HEALTH ECONOMICS, VOL. 5: 275-278 (1996)

BOOK REVIEWS

BOOK REVIEWS

Variations in Health : What can the Department of Health and the NHS do? A report produced by the Variations Sub-Group of the Chief Medical Officer’s Health of the Nation Working Group, London, HMSO. 1995.

Historians, political analysts, anthropologists and scientists will have a field day when they examine this work in some years’ time. It follows a long line of reports published in the UK over the past 150 or more years, beginning with Chadwick and Simon, Newman in the late 20s and most recently, the notorious Black Report on ‘Inequalities in Health’. The terms of refer- ence of the working party were to ‘make best use of any existing information to tackle ethnic, geographical, socio-economic and gender variations in health status, with particular reference to the strength of skewed relationships and evidence about the effectiveness of interventions’. They were to report to the Department’s Director of Research and Development on necessary research, and to support the Public Health Information Strategy on health variations.

The product is a comprehensive description of some of the mortality, morbidity and health indices data currently available from national and a few local sources. It is illustrated by figures and tables. What is remarkable, in view of the evidence presented of current inequalities-and apparent trends in these-is that the prescription offered is ‘more research’. The authors, although commenting on the wealth of research findings in the past 20 years (they neglect the pre-war work), seem unwilling to provide explanations, draw conclu- sions or suggest remedies. Perhaps the most damning paragraph is 2.11 which lists possible factors, e.g. measurement errors, access, psychosocial, biological, etc., but refuses to consider that deprivation or poverty could play a role. Although comments are made on international economic prosperity and health, the conclusions from most analyses are not stated.

Although no-one could argue with the Report’s recommendations that health variations should be identified, cost effective care provided, barriers removed, reduction of avoidable variations in treatment outcome or that social policies to promote health be fostered, alliances forged to tackle variations, and targets set to reduce variations and the stimulation and

initiation of research into effective programmes, it is interesting to contrast these with the Black Report.

The latter, examining a similar range of statistical data, was far more forthright in acknowledging the complexity of the issues. It too suggested more research-but did not restrict its recommendations for action only to those activities where incontrovertible evidence was available. It is often difficult in public health to provide evidence with the degree of rigour necessary, for example, to satisfy the needs of busy regulatory agencies or even Koch’s postulates. Snow’s classic studies on cholera in Soh0 certainly do not meet the current working party’s criteria-and yet we base our policies on clean water on them!

The Black Report approached the problem in the manner of those concerned with public health. It recom- mended the establishment, or reinforcement, of appropriate systems of surveillance capable of identify- ing the most vulnerabie-children, mothers and the disabled. Our current systems may provide some indi- cation of national trends but are quite incapable of looking at local issues or variations. The Black Report considered that the method of resource distribution within the NHS was inadequate and although a start had been made to provide more resources to deprived regions, this had not filtered down to districts. The CMO’s current report is remarkably inconsistent. It praises the changes made in the resource allocation formula to take into account deprivation indices. And yet the working party deliberately excluded the ‘correction’ of social/economic inequalities from its deliberations. The reasons that the original formula avoided the use of social indices seems to have been forgotten: it was not considered feasible to correct social problems, e.?., housing, through health care interventions.*.

The Black Report identified mothers, children and the disabled as particularly vulnerable-it is remarkable how the present report avoided discussion of, for example, abortion rates, changes in height/weight of pre-school and school children, or the reports of the local authorities, national voluntary agencies or even national studies funded by the Department of Health on the plight of the disabled and elderly.

It is impossible in the space available to give more than a flavour of the differences between the ‘Black Inequalities Report’ and the current ‘Variations Report’.

0 1996 by John Wiley & Sons, Ltd.

276 BOOK REVIEWS

It is un fortunate that university and MRC researchers are willing to provide their signatures to reports that avoid tackling well-known issues. It is sad that their own contributions to the field are omitted. But with the current pressures on universities, it is perhaps not suprising that the needs of new research are given precedence. That the report was commissioned is undoubtedly an advance. It is a pity that such an import- ant intellectual challenge has to sucomb to ideology.

REFERENCES

1. DHSS. Inequalities in Health: Report of a Research Working Group, chaired by Sir Douglas Black. 1980.

2. DHSS. Regional Resource Allocation Formula: First Interin Report of the RAW, London, 1975.

3. DHSS. Sharing Resources for Health in England, Report of the Resource Allocation Working Party, HMSO, London, 1976.

Industrial Policy and the Pharmaceutical Industry edited by ADRIAN TOWSE. Office of Health Econ- omics, London, 1995. No. of pages: 196.

This book contains eight conference papers pre- sented to a symposium at the Office of Health Economics in June 1994. The papers ' . . - explore the role industrial policy can play in providing an economic environment in which the pharmaceuti- cal industry meets the needs of patients and health care purchasers . . . .' The symposium organisers have put together an impressive team of contribu- tors. However, despite the presence of, inter alia, Dunning, Grabowski, Scherer, and Yarrow, the final product is rather disappointing.

George Yarrow focuses on the importance of innovation in the industry. He distinguishes between price competition and competition through R&D to introduce new products (innova- tive competition). He argues that there is a trade- off between these two types of competition so that any attempt to strengthen price competition will reduce the returns from R&D (profits) and thus weaken innovative competition. Yarrow suggests that as the great proportion of benefits from com- petition come from increases in knowledge rather than through the better use of a given stock of knowledge, it is important to get the appropriate trade-off. However, the reader is given no clue as to the magnitude of this trade-off; that is, if profits increase by €1, by how much does R&D increase? In the UK, for example, between 1983 and 1985 the target rate of return under the Pharmaceutical Price Regulation Scheme was cut from 25 to 19 per cent with no discernible impact on the level of R&D. Moreover Yarrow offers no indication of

W A L ~ H O L L A N D

what the optimal combination of price and innova- tive competition might be nor how it might be estimated.

Ian Neary outlines the current state of the Japanese pharmaceutical industry. Globally, Japan is the second largest single pharmaceutical market, just less than half the size of the United States market and about four times the size of the UK market. In 1992, Japan had the largest trade deficit for pharmaceuticals of any country in the world. Given the success of other Japanese R&D intensive industries. it is interesting to consider why the record for pharmaceuticals has been so poor. Neary suggests that the Ministry of Health and Welfare, which is responsible for imposing controls on drug prices, has been much more concerned with the consumer than with the producer. Consequently, drug prices have been fixed at too low a level and firms have had neither the funds nor the incentive to embark on sufficient R&D. The implication is that we limit drug prices at our peril.

In his chapter, Scherer points out that the US has nothing discernible as a well-thought-out industrial policy towards pharmaceuticals. Instead, there is a collection of instruments such as govern- ment R&D provision, patents, product regulation, and controls on the reimbursement of pharmaceuti- cal purchases by various government agencies. Scherer argues that, should a trade-off be required between modestly excessive prices and profits versus retarded technical progress, he would err on the side of excessive profits. Again, though, there is no empirical evidence on the nature of this trade-off and the reader is left with the impression that attempts to meddle with drug prices are fraught with danger. v Y