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Drivers of trade in medical goods and services
Although these concerns are not necessarily driven by trade, they may be exacerbated by it. These negative effects and concerns are, however, dependent on the existing level of resources, the regulatory frameworks governing the health system, and the fiscal (tax and subsidy) policies that shape the effects on equity and access.
Health security risks. Especially in low- and middle-income countries, risks to health security are associated with illicit trade in medical goods. Because medical goods are both essential and highly regulated, they are prone to illicit trade. This may involve goods that are themselves illegal as well as those that may be legal but which, by virtue of how they are produced, distributed, or sold, are traded through illegal means. Illicit trade in medical products—and in particular the trafficking of substandard, unregistered, or falsified products—can have serious health, economic, and socioeconomic consequences.
Global estimates of illicit trade in the medical goods sector are scarce, remain sensitive to definition, and predate the current COVID-19 pandemic. In 2017, 1 in 10 medical products in low- and middle-income countries were falsified (WHO 2017a, 2017b). OECD and EUIPO (2019) report a value of global trade in counterfeit pharmaceuticals of up to US$4.4 billion in 2016, representing 0.84 percent of total worldwide pharmaceutical imports. Despite a general perception that, with COVID-19 vaccines and other commodities in high demand and short supply, criminal networks jumped in to fill the void with falsified health products of substandard quality, more and stronger evidence is needed to detect and quantify any trends in illicit trade of medical goods since the outbreak of the COVID-19 pandemic.
There are many macro-level drivers of trade in medical goods and services. On the demand side, demographic and economic development-related forces have increased demand for medical services and products. On the supply side, technological advancements, demographics, and policy changes are at play. Three trends suggest that health spending will increase as a share of gross domestic product (GDP) over time: emergent infectious diseases, income convergence, and increasing life expectancy.
Emergent infectious diseases. The twentieth century has seen an increasing rate of emergent infectious diseases—a trend attributed to human population density and environmental change (Daszak, Cunningham, and Hyatt 2001). Most emergent diseases are transmitted to humans from animals, mostly wildlife. A small but increasing share are drug resistant. Since 1600, the likelihood of a pandemic more severe than the 1918 influenza pandemic has roughly tripled (figure 1.2).
