A D B / U N A I D S S t u d y S e r i e s Asia-Pacific ?s Opportunity : Investing To Aver t An HIV/AIDS Crisis July 2004 Acknowledgements This document is a collaborative publication of the Asian Development Bank and UNAIDS in consultation with national governments of the region, Futures Group International and several global and regional experts. Contributors included: Gayle Martin, Bill McGreevey, Ross McLeod, S. Ramsundaram, Orattai Rhucharoenpornpanich and Gary Suwannarat. Review comments and inputs were received from Geeta Sethi, Peter Godwin and Barbara Orlandini (Cambodia); Dr. P. Salil, Dr. DCS Reddy and Prof. Gopal K. Kadekodi (India); Prof. Aphichat Chamratrithirong, Sukhontha Kongsin, Waranya Teoukul (Thailand); Nancy Fee (Vietnam); Peter Ghys, Suman Mehta, Nabina Rajbhnadari and Mahesh Mahalingam (UNAIDS); Indu Bhusan and Lisa Studdert (ADB); Amitava Mukherjee (UNESCAP) and Allan Whiteside (South Africa). Editing and design was done by Lindsay Knight, Catherine Tan Lee Mei, Ronnie Elefano, Lawan Jirasuradej and Dr. Owen Wrigley. The principal writer was Siddharth Dube. Special acknowledgement goes to John Stover (Futures Group International) and Robert Greener (UNAIDS, Geneva). The overall project was coordinated by Tony Lisle and Swarup Sarkar (UNAIDS, Bangkok) and Indu Bhushan and Lisa Studdert (ADB, Manila). Participants in the workshops on costing from 19 countries are listed separately in the respective publications. Contents Executive Summar y????????????????????????????? Section I : A Make - or- Break Period in the Epidemic?s Scale and Socio - Economic Impact???????????????????????????????????? Figure 1: Two scenarios for the number of new infections in Asia- Pacific, 20 0 4 -2010 ?????????.......? Table 1: The costs of inaction: Burden of disease and direct and indirect f inancial costs of HIV/AIDS, 20 01 and 2010 ????????????????????????????????????????.?.....?? Figure 2: Projected impact of HIV/AIDS on pover t y headcount in Cambodia, India, Thailand and Viet Nam, 20 03 -2015???????????????????????????????????????...?.? Figure 3: Projected pover t y reduction achievements with and without AIDS, Cambodia and India, 20 03 -2015 .. Figur e 4: HIV prevalence among antenatal women at national and selected sub -national provinces in Myanmar, Cambodia, Thailand and India?????????????? ??...?? ??...?????................?? Figure 5: Cambodia?s life expectancy trends with and without AIDS, national figures compared to one province (Siem Riep)? ????????????????????????????????...??..............?? Section II : Success Hinges on Ending Resource Shor tfalls: Asia- Pacific Can Close the Resource Gaps???????????????????????...??? Figure 6: Resourc es required to f ight HIV/AIDS in Asia and the Pacif ic will tr iple by 20 07 ?????.......?.? Table 2: Likely share of funding for HIV/AIDS programmes in Asia- Pacif ic, 20 07 ?...???????..?......? Box 1: National approaches to resourc e mobilization: some examples??????????????.....?? Box 2: Programming and absor ptive c apacit y c onstraints must be addressed in tandem with resourc e mobilization ??????????????????????????????????????...?? Section III : Political Leaders Are Critical to Resource Mobilization and Action? The A DB / UNAIDS Studies Ser ies??????????????????????????.......??????? 1 3 4 5 6 6 7 8 9 9 11 12 13 15 16 page i v | Asia- Pacif ic ?s Oppor tunit y : Investing To Aver t An HIV/ AIDS Crisis | page 1 page i v | Asia- Pacif ic ?s Oppor tunit y : Investing To Aver t An HIV/ AIDS Crisis | page 1 Executive Summar y The countries of Asia and the Pacif ic are at a make- or-break point on HIV/AIDS. Even at relatively low levels of infection compared with those in sub -Saharan Africa, the course of the epidemic in this region, home to over half the world?s people, will determine the magnitude of the HIV/AIDS pandemic ? as well as its toll ? over the next decade. Already, over 7 million people are living with HIV/AIDS in Asia- Pacif ic, with approximately 