Why is good governance relevant to the pharmaceutical public sector?

Pharmaceutical expenditure accounts for up to 50% of total health spending in some developing countries. The high market value of products means they are a magnet for theft, corruption and unethical practices. Transparency International estimates that in some countries up to two thirds of all hospital medicines are “lost” through corruption and fraud.

The impact of corruption on the pharmaceutical sector is three-fold:

  • health impact — waste of public resources reduces government capacity to provide access to good-quality essential medicines, while at the same time the risk of unsafe medical products on the market increases due to bribery of officials and/or to counterfeiting;to national health budgets;
  • economic impact — corrupt pharmaceutical practices are extremely detrimental to national health budgets;
  • government image and trust impact — inefficiency and lack of transparency reduce the credibility of public institutions and erode public/donor confidence in governments.

Corruption within the public sector also undermines donor efforts. For example, the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM) has so far approved proposals totalling nearly US$ 19.5 billion and the Bill & Melinda Gates Foundation has awarded grants totalling more than US$ 13 billion under its global health programme. Successful implementation of such funds will depend on good governance at national level.