similar to what has been done in agriculture and education.
“There are not enough private sector projects taking place and this is because of a lack of funding options and an inability to borrow at less than double-digit rates,” said Dr Fatade. Other challenges and constraints that have been cited by prospective investors include the cost of running generators due to unreliable electricity supply from the national grid, and the tariffs and duties associated with importing medical equipment.
Seeking Treatment Abroad
A perceived lack of quality facilities at home is prompting those who can afford it to seek treatment abroad, with estimates that Nigerians could be spending as much as $1.6bn per annum on outbound medical tourism. Prime destinations include the US, the UK and India. Efforts are now under way to reverse this trend.
Since 2012 a new policy has mandated that civil servants receiving government medical coverage undergo treatment in Nigeria, although it has yet to be fully implemented. Some Nigerian public officials, however, are still accused of using taxpayer money to seek unnecessary treatment overseas. “Many civil servants are leaving even for minor health care issues that could be treated in Nigeria,” Dr Fatade told OBG.
The new NBH that was passed by parliament in 2011 and signed into law by outgoing President Goodluck Jonathan in December 2014 could go along ways towards reassuring investors and reducing regulatory overlap between tiers of government.
The NHB will provide a framework for the regulation, development and management of a national health system. It pledges an annual budget of N60bn ($366m) for primary health care and promises to ensure the provision of free medical care for the most vulnerable. Regulatory functions will be reallocated in certain instances, with the registration and licensing of all health professionals handled by the federal government and individual states accrediting non-tertiary facilities. In addition, number of areas that are currently unregulated, such as organ transplants, blood transfusions and fertility medicine, will also be given new oversight.
The private sector accounts for around two-thirds of health care spending, of which 95% is paid for out of pocket. Only around 4% of the population, most of whom are government and parastatal employees, have formal health insurance. With a per capita income of around $2700, private care and comprehensive medical insurance are beyond the means of the average Nigerian. As such, for universal coverage to be achieved, it would need to come via the roll-out of a national health insurance scheme (NHIS). This is still in the embryonic stage, but it is anticipated that it will be extended to cover a larger cohort of the population over the coming years. Of the N262bn ($1.6bn) budgeted for federal health care spending in 2014, the NHIS is to set receive N4bn ($24.4m), as the majority of funding is needed for essentials like running tertiary facilities and dispersing life-saving medicines like anti-malarials and HIV anti-retrovirals. A previous presidential directive called for the NHIS to achieve 30% coverage by 2015, a marked increase from the 3% of the population enrolled in the scheme as of May 2013.
At the moment, the main source of NHIS funding comes from corporate contributions as all public and private sectors organisations with 10 or more staff members are required to contribute 10% of their employees’ base salaries to the scheme. With an unemployment rate of around 25% and many Nigerians making their living through work in the informal sector, the cross-subsidisation pool is deemed insufficient. “On paper, the NHIS is fantastic, but to achieve 30% population coverage costs must be driven down and funding sources expanded,” Dr Arowolo told OBG.
Systemically, Nigeria has its work cut out for it and observers feel that the short-term targets of the NHIS are perhaps overly ambitious. In emerging markets such as Thailand where national health insurance roll-out has been deemed a success, there was a robust health insurance industry in place before universal coverage was attempted. Some are calling for health insurance to be made compulsory, as has been done with car insurance, as a preliminary measure before the NHIS can reach critical mass. The case could also be made that due to a lack of facilities, greater supply-side intervention is needed to keep pace with the demand-side injection, as otherwise already strained infrastructure is going to become even more overstretched.
Micro-insurance offers an interim and innovative solution to the funding deficit, and presents an opportunity for non-health-care-related companies with a captive subscriber base to partner up with the programme. The country is home to an estimated 127m active cell phone users. The country’s main carrier MTN has launched a value-added service titled “Y’ello Health Care Cover” where for a prepaid weekly fee of N250 ($1.50), subscribers can visit one of 6000 NHIS registered health management organisations twice per month and up to seven times per year, to a maximum treatment value of N80,000 ($488).
