New legislation and public health bodies expand medical coverage in Colombia

On February 17, 2017, two years after being signed into law, the Statutory Health Law (Ley Estatutaria de Salud, LES) entered into force. The most significant change to Colombian health care in nearly 25 years, the LES makes health care a fundamental right of citizens, and this legal change has wide ramifications for the provision of services. While the regulation surrounding the LES is still in effect, a new health system is beginning to take shape, with opportunities and challenges to health care companies.

System

The Ministry of Health and Social Protection (Ministerio de Salud y Protección Social, MinSalud) is responsible for overseeing the Colombian health care system, dictating policy and promoting health care in the country. The system it oversees, the General System of Social Security in Health ( Sistema General de Seguridad Social en Salud, SGSSS) has expanded to cover 96% of Colombians since its establishment in 1993. While the SGSSS is public, it is intermediated by private companies known as health service providers (entidades promotoras de salud, EPSs) and the clinics and hospitals where treatments take place – known as health service institutions (instituciones prestadoras de salud, IPSs) – are both public and private. The EPSs play a role equivalent with US health insurance firms. They affiliate patients, arrange treatments at IPSs and collect a 10% payment for their services. A key difference is that EPSs collect their premiums from the Solidarity and Guarantee Fund (Fondo de Solidaridad y Garantía, Fosyga), the central financial pillar of the Colombian health care system.

The SGSSS includes both contributory and subsidised schemes. In 2015, 43% of citizens were registered with the SGSSS under the contributory system – a total of 19.8m individuals – according to data from the Colombian Association of Comprehensive Health Care Providers. Under this plan, a total of 12.5% of an individual’s salary (8.5% remunerated by the employee and 4% by the employer) is paid into Fosyga. A further 22.7m Colombians were covered by the subsidised regime, which is designed to provide an equal level of health care for those citizens without the financial means to contribute from a regular salary from formal work.

This subsidised scheme is financed by the federal government, municipal taxes and cross-subsidy transfers from Fosyga (1.5% of payroll tax is used to fund the subsidiary regime). A further 390,000 Colombians are registered in the exemption regime designed for members of the security forces and Ecopetrol, the national oil company.

Performance

The Colombian health care system has posted impressive results over the course of the last two decades. In its “Review of Health Systems Colombia 2016”, the OECD – to which Colombia is currently in the accession process – highlights some of the headline achievements. Coverage has quadrupled from 23.5% of the population in 1993 to 96.6% in 2014. Over the same period, coverage for the poorest 20% of the country increased from 4% to 89%, while rural coverage rose from 6.6% to 92.6%.

According to World Bank data, infant mortality in the country dropped from 26.6 per 1000 births to 14.1, and life expectancy at birth rose from 68.9 years to 74 years over the same time period. So comprehensive is the coverage offered by the system that Colombia has a very low patient out-of-pocket expenditure, which, equivalent to 14% of total health care spending, is one of the lowest rates in Latin America and below the OECD average of 19%.

However, the headline figures obscure some key challenges facing the sector. First, while coverage is high and distributed among all of Colombia’s 32 departments, or regions, the quality of service and health outcomes can vary significantly across the country. For instance, in wealthier departments the number of deaths from pregnancy-related causes stands at 40 per 100,000 births, but in poor departments this figure is 205. The number of medical appointments and procedures per 1000 inhabitants in wealthier departments is also three times higher than in poor departments.

Colombia counts nearly 1800 hospitals and clinics, of which 52% are public institutions. With a total of 80,000 hospital beds, the country has fewer than 1.7 beds per 1000 inhabitants, below the regional average of two per 1000. However, the country also has three of the top-10 ranked hospitals in Latin America.

The most pressing challenge for the sector is that of financing. Increased coverage and the rising cost of treatment have outstripped financial inflows to the system, leading to calls for greater efficiencies. Speaking to media in October 2015, the secretary-general of the OECD, José Ángel Gurría, said, “Despite important achievements in recent years, the Colombian health sector still faces important challenges. The focus now needs to be on improving quality, efficiency and sustainability.”

Statutory laws such as the LES supersede regular laws previously passed in Congress and they set the rules of the game for the introduction of further laws. Under the 1991 Colombian constitution, health was designated as a service to be provided by the state. The LES elevates health to a fundamental and autonomous right for all Colombians.

Under the previous system, citizens who that they were not receiving adequate drugs or treatments for their medical conditions could put forward lawsuits – called tutelas – to the Constitutional Court on the basis that their fundamental right to life was threatened. The LES makes this process redundant. The health of citizens now replaces all other considerations, and health care institutions must meet this obligation regardless of economic factors.

