Courtesy of Philippe Douste-Blazy

By Nora Happel
UNITED NATIONS, Jul 9 2015 (IPS)

Implementation of the ambitious post-2015 development agenda which will be adopted in September 2015 at the United Nations depends to a large extent on funding.

Amidst preparations for the upcoming 3rd International Conference on Financing for Development (FFD) to be held from July 13 to 16, 2015 in Addis Ababa, Ethiopia, discussions centre on “innovative financing mechanisms” as stable and predictable instruments to complement traditional Official Development Assistance (ODA) and fill funding gaps at a time when global growth is flagging and most donor countries are facing increasing budgetary pressure.We must fight against the scandal of a world where 870 million human beings are malnourished, a world where nearly 30 percent of children on the African continent suffer from chronic malnutrition, leading to backwardness at school and a cruel loss of growth.

Conceived in the early 21st century in the context of the adoption of the Millenium Development Goals (MDGs), the idea behind the concept is to “invisibly” raise important amounts of income to correct imbalances and provide funding for the most urgent development needs such as eradication of extreme poverty and the promotion of education and global health. The mechanisms involved range from government taxes to public-private partnerships.

A prominent innovative finance example is the global health initiative UNITAID. UNITAID is funded primarily through a one-dollar solidarity levy on airplane tickets. The income raised is spent on global measures to fight malaria, HIV/AIDS and tuberculosis.

A more recent example is the Financial Transaction Tax (FTT). It is currently seen by governments as both a tool to curb financial speculation and a mechanism to raise considerable revenue – which could be used to finance for development. Ongoing plans on an EU FTT to be implemented in 11 willing EU countries might prove as the next step in innovative finance.

In an interview with IPS, Philippe Douste-Blazy, U.N. Under-Secretary-General in charge of Innovative Financing for Development, chair and founder of UNITAID and former French foreign minister, shares his insights on the FTT and innovative finance mechanisms shortly ahead of the upcoming Conference on Financing for Development and the adoption of the Sustainable Development Goals (SDGs) later this year.

Q: Which role does innovative finance play in the context of the negotiations on the post-2015 development agenda?

A: 2015 is a historic year because three great international conferences will take place which are vital for the future of the world:  the Addis Ababa conference on Development Finance, the General Assembly of the United Nations where the international community will launch the Sustainable Development Goals and the COP21 on climate change in Paris.

In all three cases, the scenario will be the same: a magnificent political agreement but without any financial means to back it up. I want to sound the alarm! If we fail to find innovative financing now, at a time when the world has never had so much money but the gap between rich and poor is constantly widening, the 21st century will end in extreme violence.

Q: Financing for development requires considerable financial resources. Is the FTT a suitable tool to raise the necessary funding compared to other innovative finance tools?

A: Finance is currently one of the least taxed economic sectors. It is absolutely surprising when you know the terrible impact this sector had on international development because of the 2008 economic crisis. Implementing a painless percentage tax on financial transactions could generate hundreds of billions worldwide and as a result, be positively decisive on the fight against extreme poverty, pandemics and climate change.

We are now living in a completely globalised world and those threats are upon every citizen of the world. Globalised activities and exchanges should then contribute to international solidarity. That is what we had in mind with President Chirac and President Lula when we implemented the solidarity tax on plane tickets.

People are travelling more and more, so levying a small portion of the price of their tickets offered the opportunity to improve the access to life-saving treatments all around the globe. FTT follows the same logic. Financial needs are considerable and we need to take the money where it is. Innovative financing tools shouldn’t be positioned as rivals, they should instead be seen as complementary.

Q: UNITAID invests the funds raised by means of global solidarity levies to fight HIV/AIDS, tuberculosis and malaria. What are your results at UNITAID in combating these diseases?

A: First, UNITAID’s investments helped create the market for some key more effective HIV treatments in 2007, by bringing the prices down from 1,500 dollars/year to under 500.

