Global Health Policy
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September 28, 2007
AIDS Treatment as an International Entitlement: Are We Ready for a Global Welfare Paradigm?
Posted by Mead Over at 12:02 PM
On Wednesday, UNAIDS published "Financial Resources Required to Achieve Universal Access to HIV Prevention, Treatment, Care and Support" to present the world with a bottom line: $50 billion a year. While acknowledging that "some might ask if the goal of universal access is worth the effort that will be required," the report declares "the answer is a resounding yes." But as justification for this echoing affirmative, it just vaguely alludes to the potential benefits of this unprecedented level of spending on a single disease and totally ignores what $50 billion a year means in terms of foregone opportunities.
Because some of those who will influence how much of that $50 billion materializes are economists and budget geeks, perhaps it's worth a moment to take out the green eyeshade, and tote up the benefits and costs. On the benefit side, expanded expenditure on prevention will avert some of the future need for treatment and spending on orphans and vulnerable children will educate some of these kids. These can validly be thought of as investment expenditures, which promise to yield benefits to the future of the country.
Where treatment is concerned, however, the benefit side of the ledger is only very weakly supported by the evidence. The argument goes that AIDS treatment is worthwhile in economic terms because it maintains family units so that children can attend school, permits patients and caregivers to return to work, and in other ways - through its positive effects on the health of adults - yields economic returns. Whether that is the case is a matter where research can shed light, although not yet definitive answers. In one of the most relevant such studies, my former CGD colleague Harsha Thirumurthy and his co-authors Joshua Graff Zivin and Markus Goldstein have found that while treatment can indeed increase labor force participation from 60% to 90% and will generate additional non-market benefits in the form of patient happiness, additional schooling for his children, etc. However, they find that even their low estimate of the annual cost of treatment of $350 per year is enough to offset the incremental wages these workers would earn each year. And since their cost estimate omits the cost of eventual second-line treatment and of expatriate personnel and uses lower-than-usual drug prices, their results do not support the claim that AIDS treatment has a positive rate of social return. (In contrast, upper income Kenyans making US$5,000 a year or more would find it in their self-interest to purchase AIDS treatment out-of-pocket at US$350 per year. But only a small part of the proposed $50 billion a year will facilitate the access of middle income patients, and only as an incidental side effect.)
If AIDS treatment is not an investment, can it still be justified? There is obviously a human rights case to be made - and indeed it often is, sometimes as part of a broader concept of a "right to health." As it happens, the UN Special Rapporteur on the Right of Everyone to the Enjoyment of the Highest Attainable Standard of Physical and Mental Health has helpfully set out the components of such a right, which "includes freedoms (e.g. freedom from non-consensual treatment and non-consensual participation in clinical trials) and entitlements (e.g. to a system of health care and protection). For the most part, freedoms do not have budgetary implications, while entitlements do." As the Special Rapporteur suggests, an entitlement is much like a welfare payment; it is defined by Merriam-Webster as:
1 a : the state or condition of being entitled : RIGHT b : a right to benefits specified especially by law or contract; 2 : a government program providing benefits to members of a specified group; also : funds supporting or distributed by such a program and 3 : the belief that one is deserving of or entitled to certain privileges
Thus, as global AIDS treatment programs are currently being implemented, they look far less like an "investment" - contribution to the eventual sustainability of the recipients and their countries - and more like a transfer payment. We must learn to think about support for antiretroviral treatment in the same way we think about welfare payments at home - e.g. hoping that the recipients can use the support to free themselves from welfare dependency, yet knowing that a proportion of them will not succeed in doing so. Those who receive entitlements typically become dependent on them, and never more starkly than in the case of expensive life-giving drugs. Most of us support such payments anyway from a feeling of compassion and solidarity with the poor and unfortunate.
Those people whose lives currently are sustained by donor funding of their AIDS treatment probably feel that they are entitled to continuation of that treatment, that their donor has entered into an implicit contract to provide life-sustaining drugs in exchange for their adherence. Furthermore, international and domestic opinion will hold donors responsible for maintaining treatment subsidies to individuals who have already started treatment. However, as The Economist points out, "The problem with AIDS is that the more successful you are at treating it, the more you end up paying." As donors foot the bill for an ever-increasing number of patients, the proportion of the remaining discretionary spending in their AIDS budgets left for prevention and other activities will likely shrink accordingly - or will come out of other health and development pots.