Passing of POS

In practice, the LES means that all Colombians, regardless of economic status, will have free access to all drugs and treatments registered in the country as prescribed by their doctor, with certain exceptions. This effectively spells the end of the Obligatory Health Plan (Plan Obligatorio de Salud, POS). Under the prevailing system, all Colombians are registered to one of more than 60 EPSs.

The POS had a comprehensive list of treatments and drugs that a patient could receive under the system, and anything outside of the POS – such as high-cost oncology drugs – could be administered with the approval of the EPSs’ Technical Scientific Committee (Comité Técnico Científico, CTC).

However, should an EPS deny treatment, patients could resort to the tutela process, appealing to the Constitutional Court on the basis that denial of treatment represented a violation of their fundamental right to life. As the health tutela process became more common, it became more efficient, with a three-day review process becoming typical.

In 2015 a total of 151,213 health tutelas were brought to the Constitutional Court, up from 118,281 in 2014, and the vast majority of cases were successful. According to the Colombian Medical Federation, 69% of the system’s total pharmaceutical expenses in 2014 were for non-POS items.

Mipres

Given the relative ease through which patients could access non-POS drugs and treatments, the POS had become redundant, and was due to be phased out entirely over the two-year period between the signing and implementation of the LES. Unsurprisingly, however, given the challenge of switching over to a new system, in early 2017 EPSs and IPSs were still using the POS, and hospitals were still operating in the same manner as before.

However, in December 2016 MinSalud launched its new online system for doctors prescribing nonPOS drugs, called “My Prescription” (Mí Prescripción, Mipres). Mipres serves three crucial functions: it reinstates the autonomy of medical professionals – a key article in the LES – by allowing doctors to prescribe any registered drug or treatment they see fit for the patient; it speeds up prescription processes by putting an end to the CTC approval process; and also by publishing prescriptions online, it gives greater transparency to doctors’ activities and the way they make prescription decisions.

Exceptions

There are currently five categories of non-POS services that cannot be prescribed on Mipres: procedures and drugs with primarily cosmetic ends; those that have unproven safety or efficacy records; those that have not received approval from the relevant local regulatory body; experimental drugs; and any medical procedures that must be undertaken outside of Colombia.

In March 2017 Alejandro Gaviria, the country’s minister of health, told attendees at a conference in Bogotá that MinSalud was in the process of analysing treatments on a case-by-case basis to determine if they fall into each category. For example, while breast augmentation surgery falls into the first category, prosthetic mammary reconstruction following a mastectomy is a more debatable case that needs to be studied further.

In the case of oncology treatments, Gaviria said that doctors would be free to prescribe drugs whose effectiveness was backed up by significant scientific evidence, but that newer, high-cost drugs would only be prescribed in the event that other treatment options had been expended and that an oncology specialist had identified the need of the individual.

Whereas the POS had an exhaustive list of treatments and procedures that could be accessed under the SGSSS, under the new system all registered treatments are available unless they are classified as an exception. Given the importance of the public health sector, pharmaceutical firms and clinics have a strong interest in avoiding having their products fall under the exemption classification.

In February 2017 MinSalud unveiled the new methodology by which it would determine the drugs and services that would not be covered by public funds. The four-stage process begins when any health actor registered online with MinSalud makes a claim that a certain procedure or product should or should not be paid for from Fosyga. Next, an independent scientific-technical committee consisting of sector professionals analyses the case in question with support from the Institute of Health Technology Evaluation (Instituto de Evaluación Tecnológica en Salud, IETS), the agency tasked with assessing new products and procedures. If the committee concludes that the product should be exempted, a period of consultation with affected patients occurs before the decision is published on the MinSalud website.

Improvements

MinSalud has also worked on plans to simplify the means by which Colombians affiliate with EPSs, cutting red tape and introducing a new online system whereby citizens can update their details. Article 14 of the LES also establishes that in cases of emergency treatment, no prior authorisation can be demanded by EPSs or IPSs, and new fines have been put in place for failure to treat patients. This follows a handful of cases in recent years, well covered by local media, in which patients died while health care providers delayed treatment due to problems with their EPS paperwork. In addition, in February 2016 MinSalud introduced the Integrated Health Attention Policy to improve health care access, and to reduce pressure on accident and emergency rooms, which have become the de facto entry point for many patients without urgent needs.

Bottom Line

The LES is impressive both in its symbolic enshrinement of the fundamental right to health care of all Colombians, and in its practical impact of doing away with the inefficient ways by which citizens accessed non-POS drugs. Juan Carlos Giraldo, director of the Colombian Association of Hospitals and Clinics (Asociación Colombiana de Hospitales y Clínicas, ACHC), told local media that the new law was “a catalogue of good intentions.”

However, the implementation of the LES also looks likely to put further pressure on a system that is already under a financial burden.

