Can numeracy and literacy fill the health gaps of Europe?

health europeProfessor Helmut Brand, president of the European Health Forum Gastein (EHFG), Jean Monnet Professor of European Public Health and head of the Department of International Health at Maastricht University, The Netherlands. He serves on the European Advisory Committee on Health Research (EACHR) of WHO Europe and on the Expert Panel on “Investing in Health” (EXPH) for the European Commission.

Europe is undergoing a period of profound demographic change. Populations are ageing, fertility patterns are changing, modern living has impacted our habits, and consequently, there is an increasing prevalence of people living with one or more chronic disease. Cases of diabetes, for example, are expected to rise from 58.9 million cases in 2015 to 71.1 million by 2040. Today over 10 million people are living with dementia in Europe and it is set to double by 2050. All the while, governments struggle to manage health care spending as much of the continent recovers from the damaging global recession and faces a rising cost of treatments.

With so many potential stumbling blocks for European health systems, can we all truly access quality care?

I say we can. Demographics do not define Europe’s destiny. By proactively considering the challenges and seizing opportunities for new approaches to health care, we can influence our health outcomes for the better. A key lesson for individuals and governments alike: we stand to learn a lot from our neighbours. Working together, we can avoid reinventing the wheel, and promote a better understanding of health care at individual and community level to support health systems as a whole.

Mind the gap: measuring health system performance

Though each country starts from its own context and its health system serves a unique population, most have a similar end goal: well-equipped, efficient and sustainable health system to meet the needs of all citizens.  As such, there is value to be derived from measuring how well countries are doing against comparable health indicators.

This is already well underway. In the recent report “So What?”, prepared by the European Commission Expert Group on Health System Performance Assessment (HSPA), the OECD, the World Health Organisation Regional Office for Europe and the European Observatory on Health Systems and Policies, the authors state: “Countries often benchmark with other countries. Whilst the challenges involved in these comparisons are well known, it is also evident that information deriving from international comparisons can provide the basis of further scrutiny and a deeper comprehension of the policies required to improve the status quo.”

Platforms such as the European Union and the OECD offer an excellent means by which governments can share where they are succeeding and where there are gaps. Which prevention tactics are effective in reducing childhood obesity? How can we improve outpatient care for the elderly? Particularly pertinent as government resources are challenged in keeping up with demographic change, this exchange of best practices can facilitate sound strategies for quality health interventions.

Such cross-border collaboration is also the objective of the annual European Health Forum Gastein (EHFG), taking place on 28-30 September. This year’s conference theme, Demographics and Diversity in Europe, places the focus on what new solutions for health one country can learn from the other, to better respond to demographic trends.

Close the gap: accelerating health literacy in Europe

Health literacy, the competence to understand and apply information to make decisions for health care, disease prevention and health promotion, remains a public health challenge in Europe. In the most recent publication of Health Promotion International, I discuss together with colleagues research that demonstrates health literacy on this continent is still at its infancy.

The ability for an individual and their community to be fully informed and engaged in their own care is a necessary step in tackling the burden of chronic diseases in Europe. Take diabetes for example. The HSPA report examines the incidences of hospital admissions for diabetes patients across Europe. Such acute deterioration in the health– such as cardiovascular, renal and neurological complications – is traumatic for patients, expensive for health systems, and often, avoidable.

diabetes

An effective primary health care system should be capable of implementing a baseline of access to quality health care that prevents the emergence and progression of many major chronic diseases. But to respond to rising populations and limited health system resources, we must also strengthen what is below primary care – community level care. The more each patient, carer, and member of a community is empowered and involved in their own health care delivery and the greater the health literacy amongst the population, the better.

As highlighted by the European Patient’s Forum, empowered patients are part of the healthcare team, crucial for the performance of health care systems. This concept was explored in depth at last year’s EHFG, and is a discussion that will continue to be of pertinence to the Forum for the foreseeable future. A key recommendations of HSPA’s reports states: “In future, greater attention should be given to the assessment of patient experiences, such as patient reported experiences and patient reported outcomes. Health care in most countries is still not sufficiently patient-centred, despite the patients’ participation being increasingly emphasised in recent decades.”

Learning from our neighbours, whether they be neighbouring countries or neighbouring members of the community, will help us keep up with the health care demands of demographic change.

