By Robert Hecht, President, Pharos Global Health
     J. Stephen Morrison, Senior Vice President and
     Director of the Global Health Policy Center

We are at a transitional moment in how disease control efforts are structured in middle-income countries (MICs). To meet new evolving opportunities and threats in the coming decade in MICs, we cannot presume there will be a major new donor-led financing facility—à la the Global Fund, the President’s Emergency Plan for AIDS Relief (PEPFAR), Gavi, or the Global Financing Facility—to underwrite a large share of the costs of fighting additional diseases, infectious and noncommunicable. The “golden era” of massive annual increases in donor assistance to global health during the last decade from 2000 to 2010 is long past. Middle-income countries and donors alike are now under increased pressure to embrace a new paradigm in line with new realities.

In this new paradigm, MIC countries themselves will pay for expanded disease control services (health workers’ labor, drugs and vaccines, supporting infrastructure) versus relying on donors. It is their decision power that ultimately will be most consequential—what choices they make in terms of affordable national investment priorities. Development assistance for health will no longer finance health service delivery (this trend has in fact been accelerating in recent years) and will instead focus on less costly but vital “global public goods” (e.g., knowledge and advice on strategic planning, disease and financial modeling, assessing benefits and costs, and sharing of global best practices). Drug and diagnostic manufacturers, country governments, and donor agencies will need to intensify sustained dialogues if access and affordable price levels are to be achieved through mechanisms such as pooled purchasing, patent donations, tiered pricing, and voluntary licensing. A sweeping systemic transformation in price and access may not be realistic: what is needed, and indeed feasible, are carefully negotiated concrete solutions, conducted in good faith, and carried out in diverse settings to ensure rapid and sustained availability of specific key medicines and other health products.

In this commentary we explain why and how the ground is shifting in disease control, and we elaborate further on what the new paradigm looks like. We then illustrate what is happening through the lens of hepatitis C (HCV) elimination, where some middle-income countries, drug manufacturers, and a few international organizations are beginning to model this new paradigm in order to scale up treatment and drastically cut the 550,000 annual deaths due to HCV. We conclude with some thoughts on what donors, including the U.S. government, can do to embrace and accelerate this new approach.

A New Era in Disease Control and the Role of Donor Aid

The decade between 2000 and 2008 was a “golden era” of rapid increases in development assistance for health (DAH) in which $300 billion of aid was channeled to programs to fight major infectious diseases, including AIDS, tuberculosis (TB), and malaria, and to subsidize the purchase of powerful new vaccines to prevent childhood deaths. The results have been historic. HIV prevention and treatments programs have averted millions of infections and saved millions of lives: over 17 million persons are today on life-sustaining antiretrovirals. Malaria bed nets and improved drugs have similarly cut illness and deaths for millions. The same is true for new vaccines against childhood pneumonia and acute diarrheal disease.

But the amount of DAH peaked at $38 billion in 2013 and has plateaued since then. And as increased numbers of countries have seen steady economic growth and graduated from low-income status to middle-income status, their eligibility for access to donor financing has steadily diminished.

The largest programs—PEPFAR, the Global Fund, and Gavi ($12 billion a year)—are fighting to keep their funding at current levels.

At the same time, the health needs of middle-income countries continue to grow. There has been a recent call, for example, for an extra $7 billion a year to scale up programs to reduce child malnutrition. And there are other new opportunities to fight infectious diseases such as dengue fever and noncommunicable diseases such as hypertension and diabetes, using effective low-cost solutions. Recent studies suggest that there are inexpensive surgeries that could reduce much illness and death in MICs. In the coming years, we may also see new vaccines and treatments for Zika, Chikungunya, Ebola, and other health threats, driven by breakthroughs in health research and development and in models for delivering care in primary health settings.

In this environment of growing needs and opportunities to save lives at low cost in MICs, and simultaneously of flat levels of DAH that are already claimed by the AIDS, TB, malaria, and maternal/child health communities, how will countries be able to scale up these new disease control strategies?

Those of us working in global health—MIC governments, donor agencies, civil society organizations, the private sector, academics, and others—need to adjust our mindsets and accept several new realities:

1. Countries—and not donors—will have to pay for these disease control programs with their own funds, from a combination of government health budgets, public and private insurance, and possibly innovative approaches to financing (see below). Donor funding for direct service delivery will be limited to a small number of poor high-disease-burden countries (think Malawi and AIDS). Lower-middle-income countries like India and Nigeria will pay most of their own way.

