Getting serious about financing the end of epidemics

The following post was originally published at the Lancet Global Health Blog on Oct. 6, 2017. 

The U.S. Congress appears poised to reject major cuts to global health programs, but a more fundamental problem remains. The international efforts to end the epidemics of AIDS, tuberculosis (TB) and malaria are underfinanced. By 2020, if current funding levels are not increased, the annual financing shortfall could reach approximately $3.5 billion for malaria, $6 billion for TB, and $7 billion for HIV.

This investment deficit means we are watching the steady undoing of our opportunity to end these epidemics in the near future, and creating the real threat of resurging diseases made worse by growing resistance to drug treatments. Flat investment levels will not end the epidemics of AIDS, TB and malaria, and delaying a better financed response translates to millions of lives lost and billions more dollars in expense.

A much more deliberate effort is needed to close the financing gap. Policymakers and global health advocates should take this up with urgency and be willing to get out of their comfort zones. This will require learning about and working with innovative and private finance, and growing domestic investments by implementing countries. It will also require recognizing that donor aid has unique strengths, including the ability to catalyze other funding, and needs to be increased.

The funding gap is completely avoidable, but addressing it will require understanding the potential and limitations of each financing approach.

First, innovative financing has enormous potential to unlock significant resources. It is estimated there is now $100 trillion in the global savings pool, and billions of dollars are available in development banks. World Bank President Jim Kim has observed that, “For decades, the rich have used sophisticated tools – swaps, derivatives, debt – to get richer. We need to put those tools to work in creative ways on behalf of the poor.”

Innovative financing for global health can take many forms, including:

  • Public guarantees that mitigate risk in private financing, thus encouraging investment
  • Public-private funding, where resources from public and private sources are combined, and private funding and expertise are leveraged
  • Buy downs of government loans, in which a third party pays all or part of the interest or principal of a loan to open up social spending
  • Milestone-based payments, where funding is disbursed once agreed upon services are delivered or outcomes achieved
  • Debt swaps, in which a country’s debt is forgiven if it guarantees those funds will be invested in social goals
  • Impact bonds that pay returns to investors if predetermined social goals are realized
  • Seed funding from the public or donor sector that operates like venture capital to support high-risk, high-return priorities
  • Dedicated taxes or levies earmarked to health priorities

These arrangements have great potential, but they are no panacea. Private investors may be less inclined to finance projects in politically unstable environments, or projects unlikely to deliver a profit in the short term.  Increasing reliance on private sector health investment presents the risk that health systems – essential for primary care and scaling interventions – will continue to be neglected. Ultimately though, with proper oversight and coordination among stakeholders, innovative financing can be more transparent and promote accountability.

Second, increased domestic investment is crucial. When countries invest in their own people’s health, it advances country ownership and can help integrate single disease programming into the broader health system. This financing has increased markedly in recent years. Countries receiving support from the Global Fund, for example, increased support of their own health programs by 52 percent between the 2012-2014 and 2015-2017 funding cycles. The later period marks the first time African countries have mobilized more domestic than foreign funding for health.

Yet many of the countries most heavily affected by major epidemics are not near being able to finance responses on their own. Withdrawing donor aid too rapidly from middle-income countries risks progress in fighting disease. Even many countries with growing economies face significant challenges in improving tax collection, tackling corruption, and improving oversight and transparency – all necessary to increase domestic resources.

Third, donor aid remains essential to success. As noted by writer Jonathan Glennie, aid has unique advantages. It generally is focused on public health outcomes, is flexible, is increasingly accountable and transparent, and frequently promotes engagement of civil society in decision-making. It often builds in critically important evaluation components. And aid can take on the politically difficult work of serving socially marginalized groups that may be ignored, or worse, by their own governments.

The 1970s smallpox elimination campaign is an example of aid’s potential. Success in ending that global scourge required adapting to the needs of communities, flexibility in strategic implementation, and global determination and financing.

Policymakers who want to save millions of lives from epidemics need to be talking about increasing donor aid, not letting it flatline or decline. Of course, aid-supported programs need to be adaptable and fully accountable, focused on outcomes, leveraging investment, and supporting equity of access. Donor-supported programs like the Global Fund, and U.S. bilateral programs on AIDS, TB and malaria, demonstrate how aid can be results-driven and lead the way to ending epidemics.

Attention to efficient, strategic use of funds is always important, but we cannot end disease threats without a more committed and creative approach to expanding financing. Priorities include:

  • Leading the way. The U.S. (or another major donor) should challenge world leaders to come together to marshal public and private financing adequate to end the biggest epidemics.
  • Thinking inclusively. Advocates and policymakers should drive discussion of options for increasing financing for global health priorities. The role of innovative finance and its synergies with donor aid should be considered in the multilateral aid reviews underway in the U.S. Congress and several U.S. think tanks.
  • Promoting and tracking innovative finance. Donor governments should actively consider incentives to harness private dollars for global health, building in protections to promote transparency and accountability. A new resource-tracking endeavor is needed to capture public, private and donor health financing together to help policymakers use resources strategically.
  • Being willing to experiment. Bilateral and multilateral organizations should explore new financing approaches, such as public-private finance or loan buy down arrangements. There is often a natural risk aversion in these institutions, but it’s important to utilize the extensive resources in major aid pools to explore how to more effectively leverage private finance.
  • Promoting domestic investment. The international community should build in financial and diplomatic incentives for implementing countries to invest more in their health, including the health of those most at risk and socially marginalized. Greater investment is also needed in civil society groups to advocate for government financing, services and equity of access. Donors should require sustainability plans be in place. All funding streams should ultimately pave the way for increased country capacity and ownership.
  • Increasing donor investment. Policymakers in donor countries must understand the huge return on investment for global health aid and the lessons of history when interest waned in tackling infectious disease. Innovative finance can supplement appropriations here, too: small levies on larger pots of spending can generate billions.

The worst epidemics of our time can be ended, but the window of opportunity is closing. The funds are there; it is a matter of harnessing them and using them wisely.