Useful links

Health at a Glance: Europe 2014

Slow growth in health spending but Europe lags behind (OECD Health Statistics, 2015)

Disruptive innovation in legal services – promising for consumers and challenging for regulators

Concept illustration with mobile phone and law icons.
Click to find out more about the meeting

James Mancini, Competition Division, OECD Directorate for Financial and Enterprise Affairs

Legal professionals[i] are present during some of the most important events in our lives, such as setting up a business, buying a house, writing a will or navigating a divorce. Recent developments in legal services markets suggest that this may not be the case forever. Consumers have increasingly turned to online platforms and automated technologies to obtain services that were delivered by legal professionals in the past. In the process, traditional business models and regulatory frameworks are being called into question. What should policymakers, regulators and competition authorities know about changes in legal services markets?

The scope of current and potential innovation in legal services is substantial

Legal services that have changed little over generations are now being transformed thanks to several enabling factors. Communications technology permits lawyers to interact with clients, outsource work and share documents with colleagues seamlessly. The “democratisation of knowledge” via the internet is allowing consumers to better understand their legal needs, and the nature of the services that legal professionals provide. Further, concerns about fee levels generally, and the financial accessibility of legal services for low income individuals in particular, is putting pressure on legal professionals to justify or reduce their charges.

These factors are giving rise to the entry of new competitors into legal services markets (where permitted by regulation) and, in fewer cases, the adaptation of legal professionals to current realities.  In particular:

  • Online service delivery is allowing both legal professionals and unlicensed providers to serve clients remotely while taking advantage of the scalability of digital platforms.
  • Ranking and review information regarding legal professionals is becoming increasingly accessible, and is allowing clients to assess the quality of professionals before retaining them – a previously difficult proposition
  • The unbundling of services, partially driven by increasing client awareness and fee pressure, is transforming the distribution of tasks in legal services and ending traditional “black box” models of service delivery. As a result, standardised activities are being outsourced to low-cost providers (including unlicensed ones), and new billing models are being introduced.
  • Automation is changing the nature, and volume, of tasks that legal professionals perform. Although the extent to which the work of legal professions can be automated is subject to debate, automated systems have been introduced which offer new capabilities and even, in at least some instances, improved performance compared to legal professionals.

So innovations are not simply minor process improvements that increase legal professional efficiency. Rather, they have the potential to fundamentally redefine the practice of law, as well as the other professions associated with it, such as notaries.

The regulatory frameworks of legal professions should be assessed in light of recent innovation

Legal professions are heavily regulated across the OECD, with a range of restrictions on who can provide legal services, the fees they can charge, and other aspects of their behaviour (including restrictions on advertising, ownership restrictions and requirements to provide legal aid). These restrictions are an effort to correct market failures implicit in the traditional provision of legal services, which stem from information asymmetries and externalities. Other measures reflect broader policy objectives.

However, there are indications that some of these measures are becoming unnecessary or, worse, harmful to competition and innovation in legal services markets. Increased commoditisation of legal services and improved consumer information could eliminate the need for certain regulations altogether, by addressing the concerns that underpin these regulations. At the same time, the precise scope and enforceability of the exclusivity granted to legal professionals in their activities is under pressure. Limits on the number of legal professionals in a jurisdiction and advertising restrictions  hinder innovation and put professionals at a disadvantage compared to disruptive firms. The reliance on self-regulation in legal services may result in conflicts of interest when new disruptive entrants begin to challenge incumbents.

As a result, the regulatory status quo may be difficult to maintain, and policymakers should not attempt to do so by blocking innovation. Rather, careful consideration must be given to how the scope and specific provisions of legal professional regulations should be modified. Should a supervisory body oversee the activities of self-regulators, as is the case in the UK with the Legal Services Board? Should the reserved activities of legal professionals be narrowed and clarified? Should different levels of professional certification, and greater reliance on para-professionals, be promoted? These questions must all be tackled during the process of modernising legal services regulation. Further, new concerns regarding innovative service offerings and delivery models may arise, potentially requiring regulatory measures in areas such as data protection, privacy, consumer awareness and lawyer-client confidentiality.

Policymakers would therefore be well-advised to assess current regulatory frameworks in light of current and future innovations. The OECD Competition Assessment Toolkit can help.