Second, through support to the Global Fund and UNICEF, UNITAID contributed to the delivery of over 437 million of the best antimalarial treatments, helping the global community to reduce deaths by 47 percent since 2000.

Third, a 40 percent price reduction for the cartridges of an important new test for tuberculosis (GeneXpert) was negotiated for 145 countries, along with USAID and the Bill and Melinda Gates Foundation. This has saved over 70 million dollars within two years for the global community and has enabled a significant contribution to the 30 percent annual increase in detection of drug resistant TB cases.

Q: Could you tell me about your planned new project UNITLIFE? What is it about and at what stage are the preparations for this project?

A: We must fight against the scandal of a world where 870 million human beings are malnourished, a world where nearly 30 percent of children on the African continent suffer from chronic malnutrition, leading to backwardness at school and a cruel loss of growth.

Faced with this scourge which decimates generations, destabilises societies and severely penalises nations, notably in Africa, we have the duty to imagine a response combining efficacy and solidarity: this is why we want to launch UNITLIFE.

UNITLIFE is based on a simple principle: allocating to the fight against malnutrition an infinitesimal part of the immense riches created by the use of extractive resources in Africa in such a way that the globalisation of solidarity matches the globalization of the economy. So far six African Heads of State accepted such a principle. As UNITAID is hosted by the WHO, UNITLIFE will be hosted by UNICEF.

Q: How does a future FTT implemented in the 11 European countries need to look in order to be beneficial and effective? How do you assess for instance the examples of the French or Italian FTT?

A: French and Italian FTT are really disappointing. They are not fulfilling the expectations neither in terms of regulation nor about revenues. It seems that French and Italian governments were just concerned by the defence of their financial sectors.

The exemptions that are organised are preventing the tax from touching the most speculative transactions. Derivatives, market makers, intra-day and high frequency trading are not taxable with the two models whereas they’re the most dangerous.

Furthermore, it’s in taxing these instruments that a FTT would levy the most resources. For the same reasons, a European FTT that wouldn’t be applied on foreign shares will be highly disappointing. Instead of being scared of the reaction of financial sectors, the 11 political leaders must show real ambition and design a strong FFT with a broad scope and preventing loopholes.

Q: How can you make sure that a certain percentage of the money raised by the tax will be spent on development?

A: Seventeen percent of the French FTT is already allocated to climate and pandemics. President Hollande said he will allocate a part of the European FTT to the same causes; let’s hope that the portion will be bigger!

[Spanish] Prime Minister Marianno Rajoy also committed to allocate a part of the revenue to international solidarity but so far these are the only declarations we have. It would be really interesting to see the eleven

Heads of State committing together on a joint allocation to international solidarity. Using the FTT revenue to finance multilateral funds like the Global Fund, the World Health Organization  or the Green Fund would be the best way to be sure the money raised is actually spent on development.

And today when I see those tens of thousands of migrants trying to cross the Mediterranean, which is becoming the world’s biggest cemetery, I want to underline that the only solution to massive immigration from poor to rich countries is to provide what we call Global Public Goods (food, potable water, essential medicines, education and sanitation) to every human being.

Edited by Kitty Stapp

Excerpt:

By Julia Kallas
UNITED NATIONS, Dec 1 2012 (IPS)

On World AIDS Day, the fact that the number of children newly infected with HIV continues to decline is welcome news to UNITAID, the International Drug Purchase Facility hosted by the World Health Organisation.  But UNITAID is also well aware of how much more remains to be done for  children already living with the disease.

Philippe Douste-Blazy, of France, is a special advisor who promotes UNITAID and other sources of innovative financing for the achievement of the United Nations Millennium Development Goals (MDGs).

“There was some progress made but there is still a lot to be done by the international community,” Douste-Blazy told IPS regarding the fight against HIV/AIDS. “Unfortunately we do not have enough money to achieve the MDGs by 2015,” he added.

Douste-Blazy spoke to IPS U.N. correspondent Julia Kallas about the progress that has been made in preventing mother-to-child transmission of HIV but also how the international community must continue providing childhood HIV treatments to developing countries. Excerpts from the interview follow.

