The long term costs and financing of AIDS in low and middle income countries –- where is the world heading?

Third Symposium on HIV/AIDS Prevention, Care, and Treatment14 December 2010Phnom Penh, Cambodia

Robert Hecht, Managing Director

Agenda

1. What are the biggest AIDS financing the challenges we face today – and why does long-term thinking matter?

2. What is aids2031?3. What are our global findings?4. What are the policy implications for governments

and donors?5. What is the significance of aids2031-Cambodia?

What are the AIDS financing challenges today, and why does long term thinking matter?

1. We have entered a major crisis in the financing of AIDS

2. We cannot stay the current course – this will mean 3X spending, 3-4X people on ART, and too little reduction in infections

3. We need to move out of short-run emergency mode and take a long-run view of AIDS costs/financing if we are to do the right things today

4. If we take sound actions now, we will have better results in the long run

Radically reduced new infections

All HIV infected in need on treatment

More manageable costs

More sustainable financing

5. The “right actions” actions involve (a) spending smarter and (b) mobilizing additional resources – the current crisis is also an opportunity

6. National leaders and external funders need to be equipped to weigh the options and make sound choices

The global AIDS financing context

Annual spending in developing countries has grown from $400 million a decade ago to $15 billion today But there is still enormous unmet demand – and it is growing ..and the “supply momentum” is accelerating ..but available funding is becoming tighter, in low and middle income countries and in donor countries alike

It is critical that LMIC governments and external funders find ways to spend smarter and more efficiently, and mobilize resources better, if AIDS programs are to be extended and sustained over the next two decades.

Why is wrong with the way we have been approaching AIDS financing issues?

1. Too short term and emergency oriented Yet AIDS is a long term phenomenon Those on ART today will need to be supported for a

decade or more Yesterday’s infections will be tomorrow’s ART cases Some actions required to stem the epidemic will take

years to implement, e.g., legal and social norm changes

2. Most financial analysis has focused on the costs of scale up, without considering epi impact – little integrated modeling

3. Most costing has been done for advocacy (or budgeting), quantifying ambitious maximum scenarios, rather than considering how to spend wisely in constrained environments

aids2031An international consortium of partners from academia, industry, government, and NGOs who have come together to improve the long-term AIDS response by promoting actions today that positively impact the future of the epidemic.

SecretariatPeter Piot

Stef BertozziHeidi Larson

Costs and FinancingRobert Hecht

David de FerrantiCallisto Madavo

Science and Technology

Chris EliasMichael Merson

Hyper-Endemic Areas

Achmat DangorLeonardo Simão

Malekgapuru MakgobaCountries in

Rapid Economic Transition

Myung-Hwan ChoPrasada Rao

LeadershipZackie Achmat

As Sy

Programmatic ResponsePaul DeLay

Sigrun Møgedal

Social DriversGeeta Rao Gupta

William Fisher

ModellingGeoff Garnett

CommunicationDenise Gray-Felder

Key issues in financing the global AIDS response -– the raison d’etre for aids2031

1. How much financing will be required to combat AIDS over the next two decades in developing countries, under different scenarios?

2. Under these possible scale-up scenarios, what health impacts will be generated?

3. What can be done to improve efficiency, by spending on the “right things” and spending in the “right ways” on them?

4. Who will pay the future price tag for AIDS? What is the fairest and most sustainable way to do this?

Methods and data

aids2031 Costs and Financing Working Group modelled long term financial requirements for AIDS scale up

Needs estimated under four scenarios, shaped by assumptions on political will, resources, and approach

Best available demographic, epidemiological, and financial data employed (UN Pop Div, WHO, LMIC country reports and studies)

Modelling tools from Spectrum software suite (GOALS, GRNE)

Projections of country and donor fiscal space using IMF/WB GDP and growth projections and OECD donor database

Elasticities of revenue and health spending built upon van de Gaag’s work (Brookings/R4D)

20072009

20112013

20152017

20192021

20232025

20272029

2031$0

$5

$10

$15

$20

$25

$30

$35

$40

Current Trends Rapid Scale-upHard Choices Structural Change

US$

Bill

ions

aids2031: Financial requirements and health impact

0.0

500,000.0

1,000,000.0

1,500,000.0

2,000,000.0

2,500,000.0

3,000,000.0

3,500,000.0

Current Trends Rapid Scale-upHard Choices Structural Change

Total annual financial needs, 2008-31 New HIV infections among adults 15-49 annually

aids2031: Key results of global modeling

Scenario Cumulative funding

required, US$ billions

(2009-2031)

Cumulative adult HIV infections,

millions(2009-31)

Number of new HIV

infections, millions (2031)

Number of people on

ART, millions(2015)

Cumulative life years gained,

millions

Current Trends 490 47.5 2.1 8.8 148

Rapid Scale-up 722 33.3 1.3 11.6 235

Hard Choices for Prevention 397 39.4 1.7 11.3 232

How much will AIDS cost, and who will pay?(AIDS spending requirements as a share of GDP, 2015)

