Experts say that underfunded pilot universal healthcare sites to be set up by South Africa as part of its proposed national health insurance may be doomed to fail as debate rages about how the move to more equitable healthcare will be funded.

In March, South Africa announced 10 districts across the country that will pilot universal healthcare under its proposed national health insurance (NHI).

Pilot sites have only been allocated an additional R11 million (or 1.3 million dollars) to implement the NHI, according to Di McIntyre, professor at the School of Public Health and Family Medicine at South Africa’s University of Cape Town.

“The NHI is actually about comprehensive reform of the healthcare system…you can’t do anything with R11 million,” said McIntyre, speaking at the South African National Health Assembly in Cape Town on Jul. 6.

“We have to apply pressure to the national treasury to actually start funding the rebuilding of the public health system.”

Researcher Daygen Eagan, with the South African pro-bono human rights law organisation, SECTION27, estimated that pilot sites could need at least several hundred million rands to roll out the necessary healthcare improvements as part of the pilot, including district-based interventions to reduce maternal and child mortality, and expanded school-based health service.

South Africa released a draft policy document on the NHI in August 2011, and is hoping universal healthcare will not only increase access but also improve health outcomes and value for money.

According to the World Health Organization (WHO), South Africa spends about 400 dollars per person on healthcare, roughly the same amount as Cuba but charts much poorer results for this investment than the island nation.

Maternal mortality in South Africa, for instance, is about seven times higher than that in Cuba, according to the WHO. Now, researchers say that not only are pilot sites underfunded but that they have serious concerns as to how the country will fund the NHI.

Who will foot the bill?

Government has proposed that the NHI be funded through a National Health Insurance Fund, a public entity outside of the Department of Health but accountable to government. This pool of money may be funded through increased health budget allocations from general tax, or though increased personal income tax or the value added tax (VAT) placed on most purchased goods, which many argue would allow the country to tap into its huge informal economy.

However, McIntyre warned that increasing VAT would shift the burden of funding the NHI to poorer households, while the middle class and wealthy have enjoyed successive cuts to personal income tax since the country ushered in democratic rule in 1994.

Associate researcher with the Alternative Information and Development Centre in Cape Town, Dick Forslund issued a similar warning regarding the possible introduction of a payroll tax. While taxes like these initially draw on private sector resources, employers quickly begin to factor these kinds of taxes into wage negotiations, shifting the to employees.

McIntyre argued that government’s draft policy document, or Green Paper, is deliberately ambiguous on the issue of NHI funding, largely because National Treasury – not the Department of Health – will ultimately decide how universal healthcare will be funded. She called on health activists to be strategic in advocacy around the NHI.

“Treasury is going to kill the NHI dead so (we) have to be strategic,” she told IPS. “At a minimum, we should be calling for no further tax reductions.”

Breaking the rules

Both McIntyre and Forslund argued that more could come from South Africa’s existing tax base.

“For most countries, 70 percent or more of healthcare costs comes from public funds,” McIntyre told IPS.

“In South Africa, about 40 percent of money spent on healthcare comes from public funds with contributions from private insurance companies representing as bit or bigger of a share and there’s still quite a bit that comes out of (patients’) pockets.”

Despite signing onto the 2001 Abuja Declaration, in which African governments pledged to commit 15 percent of national budget to health, South Africa currently dedicates about 12 percent of its national budget to health.

If South Africa is going to up the ante for health, Forslund said the country will have to abandon neo-liberal economic policies ushered in as part of the country’s negotiated settlement as part of its transition to democracy.

These policies dictate tax revenue should not exceed 25 percent of the country’s Gross Domestic Product (GDP), said Forslund, arguing that what he called the “25 percent rule” was a strategy by the former Apartheid government to ensure that the political revolution did not become an economic one.

But with increasing social welfare demands on the state, including commitments to free education and healthcare, South Africa will need to break its 25 percent rule.