Competition authorities are well-positioned to promote pro-competitive regulatory outcomes

Competition authorities are likely to have little experience in legal services markets given that enforcement issues in these markets have been rare. There is a role for them, however, in helping to respond to the challenges described above. They can promote competition assessments of existing regulations to enable a better understanding of the trade-offs implicit in current regulatory frameworks. Authorities can also help facilitate productive interactions between disruptive innovators and policymakers as well as regulators. These efforts could avoid enduring conflicts between regulators and established disruptive firms, which can engender great controversy and leave everyone worse-off.

Useful links

This post is based on a background paper for a session on disruptive innovations in legal services discussed in Working Party No. 2 of the OECD Competition Committee on June 13, 2016. More details on the session are available here.

Ministers, the business community, civil society, labour and the Internet technical community will gather in Cancún, Mexico on 21-23 June for an OECD Ministerial Meeting on the Digital Economy: Innovation, Growth and Social Prosperity.

Disruptive innovation and competition in Latin America and the Caribbean James Mancini on OECD Insights

[i] The composition of legal professions vary significantly between different countries, legal disciplines and regulatory frameworks. The core of the legal professions considered here consists of lawyers and notaries as well as other licensed, regulated professionals in some jurisdictions that provide services with respect to court proceedings and other legal processes (e.g. bailiffs, commercial court clerks and judicial commissioners in France).

The sharing economy and new models of service delivery

Digital economy ministerialMinisters, the business community, civil society, labour and the Internet technical community will gather in Cancún, Mexico on 21-23 June for an OECD Ministerial Meeting on the Digital Economy: Innovation, Growth and Social Prosperity. Today’s post is by Antonio Maudes, Director, Maria Sobrino, Head of Market Studies Unit, and Pedro Hinojo, executive adviser in the Advocacy Department of Spain’s National Authority for Markets and Competition (CNMC)

The June 2016 OECD Ministerial Meeting on the Digital Economy in Cancun, Mexico will feature high-level discussions that will help to shape the current debate and present new ideas and perspectives for the participants regarding online platforms. Opportunities coming from online platforms not only create innovative forms of production, consumption, collaboration and sharing between individuals and organisations,  but also promote economic benefits and employment opportunities thanks to the digital economy by creating a fast-moving business environment.

But, what is the “sharing economy”? Finding a precise definition is both challenging and controversial. The CNMC, the Spanish Competition Authority, has approached this phenomenon through a public consultation (launched on November 2014, with a first and a second stage), achieving some preliminary findings, which were submitted to public consultation too. The results of the latter consultation point out that competition authorities, regulators, consumer organizations and universities tend to perceive the sharing economy as an opportunity to improve social welfare, regulation and competition while unions and freelancers had a somewhat negative view.

After more than one year of intense work, the CNMC has gained knowledge about these new models of service delivery in the digital economy. One of the defining features of the sharing economy is the use of underutilised assets and goods, be it in exchange of other resources (money or other goods or services) or for free. But this is not new: houses, cars and other durable goods have always been exchanged and shared (among relatives, friends, colleagues…). The novelty is the scale of the current wave of sharing economy, overcoming transactions costs and informational asymmetries.

This has been made possible thanks to technological and social transformations, somehow intertwined:

  • On the technology side, the “21st century sharing economy” relies on internet platforms in multi-sided markets, which slash transaction costs by matching supply and demand more efficiently. The IT revolution, chiefly smartphones and apps, allows us to find new services or providers thereof very conveniently. Competition is not one ‘click’ away, it is even closer. Competition is actually one ‘swipe’ away. It is at our own hands, every day, every time.
  • On the social sphere, people are showing how they are willing to concede anonymity in order to enjoy the sense of belonging to a community and building trust among a wider network, thus sharing goods and services within platforms. The voluntary revelation online of the “real world” identity helps to reduce information asymmetries, facilitating markets and transactions.

This is, without a shadow of a doubt, a structural, unstoppable and disruptive revolution. A fourth sector is emerging, not falling under any of the traditional three classifications (primary-agriculture, secondary-industry, tertiary-services).

In this digital economy, the consumer is more empowered, with access to a wider variety of goods and services and higher quality at lower costs and more efficient prices. The user receives more information, more comparable and reliable, as shown by reputation mechanisms. And consumers can even be producers, offering their goods and assets as services. In a nutshell, a new economic agent is born: the “prosumer”, who can participate in both sides of the market. And this empowerment of the prosumer, along with market entry for new players, is the main reason why the CNMC, as a competition authority, welcomes these new models of service delivery within the sharing economy.

