Healthcare reform in the United States and China: pharmaceutical market implications

A grant from the One-University Open Access Fund at the University of Kansas was used to defray the author’s publication fees in this Open Access journal. The Open Access Fund, administered by librarians from the KU, KU Law, and KUMC libraries, is made possible by contributions from the offices of KU Provost, KU Vice Chancellor for Research & Graduate Studies, and KUMC Vice Chancellor for Research. For more information about the Open Access Fund, please see http://library.kumc.edu/authors-fund.xml.Objectives The United States and China are broadening health insurance coverage and increasing spending on pharmaceuticals, in contrast to other major economies that are reducing health spending and implementing a variety of drug price controls. This article analyzes the implications of health system reforms in the United States and China for national pharmaceutical markets. It follows a historical institutionalist approach that identifies path dependency in the design and operation of national health systems. On that basis, we estimate prescription sales for 2015 and 2020, analyze the sustainability of free-market pricing for drugs in the two countries, and assess future competitive dynamics in the pharmaceutical sector. Methods The institutional trajectories of health system reform and insurance coverage were studied for the United States and China. Next, data were collected from government, industry, and analyst reports on total healthcare spending and prescription drug expenditure by insurance status (in the United States) and by site of care (in China). Simple quantitative models were developed to estimate future drug spending based on insurance coverage, treatment locations, and health spending as a percentage of GDP. Results Both countries will see rising total pharmaceutical spending and will be the two largest country markets for prescription drugs through at least 2020. In dollar terms, the U.S. pharmaceutical market will be over $440 billion in 2015 and$700 billion in 2020; China’s prescription market will be over $155 billion in 2015 and grow further to$260 billion in 2020. In both countries, generics will increase their share of all prescriptions, but economic and structural incentives for new drug invention and brand-name prescribing by physicians will keep the share of patented drug sales high compared to countries with more direct government control over the pharmaceutical market. Conclusions Expanding private insurance contributes to spending on branded drugs, since insurers compete for market share rather than cost savings. Health system reforms presently being enacted in the United States and China align to historical institutional trajectories in each country, but leave unresolved a core tension between incentives for new drug invention and universal access to affordable medicines.The authors gratefully acknowledge financial support from the University of Kansas Open Access Fund and helpful comments from three anonymous reviewers

Epistemic Contests and the Legitimacy of the World Trade Organization: The Brazil–USA Cotton Dispute and the Incremental Balancing of Interests

The World Trade Organization (WTO) features prominently in studies of international institutions, often cast either as a tool of rich-world domination over the poorer South or as a neutral mediator facilitating a tariff-free world of economic prosperity. This article instead analyses how the WTO has sought legitimacy for itself and for the underlying institution of free trade in the midst of questions regarding its organizational mandate and management of international trade negotiations. Historically, legitimacy for GATT and later the WTO was understood to derive from expanding membership and success at major trade round negotiations. In the past decade, and despite a lack of progress in the Doha Round, legitimacy has been built through institutional deepening by means of dispute resolution processes. This shift, I argue, raises epistemic questions of expertise, the relationship of models to real-world outcomes, and methods for bounding disputes over scientific facts. Based on a case study of the Brazil-Upland Cotton dispute and a trend analysis of over 400 total WTO disputes, I find that the WTO dispute settlement process is helping to legitimize the institution of free trade through its public display of rational authority and neutral expertise. At the same time, dispute panels have begun to pass judgment on issues of econometric and scientific uncertainty. As a result, the basis for the broader legitimacy of the WTO is shifting from questions of representation that have long drawn attention to epistemic issues, especially concerning the design of international trade models. The article thus provides insights on the resolution of disputes in global trade while contributing to our understanding of the evolving role of modeling at international organizations

Kingstar Winning: From Electronic Medical Records to Integrated Healthcare in China

Kingstar Winning’s president, Zhou Wei, sought to position his company for faster growth in anticipation of a market shakeup among providers of electronic medical records (EMRs) and e-health solutions to hospitals in China. The options he was considering included expanding the company’s domestic project base, a domestic merger or acquisition, and international growth, possibly through a joint venture project with Huawei. The case describes the history and growth of Winning, contextualizes the transition from paper to electronic medical records underway in China, analyzes Winning’s approach to EMR development through “software as a service” and a “flexible R&D mode,” and evaluates specific projects at two hospitals in the Shanghai region. Financial data is provided for the company, along with market projections and additional information on the use of EMRs

Healthcare in China: Institutional Trajectories and Future Opportunities

China’s healthcare system was undergoing significant growth in the early 2010s, evidenced by expanded government-backed insurance and experiments with private clinics, hospitals, and insurance. Reforms under discussion would further restructure relations among insurers, hospitals, physicians, and patients. Policy changes also were likely to change competitive dynamics in major healthcare industries, and especially for pharmaceutical, biotechnology, and medical device and diagnostics companies. This case summarizes the institutional history of China’s healthcare system and identifies dilemmas for reform, especially in the insurance system and payment structures for hospitals and physicians. A final section analyzes opportunities for healthcare innovation and systems integration in China. The case is designed to help students learn about the Chinese healthcare system overall as well as strategic choices faced by insurance firms, hospitals, and pharmaceutical and medical device companies. It also can be used to analyze moral hazards, opportunity costs, and systems integration in healthcare more generally