[Ip-health] Economist: A spoonful of ingenuity

Fri Jan 8 04:00:02 2010

http://www.economist.com/world/international/displaystory.cfm?story_id=3D15=
213715

Innovation in global health

A spoonful of ingenuity
Jan 7th 2010 | NEW YORK
 From The Economist print edition

New ideas for raising money for medical care=97and spending it

IN THE old days, the job of eradicating disease fell to governments
and inter-governmental bodies. Then charities, often led by
celebrities or entrepreneurs, joined in. Finally, in the Western world
at least, governments accepted the need to pool their efforts with
those of private donors, big and small. The effort still seems unequal
to the task. Every year, nearly 11m children die before the age of
five because of a mixture of poor nutrition and preventable disease.
Many of the United Nations=92 Millennium Development Goals (calling, for
example, for a plunge in child and maternal mortality by 2015) look
unattainable.

The good news is that more imaginative ways of raising and spending
money are now on the horizon. How well they do will depend on many
details=97like the quality of information flowing between poor places
and the governments, firms and individuals that want to help.

The change in funding is already dramatic. In 1990 more than two-
thirds of the $5.6 billion spent on global health assistance came from
governments (see chart 1). By 2007, when total funding for health
reached nearly $22 billion, government spending still made up the
lion=92s share. Look closer, though, and it emerges that the yeast which
leavened this bread was =93non-traditional=94 financing. In 2007 private
money from firms and charities like the Gates Foundation eclipsed the
total from all sources spent in 1990.

As a case of the new sort of money-raising, take UNITAID, an agency
founded by France, Brazil and three other countries, which is hosted
by the World Health Organisation in Geneva and calls itself a
=93facility=94 for the purchase of drugs to fight important diseases.
UNITAID=92s main income comes from a charge on air tickets, levied by a
dozen states; combined with cash contributions from other countries,
this has raised $1.5 billion in the past four years.

This month, a private foundation linked to UNITAID will start raising
money directly from the public. With help from most of the world=92s air-
ticket issuers and internet-travel portals, passengers will be invited
to give a couple of dollars, or so, to the fight against disease every
time they book a flight online. UNITAID hopes that, within a few
years, this plan will raise between $600m and $1 billion a year. If
so, it will merit its name, MassiveGood.

Tiny private contributions are not just a complement to large donors,
says Philippe Douste-Blazy, UNITAID=92s boss. In a new book*, he and a
co-author argue that =93building solidarity=94 by involving the general
public will be an essential part of any successful effort to combat
disease.

What else will be needed? Begging for more money will never work,
argues Sir Richard Feachem, a British-born health specialist who is
now a professor at the University of California. He should know: as
the former boss of the Global Fund to Fight AIDS, Tuberculosis and
Malaria, a big international agency, he often banged the drum for more
donor money=97and took flak from critics who said the fund was not
transparent enough. In his view, the best way for any agency to get
more money is to show that the sums it already spends are well used.
He thinks that calls for clever fund-raising, cautious spending and
the precise measurement of outcomes. And happily, there is progress on
all three.

As well as appealing to the charity of ordinary people, agencies are
finding new ways to raise money from lenders. A trail has been blazed
by the GAVI alliance, a public-private partnership that funnels money
towards vaccines for neglected diseases in the poor world. It has
raised more than $1 billion in short-term financing by issuing bonds
backed by sovereign pledges of aid money in future years. By making a
big sum available today, rather than promising a trickle over a long
period, the project has helped to create the economies of scale that
make widespread vaccination possible. The Global Fund also has new
ideas; this year it will launch its own exchange-traded fund=97based on
an index of firms investing in health and development=97aimed at both
traditional investors and =93socially responsible=94 ones.

Another approach is to encourage firms to pool patents, which lowers
the cost and accelerates the pace of drug development. Clever
researchers at modest institutions may benefit from knowledge gained
in more prestigious places. Under pressure from the WHO and anti-
poverty activists, the drugs industry has started to relax its patent-
protection policy. GlaxoSmithKline (GSK), a British drugs giant, said
early in 2009 that it was ready to share certain patents (but not
those for HIV). GSK and Pfizer, an American rival, then announced they
would combine their patents for HIV into a joint research effort,
called ViiV. In December UNITAID launched its own plan to create a
global pool for HIV patents. The agency=92s board will hold a final vote
on this in February; Mr Douste-Blazy expects ViiV and some other big
firms to take part.