This “permissionless” innovation can foster competition by challenging the status quo in some sectors traditionally shielded from competition. The absence of competitive pressure was in many cases provoked by inefficient regulations which made entry more difficult (if not virtually impossible), as well as market failures such as information asymmetry. Paradoxically, new business models overcome technological obstacles while responding to these market failures more efficiently than traditional incumbents (for instance, through online reviews and reputation mechanisms), question the rationale for distortive regulation.

Other benefits of the sharing economy can be felt beyond the scope of competition:

  • Economic development, fostered by the innovative and technological dimension of these new business models.
  • Environmental sustainability, as the circular economy emphasizes access and service provision rather than at ownership and goods production. Indeed, one of the reasons behind the thriving of the sharing economy, apart from the technological and social transformations already mentioned, is increasing environmental awareness.
  • Redistribution of resources towards low-middle income citizens, which can monetise some illiquid under-utilised assets (in order to smooth their consumption over the cycle) while accessing some goods and services at lower prices.
  • Better contribution than traditional business models to other general goals, like consumer protection or tax compliance, due to the electronic tracking of transactions and, consequently, greater transparency.

Therefore, the role of public policy is to embrace these new models in order to increase general welfare. The CNMC preliminary findings on the new business models and the sharing economy” advise governments to take advantage of this opportunity to revise the existing sectoral regulation according to the efficient regulation principles (necessity, appropriateness, proportionality). The fact of dealing with multi-sided markets implies that the platform has to balance at the same time the interest of both producers and consumers. This reduces the risk of a “race to the bottom” in terms of quality standards given that if consumers don’t perceive adequate guarantees, they can switch to another platform or not fulfil the transaction. Reforms in horizontal regulation (for instance, in the areas of tax and labour compliance) might also be warranted in order to ensure its adaptation to a new and more flexible economic reality.

The OECD, with its rich history of dialogue and analysis, is the perfect setting to shape the digital economy and the future of the new services’ economy.

Useful links

OECD Digital Economy Outlook 2015

OECD work on Innovation in science, technology and industry

Digital Transformation in Chile: A roadmap to strengthen its governance

Digital chileBarbara Ubaldi, Senior Project Manager at the OECD leading the work on digital government and open government data (@BarbaraUbaldi) and Rodrigo Mejía Ricart, Junior Policy Analyst at the OECD (@rodrigoamrc)

The digital revolution has drastically changed societies. People work and relate on the move. We are now able to interact, access information and services by touching a screen that fits our hands. For over 15 years now, specialists have looked for the best ways to leverage the power of new technologies to make governments more efficient and effective. The evidence points towards a horizon of endless possibilities: higher productivity, more convenient services, greater transparency and accountability, improved data management for evidence-based policies, inclusive and cost-effective decision-making processes, among many other benefits. The practice, however, shows it is easier said than done.

Governments have made strenuous efforts, yet the expected benefits have not always been met. Besides, are governments really offering digital services and answers that better respond to users’ demands and needs?  Duplication of efforts, poor investment decisions, incoherent use of technologies, inadequate flows of information and lack of engagement of service users lead to overall digital fragmentation. These are common challenges among OECD and non-OECD member countries and more often than not they are the result of one single (yet not so simple) thing: inadequate governance.

Governance determines the decision-making process, how priorities are set and executed and how resources are allocated. It is the most basic and fundamental enabler of government activities in all policy areas. It is also the framework that allows governments to drive change, adapt to new realities and solve outstanding challenges. Given the evolving nature of society, good governance is a continuous process. In the field of digital government, the Government of Chile has shown the lucidity, courage and commitment to accept the constant quest for improvement.

Under the leadership of the Ministry of Finance and the Ministry General Secretariat of the Presidency (through its Modernisation and Digital Government Unit) Chile has established itself as a regional leader and has been rapidly closing the gap with other OECD countries in the field of digital government. Instead of giving way to complacency, this drive has led the government to set one only objective: do better. This is particularly challenging in Chile given the short political cycles that produce frequent changes. This lack of continuity can affect the stability of digital government policies, the achievement of goals and the return on investment.

The Government of Chile engaged with the OECD in a Digital Government Review focused on the institutional and governance framework for digital government. The Review benchmarks Chile against ten advanced countries in the field of digital government.

