A Health Plan for the G8: Focus on How Funds Are Spent

Roger Bate & Philip Coticelli | 06 Jun 2007
The Global Fund to Fight AIDS, TB and Malaria was established in 2002 to procure health commodities for the poor. The U.S. taxpayer is the largest contributor, accounting for about a third of the $10 billion the fund has raised to date. This money has put 1.1 million people on HIV/AIDS drugs, treated 2.8 million cases of tuberculosis and distributed 30 million insecticide-treated nets (ITNs). It claims to have saved 1.8 million lives, a figure it is touting at this week's G8 Summit of the world's most powerful governments in Germany. It is asking for $15 billion more by 2010. While it has probably helped countries make progress against disease—if not as much as it claims—persistent problems should be addressed before G8 leaders increase global taxpayer contributions.

Developing countries have weak health information systems and cannot accurately measure cases of disease and deaths, nor test and regulate drugs, ITNs and other commodities. The fund infers progress from inputs, such as drugs and ITNs distributed, rather than actually measuring reductions in disease. Hyped figures, such as the 1.8 million lives saved, are superficial and ignore the cultural context and policy environment in which these commodities operate.

For example, the malaria component of those 1.8 million deaths averted is based on a 2004 study showing that 5.5 children are protected for every 1,000 ITNs correctly used. The fund coupled this protection rate with the unwarranted assumption that all 30 million of the ITNs it distributed are being properly used. This is a grand leap of faith that all proponents of ITNs readily make. In reality, compliance is a tremendous problem and gaps between net ownership and use are large, persistent and inadequately addressed in development programs. A 2006 National Statistics Bureau survey in Uganda found only 14% of rural households owned an ITN, and only 8% of young children and pregnant women used one the night before the survey.

UN technical bodies review the safety and efficacy of disease control commodities supplied to developing countries. The review process for ITNs is spearheaded by the World Health Organization Pesticide Evaluation Scheme (WHOPES). It has taken recent applicants two years on average to complete. During this time, independently evaluated and cheaper products are barred from competing for Global Fund contracts, which now all require WHOPES recommendation. This has inadvertently enabled two manufacturers— Vestergard Frandsen SA and Sumitomo Chemicals Ltd—to preserve a near monopoly on public contracts for ITNs, keeping prices high and wasting public funds. The U.S. government alone has opened competition to qualified alternatives. WHOPES review focuses solely on product efficacy and ignores good manufacturing practices, such as the safety of factory workers handling insecticides used with the nets.

Yet for 19 of the 30 anti-malarial drugs the Global Fund approves for purchase with its financing, good manufacturing practices is the only criteria required to compete. None of these drugs have been submitted to the WHO, US Food and Drug Administration or any stringent regulatory authority for testing—in fact only two out of the 30 have received regulatory approval. The Fund has consciously allowed smaller drug companies to compete for its grant money without ensuring the drugs are safe or even that they work at all. This continues a bias against Big Pharma which was evident a few years ago in the desire to treat HIV sufferers, when 18 drugs made in India and purchased with taxpayer funds were found to be of unknown quality. Perhaps worse is that some of the new untested medicines are made in Europe, and hence directly condoned by EU country Governments—notably Belgium and Italy.

We recently voiced these concerns in a public meet-and-greet with the new Global Fund Chief, Dr. Michel Kazatchkine. He attributed the Fund's incongruous policies and political predilections to growing pains, and assured that the Fund would resolve matters. A recent study in the Lancet, a British medical journal, correlated poor grant performance with Global Fund money stewarded by recipient governments. In several countries, mismanagement prompted the Fund to withdraw grants, most recently in Uganda. The former Health Minister is charged with embezzling funds intended to buy medicines. But while the World Bank continues to cite worries of corruption in Uganda, the Fund recently announced it would unlock $26 million for Tuberculosis control.

The U.S. General Accounting Office recommends more rigorous oversight of the Fund's in-country accountants and comprehensive risk management systems to forecast errant grants. And with the Fund financing two-thirds of malaria control globally and much of TB and HIV control, it is essential improvements are made and quickly.

With power comes responsibility. The Fund should be supported by the G8, but it must be held to a higher standard. Its grant performance must be measured in epidemiological and not speculative terms. It should strengthen and balance its regulatory requirements—and notably withdraw unproved medicines from its listings. It should developer stronger safeguards against and penalties for corruption. And its doing so should be required by the G8 before doubling its budget.

Philip Coticelli is the Research and Communications Manager at Africa Fighting Malaria. Roger Bate is a Resident Fellow at the American Enterprise Institute.