With this in mind, then, what is the real meaning of US$50 billion a year, and what is its opportunity cost? One way of thinking about the cost is to compare it with other things the same money could buy. A 2002 World Bank study (.pdf) estimated that the cost of achieving all eight of the UN Millennium Development Goals by the year 2015 would be between $40 and $60 billion dollars a year. According to the authors, this would be the cost not only to reverse the spread of HIV through expanded prevention (part of goal 6) but also to (1) eradicate extreme poverty and hunger; (2) achieve universal primary education; (3) promote gender equality and empower women; (4) reduce child mortality; (5) improve maternal health; (6) combat malaria and other diseases; (7) ensure environmental sustainability; and (8) develop a global partnership for development - all of which are justified as investments in the future sustainable growth of the recipient countries. So one way of understanding the proposed annual expenditure of $50 billion is to consider whether we should forego all of these other efforts in order to single-mindedly focus on universal access to AIDS treatment and prevention and on the care of the orphaned children.
By effectively converting foreign assistance from discretionary to entitlement spending, the "success" of existing AIDS treatment programs has already locked us into a new aid paradigm. To the extent that the international community heeds the UNAIDS' call, entitlement spending will greatly increase in the next few years, both in absolute terms and, unless total assistance expands at the same phenomenal rate, as a percentage of total assistance. Are voting taxpayers of the OECD countries ready for this new entitlement paradigm? Growing funding for AIDS treatment suggests this possibility (including the latest Global Fund replenishment round this week in Berlin). But there is reason for concern: historically when budgets expand less quickly than planned, growing entitlements often squeeze out discretionary programs. And even if they do not, there may be negative repercussions from the extreme form of aid dependency that AIDS treatment represents. It's far past time to take a clear-eyed look at costs, benefits and long-term implications of the path that we've collectively chosen, so that foreign assistance continues to improve the well-being of all the poor and sick in developing countries while also sustaining their poorest AIDS patients.
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Comments
Mead Over’s discussion of AIDS Treatment as an International Entitlement raises important questions about when there are, or should be, international entitlements. Similarly issues are discussed in my forthcoming edited book on Global Obligations for the Right to Food. For those who are interested, a pre-publication draft of the concluding essay may be accessed here . Apart from the resource requirements, we should also appreciate the need for serious planning for the implementation of any such global entitlement program. How should such programs be carried out?
Aloha, George Kent
Posted by: George Kent at October 3, 2007 02:56 PM
Dr. Over's article may well start a long overdue debate in the international health community. He is the only economist with a depth of experience from his work at the World Bank, and now the CGD, that has taken on the challenge of addressing the unfunded liabilities inherent in patients requiring 2nd line therapies. We have all had a fixation on the price of ARVs. Yet, the ongoing medical care costs for patients in salvage therapies will dwarf the price for those therapies by a factor of 10 - 20.
Whether in the US or EU, we have learned of two certainties in AIDS treatment. In time: 1) a certain cohort of those initiating treatment will eventually become drug resistant, and the number is cumulative year upon year; and 2) the medical care costs for that treatment will continually increase.
As his article points out, UNAIDS has estimated resource needs at $50 billion a year--but it "omits the cost of eventual second-line treatments." Even at $50 billion, this is a sum slightly under total ODA in 2006.
When TB and malaria are added in, then these three disease entities will consume more than 50% of all ODA.
Since the donor community has set universal targets for AIDS treatment, it would not be unusual for countries that have accepted them to become dependent on continued funding. Thus, this could well evolve into entitlement spending. Before that becomes a reality, donors need to be deeply concerned about the importance of this article and "take a clear-eyed look at costs, benefits and long-term implications of the path that we've collectively chosen."
A Letter to the Financial Times of October 4 which is complementary to the concerns in Dr. Over's article is attached below.
