“A 1-3% margin is just not enough… By Farooq Tirmizi and Ariba Shahid I suspect the wholesale stage of the supply chain is where counterfeiters are entering the market” T here is a big revolution is underway in Pakistan’s healthcare sector, one that is about to dramatically change not just the sector, but its relative size in the economy. How, and how much, Pakistanis use the country’s healthcare system, and who pays for it, are all about to change. And many parts of the sclerotic healthcare sector are about to feel the effects of that shake-up, not least of which is the pharma– accounts for nearly two-thirds of healthcare spending in Pakistan. Perhaps we should clarify: it is not one, but two simultaneous revolutions taking place in the country’s healthcare sector, one driven by a rare government policy success in expanding access to healthcare insurance to the nation’s low-income population, and the other driven by the advent of technology and venture capital-backed startups seeking to improve Sehat Insaf program, which provides for health insurance – paid for by the government, but serviced by private insurance companies – to a large swath of the country’s low-income population. The second is the advent of online pharmacies such as Dawaai, which are seeking of the retail supply chain for pharmaceutical products in Pakistan. Each of these attacks a different segment reshapes how healthcare is paid for, and specifically who can afford what kinds of healthcare in Pakistan. The second tries to improve the buying experience – and possibly even the price points – paid by consumers in their single biggest category of healthcare spending. Both of these are likely to result in more equitable access and a more affordable, better quality of healthcare available to a much Furquan Kidwai, CEO of Dawaai larger proportion of the population. But these changes will also affect the current incumbents in the sector in terms of how they do business. the subject of this story. insurance works is to take the probability of any single individual needing expensive healthcare costs and multiplying it by the expected expense. That expense – after adding adminismargins – is charged as a premium to people who enroll in the healthcare plan. Essentially, your premium is approximately equal to the probability-adjusted cost of you getting sick and needing expensive care. The health insurance company then creates a network of providers – hospitals, diagwill accept that insurance as a form of payment. If you need care, you go to the provider in the insurance company’s network and they will ask you to pay cash for a small portion of the actual cost, and the rest will be covered by the insurance plan. The health insurance plan will include how much you will be expected to contribute each month in premiums, how much you will have to pay in cash at a healthcare provider, and total coverage limits on how much the health insurance company will help you pay for. In a private sector health insurance plan, the monthly premiums are paid for by either the individual seeking insurance, or perhaps by - ment. In the Sehat Insaf program, the premiums Sehat Insaf: improving access to healthcare T he Sehat Insaf program is perhaps one of the biggest policy successes of the Pakistan Tehrik-e-Insaf (PTI) govgovernment in 2013, and is now being extendfederal level in 2018. Here is how the Sehat Insaf program works: for low-income Pakistanis – as idendocument poverty and income levels – the government of Pakistan will provide a health insurinsurance works in providing access to services in both Pakistan and in other countries. Fundamentally, insurance is a means of spreading the risks of low-probability events. For an average person – particularly a young person – the odds of getting sick enough to need expensive healthcare is relatively low, but if that happens, the cost is high. So the way 14
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