Investing in Health in the Developing World

1. Investing in Health in the Developing World By Xavier Sala-i-Martin, Columbia University

2. The Problem Is… Aid Sector does not Prioritize Correctly • WE (the rich world) decide priorities based on our own beliefs or prejudices. • Example 1: AIDS or Other Diseases? • Example 2: if AIDS, Prevention or Cure?

3. Priorities. Example 1: Should we deal with AIDS or other diseases First? • For many years, international institutions (ie, WB and UN) neglected AIDS, even when it was clear that it was going to be a disaster in Africa (they paid lip service in their websites… but did little). • How many lives and much money would we have saved had we INVESTED IN AIDS 20 years ago? (or 50 years ago?) • Why the Neglect? It was NOT SEXY to deal with AIDS (gays, drugs, prostitutes, etc) • More recently, AIDS has become “sexy”, so enormous amounts of aid-effort are devoted to it. But, is it the right thing to do?

4. AIDS or Other Diseases First? • Principle: “Bring the greatest good to the greatest number” (in no so sexy economic jargon, “save cheap lives first”).

5. AIDS or Other Diseases First? FACTS: • Two and a half times more Africans die of other preventable diseases than aids like Measles and other childhood diseases, respiratory infections (from cooking fire inside small unventilated huts), malaria, tuberculosis, diarrhea, and others, • In 2002, 15.6 million people died of these diseases. “Only” 2.8 million died of aids. • A year supply of condoms cost $14 • Medicines that treat TB cost $10/year • Package of intervention designed to prevent maternal and infant death cost $3 • 3 million children die every year because they are not fully vaccinated even though vaccines cost pennies • 25% people suffer from intestinal worms, even though treatment costs $1 per year • Bednets that help prevent malaria cost $12 • Pills that deal with malaria cost 12 cents per tablet (Vietnam reduced Malaria by 97% between 1991-1997 through bednets and anti-malarial drugs)

6. AIDS or Other Diseases First? • Overall, the WB estimates that cost per year of a package of a variety of health interventions like these would cost $40 (compared with $1500 of AIDS). • Kremer (JEP 2002): “for every person treated for a year with antiretroviral therapy, 25 to 110 disability adjusted years of life could be saved through prevention and vaccination of other easily preventable diseases”

7. Priorities.Example 2: Prevention or cure? • According to WHO data • Antiretroviral pills now cost $300/year per patient • But need to add the expert laboratory testing and expert medical care they need for the drugs to be effective so the total cost per patient is $1500 • With some effort, this number can be brought down to $1200 per person. • Total WORLD foreign aid to AIDS is about $20 per person!!!

8. Prevention or Cure? • Emily Oster (in “Sexually Transmitted Infections, Sexual Behavior, and the HIV/AIDS Epidemic” QJE, May 2005). • Why is there so much variation in HIV prevalence rates across African countries (or between African countries and the USA)? • Is it sexual behavior? (number of extramarital partners? Use of condoms? Use of prostitution?) • Is it transmission rates (ie, probability of infection by a sexual partner)? (we know that AIDS is transmitted more easily of the partners have other sexually transmitted diseases –STDs-, especially those that cause open genital sores) • Is it biological differences across countries?

9. Prevention or Cure? • Oster (2005). Results. • Except for condom use, sexual behavior does not vary systematically across 14 African countries and USA • What varies significantly are transmission rates: • For Africa, prevalence rate is 11.8% vs 0.15 for the USA • For Africa, transmission rate is 25% vs 10% in the USA • For Africa, rate of UNTREATED STDs is 11.9% vs 1.9% in the USA • Implication: • (1) treat other STDs (which are cheaper) • Region of Mwaza (Tanzania ) treated bacterial STDs • Female-to-Male transmission rates decreased by 25% • Male-to-Female transmission rates decreased by 36% • Yearly cost: $59.000 for 150.000 (39 cents per person/year) • Cost of year/life saved: $3.67 • Estimated cost for 14 countries: $1bn /year • (2) Change Risky Behavior (Uganda) • Education campaign in Uganda in the 1990s (ABC Campaign: Abstain, Be Faithful, condomize) has reduced PREtramarital sex for women (from 35% to 22%), EXTRAmarital sex for women (from 6% to 3%), and for men, EXTRAmarital sex (from 23% to 16%). There was also a reduction in the NUMBER OF PARTNERS for those having extra and premarital sex. • The cost was $180 million over 10 years. • Cost of year/life saved: $16.82 • Cost for 14 countries: $2.8bn /year

10. Prevention or Cure? • The WHO (a paper by Andrew Creese at the Lancet) says that the cost of saving the same life through prevention (condom distribution, blocking mother to child transmission, and counseling and testing of prostitutes) would cost between $1 and $20 per life saved • That is: For the same money spent giving one more year of life to an AIDS patient through ARV treatment, you could give 75 to 1500 additional years of life to the rest of the population (increase life expectancy by 15 extra years to 5 to 100 people!) • WHO in its 2002 World Health Report shows that money spent in educating prostitutes saves 100 to 1000 more lives than the same amount of money spent in antiretroviral treatment. • But then it mysteriously concludes that ARV treatment is COST-EFFECTIVE!!! (sic)

11. Prevention or Cure? • AIDS prevention in the African AIDS corridor entails dealing with Prostitutes, other Sexually Transmitted Diseases, and Condoms • BUT: International organizations much prefer to flood their websites with numbers about “antiretrovirals, hospitals, doctors, etc” than talking about condoms and prostitutes. • BUT: NGOs and left-wing activists much prefer attacking the pharmaceutical industry (and capitalism in general) for selling their cocktail-pills at price way above marginal cost. • BUT: The religious right-wing prefers to live in another planet and preach abstinence rather than recognize that the use of condoms may help • BUT: Governments in Africa prefer to IGNORE the problem because it hurst tourism and FDI (Trevor Manuel of South Africa)

12. Summary • We have a health problem • Africans will not be able to solve it (they do not have the doctors, the technology or the resources to solve it). • This is why health economists should devote more RESEARCH to HEALTH OF THE DEVELOPING WORLD (they don’t!) • But it should be done using ECONOMICS (costs and benefits) rather than TELEGENICS.