Sincerely,
Jeremiah Norris
Director
Center for Science in Public Policy
Hudson Institute
Washington, DC
Donors' focus on one disease is distorting African health systems
Published: October 4 2007
From Mr. Jeremiah Norris
Sir, Andrew Jack ("From symptom to system", September 28) has opened a much-needed debate on the unprecedented flow of fiscal resources being poured into fragile economies for one disease - HIV/Aids. His opening sentence finally gives voice to someone out of Africa (a Zambian minister). A failure to listen will be at our peril.
The press of funds has blurred the vision of many on what is happening to patients. They have become simply numerical targets treated because they are poor rather than because they are sick.
Since 2004, some $36bn has been allocated by donors to HIV/Aids, mainly for treatment. Yet donors have no idea of what is happening in terms of patients' outcomes. They have no patient records to show viral suppression levels over time; the number who experienced drug resistance or who had co-morbidities, restricting therapies that could be administered; the adherence and mortality rates, or the use of which antiretrovirals caused virologic failures.
Still, rapid scale-up to 10m on Aids treatment by 2010 is the normative standard being pursued in the absence of clinical knowledge. By then, at least 20 per cent of patients will be drug-resistant and require more expensive salvage therapies. The cost of medical care will dwarf the price of medicines for these 2m patients and consume an amount greater than the remaining 8m on first-line therapies.
The central policy issue faced by global society lies not in the price of drugs. Rather, by failing to assign a proper value to the consequences of post-price effects, policymakers drastically underestimate the costs involved by the sequential increases in the number of chronically sick, drug-resistant patients. Their care and maintenance will ultimately prove an unsustainable macroeconomic liability for donors and affected governments.
Posted by: Jeremiah Norris at October 4, 2007 04:45 PM
While I agree with Mead Over’s concern that AIDS as a much-publicized disease may squeeze other (health) expenditures, I also think that the question whether to invest in HIV or the other MDGs is not that clear-cut, as there exist complementarities between the MDGs; for example, it has been argued that poor nutritional status that is often associated with poverty increases the chance of HIV transmission. Investing in nutrition then would show pay-offs in (at least) two MDGs, not only one.
Such additional benefits of addressing the socioeconomic status of HIV-positive individuals may be particularly good news if we are not sure whether, and which, HIV prevention interventions that currently are directed mainly at behavioral change, work best. For example, a recent paper by the World Bank economist Damien de Walque ( http://www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2006/06/23/000016406_20060623143206/Rendered/PDF/wps3956.pdf ">Discordant couples) indicates that a large fraction of infected people in five countries in sub-Saharan Africa are discordant couples. In such a situation, strategies based on the prevention of transmission in high-risk relationships neglects a key target group in these countries. Given our yet imperfect knowledge of the behavioral factors relating to HIV transmission, it may be time to take a broader approach to fighting HIV/AIDS and take biological and socioeconomic risk factors into account when designing prevention strategies.
Posted by: Sebastian Linnemayr at October 4, 2007 05:09 PM
I fully agree with Mead's post, and hope that it stimulates further discussion of the issue he raises.
While he's drawn attention to the potential negative effects of AIDs treatment funding becoming an entitlement that squeezes out funding for other types of development assistance, I want to point out another. It is quite possible that the current levels of funding for AIDs treatment will not be sustained. Other priorities very likely will emerge (e.g. combating climate change) which will draw funds away. Indeed, Jon Liden, of the Global Fund, made precisely this point in July in an FT article by Hugh Williamson
http://www.ft.com/cms/s/0/f0330922-2b0c-11dc-85f9-000b5df10621,dwp_uuid=27895d8a-6533-11dc-bf89-0000779fd2ac.html
He said the Global Fund “is not naive about what [the increased importance of] global warming will do to Aids funding in a few years’ time”. A string of high-level climate reports, plus the G8 focus on climate this month, meant the “huge momentum” behind Aids funding “cannot last for ever”.
If he is right, and I think he is, what does that predicted fall in spending mean for how HIV/ AIDs spending should be used now? Surely one conclusion would be a shift in attention and resources from treatment to prevention? Another almost certainly is much greater attention to sustainability of treatment programs under scenarios of scaled back external funding.
Posted by: April Harding at October 5, 2007 09:28 AM