= Group I

= Group II

One reality: High burden low income countries Projected HIV prevalence and AIDS expenditure, 2008-31

2008 2015 2030

Country PrevalenceGDP per

capita (US$)c

AIDS exp per capita (US$)

AIDS exp as % of THEd

AIDS exp as % of GDP

PrevalenceGDP per

capita (US$)c

AIDS exp per capita (US$)

AIDS exp as % of

THEd

AIDS exp as % of GDP

Prevalence

GDP per

capita (US$)c

AIDS exp per capita (US$)

AIDS exp as % of THEd

AIDS exp as % of GDP

Cameroon 5·0 782 6 15·8 0·8 3·8 898 17 36·0 1·9 1·9 1,234 15 22·6 1·2

Kenya 7·0 513 11 52·0 2·2 5·7 627 23 84·6 3·6 3·2 921 23 57·3 2·5

Mozambique 12·6 336 12 86·3 3·5 12·2 493 30 145·1 6·0 8·0 1,198 30 57·8 2·5

Nigeria 3·1 522 4 19·0 0·7 2·6 674 11 44·0 1·6 1·5 1,137 11 25·3 1·0

South Africa 18·3 3,946 32 9·8 0·8 19·3 5,194 58 13·4 1·1 17·9 8,992 64 8·4 0·7

Uganda 5·5 294 8 42·3 2·8 3·8 353 14 59·7 4·0 1·6 550 12 31·8 2·2

Zambia 15·2 401 24 111·5 6·0 13·1 530 34 118·9 6·4 7·9 915 33 64·5 3·6

Sources:Unless otherwise indicated, all numbers are the authors’ own calculations. c Based on World Bank GDP estimates.d THE stands for total health expenditure.

...and GDP (2-6%)….and will remain stubbornly high

over the next two decades

AIDS spending will absorb large share of health

expenditure ...

Another reality: Low burden middle income countriesProjected HIV prevalence and AIDS expenditure, 2008-31 2008 2015 2030

Country PrevalenceGDP per

capita (US$)c

AIDS exp per capita (US$)

AIDS exp as % of THEd

AIDS exp as % of GDP

PrevalenceGDP per

capita (US$)c

AIDS exp per capita (US$)

AIDS exp as % of

THEd

AIDS exp as % of GDP

Prevalence

GDP per

capita (US$)c

AIDS exp per capita (US$)

AIDS exp as % of THEd

AIDS exp as % of GDP

Brazil 0·6 4,010 4 1·1 0·1 0·6 4,566 4 1·1 0·1 0·5 5,650 4 0·9 0·1

Cambodia 0·9 512 3 11·0 0·6 0·6 814 5 10·7 0·6 0·2 1,903 5 4·2 0·3

China 0·1 1,930 0 0·5 0·0 0·2 3,277 3 2·4 0·1 0·2 9,002 3 0·8 0·0

India 0·3 727 1 1·7 0·1 0·2 1,090 2 4·2 0·2 0·1 2,388 2 1·8 0·1

Mexico 0·3 6,320 7 1·8 0·1 0·3 7,009 9 2·1 0·1 0·3 8,018 8 1·6 0·1

Thailand 1·4 2,779 4 1.2 0·1 1·1 3,489 4 3·2 0·1 0·6 5,179 3 1·6 0·1

Ukraine 1·6 1,172 2 2·2 0·1 1·6 1,817 6 4·8 0·3 1·8 4,332 6 1·9 0·1

Vietnam 0·5 661 1 2·3 0·1 0·5 963 3 5·7 0·3 0·6 1,822 3 3·0 0·2

Sources:Unless otherwise indicated, all numbers are the authors’ own calculations. c Based on World Bank GDP estimates.d THE stands for total health expenditure.

AIDS spending will consume smaller share of health

expenditure (<10%)

With low prevalence, AIDS spending stable or declining

to 2031 ...and a smaller fraction of GDP

What are the global policy implications?

1. Concentrate on expanded, smarter prevention2. Make ART more efficient – drugs, tests, personnel,

delivery models3. Continue investing in game-changing AIDS prevention

tools4. Launch “social movement” for prevention in

generalized settings5. Encourage middle income countries (and those with

concentrated epidemics) to pay more; pursue donor “transition” strategies

6. Sustain support for high burden low income countries, but linked to greater domestic funding (“ownership”) and commitments to target-based prevention

What is the significance of aids2031-Cambodia?

Selected by our task force to explore the cost and financing options for a low burden, low income country

1. Cambodia can be an important global leader in targeted prevention.

2. Cambodia can show how strong prevention helps to alleviate long-term treatment costs.

3. Cambodia can be a global leader in setting a long-term financing framework to reduce donor dependency.

4. Cambodia can show others how a national team can master an integrated program/cost/impact modeling approach.

5. Cambodia can show others how a team of epidemiologists and economists can work together effectively.

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