Tag: murali neelakantan

Theory is one thing, implementation is a whole other story

In a paper written earlier this year, I and my co-author, Murali Neelakantan argued for unifying India’s (many) healthcare markets. Part of our proposal touched upon the need to unify a crucial aspect of these markets: procurement.

Furthermore, to ensure cost eff iciency and streamlined operations, the government will act as a monopsony buyer, procuring medical goods and services for all empanelled hospitals. This centralised approach will enable economies of scale, reduce costs, and guarantee steady demand for healthcare providers. By taking on the responsibility of procuring medical supplies, the government can negotiate better prices and allocation of resources within the healthcare system. We recognise that the healthcare requirements will vary across the country and even across states but we argue that there can be central procurement nevertheless. The local hospital or health authority will purchase based on the price notified by the central procurement agency.

https://ippr.in/index.php/ippr/article/view/213/92

It is one thing to say this as a theorist. As any public policy analyst will tell you, it is quite another to actually implement a scheme such as this. There will be teething troubles, there will be glitches. There will be leakages and pilferages. There will be stumbling blocks and unforeseen issues. Why, where will you start even, leave alone the question of actually making the whole thing work!

All good questions, of course. Entirely valid points. But we did point out that at least one state in India has already taken steps in this direction. Tamil Nadu already does centralized procurement of medicines, among other things worth emulating:

Another instance of successful healthcare reform at the state level can be found in Tamil Nadu, where the state government has implemented a range of innovative measures to improve the accessibility and affordability of healthcare services. These initiatives include the Tamil Nadu Medical Services Corporation (TNMSC), which centralises the procurement and distribution of drugs and medical equipment, resulting in more efficient and cost-effective processes (Parthasarathi and Sinha 2016).

https://ippr.in/index.php/ippr/article/view/213/92

But then, about two weeks ago, came news of a most excellent paper, written by CS Pramesh et al. Allow me to quote the abstract in its entirety:

In health systems with little public funding and decentralized procurement processes, the pricing and quality of anti-cancer medicines directly affects access to effective anti-cancer therapy. Factors such as differential pricing, volume-dependent negotiation and reliance on low-priced generics without any evaluation of their quality can lead to supply and demand lags, high out-of-pocket expenditures for patients and poor treatment outcomes. While pooled procurement of medicines can help address some of these challenges, monitoring of the procurement process requires considerable administrative investment. Group negotiation to fix prices, issuing of uniform contracts with standardized terms and conditions, and procurement by individual hospitals also reduce costs and improve quality without significant investment. The National Cancer Grid, a network of more than 250 cancer centres in India, piloted pooled procurement to improve negotiability of high-value oncology and supportive care medicines. A total of 40 drugs were included in this pilot. The pooled demand for the drugs from 23 centres was equivalent to 15.6 billion Indian rupees (197 million United States dollars (US$)) based on maximum retail prices. The process included technical and financial evaluation followed by contracts between individual centres and the selected vendors. Savings of 13.2 billion Indian Rupees (US$ 166.7million) were made compared to the maximum retail prices. The savings ranged from 23% to 99% (median: 82%) and were more with generics than innovator and newly patented medicines. This study reveals the advantages of group negotiation in pooled procurement for high-value medicines, an approach that can be applied to other health systems.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10452934/ (Emphasis added)

There is an important difference between what was attempted here and what we are suggesting in our paper. Our paper talks of centralized procurement, while this paper speaks of implementing a pooled procurement approach. As they go on to say in their paper, “…centralized procurement systems require considerable administrative and managerial resources. A pooled procurement approach that is less resource-intensive and sustainable without significant investment is the WHO-suggested group contracting approach”.

But note that they did not give up on centralized procurement – they thought it easier to begin with pooled procurement, before tackling the much bigger beast that is centralized procurement. (Also note that there is academic research on how centralized procurement can be of benefit, especially in developing nations.)

And they’re quite right, of course. Beginning at a relatively smaller scale and then attempting more ambitious targets is unglamorous, perhaps – but it is also a much more sensible way of doing things. These four paragraphs in particular make for fascinating reading in terms of actually working through the nitty-gritty of implementing pooled procurement. And if you are going to spend time reading those four paragraphs later, please also do spend time on Fig.2.