As the cost of providing non-POS drugs and treatments has risen, inflows to EPSs have not increased in tandem, and as such EPSs, have not been able to pay for treatments and services undertaken by IPSs. The ACHC estimated that as of June 2016 its member hospitals and clinics – which make up roughly 65% of the total in the country – were owed COP7.1trn ($2.1bn). The association predicted that the figure for the whole sector could reach as high as COP13trn ($3.9bn) by the end of 2017. The situation for EPSs is critical. In August 2016 the National Superintendence of Health, a government regulator announced that it was introducing special oversight measures for 13 EPSs in order to help them restructure their financial positions. In 2015 SaludCoop, an EPS, was liquidated, and in early 2017 another health care provider, Cafesalud, was in the process of being sold off and restructured in order to return it to solvency.

Adding Up

As the cost of treatment has gone up, the state has had to shoulder more of the cost. When the SGSSS was designed in 1993, it anticipated that most Colombians would be part of a contributory system and that a greater proportion of income, would, therefore, come from the private sector. However, attempts to formalise the economy over the past 25 years have borne little fruit, and the majority of Colombians remain on the subsidised system. The dominance of the subsidised scheme means that of a total health sector expenditure of approximately $17.5bn, three-quarters comes from public sources. The extra access to services guaranteed by the LES is expected to generate an additional COP2trn ($600m) in costs for 2017, while total health spending as a proportion of GDP is forecast to grow from 7% to between 10% and 11% over the next 10 years.

Response

One possible way to balance the books would be to increase federal funding to the system. A recent tax reform earmarked an extra COP1.3trn ($390m) for health care spending for 2017, taking the total federal budget for the sector to COP21.5trn ($6.5bn). There could be scope for further increases given that the federal health spend remains below that of both social security at COP27.5trn ($8.3bn) and education at COP33.9trn ($10.2bn). However, with oil revenues remaining low and post-conflict programmes expected to cost around $16.8bn over the next decade, the budget is already tight.

The preferred approach of MinSalud appears to be minimising its exposure to increased costs in the coming years, principally by introducing firmer price control mechanisms, changing the process by which new drugs and treatments enter the market, and promoting the use of generics and biosimilar drugs. Under the presidency of Álvaro Uribe ( 2002-10), drugs prices in Colombia spiralled upward in an unregulated market. Studies showed that drugs were sold at many multiples of prices in a number of comparative markets. For example, in 2013 Rituximab, a leukaemia drug, cost 12 times more in Colombia than in the UK. In 2013 authorities introduced an international price referencing system to set maximum sale prices for over 500 pharmaceutical products.

In 2016, however, MinSalud demonstrated the length it was prepared to go to in order to keep prices low. In June 2016 Gaviria announced that MinSalud would push for a compulsory licence for Imatinib, a leukaemia drug produced by Swiss firm Novartis, unless a price agreement could be reached. Under a compulsory licence, generic versions of a drug are permitted for sale despite the existence of a patent. Imatinib was not under patent between 2003 and 2012, and during this time generic versions of the drug at far cheaper prices, but the introduction of the patent, which runs until 2018, forced drug firms to end sales. In December 2016 Novartis agreed to drop the price of the drug by 44%. Prescribed to just 2500 patients across the country, Imatinib is by no means the drug responsible for the biggest drain on the budget. Rather, MinSalud’s stance on the matter is seen by many in the industry as a shot across the bow of the pharmaceutical industry and an attempt to show that the ministry is prepared to take a tough stance in order to keep prices low.

New drugs will also face a revamped licensing process. Cost-efficacy studies, undertaken by IETS, will now be conducted in parallel with the usual licensing process of the state agency, the National Institute of Food and Drug Monitoring. The assessment will then rule on whether the medical benefits of the product are worth the additional costs to the system, and future drug licences will be delivered with a maximum price of sale. However, while approval for new high-cost drugs is getting more stringent, the government is also working on legislation to make the entrance of biosimilar drugs easier. While generic drugs use the same active ingredient as the parent drug, biosimilars use proteins that are similar but not exact replicas. In October 2014 Congress passed a bill that would allow biosimilars to receive licences based on the clinical trials of the mother drug, rather than the new protein.

Outlook

Colombia’s health care reforms received significant praise in the Economist Intelligence Unit’s 2017 study “Value-based Healthcare: A Global Assessment”. Colombia and Turkey were the only two developing countries to demonstrate strong policy support for value-based health care, and the former was noted for reaching coverage of 95% and basing the health care system around the patient.

Under Gaviria, MinSalud has become one of the most progressive ministries in the government, and its policies on topics such as price control and biosimilars are pioneering for the region. The LES promises an expansion of services that opens up high-level treatment to 48m Colombians, and therefore opportunities to health care and pharmaceutical companies. However, the financial sustainability of the sector remains the most pressing challenge.