Q: What is the current funding scenario for treating childhood HIV in developing countries?

A: About 3.3 million children are living with HIV today. Unfortunately we do not have enough money to reach the Millennium Development Goals (MDGs) in general but in particular to reach the health-related MDGs – HIV, tuberculosis and malaria.

We must find funding now because with the current economic crisis, we will see a dramatic decrease in Official Development Aid (ODA). It will be difficult for all countries to help. We cannot ask the Greek government, for example, to donate 3 billion dollars for development countries because they are seeing an increase in poverty themselves. So we are going to see an increase in childhood mortality.

We have to create innovative financing for development. For example, UNITAID has placed a small tax on plane tickets. This funding helps combat childhood HIV.

Children are rarely born with HIV in wealthy countries because mothers living with HIV are treated during pregnancy to ensure that their babies are born HIV-free. Still, more than 1,000 children are born HIV-positive every day – 99 percent of them in Africa. Only 28 percent are treated.

We analysed what companies were interested in producing antiretroviral drugs. Our long-term funding gave suppliers the incentive to manufacture child-friendly formulations so we were able to buy pills for five years. Several generic suppliers that entered the market brought the price of the pills down by 70 percent.

Before, no child was treated by periotic antiretroviral, but with an adult’s syrup, 18 times a day. Now with only two pills a day, children can be treated.

Q: World AIDS Day is on Dec. 1. Should we be celebrating major progress?

A: Yes. We can see that there was some progress made, but there is still a lot to be done by the international community. For the first time more than 50 percent of the 15 million patients who need antiretroviral therapy have access to it.

It is also huge progress that we have 7 million fewer new HIV infections around the world, in particularly in Sub-Saharan Africa. Unfortunately in Eastern Europe, Russia and Indonesia, however, the infection has increased.

Q: Can you talk about the development of the three-in-one fixed-dose combination AIDS medicines for children?

A: Since its creation UNITAID has been working on combating paediatric HIV by creating a market for quality child-friendly antiretroviral treatments. Before, there was no incentive for pharmaceutical companies to invest in child-friendly antiretroviral drugs. HIV treatments for children in low-income countries were syrups designed for adults – up to 18 foul-tasting doses a day.

So the three-in-one fixed-dose combination AIDS medicines for children are a major innovation, from 18 doses a day to a pill twice a day. It is huge progress. Every year UNITAID finances the treatments of more than 100,000. Now is the time to follow up on our work with paediatric HIV.

Q: How should the new post-2015 sustainable development agenda address HIV/AIDS, and what can be done more effectively?

A: We cannot continue if we do not have money. Every head of state, head of government or member of parliament says we are going to reach the MDGs. It is not true.

To combat HIV we need three things. First is prevention. We need to help prevent high-risk people such as prostitutes and homosexuals from becoming infected. Secondly, we must ensure universal access of treatment. Only 54 percent of adults and 28 percent of children are being treated today.

Finally, we need to raise funds to achieve the MDGs – we need more innovative financing. With UNITAID, we proved that this is possible.

Q: Can you talk more about the one-dollar plane tax idea created by you, former Brazilian president Lula and former French president Chirac? What needs to be done to get more countries involved in this project?

A: UNITAID’s funding model is based on an air ticket solidarity levy. Every American who goes to France is going to pay one extra U.S. dollar to support our program. It is the same thing in 15 other countries. In five years we raised 2.5 billion dollars, and it is predictable, sustainable funding.

For the traveller, it is painless – people who can pay for a plane ticket can easily pay an extra dollar. It is not even the price of a coffee. With this funding we help combat childhood HIV. Eight out of 10 children are treated thanks to this system. Now we are working to convince more countries to become involved in this program.

Excerpt:

India may be famous for the Taj Mahal, its religious ceremonies, Bollywood films and one of the highest economic growth rates in recent years. But more importantly, India has had a positive global impact through its supply of vast quantities of low-cost, good-quality generic medicines, which have saved or prolonged millions of lives.