The OECD Review Digital Government in Chile: The Institutional and Governance Framework, shows that good co-ordination across public institutions and appropriate incentives are essential to achieve expected goals.

ICT Governance Structures in OECD Countries

Chile

Source: OECD’s calculations based on OECD Survey on Open Government Data (dataset, 2014); OECD Survey on Digital Government Performance (dataset, 2014); and “OECD Questionnaire on Governance of Digital Government” (unpublished dataset, 2016); and desk research.

To drive change and develop  a whole-of-government approach, the Review recommends, the body responsible for digital government should be able to structure ICT investments and strategies  and ensure they are in line with the overall digital government strategy and broader public sector objectives. This implies endowing the entity with the right authority level supported by a solid legal basis. The Digital Government Review of Chile advances two alternative recommendations: (a) the creation of a Sub-Secretaría de Gobierno Digital, or (b) the creation of a digital government agency. The strengths and weaknesses of both models are assessed based on the Chilean context: (a) is more agile and provides greater political visibility; (b) provides greater stability and technical focus, which would need to be balanced with adequate democratic accountability and political leverage.

Governance choices must come from Chile’s democratically elected authorities. The digital government review was a gratifying exercise. It leaves small room for doubting that, provided with the right tools and institutional framework, Chile’s authorities and civil servants stand ready to drive government to the new digital frontier.

Useful links

Read the full digital government review of Chile

OECD work on digital government

Tackling antimicrobial resistance

Multidrug-resistant_Klebsiella_pneumoniaeand_neutrophil.bmp
Multidrug-resistant K. pneumoniae bacteria interacting with blood cells

Michele Cecchini, OECD Health Division

Not so long ago, catching pneumonia with a bloodstream infection meant almost certain death: 90% of patients with this condition died. The discovery of penicillin by Sir Alexander Fleming in 1928 changed everything. Now more than 90% of patients with such a disease survive and many of the achievements of modern medicine are intrinsically based on our ability to prevent and cure infections. In addition, the prevention and cure of hospital-acquired infections have allowed the introduction of complex medical interventions such as organ transplantations, advanced surgery, and care of premature neonates.

All these medical achievements may be swept away by antimicrobial resistance (AMR). Microorganisms can learn how to withstand attacks by drugs.  By using antimicrobials incorrectly, we are helping them to do this quicker than they would do on their own. At the OECD, we have calculated that about 50% of all the antimicrobials prescribed by healthcare facilities in our member countries do not meet prescription guidelines. In healthcare services such as long-term care facilities and general practices up to 70% and 90% respectively of antibiotics may be prescribed for inappropriate reasons.

The extensive use of antimicrobials in high-density livestock agriculture and aquaculture is further sustaining the growth of AMR, particularly because, worldwide, up to 70% of antimicrobials are given to animals, often for no other reason than to make them grow more quickly.

The health and economic consequences of AMR are significant but will become enormous if no action is promptly put in place. The report produced by Jim O’Neill and his team provides an idea of what may happen if we do not take action soon. According to their estimates, up to 10 million people worldwide may die by 2050 due to six common diseases for which resistance is growing. This figure becomes even more significant (and alarming) by considering that many common infections, such as the main cause of community-acquired pneumonia, are not included in the analysis.

Healthcare budgets and the whole economy may be also put under stress. Patients developing resistant infections are more difficult to treat and we calculated that each patient costs up to an additional 40,000 USD due to increased medicalisation and time spent in hospitals. This figure is likely to double once indirect costs (e.g. absence from work) are taken into account.

The main issue now is to assess what we can all do to address AMR. The OECD Health Division is joining forces with our colleagues in the Directorate of Trade and Agriculture and with the Directorate of Science and Technology to provide sound evidence on the most effective and cost-effective policy options to tackle AMR. During the 2015 meeting of the Health Minsters of G7 countries, the OECD put forward five recommendations to best address AMR and its associated health and economic burden. In particular we believe that AMR can be successfully tackled only by:

