THE FUTURE OF HIV FINANCING: Is HIV special? by Mthuli Ncube
23 Mar 2016
THE FUTURE OF HIV FINANCING: Is HIV special? by Mthuli Ncube
POST BY: RUSH Foundation

The Oil price is hovering about $40 a barrel, having dropped from a high of $100 two years ago. This aptly paints a picture of the end of the commodity super-cycle. Other commodity prices such as copper, iron ore, etc., have fallen commensurately, and the continued economic slowdown in China can only buttress this down-turn in commodities. This has major implications on the ability of countries in Africa with a high HIV disease burden to raise domestic resources and complement flattening resources from international aid donors.

This challenge has not escaped Ministers of Health, charged with making sure that all of the health sector is adequately funded going forward. Indeed, the imperatives of Universal Health Coverage endorsed, among many other development priorities, in the latest Social Development Goals, as well as UNAIDS’s proposed Fast Track in HIV, are creating a sense of urgency.

In light of this, UNAIDS and HEARD convened a High Level Workshop on the “Future of  HIV Financing” at Ditchley Park, Oxford, in late  February to  grapple with the issue of sustaining the HIV response under constraints. Health Ministers from the Southern Africa region attended this workshop.

Policy makers were able to appreciate the way HIV has evolved into a “quasi non-communicable disease”, while remaining a communicable one. About two million people are still being infected worldwide but the 15 million currently receiving life-saving treatment have normal life expectancy prospects, if they adhere. Given the explosion of non-communicable diseases in developing countries, this presents a challenges for maintaining HIV as the recipient of special focus and funding, despite the fact that it remains the biggest killer of young people in Africa. Clearly, an integrated approach to the entire health sector seems to be the way forward, though this should not come at the expense of reversing the huge progress made in this disease-specific area. The challenge will be how to retain “vertical” results while gaining “cross-health” and “cross-development” synergies.

In order to achieve UNAIDS’s Fast Track objectives to end the epidemic by 2030, there needs to be a recognition that early investment in the response at all levels will ultimately pay off, as well the acknowledgement, on the part of donors and affected governments, that the cost of keeping people on treatment for the duration of their life-time constitutes an “HIV quasi-debt” which presents unique fiscal-sustainability challenges for affected countries. If countries adopt the “test and treat” approach suggested by Fast Track, funding implications for both domestic and foreign sources need to be carefully worked out in order to achieve sustainability.

Part of the funding will have to come from efficiency gains achieved by health-systems redesign. The redesign needs to happen at several levels, including drug procurement strategies that minimize prices. Better regional coordination is critical to achieve this negotiating power. Others need to come from better use of long term instruments such as Impact Mitigation Funds for infrastructure projects, potential levies on natural resource finds, national health insurance schemes, ‘sin’ taxes etc.

Policy-makers recognize that there is  a need for innovative finance tools domestically, as well as internationally, if they are to meet the  universal coverage goals. Innovative instruments may involve the use of guarantees by international development banks, on health sector loans. Health bonds that are guaranteed by reputable international bodies such as the Global Fund, World Bank or African Development Bank, should be part of the suite of instruments under consideration for future health financing. Equally, regional funds and securitized funds, can be launched, targeting specific affected regions, with countries contributions crowding-in private sector sources. Regional drug and commodity manufacturing companies should be explored to  gain pooled-procurement efficiencies at the regional level.

Overall, there is a need for Ministers of Health to make the economic case for returns on health investment, which, in sub -Saharan Africa, UNAIDS estimates are about 200%, to their counterparts, the Ministers of Finance. There is also a need for them to explore all the economic levers available, both at a fiscal and at private sector level, in order to maximise funding for the response longer-term. For this, a better understanding of economics needs to be promoted throughout health ministries. This can be achieved through capacity building, the hiring of economists in Health Ministries, as well as secondments from Finance Ministries into Health ministries and vice versa, to promote greater understanding of the benefits and challenges of health investments. This will also help strengthen the economic analysis of health financing – thereby achieving  much-needed efficiencies –  as well as improve the efficacy of negotiations with donors and the private sector.

So, while HIV is just one of the many challenges faced by Health  and Finance Ministers in sub-Saharan Africa, it poses a unique combination of emergency and sustainability challenges, both at a social and financial level. It therefore merits the continued focus of donors, policy makers and experts at all level, while continuing to search for better ways to integrate the response into the broader health and development agenda to achieve synergies.”

Blog written by Professor Mthuli Ncube, Professor of Public Policy, Oxford University Blavatnik School, & Project Leader, RethinkHIV