The Talent Pool
WHO figures reveal that there are four doctors per 10,000 people in Nigeria, and 16.1 nurses and midwives – ratios that exceed the continental average but are still below the levels the WHO prescribes. Basic salaries for junior-level doctors range from N228,000 ($1391) to N300,000 ($1830) per month excluding housing and daily allowance. As is the case in much of Africa, there is a brain drain of physicians and other medical practitioners leaving the country, enticed by higher salaries elsewhere. A study conducted by the International Organisation for Migration found that nearly half of Nigerians trained in the medical and academic fields are working abroad.
In Nigeria’s case, the reasons listed by those seeking employment elsewhere extend beyond pay, with poor and frustrating working conditions also mentioned as leading motivations. “Those doctors and nurses remaining in Nigeria are doing so for family or patriotic reasons. There are plenty of opportunities to leave. Not just to fetch a better salary, but to gain better support infrastructure and quality facilities,” said Dr Arowolo, referencing the example of local doctors in public hospitals needing to purchase their own gloves due to a lack of inventory, or pooling their own money to purchase a back-up power generator.
In late June 2014, 16,000 resident doctors who are members of the Nigerian Medical Association (NMA) went on strike, putting an additional strain on the public health system during a period that coincided with the regional Ebola outbreak. The government announced that the striking physicians would be stripped of their position, adding further tension to an already heated public dispute. The NMA vocally condemned the federal Ministry of Health, stating that the decision to dismiss them was illegal, while the government criticised the NMA’s leadership and countered that the decision to go on strike was an abandonment of their basic duties.
Ultimately, the seriousness of the Ebola threat motivated both sides to compromise, and in late August the doctors agreed to return to work and the government reinstated their positions without taking any punitive measures. The strike brought to light the pervading sense of mistrust between practitioners and the authorities, however – something that will need to be resolved in order to avoid similar episodes in the future.
The Ebola outbreak in West Africa was first reported in March 2014. According to the WHO, as of March 14, 2014, 10,159 people had died from the disease in Liberia, Guinea, Sierra Leone, Nigeria, the US and Mali, and the total number of cases had reached 24,597. In Nigeria, the government and the medical community reacted quickly to the threat, and the continent’s largest country by population fared well in terms of mobilising resources to prevent the spread of the disease. What has become apparent is that the region as a whole was ill prepared for such an outbreak, however, and that no single country can work in isolation to contain its movement.
Nigeria avoided a widespread outbreak, and a total of 20 cases and eight deaths were confirmed, with the assessment that those infected could be traced to arrivals by air. “We have been fortunate that most incidents have been in Lagos, which is the best equipped of all states at responding to emergencies,” Margaret Olele, Pfizer Nigeria’s director of communications and public affairs, told OBG. The country was declared Ebola-free in October 2014, and according to the WHO, the success of Nigeria was attributable to ample funding, quick action and assistance from the WHO, the CDC and the non-profit Doctors Without Borders.
Figures vary as to the proportion of drugs in circulation that are counterfeit, with some estimates going as high as 50%. A survey by the WHO in 2011 found that 64% of antimalarial drugs in the market were fake. In addition to the social cost of substandard, ineffective and potentially dangerous products being sold in the open market, it is estimated that the local pharmaceuticals industry loses around N200bn ($1.2bn) annually to counterfeit medicine.
In 2012, the National Agency for Food and Drug Administration and Control unveiled new drug distribution guidelines that should prevent leakages and a parallel black market from functioning by introducing a more tightly coordinated and monitored distribution chain. Effective June 30, 2014, pharmaceuticals manufacturers and importers are only permitted to sell drugs directly to mega drug distribution centres ( MDDCs), state drug distribution centres (SDDCs) and the national health programme. From there, MDDCs can only sell on to wholesalers, while SDDCs can re-distribute to public health facilities and in some instances the national health programme, as well as wholesalers. Wholesalers, for their part, are only permitted to sell to community pharmacies, public health care facilities and private health institutions.