  1. Strengthening existing surveillance and monitoring systems. Countries should further develop their surveillance systems to monitor AMR in the community setting (as opposed to hospitals) and to increase the number of microorganisms covered. We also need better information on antimicrobial prescribing practices.
  2. Adopting a globally agreed set of measurable targets on AMR incidence and efficient antibiotic use. Measurement of these targets should be integral part of a continuous evaluation processes.
  3. Strengthening ongoing efforts to rationalise antibiotics use and prevention of AMR spread in the human and livestock sectors. Rational utilization of antimicrobials includes both decreasing inappropriate use and ensuring access to high-quality drugs when needed. Successful and efficient interventions should be upscaled at the national level and across countries.
  4. Fostering the research and development of new antimicrobial therapies. Investments to develop new antimicrobials should be delinked from expected sales through appropriate economic incentives. Knowledge-sharing, for example, through global research platforms, should be encouraged as a cost-effective approach to research and innovation.
  5. Increasing coordination between partners to upscale efforts into a true global action. Countries’ action plans should be designed to reflect international standards and by adopting a ‘one-health’ approach. Coordinating strategies and best practices with other key partners would offer an opportunity to upscale efforts in an efficient fashion.

The final report of the Review on AMR led by Jim O’Neill discusses ten specific interventions that the UK and other countries should put in place to tackle AMR. Such actions are very much aligned with the five-pronged approach that we propose and with the WHO Global Strategy for Containment of AMR. The next step is to tailor these actions to the specific context and challenges of the different countries. The OECD can provide a forum where governments can discuss, develop and coordinate new strategies for prudent antimicrobials use in human medicine and agriculture as well as coordinate common strategies to incentivize the research and development of new antimicrobial therapies.

The OECD is putting in place a comprehensive programme of work on AMR, ranging from identifying the most cost-effective strategies to tackle AMR in humans to curbing unnecessary antibiotic use in agriculture. Some of the early results of this work, specifically on promoting the rational use of antimicrobials in humans, will be discussed during the 2017 OECD Health Ministerial meeting. OECD is ready to stand next to Member Countries and other key partners to move forward in the fight against AMR.

Useful linksantibiotic consumption

Antimicrobial Resistance in G7 Countries and Beyond G7 Health Ministers Meeting, Berlin, 8 October 2015

OECD Workshop: Economics of Antimicrobial Use and Resistance in the Livestock Sector 12 October 2015

Antimicrobial resistance in G7 countries: OECD Policy Brief

Love where you live, but love it more with cleaner air

air pollutionElisa Lanzi, OECD Environment Directorate

“Paris sera toujours Paris, la plus belle ville du monde”, as Maurice Chevalier sang in 1939; the most beautiful city in the world! And yet, the city of light does not always shine: some days a year air quality is so bad that the Eiffel tower only looks like a faraway shade. Unfortunately, Paris is not the only place with air pollution problems and it is far from being the worst. The average yearly concentrations of PM2.5 were 18 µg/m3 in Paris in 2014, which is above the levels recommended by the World Health Organisation (WHO). But they were much higher in other cities, such as the Beijing area where they were more than 90 µg/m3.

Air pollution is a serious issue in most countries around the world and every year it causes severe damage to human health and the environment. The WHO estimates that ambient air pollution is the greatest environmental risk to health – causing more than 3 million premature deaths worldwide every year. Besides such a high death toll, air pollution affects human health, especially through respiratory and cardiovascular diseases. Moreover, there are strong effects on the environment, both natural and man-made. Think of all the beautiful monuments and buildings that regularly need cleaning because of the damages of air pollution…

None of this is really new, and air pollution has been a priority in environmental policy for decades. Yet it is still unresolved and clearly worsening in many areas of the world. To further motivate policy action, the report The Economic Consequences of Outdoor Air Pollution presents projections of emissions and concentrations of key pollutants, the related number of premature deaths, impacts on illness and on crop yields, and the resulting costs of outdoor air pollution.

According to the projections in this report, increasing economic activity and energy demand will result in higher emissions of air pollutants in the coming decades. This, together with other factors such as climate change and urbanisation, will lead to higher concentrations of PM2.5 and ground level ozone. Under business as usual, air quality is expected to worsen so much in the next decades that the amount of people in the world exposed to very high PM2.5 concentration levels is projected to double by 2060. In China and India, where concentrations are projected to reach particularly high levels, up to 60% of the population may be exposed to very high PM2.5 concentration levels by 2060.

Outdoor air pollution is projected to be the cause of 6-9 million deaths every year by 2060 at the global level, up from the 3 million deaths estimated in 2010. That is roughly equivalent to a person dying every 4 to 5 seconds. The projections show that there will also be an increasing number of cases of illness. For example, the report projects that, by 2060, around 3.75 billion working days could be lost due to illness.