“The 25 percent rule means a small state,” he said. “It’s a much more conservative percentage than even that applied in the United States.”

By 2025, the NHI’s cost will equate to about six percent of GDP, he estimated.

Finance Minister Pravin Gordon announced early this year that the National Treasury would release a discussion paper on NHI funding in April but has not yet done so.

By Laura Lopez Gonzalez
MONTREAL, Canada, Oct 4 2011 (IPS)

Busan represents the possibility of an aid revolution – a time in history where an encompassing, inclusive aid framework may be possible. This is according to Tony Tujan, director of IBON International, a capacity development non- governmental organisation.

Tony Tujan, director of IBON International. Credit: CIVICUS

In late November international aid players will descend on Busan, South Korea to review past aid effectiveness commitments before writing the next chapter in the fight for better aid.

At the forum, delegates will assess the world’s progress against previous aid agreements, the Paris Declaration on Aid Effectiveness and the Accra Agenda for Action – before issuing yet another.

The 2005 Paris Declaration laid out targets to improve the quality of aid and its development impact, establishing monitoring systems to assess progress and accountability. Three years later, in an effort to accelerate progress on the declaration, the Accra Agenda was drafted in the Ghanaian capital. The document proposed increased national ownership of development process, more inclusive partnerships and measurable impacts.

These were a start but Busan’s outcome document must go further to ensure sustainable, equitable and inclusive aid, according to Tujan who also co-chairs the civil society platforms BetterAid and Reality of Aid.

While the International Monetary Fund (IMF) uses the global recession as a rationale for continued conditionality, rising powers such as China, India and Brazil involved in South-South development cooperation may be unwilling to permit the continuation of a Northern-dominated aid architecture, he cautions.

With the rise of South-South cooperation, now is the time to pen a more equitable future for aid, said Tujan.

Ahead of the high-level meeting, Tujan spoke to IPS about the state of aid effectiveness and the possibility of a new aid order at Busan.

Q: What are the three main issues within aid effectiveness at the moment? A: One is that the aid effectiveness targets need to be strengthened, meaning that governments recommit to devising clear policies and programmes. An evaluation has shown that developing countries have better performance in aid effectiveness than the donors. It is the donors, who do not have incentives to implement their own commitments and targets, that have been very slow and weak in their performance.

The second issue is the question of human rights-based results. Donors and governments have accepted development effectiveness but not the human rights content. They have re-defined development effectiveness as a generic term in relation to development goals but these are not interpreted in the context of people achieving their rights, they are interpreted in terms of financial performance and institutional development.

We need a strong results agenda but this should be human rights- based. It is not so much how the programmes are implemented, what is more important is that the implementation of aid programmes clearly result in the poor and marginalised, and people in general, in claiming their human rights.

The third is the question of aid architecture. We need to come up with a new document and a new institution that is more equitable, which will accept shared leadership and not impose leadership by developed countries or even the G20 (group of major industrialised and emerging nations).

Q: What will you be hoping for in Busan? Aid effectiveness as (defined by) the Paris and Accra commitments is not sufficient and will not deliver results. Busan is at an important point in history where … an encompassing framework for development cooperation is possible. (Aid) should be about the traditional donors but it should also include the so-called “new donors” … developing countries who, one way or the other, are engaged in South-South development cooperation. It should include the totality of civil society and other private actors. Within the last two years, many governments are actually talking to civil society platforms about their development programmes, policies, aid programmes and so on because of the aid effectiveness process. In some countries – Indonesia, Philippines, Senegal – civil society is not simply consulted (but) they have been made members of the bodies that oversee aid.

Q: How likely is it that we will come out of Busan with this new architecture? A: In the full form? 50-50…Whether it will meet the overall definition of an equitable, inclusive aid architecture – that remains to be seen.