What were the key takeaways?

  1. Considerable savings, both on generic drugs, as well as on innovator drugs.
    “This outcome suggests that the concentration of demand significantly strengthened our negotiating power, while the centralized negotiation approach, combined with larger purchase quantities, allowed us to secure substantial price discounts.”
  2. Opportunity costs matter!
    “The potential impact of cost savings is huge, in not only improving the affordability of care and decreasing out-of-pocket costs for patients, but allowing for the re-allocation of drug procurement funds towards other initiatives to deliver high-quality care”
  3. Enforcement of quality standards became easier, because of pooled procurement.
    “These savings are notable because they were achieved without compromising on quality, due to strict standards imposed on both the drugs and the companies.”
  4. Pooled procurement helps individual patients across India, regardless of region-wise differences.
  5. Lower treatment abandonment rates (yay!), and therefore higher survival rates (double yay!).
  6. Lesser financial burden on the patients!

And to end, the paragraph that I hope will launch a thousand studies, and eventually, the implementation of centralized procurement of drugs and consumables in India:

Based on the success of our piloting of pooled procurement in the network, conducting such negotiations may be relevant at a larger scale for oncology drugs, such as through the national health authority, as that will enhance the bargaining power as well as have far-reaching impact on access and affordability across the entire national network. Negotiation on a national level could also address the challenges of vendor monopoly or patented drugs supplied by a single vendor. Furthermore, to determine the final price for innovator and single vendor drugs, a comprehensive evaluation of the available literature on efficacy and safety data is crucial. If a drug meets the threshold for significant clinical benefits, cost-effectiveness assessment using adaptive health technology can provide guidance for negotiating prices.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10452934/

Unifying India’s Healthcare Markets

When I teach introductory macro, I like to begin by telling my students that a good framework to keep in mind is these three questions:

  1. What does the world look like?
  2. Why does the world look the way it does?
  3. What can we do to make it better?

This is regardless of the class I’m teaching. If it is undergraduate students, we spend a lot of time on these questions, without getting as much into the intricacies as I would in, say, a Masters programme. But I find the framework to be a very powerful one, precisely because it is so simple.

Another advantage is that the framework can be used to analyze slices of the economy.

Health, for example. Only for the Indian economy, for example.

  1. What does the market for healthcare in India look like?
  2. Why does it look the way it does?
  3. What can we do to make it better?

About three years ago, I learnt that the answer to these questions wasn’t simple at all.

Think about the first of these questions. What do we mean when we say “the market”, for example? Is it the same market if you are a government employee as opposed to a private citizen? Is it the same market if you are a state government employee as opposed to a central government employee? Is it the same market if you are a rich private citizen as opposed to a poor private citizen?

What do we mean when we say “the same market”? Well, can all these categories access the same services, from the same service providers, at the same prices? If not, why not?

Of course, when you ask these questions, you are in Second Question territory. Why are these markets different? What was the reasoning behind making them different? Has that purpose been served, or not? If it has, can we unify these markets? If it has not, should we not be asking why not? Should we not be thinking about how to reform or unify these markets?

Of course, when you ask these questions, you are in Third Question territory. If you agree that the healthcare market in India isn’t perfect just yet, then you should be thinking about ways to make it better. But better might mean different things to different people! Some people might say hey, if only government got the hell out of this market, outcomes would be so much better. Other folks might say hey, if only government stayed in this market, but with the following tweaks, outcomes would be so much better.

Trouble is, both sides of the argument have a point. Some markets do, indeed, function better with minimum government. But that is only under certain conditions. And some markets do, indeed, function better with more government. But that too, is only under certain conditions.

The trick is in getting everybody to agree on what these conditions are, and to get everybody to agree about to what extent they’re applicable for a given economy at a given point of time. I doubt that we will ever get everybody to agree about everything for all countries for the foreseeable future. But then again, if we did, life would be pretty boring, and people like me would be out of a job.

By the way, I asked ChatGPT these questions. Here are its answers.