These impacts from outdoor air pollution have economic consequences. Increasing cases of illness will result in people having more medical expenses, meaning that they will end up spending less on other things. Lost working days reduce labour productivity and lower crop yields reduce agricultural output. Such effects, when considered at large scale, can affect economic growth. This type of cost is referred to as “market cost” as it is related to market transactions, and is projected to be around 1% of global gross domestic product (GDP) by 2060. That is equivalent to the current GDP of France.

But air pollution also has consequences that go beyond market costs. The impacts on mortality and the pain and suffering from illness do not have a market price. Yet, they can be a heavy burden on people and on society. Using the results of studies that directly ask people how much they would be willing to pay to reduce health risks, we are able to place a value on these “welfare costs”. While these are not a direct cost to the economy, they nevertheless reflect people’s preferences and how much they value a possible policy that would reduce health risk. The global annual welfare costs associated with the premature deaths from outdoor air pollution are projected to rise from USD 3 trillion in 2015 to USD 18-25 trillion in 2060.

If public health and the environment weren’t convincing enough to push policy-makers to act, projecting future economic costs might encourage them more. Several policy options are available for policy makers, including emission pricing, fuel efficiency and quality standards, incentives to adopt end-of-pipe technologies or spatial planning. Policy makers just need to pick what is best for their countries.

Wouldn’t it be great if we could breathe clean air? We’ll always love our cities – “Paris sera toujours Paris” (so much so that the 1939 song has come back to the radio in a modern version by Zaz now) – but we would all enjoy them more if we didn’t have to worry about our health. And, since we’re at it, it would be nice to be able to take clear pictures of monuments, from the Eiffel tower in Paris to the Imperial Palace in Beijing.

Useful links

The Economic Consequences of Outdoor Air Pollution OECD, 2016

The Cost of Air Pollution: health Impacts of Road transport OECD, 2014

OECD work on environmental policy tools and evaluation

Human rights due diligence of pharmaceutical companies: An important first

ForumRBCDamiano de Felice, Deputy Director Strategy, Access to Medicine Foundation (@damidefelice)

On Thursday 9 June, I will moderate the first ever session on pharmaceutical companies to be held at either the UN Forum on Business and Human Rights or the OECD Global Forum on Responsible Business Conduct. For starters, these conferences represent the two most important annual events organized by international organizations to promote corporate respect for human rights.

There are several reasons why it is surprising that a panel on pharmaceutical companies has been absent for so long.

First, the OECD understands very well the importance of tailoring international standards to different business sectors. It has already produced a Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas and, together with the Food and Agriculture Organization, a Due Diligence Guidance for Responsible Agricultural Supply Chains. It is currently developing a Due Diligence Guidance on Responsible Garment and Footwear Supply Chains.

Second, several scholars examined whether pharmaceutical companies – whose business is to research, develop, produce and market essential health products – are living up to their human rights responsibilities. Under international law, the right to access to essential medicines is a key component of the right to the highest attainable standard of health (i.e., the “right to health”). It is easy to see how some business decisions from pharmaceutical companies – such as favouring generic competition or avoiding excessively high drug prices – can have significant influence on whether vulnerable individuals can access crucial health products. In 2008, Paul Hunt – then UN Special Rapporteur on the right to health – even published specific Human Rights Guidelines for Pharmaceutical Companies in relation to Access to Medicines.

Third, the pharmaceutical industry seems to be ahead of the curve in terms of the adoption of human rights principles and norms. A recent report from the Business and Human Rights Resource Centre invited 180 companies from different industries to complete a questionnaire on their actions on human rights. The pharmaceutical sector was the only one where all companies had already adopted a human rights policy.

How can we then explain the absence of panels on pharmaceutical companies at the UN and OECD fora?

Conversations with business executives, government representatives and civil society activists pointed at two hypotheses.

To begin with, pharmaceutical companies are already under the attention of an older constituency of vocal health activists. This may have led those working on responsible business conduct to concentrate on other, less-crowded niches (such as extractives and consumer goods). For example, last year’s UN Social Forum – which focused specifically on “access to medicines in the context of the right of everyone to the enjoyment of the highest attainable standard of physical and mental health, including best practices in this regard” – saw almost no participation from the usual attendees of business and human rights events.