2. MICs will need to make their own decisions about whether to pay for program scale up for other infectious and noncommunicable diseases, answering the questions: Is it a priority, given scarce health budgets? Is it affordable to pay for and sustain the program? How to incentivize countries to make these investment choices? This will require countries to build the capacity to develop national disease control strategies, cost them, assess impact and cost-effectiveness, and design financing schemes. To do so, they will have to access an array of technical and analytical skills and adopt a health technology assessment framework in which they can compare the benefits and costs of different uses of their tight budgets. Most MICs do not yet have these skills and frameworks.

3. Scarce DAH will increasingly focus on relatively inexpensive but critical “global public goods” that can assist countries to design and launch effective disease control programs. Donors can help countries to sharpen their decisionmaking processes, for example by transferring know-how and sharing best practices in designing national disease control strategies, costing them, and estimating impact, and in forecasting and pooling demand so that MIC countries obtain lower prices for drugs and diagnostics. This will require that donors retool themselves institutionally to acquire adequate skills and consulting capacities.

4. Affordability and access for medicines and related medical products are not to be achieved through any single sweeping systemic change. Progress will grow out of pragmatic, applied dialogues involving governments, private industry, donors, foundations, international organizations, focused on reaching concrete, workable solutions in specific settings for specific products. High-level sustained U.S. diplomacy has a role to play in encouraging critical dialogues of this kind.

Treating Hepatitis C

The new paradigm in disease control is directly relevant to hepatitis C treatment.

Over 130 million persons are infected with chronic hepatitis C globally, four times the number of persons living with HIV. Chronic HCV frequently leads to liver disease and premature death from cirrhosis and liver cancer. When combined with deaths from hepatitis B—which is also treatable with new and inexpensive drugs—the global burden of the two main killer strains of hepatitis amounts to more than a million deaths every year.

Previously, there were few treatments for those with chronic HCV, and these treatments required weekly injections of costly drugs such as PEGylated interferon and ribarvirin that were toxic, led to complications, and resulted in a cure rate of less than 50 percent.

Starting about three years ago a newer, simpler, and more effective class of drugs came on the market. These drugs require HCV patients to take a pill a day for three months, with a cure rate of over 95 percent. Though these “direct acting antivirals” (DAAs) remain costly in the United States and other rich countries, the leading manufacturer, Gilead Sciences, has licensed its technology to a group of Indian generic drug companies and is allowing them to sell the same products in over 100 low- and middle-income countries. Gilead has also announced that it is prepared to sell its branded HCV drugs in these countries at a fraction of their cost in the United States—$900–$1,200 for a full course of treatment, as compared to a U.S. list price of $84,000–$96,000. It is expected that the Indian companies will charge less than Gilead in this “generic territory”—possibly for as little as $200–$300 per person cured if markets and dedicated financing materialize. Other originator companies that have entered the market to compete with Gilead, including Merck, Abbvie, Bristol Myers Squibb (BMS), and Johnson and Johnson, are also looking at pricing strategies to make their products affordable in MICs.

At these lower prices, it may be compelling for MICs to consider launching large-scale HCV treatment programs, especially in countries such as Egypt, Pakistan, Mongolia, and Georgia, where 5–10 percent of adults are infected with the deadly virus.

While more detailed studies are needed, back-of-the-envelope calculations of the cost-effectiveness and affordability of HCV treatment show some promise. Imagine a typical middle-income country with 10 million people, a GDP per capita of $5,000, and HCV prevalence of 5 percent. A national program to treat all 500,000 chronic HCV carriers at $900 a cure over 10 years would cost around $450 million total, or $45 million per year. Assuming that 5 percent of the country’s GDP goes to public-sector health spending, the $45 million required annually for HCV would absorb less than 2 percent of the country’s government health budget of $2.5 billion. This is however just the drug cost and does not include spending on testing, diagnostics, patient management and supervision, surveillance, and a number of related items. More work needs to be done to come up with a solid overall cost estimate and to compare this with the health and economic benefits of eliminating HCV.

There will be no large new international fund like PEPFAR to assist these countries with HCV treatment. The MICs themselves will have to figure out whether it is a justifiable and affordable investment to implement a national HCV strategy and how to pay for it with their own scarce national resources.