But for our country (India), and for the circumstances that India finds herself in today, Murali Neelakantan and I have answers to the first and the second questions. And we have a proposal for the third. These answers can be found in a paper that we’ve written, called Unifying India’s Healthcare Markets. Please go through the paper, and I hope you find stuff to disagree with. I also hope you’ll tell us why you disagree with it, and how we might go about resolving these disagreements.

Because you see, our hope is to not win an argument with you. It is to learn how to best answer the third question. Because what could possibly more important for India?

So please, read the paper, and let us know what you think – especially if you disagree with us.

Respectful disagreements are underrated!

As always, thank you for reading.

Ten types of statistical averages

H/t Murali Neelakantan on Twitter

In Which Bairstow-ji Learns About Public Policy

Just in case you haven’t seen the video already, do take a look. The footage of the stumping gets over in the first minute and change, and that’s what I want you to take a look at.

Note the fact that Bairstow seems to mark his presence in the crease with his foot before walking off to converse with his batting partner. Which, of course, is when the wicket keeper throws down the stumps, and appeals for the dismissal of the batsman. All this was done in one smooth motion by the ‘keeper, and was done before the umpire declared the ball dead. If you really want to get into the weeds, here, knock yourself out.

Now nobody (not even the England cricket team!) is arguing that Bairstow wasn’t out. He was. Should the ‘keeper have stumped him is the first question. And given that he did, should the Aussies have appealed? That’s the second question. This is where the spirit of the law, and the intent of the batsman come into play.

First question first: should the keeper have thrown down the stumps?

“Well, why not?” is a perfectly legitimate response in this instance. Is there anything in the rules that stops him from doing so? No. Is the MCC considering changing the rules to prevent keepers from doing so in the future? As far as I can tell, no.

So the keeper could have thrown down the stumps as far as the rules are concerned. Ah, but should he have?

Well, is there precedent? That is, have other batsmen gotten out in this fashion before? And the answer to that question is yes, they have. Our very own Shrikanth got out in his debut match just this way!

Should Bairstow have been warned before being dismissed in this fashion? That is, should the Australians have warned him at least once in advance? I don’t see why, and I do not understand why it is necessary to warn a batsman before the batsman is “Mankaded” either. Or whatever the updated, politically correct term for it is these days.

So yes, the stumps could, and should, have been thrown down.

Second question second: should they have appealed? Or should they not at least have withdrawn the appeal?

Bairstow wasn’t attempting to take a run, or charging down the wicket in order to hit it out of the park, so there was no “intent”. And if there was no “intent”, is this not unfair, or against the spirit of the game? Do we change the rule to say that the batsman cannot be stumped in this fashion? If so, how exactly do we phrase the law?

It doesn’t matter if there was intent or not, that’s my take on the issue. If these are the rules as they stand – and they are – then one should be able to apply the rules when called upon to do so. Why call upon the umpires to apply the rules? Well, because that’s what the rules are there for! To be applied when a doubt arises.

Or put another way, it is outcomes that matter, not intentions.

Does intent never matter? Well, yes, it does. A friend brought up the movie Drishyam. Spoiler alert, so please read the next paragraph only if you’ve seen the movie, or don’t intend to watch it.

The central concept of the movie works only if you buy the idea the girl killed in self-defense. Imagine that case coming up in court, or ask yourself if you have even a little bit of sympathy for Ajay Devgan’s character. If you do, it’s because of the fact that you are giving more weightage to the intention (self-defense) than the outcome (the death of the boy).

My response to this point would be that Bairstow wasn’t outside of his crease “with intent”, sure, but neither was he engaged in protecting his life! He was simply being careless at best, and doing the job of the umpire at worst. Why do I say he was doing the job of the umpire? Because it was he who was calling the ball dead, instead of the umpire, by marking the pitch with his foot. Not his call to make, and the ‘keeper challenged his right to do so.

The umpire upheld that challenge, making to Bairstow the point that lies at the heart of central policy.

Outcomes over intentions!

My thanks to Mihir Mahajan and Murali Neelakantan for engaging discussions on this most delightful of topics, and my thanks to the English and Australian teams for being the teams in question. It helps that neither of the teams involved was India, and it also helped that I don’t particularly like either of the two teams.