Additionally, most business and human rights specialists are experts in human rights abuses committed by companies while sourcing and manufacturing their products (that is, in the upstream side of global value chains). With the exception of a few reports on ICT companies and the right to privacy/freedom of expression, most business and human rights organizations focus on “upstream” topics, such as extractive companies and indigenous’ rights, apparel companies and workers’ rights, seafood companies and human trafficking, food/beverage companies and land rights, etc.

Against this background, the most important challenges for pharmaceutical companies lie in the way in which they market and distribute their products (that is, in the downstream side of global value chains).

Starting the conversation: the Access to Medicine Foundation

The willingness to explore what human rights due diligence means in the downstream side of global value chains and to understand the differences with its implementation in the upstream side was the trigger for the OECD to co-host a session on pharmaceutical companies with the organization whose strategy I lead, the Access to Medicine Foundation.

The selection of our organization was not by coincidence. The Access to Medicine Foundation is a non-profit organization that guides and incentivizes pharmaceutical companies to do more to facilitate access to medicine. In particular, we:

  1. Build multi-stakeholder consensus on a list of ambitious yet achievable actions for pharmaceutical companies to improve access to medicine;
  2. Analyse, measure and publicly report on the extent to which companies meet these expectations; and
  3. Use and diffuse this information to catalyse corporate change.

Our flagship product – the Access to Medicine Index – is a biennial report that ranks 20 of the largest pharmaceutical companies in the world on the basis of their performance against more than 70 indicators that have been agreed upon by multiple stakeholders after a year-long consultation process.

The panel at the OECD session will build on the work of the Access to Medicine Index because of the alignment between our indicators and the most authoritative international standards on responsible business conduct: the UN Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines for Multinational Enterprises.

I can offer three examples of this alignment here below.

  • The UNGPs and the OECD Guidelines both require business enterprises to adopt a policy commitment to respect human rights. The Access to Medicine Index assesses how companies integrate access-to-medicine issues within their corporate strategies and governance structures.
  • International standards emphasize the importance of interactive processes of engagement with relevant stakeholders. We reward companies that, through engagement with global and local stakeholders, better incorporate local needs and perspectives within their access strategies, increasing the likelihood of uptake and success.
  • All business enterprise are expected to carry out human rights due diligence, that is, an ongoing process by which they assess actual and potential human rights impacts, integrate and act upon the findings, track responses as well as communicate how impacts are addressed. The Access to Medicine Foundation raises the bar at several points of the pharmaceutical business model. For instance, leading companies are expected to take socio-economic factors into account when they set the prices of their drugs, and to differentiate both between countries and within different national population segments. Proof of strategy implementation is provided in the form of examples of corresponding price and sales data.

The success of the multi-stakeholder process of consensus-building at the Access to Medicine Foundation represents a very good starting point for a detailed conversation on how to ensure responsible business conduct from pharmaceutical companies. On 9 June we will discuss how to build on it and progress even further.

I hope to see you there.

Useful links

The 2016 OECD Global Forum on Responsible Business Conducts takes place in Paris on 8-9 June 2016. The event will be webcast live starting at 9.30 am CET on 8 June 2016.

The session on the pharmaceutical industry and responsible business conduct will start at 4.30 pm CET on 9 June. It will include:

  • Catherine Dujardin (Public Health Expert, Belgian FPS Foreign Affairs, Foreign Trade and Development Cooperation) will present what a government can do to incentivize pharmaceutical companies to contribute to the achievement of the Sustainable Development Goals, in particular with respect to the quality of medicines;
  • Sarbani Chakraborty (Head of Global Health Policy, Merck Serono) will comment on how to best integrate access to medicine in the business strategy of a pharmaceutical company;
  • Helena Viñes Fiestas (Head of Sustainability Research, BNP Paribas Asset Management) will share her experience as member of the Expert Review Committee of the Access to Medicine Foundation and investor lead for a collaborative engagement on clinical trials transparency;
  • Herman Mulder (National Contact Point, Netherlands) will introduce the role of NCPs in providing accountability for the actions of pharmaceutical companies, building on a recent Specific Instance at the Dutch NCP on the use of medicines in lethal injections;
  • Patrick Durisch (Health Programme Coordinator, Berne Declaration) will discuss the responsibilities of pharmaceutical companies with respect to the globalisation of clinical trials.