Q: What are the political challenges? A: Politically, you can fit it down to one country, China – and the G77 (the largest single coalition of developing countries). Will these countries accept a Busan compact that is premised on South-South cooperation where China commits to the aid effectiveness of its support to other countries?

If we have a Busan outcome document that is such, it will radically change the future of the OECD (the Organisation for Economic Co-operation and Development) because now we will have a new animal that is not the OECD where aid can be mediated in a more equitable fashion.

China and the G77 are conscious that the leadership of the OECD Development Assistance Committee (DAC) is very much premised on the political and economic interests of those countries. They will not subsume their efforts under that leadership.

In this case, it is an objective shared even by the DAC. The DAC wants China in, it wants everyone in and apparently they (the DAC) are aware of the consequences of that happening or where it will lead.

Q: How has the global economic downturn impacted aid effectiveness? A: The IMF says that in the context of a recession, it should be given the full powers to impose conditionalities and fiscal restraints – conditionalities to handle sovereign debt, conditionalities to deal with fiscal policies and financial systems.

Civil society organisations have demanded that we should end policy conditionality – not fiduciary conditionality – that is intrusive and often goes against human rights and sovereignty.

You do not need conditionalities if you have the right processes (and) democratically negotiated compacts are made. If you have such democratic processes where citizens are not only consulted but involved in the process of creating the modalities for assistance then these do not become imposed conditionalities. Even then there could be mechanisms to reduce, let us say, the power of the conditions and yet be able to achieve policy reform.

IMF policies are premised on neoliberalist prescriptions and that is why we believe that conditionalities should be ended. We did not get that in Accra, chances are we will not get that at Busan because the IMF is moving heaven and earth to kill that demand.

Excerpt:

By Laura Lopez Gonzalez
MONTREAL, Canada , Sep 30 2011 (IPS)

Assassinations, intimidation and disappearances were the manifestations of civil society repression in Africa, but this may be changing as the crackdown on civil society is becoming more formally accepted and increasingly “by the book”, according to Ingrid Srinath, secretary general of the global civil society network, CIVICUS.

to Ingrid Srinath, secretary general of the global civil society network, CIVICUS. Credit: Laura Lopez Gonzalez

In the last two years, CIVICUS’ Civil Society Watch Programme has responded to civil society in more than 90 countries worldwide. In Africa, countries are increasingly using legislation, including laws governing homosexuality, treason and access to information, to hamper non-governmental mobilisation, said Srinath, who previously headed up the child rights organisation Child Rights and You in her native India before taking the helm at CIVICUS.

In response to the crackdown, which Srinath links to the global economic recession, CIVICUS has established a Crisis Response Fund. Threatened civil society organisations from around the world can apply to the fund for money to support activities such as documentation of human rights abuses as well as related advocacy and training.

The initiative is supported by Lifeline, a similar emergency fund accessible not only to organisations but also at-risk human rights defenders. Through Lifeline, human rights defenders can access money for medical costs, legal representation and even temporary relocation.

As South Africa continues to debate a controversial protection of information bill recently withdrawn from parliamentary consideration for further discussion after public protest, Srinath spoke to IPS about the civil society crackdown in Africa.

Q: You have spoken recently about a global crackdown on civil society, what does that crackdown look like in Africa? A: In Africa, the clampdown takes a few different forms. A large part of it is legislation, so whether it is … the anti-homosexuality bill in Uganda or this new protection of information legislation in South Africa, there is a legislative pushback to constrain freedom of expression, association, and assembly. Then there is the outright what you might call “extra judiciary” measures – the assassinations, intimidation, torture – that is more a factor in Zimbabwe or too many countries to actually list.

Finally, there is this constant undermining or erosion of civil society by these constant attacks on accountability. Every African government official I have met will make the accusation, “who are these civil society people accountable to anyway? We get elected, who elected them?” which is such a specious argument.