Many people go to India to buy life-saving generic medicines from pharmacies and bring these back in suitcases to give to close relatives who cannot afford the expensive branded original products.

A decade ago, the Indian pharmaceutical company Cipla produced generic HIV/AIDS drugs that could treat a patient for 300 dollars a year, far cheaper than the branded product’s cost of 10,000 dollars per patient a year. Today the Indian generic version is even cheaper, below 80 dollars.

Martin Khor. Credit: Nic Paget-Clarke.

This has enabled millions more AIDS patients to be treated, since India supplies 70 percent of the HIV/AIDS drugs obtained by the United Nations Children’s Fund (UNICEF), the Global Fund and the William J. Clinton Foundation for developing countries.

A further 75-80 percent of medicines (not only for AIDS) distributed by the International Dispensary Association to developing countries come from India. No wonder India has been termed the ‘pharmacy of the developing world’.

In January 2012, the Indian Drug Manufacturers’ Association (IDMA), comprised of 700 drug-manufacturing member companies, celebrated its 50th anniversary, by toasting the industry’s high growth, wide range of medicines, and its contribution to safe, affordable drugs.

But there are also many factors that may hinder the continuation of the country’s role as chief supplier of medicines to developing countries.

A main factor of the industry’s success was the government’s decision, back in 1970, to exclude pharmaceutical drugs from product patents.

This paved the way for local companies to produce generic versions of expensive foreign drugs and within a few decades they had taken over 80 percent of the domestic market, while also supplying cheap medicines abroad.

The situation took a negative turn when the intellectual property agreement, known as TRIPS, was established in 1995 together with the World Trade Organisation, which disallowed countries from excluding medicines from patentability.

However, TRIPS allowed individual countries to determine the criteria for an invention that can be granted a patent. Furthermore, TRIPS gave governments the ability to grant a compulsory licence to local companies to produce the patented products, if their requests to patent owners for a voluntary licence did not succeed.

To implement its TRIPS obligations, India passed changes to its patent law in 2005 so that drugs could now be patented. However, the new law also contained flexibilities such as strict criteria for patentability (trivial changes to a patent-expired product would not qualify for a new patent); allowance for public opposition to a patent application before a decision is made; and compulsory licencing.

India has one of the best patent laws in the world that still gives some space to its producers to make generic drugs. But it is also true that the old policy space has been eroded because many new drugs have, since 2005, been patented by multinational companies that are selling them at exorbitant prices.

Indian companies can no longer make their own generic versions of these new medicines unless they successfully apply to the government for compulsory licences, a most cumbersome process; or unless they obtain a licence from the patent-owning multinational, which comes with stringent conditions, especially for export.

Another worry is that India is negotiating a free trade agreement (FTA) with the European Union. Such agreements usually contain provisions such as data exclusivity and extension of the patent term, which prevents or hinders generic production.

Finally, six Indian companies were recently bought up by large foreign firms. If this trend continues, the Indian drug market may be dominated by multinationals again. It is uncertain whether they will continue to supply the developing world with cheap generic medicines when this may be in conflict with their own branded products.

International health organisations such as UNAIDS, UNITAID and Doctors Without Borders have raised their serious concerns that these recent trends may threaten India’s role as the chief supplier of affordable medicines to Africa and other developing countries.

Millions will die if India cannot produce the new HIV/AIDS medicines in the future –it is a matter of life and death, said Michel Sidibe, executive director of UNAIDS, during a visit to India last year.

Thus, a strategy is needed that involves the government and the drug companies, which ensures that the local drug industry continues to thrive; that it produces not only existing medicines but also new medicines even if they are patented; and that they are supplied at cheap prices not only in India but to the developing world.

That was the sobering message that emerged during IDMA’s 50th anniversary conference in January, even in the midst of congratulations on the achievements of the past. (END/COPYRIGHT IPS)

* Martin Khor is the executive director of the South Centre in Geneva.

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