I cannot resist making this final point, though – it really is a world gone upside down in 2023, eh? I just wrote a blog post in defense of something the Australian cricket team has done!

Aah Ko Chahiye…

And the reason behind this video for this Sunday was this wonderfully whimsical article.

H/T Murali Neelakantan

India: Understanding our Constitution a little bit better

In less than a week, we celebrate our Republic Day.

But what exactly is a republic? How is it different from a democracy – which begs the question, what is a democracy?

One of the definitions of democracy, given by Google, is this: “control of an organization or group by the majority of its members.”.

Or, as children in India have been saying for years at around 5.30 in the evening, “majority wins” (Extra points for reading this in that wonderfully evocative sing-song cadence.) But hey, there’s so much more to it than that!

So what is a republic? Once again, Google to the rescue: “a state in which supreme power is held by the people and their elected representatives, and which has an elected or nominated president rather than a monarch.”

So when we celebrate Republic Day, we’re really celebrating the fact that we’re not ruled by a monarch anymore, but rather by ourselves. Except that we elect some people to do the job for us.

So when we appoint somebody, what powers do we give them? What powers do we not give them? Do we give them the power to change the powers that we give them – if you see what I mean?

That is where the constitution comes in. Again, our old pal Google: “a body of fundamental principles or established precedents according to which a state or other organization is acknowledged to be governed.”

The Constitution, sets the maryadas of the government in power. This you can and should do, this, uh, not so much. That, not at all. The Constitution does so much more than that, but that is certainly one of its main purposes.

Which begs the question: who came up with the idea of constitutions? Who, in India’s specific case, was appointed to write India’s Constitution? On what basis? What were their ideas and motivating principles? And that is the direction in which today’s post will go.

Disclaimer: I don’t pretend to be anywhere near an expert on this topic. This is on the basis of stuff I have been reading in order to teach myself. If you have links to share that will broaden my understanding of this topic, please do share.

Many thanks to Murali Neelakantan for providing a ton of helpful suggestions!

  1. “To understand the first conceptualisation, that of constitution-as-function, we should clarify what scholars view to be the traditional purposes of constitutions. A central idea here is the limitation of government power. Constitutions generate a set of inviolable principles and more specific provisions to which future law and government activity more generally must conform. This function, commonly termed constitutionalism, is vital to the functioning of democracy. Without a commitment to higher law, the state can operate for the short-term benefit of those in power or the current majority. Those who find themselves out of power may find that they are virtually unprotected, which in turn may make them more likely to resort to extra-constitutional means of securing power. By limiting the scope of government and precommitting politicians to respect certain limits, constitutions make government possible.”
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    That’s the whole maryada angle we were talking about earlier. That is from the UCL website, and the website is worth a detailed look.
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  2. So if the idea of the Constitution is to, in this case, set up the framework for the operation of the government, that makes it pretty darn important. Who did we give the job to, and how?
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    “”India was still under British rule when the Constituent Assembly was established following negotiations between Indian leaders and members of the 1946 Cabinet Mission to India from the United Kingdom. Provincial assembly elections were held in mid 1946. Constituent Assembly members were elected indirectly by members of the newly elected provincial assemblies, and initially included representatives for those provinces that formed part of Pakistan (some of which are now in Bangladesh). The Constituent Assembly had 299 representatives, including fifteen women.”
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    Note that we didn’t really give the job to anybody. There were provincial assembly elections, and the Constituent Assembly members were elected indirectly by members of these provincial assemblies. But that may be a good thing! As Vijay Kelkar and Ajay Shah note in their recent book, In The Service Of The Republic: “The Constitution of India my not have won a referendum either in 1950 or today.” (Emphasis added).
    I really wish we had the time to explore this question in more detail: who frames the rules by which we agree to live as a country, and on what basis. But I promise to get to it in later posts. For the moment, we move on.
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  3. “(1) This Constituent Assembly declares its firm and solemn resolve to proclaim India as an Independent Sovereign Republic and to draw up for her future governance a Constitution;(2) WHEREIN the territories that now comprise British India, the territories that now form the Indian States, and such other parts of India as are outside British India and the States as well as such other territories as are willing to be constituted into the Independent Sovereign India, shall be a Union of them all; and