On the consumer-facing side, only pharmacies and public and private health care facilities that are registered with the Pharmaceutical Council of Nigeria can retail directly to the public. In order to be registered as a participating pharmacy, one must have on board a superintendent pharmacist with at least five years of post-qualification retail experience. In order to open a registered MDDC, a pharmacist with over 10 years of wholesale experience is needed to manage the operation. “It is a solid guideline that in theory should reduce the challenges around counterfeiting by tracking and tracing product movement. It should also in theory open up opportunities for new private businesses to participate in the distribution chain and provide a platform to upgrade existing government distribution infrastructure that is in a very rudimentary stage,” said Olele.
Overall, those involved in the industry have applauded the new guidelines, while also expressing some reservations that the distribution chain could become over-regulated and create inefficiencies.
To function effectively, the proposed system requires numerous distribution centres spread across the country, and there could be a shortage of pharmacists with the requisite qualifications and start-up capital to open the number of community pharmacies and MDDCs needed. According to Olele, the trade association has formed a committee to provide input to the Ministry of Health, and has been pushing for a pilot project before the programme goes national.
“Rolling out the system upstate will be far more challenging and needs more time as the infrastructure there is far less formal,” she told OBG.
Multinational pharmaceuticals firms are increasingly looking to Africa, where an emerging middle class and greater consumer awareness of healthier lifestyles offer solid long-term prospects. Nigeria, with the continent’s largest population and its largest economy, is central to their ambitions for expansion. According to research from IMS Health, local pharmaceuticals sales in 2011 were worth $1.88bn. While this lags behind the spend in the more established African markets of South Africa ($3.78bn) and Egypt ($3.08bn), spending through to 2016 is expected to grow at a compound average growth rate of 13% – one of the fastest expansion rates in Africa.
Multinational pharmaceuticals firms compete with a fairly strong indigenous industry that, according to the Pharmaceutical Group of the Manufacturing Association of Nigeria, is responsible for producing around 60% of all medicines consumed within ECOWAS.
Through technical assistance and capacity-building from the WHO and UNITAID – a global health NGO that works to make access to treatments for those with HIV, malaria and tuberculosis more affordable for developing countries – a number of Nigerian pharmaceuticals companies have received good manufacturing practice accreditation that bolsters their export credentials and allows them to participate in international tenders.
A major hurdle in the effort to increase manufacturing self-sufficiency is a shortage of raw materials to make finished products in-country. Nigeria loses an estimated N1.5bn ($9.2m) annually to the importation of active pharmaceutical ingredients (APIs). According figures from the Association of Community Pharmacists of Nigeria, 85% of APIs need to be imported, resulting in a higher cost of goods sold. Many APIs come in the form of chemical and petrochemical by-products. Yet despite abundant hydrocarbons reserves, Nigeria’s downstream petrochemicals sector remains underdeveloped.
For multinational research-based pharmaceuticals companies, in addition to high costs associated with procuring raw materials, an unstructured intellectual property regime acts as a deterrent to investing further in local production capacity. Competitive price pressures and strong competition from generics also limit branded medicine’s potential. At the moment, Indian companies are the most represented in the market through their strong position in the generics space. “Innovative pharma might not always be the cheapest, but there are other factors beyond price to be considered. We need to strike a partnership with government to see how a balance can be reached between better price and quality,” Pfizer’s Olele told OBG when discussing the prospects for innovative medicine being incorporated within the NHIS.
Although progress has been made in the reduction of life-threatening infectious diseases, there are long-term hurdles to overcome in ensuring that every Nigerian, irrespective of geography and income, has access to basic health services. The Ministry of Health has proposed ambitious initiatives that could dramatically improve the provision of health care at all levels, and execution and delivery will be dependent on key legislative bills being passed, the requisite funding being mobilised and the direction of the new administration.
Despite some of the challenges to doing business in the country, there are immense opportunities for private sector participation across the delivery chain. Should the ambitious objective of 30% NHIS coverage be achieved, this would give prospective investors an assurance that a significant proportion of the population will have the insurance cover to visit new facilities. And as more services and infrastructure become available, this should reduce the need for Nigerians to pursue treatment abroad and provide local practitioners with better domestic career prospects.
As the national health agenda gradually shifts its focus from infectious diseases to non-communicable lifestyle illnesses, the composition of pharmaceuticals sales is expected to change, reducing the dominance of anti-infectives and anti-virals and providing new prospects for branded and generic medicines alike.
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