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 Treatment 14 December 2010 Phnom 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

aids2031 An 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. Secretariat Peter Piot Stef Bertozzi Heidi Larson Costs and Financing Robert Hecht David de Ferranti Callisto Madavo Science and Technology Chris Elias Michael Merson Hyper- Endemic Areas Achmat Dangor Leonardo Simão Malekgapuru Makgoba Countries in Rapid Economic Transition Myung-Hwan Cho Prasada Rao Leadership Zackie Achmat As Sy Programmatic Response Paul DeLay Sigrun Møgedal Social Drivers Geeta Rao Gupta William Fisher Modelling Geoff Garnett Communication Denise Gray-Felder

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

aids2031 Costs and Financing Scenarios Current trends: Continuation of current rates of scale-up. Coverage reaches about two-thirds of the universal access targets by 2015 and then remains at those levels. Rapid scale-up: AIDS financing expands substantially to allow rapid scale-up to full coverage (80-100%) by Hard choices: In context of highly constrained resources, strong political will drives decisions to focus on scaling up only most cost-effective prevention interventions. Structural change: Assumes long-term approach emphasizing reducing vulnerability, e.g., programmes to prevent violence against women and create a highly supportive legal and political environment for prevention among sex workers, MSM, and IDUs.

aids2031: Financial requirements and health impact Total annual financial needs, New HIV infections among adults annually

aids2031: Key results of global modeling ScenarioCumulative funding required, US$ billions ( ) Cumulative adult HIV infections, millions ( ) Number of new HIV infections, millions (2031) Number of people on ART, millions (2015) Cumulative life years gained, millions Current Trends Rapid Scale-up Hard Choices for Prevention

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, CountryPrevalence GDP per capita (US$) c AIDS exp per capita (US$) AIDS exp as % of THE d AIDS exp as % of GDP Prevalence GDP per capita (US$) c AIDS exp per capita (US$) AIDS exp as % of THE d AIDS exp as % of GDP Prevalence GDP per capita (US$) c AIDS exp per capita (US$) AIDS exp as % of THE d AIDS exp as % of GDP Cameroon 5· ·80·83· ·01·9 1, ·61·2 Kenya 7· ·02·25· ·63·63· ·32·5 Mozambique 12· ·33·512· ·16·08·01, ·82·5 Nigeria 3· ·00·72· ·01·61·51, ·31·0 South Africa 18·33,946329·80·819·35, ·41·117·98,992648·40·7 Uganda 5· ·32·83· ·74·01· ·82·2 Zambia 15· ·56·013· ·96·47· ·53·6 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 countries Projected HIV prevalence and AIDS expenditure, CountryPrevalence GDP per capita (US$) c AIDS exp per capita (US$) AIDS exp as % of THE d AIDS exp as % of GDP Prevalence GDP per capita (US$) c AIDS exp per capita (US$) AIDS exp as % of THE d AIDS exp as % of GDP Prevalence GDP per capita (US$) c AIDS exp per capita (US$) AIDS exp as % of THE d AIDS exp as % of GDP Brazil 0·64,01041·10·10·64,56641·10·10·55,65040·90·1 Cambodia0· ·00· ·70·60·21,90354·20·3 China0·11,93000·50·00·23,27732·40·10·29,00230·80·0 India0·372711·70·10·21,09024·20·20·12,38821·80·1 Mexico0·36,32071·80·10·37,00992·10·10·38,01881·60·1 Thailand1·42, ·11·13,48943·20·10·65,17931·60·1 Ukraine1·61,17222·20·11·61,81764·80·31·84,33261·90·1 Vietnam0·566112·30·10·596335·70·30·61,82233·00·2 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 and a smaller fraction of GDP

What are the global policy implications? 1.Concentrate on expanded, smarter prevention 2.Make ART more efficient – drugs, tests, personnel, delivery models 3.Continue investing in game-changing AIDS prevention tools 4.Launch “social movement” for prevention in generalized settings 5.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.