Medicines: corruption and pharmaceuticals
Fact sheet N°335
US$ 4.1 trillion is spent globally on health services every year, with US$ 750 billion spent in the pharmaceutical market.
10 to 25% of public procurement spending (including on pharmaceuticals) is lost to corrupt practices.
In developed countries, fraud and abuse in health care has been estimated to cost individual governments as much as US$ 23 billion per year.
Countries with a higher incidence of corruption have higher child mortality rates.
Lack of medicines and counterfeit and substandard medicines lead to patient suffering and have direct life or death consequences.
To reduce corruption, thorough checks and balances are required at each step in the medicine chain. Good governance includes transparency, accountability, promoting institutional integrity and moral leadership.
Access to health care and essential medicines is needed to reduce disease and death, and enhance quality of life. Medicines are only beneficial when they are safe, of high quality, and properly distributed and used by patients.
Unethical practices in the medicines chain
The medicines chain refers to the steps required for the creation, regulation, management and consumption of pharmaceuticals. Corruption in the pharmaceutical sector occurs throughout all stages of the medicines chain, from research and development to dispensing and promotion.1
Unethical practices along the chain can take many forms such as falsification of evidence, mismanagement of conflict of interest, or bribery. The Figure illustrates key steps of the medicines chain and some examples of unethical practices.
Good governance within the medicines chain is one essential means for optimizing public health outcomes. For example, countries with higher incidence of corruption have higher child mortality rates, even after statistically controlling for quality of health-care provision.2
What factors contribute to pharmaceutical corruption?
US$ 4.1 trillion is spent globally on health services each year3 with US$ 750 billion spent in the global pharmaceuticals market.4 However, 10 to 25% of public procurement spending (including on pharmaceuticals) is lost to corrupt practices.5 Medicines change hands several times before reaching patients. The large number of steps in the medicines chain allows numerous opportunities for unethical practices to take place.
While there are reported cases of corruption in the medicines chain, much unethical practice goes unreported. This is due to fear of victimization and retaliation towards whistle-blowers, and a lack of incentives to come forward. Some forms of corruption have become institutionalized to the point where people feel powerless to influence change in their countries.
Countries with weak governance within the medicines chain are more susceptible to being exploited by corruption. These countries lack:
appropriate legislation or regulation of medicines;
enforcement mechanisms for laws, regulations and administrative procedures;
conflict of interest management.
A lack of transparency and accountability within the medicines chain can also contribute to unethical practices and corruption.
Impact of corruption
There are at least three main areas of negative impact from corruption in the medicines chain.
Negative patient impact. Unethical practices lead to reduced availability of medicines in health facilities due to diversion of medicines, as well as the presence of unsafe or ineffective products on the market. Diverted, counterfeit and substandard medicines have been identified in markets of both rich and poor countries, as well as medicines that are granted unwarranted registration. Such practices lead to patient suffering and have direct life or death consequences.
Lost resources. Corruption results in enormous amounts of limited public health resources being lost. For example, in developed countries, fraud and abuse in health care has been estimated to cost individual governments as much as US$ 12–23 billion per year.6 In developing countries, up to 89% leakage of procurement and operational costs has been observed.7 Such losses cripple the ability of health-care institutions to provide adequate care.
Eroding confidence. Corruption also takes a more subtle toll by eroding public and donor confidence in public institutions. In some countries, the public health system is perceived as the most corrupt public service institution.8 Pharmaceutical corruption within ministries of health has also threatened the withdrawal of donor contributions in some low-income countries.9,10,11
To ensure accountability and reduce corruption, thorough checks and balances are required at each step in the medicines chain. Good governance, transparency, accountability, promoting institutional integrity and moral leadership are also essential.
WHO is committed to reducing corruption in the medicines chain through its Good Governance for Medicines (GGM) programme, launched in 2004. By applying transparent, accountable administrative procedures and by promoting ethical practices, GGM provides support for countries to curb corruption. The programme assists countries through a three-step process of assessing their vulnerabilities to corruption, and developing and implementing specific programmes to maintain efficient health-care systems that are not undermined by the abuse of corruption.
1. Measuring transparency in the public pharmaceutical sector: assessment instrument, WHO/EMP/MAR/2009.4.
2. Gupta S, Davoodi H, et al., (2000). Corruption and the provision of healthcare and education services, International Monetary Fund:11.
3. WHO Fact Sheet: spending on health: a global overview, 2007.
4. IMS Health lowers 2009 global pharmaceutical market forecast to 2.5–3.5 percent growth, IMS New Releases.
5. Transparency International (2006). Handbook for curbing corruption in public procurement.
6. Becker D, Kessler D, McClellan M. Detecting medicare abuse. Journal of Health Economics, 2005, 24:189–210.
7. Ye, X, Canagarajah, S. (2002). Efficiency of public expenditure distribution and beyond: a report on Ghana's 2000 public expenditure tracking survey in the sectors of primary health and education. Africa Region Working Paper, No. 31.
8. Fidler A, Msisha W, Governance in the pharmaceutical sector, Eurohealth 14, 2008, No. 1:25–29.
9. The Global Fund welcomes Ugandan corruption inquiry report, Global Fund Press Release, June 2006.
10. The K27 billions scandal at the ministry of health, The Lusaka Paper, June 2009.
11. Dutch Government stops aid to Zambia, Africa News, May 2009.