    (3) WHEREIN the said territories, whether with their present boundaries or with such others as may be determined by the Constituent Assembly and thereafter according to the Law of the Constitution, shall possess and retain the status of autonomous Units, together with residuary powers, and exercise all powers and functions of government and administration, save and except such powers and functions as are vested in or assigned to the Union, or as are inherent or implied in the Union or resulting therefrom; and

    (4) WHEREIN all power and authority of the Sovereign Independent India, its constituent parts and organs of government, are derived from the people; and

    (5) WHEREIN shall be guaranteed and secured to all the people of India justice, social, economic and political; equality of status, of opportunity, and before the law; freedom of thought, expression, belief, faith worship, vocation, association and action, subject to law and public morality; and

    (6) WHEREIN adequate safeguards shall be provided for minorities, backward and tribal areas, and depressed and other backward classes; and

    (7) WHEREBY shall be maintained the integrity of the territory of the Republic and its sovereign rights on land, sea, and air according to Justice and the law of civilised nations, and

    (8) this ancient land attains its rightful and honoured place in the world and make its full and willing contribution to the promotion of world peace and the welfare of mankind.”
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    This is the famous Objectives Resolution, put forth by Jawaharlal Nehru on the 13th of December, 1946, in one of the first few (the very first?) meetings of the Constituent Assembly. (5) and (6), to me, are the most crucial parts of the resolution. If the question is, what were the aims and aspirations of the members of the Constituent Assembly in terms of what they hoped the Constitution would achieve, this is the best answer I could find.
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  4. “It was here that the enduring distinction between “justiciable” and “non-justiciable” rights (Directive Principles) was first mooted, much to the consternation of K.T. Shah. It was in the Sub-Committee that Minoo Masani, Hansa Mehta and Rajkumari Amrit Kaur argued strongly for a right to inter-religious marriages and to a uniform civil code (with Ambedkar’s support), but were voted down. It was in the Advisory Committee that the right to privacy (secrecy of correspondence and prohibition of unreasonable searches and seizures) was dropped from the draft bill of rights, as was the right to vote. Here you find Ambedkar’s eloquent arguments for the link between constitutional rights and the economic structure, and K.T. Shah’s radical proposals to make remuneration for housework a fundamental right. In short, endlessly fascinating stuff.”
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    All of that comes from Gautam Bhatia’s blog, written in collaboration with Vasudev Devadasan. The blog is worth subscribing to, and reading this post (part 1 of 3, no less) makes me want to burrow into this topic for a long time to come. Alas, accursed economics!
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  5. And finally, from a column written in 2018 by Gautam Bhatia, this excerpt – but do read the whole thing!
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    “In hearing and deciding these cases, the court has an opportunity to affirm the words of one of its greatest civil rights judges, Justice Vivian Bose, who recognised the deeply transformative character of the Constitution when he said: “Is not the sanctity of the individual recognised and emphasised again and again? Is not our Constitution in violent contrast to those of states where the state is everything and the individual but a slave or a serf to serve the will of those who for the time being wield almost absolute power?” How India Became Democratic helps us to understand that the answer to both those questions is an unambiguous “yes.””

 

It shames me to realize how little I know about India’s constitution, and the history of that constitution. We live by a set of rules whose origins, aims and framers are largely unknown to most of us. This post was my attempt to begin to change my own status quo, and I hope to dedicate at least one Monday a month to writing a post that helps me learn more about the Indian Constitution.

And on that aspirational note, a very happy Republic Day to you all!

EC101: Links for 26th December, 2019

  1. On some articles about Baumol’s cost disease.
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  2. A topic that is very, very dear to my heart: teaching economics better, and to younger folks.
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  3. A topic on which I changed my mind this year, and therefore this year ought to count as a success. Props to Murali Neelakantan for helping me do so! On patents.
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  4. Two sets of links about this year’s Nobel. One set is rather informative…
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  5. While the other is more critical.