The medicine goes down

Also in the pipeline are several market-based innovations that aim to
make spending more efficient. That is one result of the emergence of
the new sort of agency, GAVI and the Global Fund, and NGOs and
charities (see chart 2). UNITAID and the charitable foundation of Bill
Clinton, a former American president, have transformed the market in
treatments for children with AIDS, by aggregating demand and
encouraging suppliers to cut costs and develop formulations that are
easier to take. Roughly three-quarters of the children now taking AIDS
medicine get their supplies thanks to these two groups.

Another idea is the Affordable Medicines Facility-Malaria (AMFm), to
be rolled out by the Global Fund by mid-2010. In Africa and southeast
Asia malaria parasites have grown resistant to older drugs like
chloroquine. Artemisinin, a drug made from a Chinese plant, does work
but the ideal formulation (an Artemisinin Combination Therapy, or ACT,
which involves other drugs too) can cost $10 a treatment=97ten or more
times the cost of straight artemisinin or older drugs.

The Global Fund is going to spend $216m over two years subsidising the
cost of ACT to wholesale buyers who will then supply it to ten hard-
hit countries. By insisting that the benefits be passed down the
supply chain, it intends to reduce the retail price to only 20 to 50
cents. The fund will spend another $127m on marketing, training and
other support for the effort. ACT is already being produced by private
firms; the hope is that a dramatic expansion of the market will lead
to big economies of scale and much lower costs.

Sceptics fear that middlemen will pocket the subsidy, or that there
will be leakage to other markets; some fret that 50 cents is too
pricey to compete with chloroquine for people earning $1 a day. But
pilot projects suggest the new policy may work.

Yet another incentive-based approach bubbling up is Advance Market
Commitments (AMC). Because the victims of most neglected diseases are
poor, drugs firms cannot count on enough profitable customers to
recoup their investments. The AMC mechanism offer drugs firms a huge
carrot by subsidising the initial purchase of new vaccines for the
poor, if they vow to sell those vaccines cheaply in future.

Here too, critics abound. Some argue that such a system could reward
mediocre, rapid inventions, while penalising possibly better ones that
might take longer to get to market. Some economists question the price
and volume assumptions used in developing the AMCs. In the end,
though, much of this information is unknowable in advance. Arguing
that a successful effort could accelerate vaccination by many years,
GAVI has forged ahead. Last year it launched a $1.5 billion AMC
programme to reward the first firm to find an adequate vaccine for
pneumococcal disease.

The hardest area to improve is measurement and evaluation. A lack of
transparency has already led to several scandals. The Global Fund has
been criticised for not checking on national-government spending.
Product Red, a branding campaign cofounded by Bono, a rock singer,
directs some of the cash raised by retail sales (Dell, American
Express, the Gap and other big firms are members) to the Global Fund.
But recently, questions were asked about how much of this money is
spent on overheads.

To overcome such doubts, Mr Douste-Blazy wants the MassiveGood
campaign to be more transparent. He wants online donors to be able to
track their $2 gifts right down to the pills received in a remote
village. He says he is working with Google on ideas that could produce
such a tracking system within two years. His co-author, Daniel Altman,
a former Economist journalist, thinks that online monitoring, plus the
network that MassiveGood has launched on Facebook, could tighten the
link between donors and recipients.

Nobody opposes transparency, but some quibble with that heady vision.
Prashant Yadav, a logistics specialist at Massachusetts Institute of
Technology, says tracking pills may be a mistake. What if an NGO needs
a lorry, or to spend money cultivating market demand for a useful
drug? He thinks charities should link financing to health outcomes,
rather as media firms link spending on advertising to verifiable
changes in shopping behaviour.

The World Bank=92s Nicole Klingen advocates independent financial and
technical audits; another good idea, she says, would be to simplify
the hundreds of measurement and evaluation forms that donors demand
from officials in poor countries. Several international bodies are
working on a unified health-funding platform, to be rolled out in four
or five countries this year.

Improving measurement will not be easy. Ask Christopher Murray of the
University of Washington, whose team labours over an annual report on
development spending on health. As Chart 3 shows, billions of dollars
are impossible to allocate.

For all the new ideas, the problems of funding global health remain
grave. The flurry of innovative schemes should help, both by
persuading official donors that money is being spent wisely and by
attracting funds from the vastly bigger pool of global private
capital. But perhaps change will come only when poor countries
themselves demand better ways to test the results of health spending.
External funding can be a catalyst, but the developing world will have
to mobilise its own money and willpower to tackle humanity=92s great
scourges.

=93Power in Numbers: UNITAID, Innovative Financing, and the Quest for
Massive Good=94, by Philippe Douste-Blazy and Daniel Altman, Public
Affairs, New York, Publication forthcoming

------------------------------------------------------------

Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
thiru@keionline.org

Tel: +41 22 791 6727
Mobile: +41 76 508 0997