Q: Is civil society equipped to legally contest these legislations? A: There is actually very good legal support available… from Lawyers for Human Rights, the International Centre for Not-for-Profit Law, (and) CIVICUS itself has a number of toolkits and can model legislations. If you have a new legislation in your country and you want someone to analyse it for you and come back with a critique of it, CIVICUS and a number of other organisations have that capacity and are willing to do that.

You need a multifaceted approach. There is an element of this that is legal, which means mounting legal challenges to the constitutionality of these laws, and mounting the legal challenges internationally because all of these laws are in violation of treaty commitments. As important is building public opinion. India just decriminalised homosexual sex last year. This was not as much because of the legal challenge as much as (shifting) public opinion.

Q: You have linked the clampdown to the recent global economic downturn, how are these two related? A: There are two connections between the economic downturn and the clampdown. One is the economic downturn has caused public anger, not so much the downturn but the kinds of responses governments made to it. That caused a lot of public anger. We see this direct correlation, every time there is a spike in food prices, there is a spike in public protest and there is a spike in repression that follows. Public anger, from a government point of view, needs to be repressed so there has been a crackdown in response to the mounting public anger.

The second connection is where once the international community might have been willing to intervene previously…post financial crises geopolitics means that certain countries with very large markets, or who are large providers of capital or natural resources – especially energy – can now get away with it where they could not a few years ago. Simultaneously of course, civil society has less resources to fight back.

Q: What are the top three African countries experiencing the worst civil society clampdown? A: Zambia, Ethiopia and Swaziland. The situation across these countries is bad but, in some ways, the lowering of standards in South Africa has a worse long-term impact than the more direct repressing than you’re seeing in Ethiopia because that lowers the bar for everybody and then everybody pays a price. Whereas a particularly repressive (Robert) Mugabe is really bad for Zimbabweans but has no trickle over effects to other parts of the continent.

Q: How would you characterise the African Union’s response to growing repression of the continent’s civil society? A: I have not seen the African Union doing anything with any degree of responsiveness, principle or just even good strategy. Whether it was Libya or anywhere, they were the last to respond and had the weakest response. I think there’s an opportunity here for the AU to re-invent itself in a post Arab spring moment. I am not immediately sensing that there is that kind of leadership. There is the opportunity if someone is willing to exercise that leadership.

Q: Have you seen coping strategies emerge within civil society to these kinds of threats? A: I think we have gotten better at calling on each other. Whether with (what has happened in) Uganda, Zambia, Swaziland, Zimbabwe or Ethiopia, there has been an ability to reach out across national borders to get advice, solidarity, advocacy, and political pressure from other African countries. I think we are getting slightly better at documenting the crackdown. Across these countries you are seeing persuasive, authentic data that allows you to make a stronger case.

One of the missing pieces is more pan-African civil society networks, there are a couple but we need more and perhaps networks focused on (the crackdown).

Excerpt:

South Africa’s recently-awarded tender for antiretroviral drugs halved drug costs for the world’s largest ARV programme. Driven by a better-prepared and more aggressive government, the deal may stand up to criticism better than initially thought.

In a country with an estimated HIV prevalence rate of about 18 percent, more than a million South Africans are currently on ARVs.

South Africa will save an estimated 685 million dollars over the two-year life of the new tender. The deal was nonetheless criticised for an alleged lack of transparency, and for possibly preventing even greater savings by locking in prices for drugs that could become yet cheaper.

Generally, the agreement was praised, although it could prove a difficult example for other countries to follow.

How the deal was done

Bidding companies were also required to submit detailed breakdowns of drug costs, listing the proportion of costs associated with production – from active ingredient purchases and drug formulation to shipping.

“What South Africa tried to do was get a sense of the cost of actually manufacturing the drug and what might be a reasonable profit margin,” says Brenda Waning, Coordinator of Market Dynamics for UNITAID, the United Nations drug-funding agency. “It’s very difficult figure for companies to release – it’s like their best kept secret.”