So far, only a few MICs have done the requisite homework or launched national programs. Egypt is putting together a large effort that will be funded mainly by the government through its social insurance fund. Egypt’s fragile and unstable national finances may slow or endanger the sustainability of the program. Pakistan is expanding treatment mainly in the private sector, with patients paying out of pocket; thus far, the program is only affordable for wealthier citizens. Georgia is moving toward a universal program using government budget support, with Gilead providing free HCV drugs. Mongolia is considering taking low-interest loans from regional development banks or finding ways to tap into private credit markets to borrow a part of the treatment costs, calculating that a large upfront investment in HCV treatment would yield major downstream benefits, in terms of reduced spending on patients with liver disease and improved productivity and earnings by those cured of chronic HCV infection, that would more than pay back the loans.

But most other countries with significant hepatitis C burden have been slow to make HCV treatment a national priority. The expected costs can seem daunting, the affected populations are often marginal and stigmatized, and the basic data and systems and skilled personnel to implement and monitor programs are frequently not in place.

Next Steps for Donors

What is an appropriate and realistic role for DAH in these MIC countries, where hepatitis control and future programs to fight cancer, heart disease, and the next pandemic will be financed largely from domestic sources?

There are two key actions that donors can take. First, they can help MICs to evaluate the case for investing their own funds in disease control and further assist the countries in designing scaled-up programs if the investment case is positive. To do this, donors can play a valuable role—at relatively low cost—by sharing key information and know-how on what other countries are doing and the lessons learned; best practices and how to adapt them to MIC conditions; and how to prepare a strong national disease control strategy, cost it, and assess its impact.

Second, donors can assist MICs in finding ways to make disease control efforts cheaper and more efficient, including by actively encouraging dialogues among industry, countries, and foundations on how to achieve affordable prices and improved coverage for drugs, vaccines, and diagnostics, and by testing low-cost models for service delivery using nurses and community workers in place of doctors.

While the UN Secretary General’s High-Level Panel on Access to Medicines continues to debate new mechanisms to improve developing countries’ uptake of drugs at affordable prices, efforts to deepen the use of existing tools, including long-range demand forecasting, tiered pricing, and voluntary licensing to generic manufacturers, can lead to financially sustainable solutions for many MICs. Specific price and volume negotiations between pharma companies and individual MIC governments may also yield positive results, as has happened for example between Brazil and suppliers of new vaccines and drugs.

There are also opportunities for external organizations to help MICs to design new financing mechanisms for HCV and similar cures. Credit facilities are worth exploring, both using private markets and by drawing on the resources of the World Bank and the regional development banks.

To date, the traditional global health donors have been slow to embrace this new paradigm for disease control and for the use of DAH. To do so, they will have to adjust their skill mix (fewer managers of health service delivery, more technical specialists who can assist MICs in designing their disease control strategies). Their relationships with MIC governments will also have to change, with the donors becoming primarily providers of technical know-how and information and moving away from subsidizing services delivered by governments and large nongovernmental organizations, as has been the case with PEPFAR and the Global Fund, or paying for commodities, as Gavi has done.

The U.S. government could play a more active role in shaping this new paradigm, using its health diplomacy and thought leadership capabilities. The Department of Health and Human Services and the State Department could convene MIC governments, global public health leaders, and pharmaceutical companies to identify and shape national and international actions to accelerate the next wave of disease control efforts. The United States could also use its influence in multilateral fora like the World Bank and the World Health Organization to drive a more vigorous discussion around new approaches to scaling up disease control programs in MICs. Already the U.S. Centers for Disease Control and Prevention is providing technical support to Egypt and Georgia to design and launch expanded HCV programs. This could be extended to other countries and to other diseases.

The Future of U.S. Policy

In this new era, there are several critical considerations that will figure prominently as U.S. policymakers ponder how to act effectively to support MICs to adopt new health technology and delivery solutions to meet important health challenges: How can the United States advise and incentivize countries to make these life-saving choices an investment priority? How can the United States help to strengthen these countries’ capacities and knowledge to make the best choices? And how to use U.S. diplomatic strength to advance pragmatic, applied dialogues that can achieve affordable pricing and expanded coverage and uptake of medicines and other related products including vaccines and diagnostics? Finding smart answers to these questions should be a priority for the next administration.

Robert Hecht is president of Pharos Global Health Advisors and J. Stephen Morrison is senior vice president and director of the Global Health Policy Center at the Center for Strategic and International Studies, both in Washington, D.C.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

© 2016 by the Center for Strategic and International Studies. All rights reserved.