Meeting of Ministers of Health and Finance on Domestic Financing for Health 12 November 2013 Addis Ababa, Ethiopia Innovative Solutions for Funding Health: Past, Present, & Future

What we heard from the Honorable Ministers, MPs, Delegates, and Civil Society in the video was encouraging… “Departure from traditional thinking…” “Efficiency & effectively using existing resources…” “Partnership with private sector…” “Community…” “Thinking outside of the box…” “Go beyond the norm…” “Sustainability”“Homegrown…” “Suite the needs of African continent…” Value for MoneyNew technologies“Political will…”

Emerging Economies Developed Economies In 1962, child mortality and family size divided the world into developed and emerging economies, with little in the gap…

2 1 …and then family size declines First, child mortality declines… …but over the past 50 years there has been a dramatic shift in the organization of the world trending to smaller families

We also start to see longer life expectancy across all countries…

Over the past 50 years, life expectancy in the US gained just 7 years as new diseases become more prevalent in society Smallpox (1915) Influenza Epidemic (1918) Penicillin (1925) Polio, Measles (1962/63)

“…nearly 30% of lifetime health expenditure is incurred during middle age… …and nearly an additional 40% during the senior years…” As countries experience economic growth, there is a tendency for higher health costs to accumulate later in life… Total: 70-75%

ODA (7%) Non-ODA + ODA (9%) Type10-yr CAGR Non-ODA-1% ODA-7% Type10-yr CAGR Non-ODA37% ODA9% Total Development Aid from In the past decade, Non-ODA has contributed greatly to the development aid universe creating new funding opportunities (US$, billions) Source: OECD data 2013; Non-ODA is all aid related investments including PPP, other than Official Development Assistance as defined by OECD.

As the world develops, demographics shift, people live longer… As health interventions become more expensive, and aid more dynamic We might want to start thinking a little more creatively and collaboratively about funding health…

PRODUCT(RED) Funding raised to date: > $ 215 Million Impact: 14 million people with HIV/AIDS in Sub-Saharan Africa Established: 2006 Objectives: To build a commercial development product using consumer contributions Source of funding: Percentage of profit generated from purchase of (RED) products (Apple, Microsoft, Starbucks etc) by consumers worldwide PRODUCT (RED) $10 Pays a fee for (RED) trademark $10

Advanced Market Commitments (AMC) Established: 2007 Objectives: To stimulate manufacturer to produce new vaccines at affordable prices Source of funding: Donor Governments of Canada, Italy, Norway, Russia, UK and Gates Foundation Funding raised to date: US$1.5 billion donor commitment Impact: Access to pneumococcal vaccine 10 years sooner. Could save 1.5 mm lives by Beneficiaries include Benin, Cameroon, CAR, Congo & other African countries Assess if the vaccine meet criteria Provide financial support to AMC Funds Contribute to long term cost of the vaccines Enter into procurement agreement Vaccines are delivered to countries Donor Governments GAVI Alliance Independent Assessment Committee Vaccine Manufacturers UNICEF

Debt2Health Funding raised to date: € 170 million Impact: Debtor countries include Pakistan, Indonesia, Cote d’Ivoire, Egypt Established: 2007 Objectives: To convert debt service payments into new investments in health Source of funding: Amount of debt foregone in developing country by creditor country CreditorBeneficiary Global Fund Debt cancellation Counterpart Payment(s) Funding of grants based on Performance based funding system

The Global Fund’s Focus in Innovative Finance 15 RDI Ratio ODA as a % of Total Development Aid Global Fund’s positioning in Innovative Finance RDI Ratio: Relationship between a country’s lower disease burden & income level Timeline

1. Upfront investment 3. Deliver interventions 5. Repayment and ROI from performance-based payments Outcome Funders Verification Agent 2. Funding for operating costs Impact Investors Impact Investors Service Provider Instrument-issuing organization 4. Outcome and impact results are independently verified Pay-for-Performance Instrument Product design phase at the Global Fund Objectives: To leverage upfront private investment for malaria intervention programs Source of funding: Impact investors (e.g. high net worth individuals, foundations) Funding targeted: US$ million Impact: Increase efficiency of program implementation

Health Microinsurance Product design phase at the Global Fund Objectives: To build a business model for quality primary health care that is affordable, sustainable, scalable and replicable Source of funding: Donors, private sector companies, government etc Funding Targeted: In discussion with MI intermediaries, telecos, private sector companies Impact: Overall goal is universal health coverage. Pilot will be initiated in a few countries Solution requires high quality delivered at a very low cost and will need to conquer the barrier of cash payments that keep so many from seeking medical care. High Fees Low Productivity Family Members Falling Sick Sick Workers

Numerous Innovative Financing mechanisms exist… Taxes Air ticket tax Global Solidarity Tobacco Contribution Financial Transaction Tax Remittance tax Voluntary Solidarity Contribution PRODUCT (RED)MassiveGoodNational LotteriesCrowdsourcingMatching fund Debt Instruments Sustainable Investing Bonds Pay-for- Performance Diaspora Bonds Vaccine Bonds (IFFIm ) Debt2Health Public- Private Incentives Advance Market Commitments Affordable Medicines Facility for Malaria (AMFm) Health Micro Insurance

Contact Information Innovative Finance Department Makiko Takayama Specialist Adam Bornstein Specialist