It’s not clear how accurate the information provided is, but by comparing the submissions of a number of manufacturers, it’s possible to judge how valid the figures are, she adds.

These cost breakdowns may prove crucial later on, should either drug companies or the government try to argue for a change in prices mid-tender.

The tender allows companies to apply to raise drug prices mid-tender, but firms will have to justify these increases. Having an initial benchmark of cost components will allow government to better evaluate these claims, says Vishal Brijlal, the Clinton Health Access Initiative’s (CHAI) South Africa country director. The government is under no obligation to accept proposed price hikes, he adds.

Newly introduced clauses like these may be in response to past abuses by drug suppliers, who have tried to claim for costs, such as currency fluctuations, that are not only part of ordinary business costs but often offset by insurance.

Room for improvement?

Meanwhile, a quarterly review of the prices for active pharmaceutical ingredients in antiretrovirals, which comprise up to 70 percent of some drugs’ costs, will allow government to identify any change in the cost of manufacturing them. While government may then request price reductions from tender prices suppliers, it remains unclear whether firms will be obligated to reduce these prices.

According to Brijlal, suppliers will be mandated to lower their prices. Jonathan Berger, a senior researcher for South African human rights organisation Section 27, disagrees.

“My understanding is that the department says there is a provision to renegotiate price,” Berger says. “But there is no obligation for companies to accept that. It’s meaningless – that was the biggest problem for the tender.”

The Department of Health was not available for comment.

For Waning, South Africa’s new tender represents a shift in international purchasing power, away from donors and towards large national buyers of essential medicines like India, China and South Africa, which funds 60 percent of its treatment programme.

“As countries assume more responsibility for treatment of patients and donors assume less, countries are having more of a say over who’s who in terms of pharmaceutical suppliers,” she says.

South Africa’s massive purchasing power and large share of the global market may make civil society criticisms about the tender’s lack of transparency more important.

In a December 2010 statement, Section 27 and the advocacy group Treatment Action Campaign called on government to detail how points were awarded in future tenders.

“We don’t know how points were worked out… competitors can’t tell whether or not the tender was correctly awarded,” Berger says. “Other competitors have a right to know how points were allocated and why they didn’t win.”

According to Brijlal, competitors could deduce points earned from public documents but he admits it would be difficult.

What the future holds

But South Africa’s ability to negotiate cheaper drugs mid-tender will likely only apply to possible savings on newer ARVs such as tenofovir, where advances in formulation, generic competition or economies of scale could bring down prices, according to Andy Gray, a senior lecturer at the department of therapeutics and medicines management at South Africa’s University of KwaZulu-Natal.

Prices for older drugs, like stavudine, are unlikely to show more than single digit percentage drop in coming years, and prices for these drugs have likely gone as low as they can go, says Brijlal.

While Waning warns that international pressure for cheaper drugs has to be balanced against concerns that ARV producers will lose interest in the market, Gray says the nature of the AIDS pandemic continues to make it an attractive venture for companies – and opens up the possibility for potentially cost-saving advancements.

As HIV continues to mutate, patients may develop resistance to first-line drugs and will need new drug regimens.

“Even in high priced markets like the US, patients are requiring rescue regimens because of resistance and that’s still sufficient to keep some firms in research and development,” Gray says. “What makes it easier [to attract companies], is that, as opposed to conditions like hypertension, HIV requires a lifelong treatment.”

About 14 percent of patients attending South African clinics run by the international medical charity, Medicines Sans Frontiers, developed resistance to first line drugs within five years of starting ARVs; a quarter of those patients needed third line drugs just two years later.

While advancements in ARVs and markets may make it cheaper for countries like South Africa to access the drugs, Brijlal says countries sourcing their own ARVs need to do their research to capitalise on better prices but admits that capacity remains weak.

“With the movements among donors to post drug prices, there’s no reason that countries can’t be prepared when they negotiate and that’s the most powerful tool,” Waning said.