0.5 million deaths ever y year. The resulting economic losses totalled US $7.3 billion in 2001 alone. Millions of people have been impoverished and the poorest rendered destitute. Even in low-prevalence countries, socio - economic losses have mounted in areas suf fering from advanced, localized epidemics. Failure to immediately establish comprehen- sive and ef fective prevention, care and treatment programmes will result in an estimated 10 million adults and children in Asia- Pacif ic becoming newly infected bet ween 2004 and 2010, the annual death toll rising to 0.76 million by 2010 and annual f inancial losses reaching US $17.5 billion. Pover ty reduction ef for ts will be eroded. By current trends, ever y year bet ween 2003 and 2015, an average of 5.6 million people will be impoverished by HIV/AIDS in Cambodia, India, Thailand and Viet Nam, alone. But by establishing comprehensive responses today, cumulative new infections by 2010 can be reduced from 10 million to 4 million, deaths in 2010 to 0.76 million to 0.66 million and annual losses to US $15.5 billion. Resource needs are rising exponentially. In 2003, the countries of Asia- Pacif ic required more than US $1.5 billion 1 to f inance a comprehensive response but only US $200 million was available from all sources combined, including the public sector. From 2007 until 2010, US $ 5.1 billion will be required each year. Asia-Pacific?s leaders must promptly invest in comprehensive, multi- sectoral responses to HIV/AIDS to avert severe epidemics and escalating economic losses. 1 T he new U N A I DS global est imates published in July 20 0 4 have revised t he A sia Pac if ic est imate for 20 07 to US $ 5.9 billion instead of US $ 5.1 billion. Sinc e t he f igures presented in t his repor t were der ived joint ly by gover nment ex per t s to get her wit h global and regional ex per t s, based on t he gover nment ?s cur rent c apac it y, t he older est imates have been ret ained. T he revisions will not make a mater ial dif ferenc e to t he argument s being presented here. Det ails of t he cur rent est imate are available as an A D B / U N A I DS public at ion. For t he new est imates, see t he U N A I DS G lobal Repor t 20 0 4. page 2 | Asia- Pacif ic ?s Oppor tunit y : Investing To Aver t An HIV/ AIDS Crisis Sec tion I | page 3 A M ake - or- Break Pe riod in E pide mic ?s Scale and Soc io - Economic I mpac t When measured against the enormous human and economic losses that will be aver ted, these investments are modest. They will result in savings for the region of nearly US $2 billion annually by 2010. Moreover, the region as a whole can well af ford these investments. Even the peak resource need of US $ 5.1 billion annually for the years 2007-2010 is just 4 per cent of current regional health expenditure and 0.2 per cent of regional gross national income (2001). A key constraint is that too little health spending is publicly f inanced. Without far greater investment of public resources, the response will remain inadequate and inef f icient, key priorities will be neglected, and multisectoral ef for ts will not develop. Based on current trends in donor suppor t, public investments across the region must increase ten-fold by 2007. Larger and richer countries can af ford to substantially increase public sector investments. In poorer countries, donors must cover funding shor tfalls or, where necessar y, even fully-fund national ef for ts. Public resources should go to f inancing a large par t of all prevention ser vices, and to subsidizing health care and treatments for poor HIV/AIDS -af fected households. It is vitally impor tant that governments ensure full funding of prevention programmes for vulnerable populations where most new infections continue to occur, including sex workers and their clients, injecting drug users, men who have sex with men, migrant and mobile populations, and young people. The par ticular risks faced by women should be identified and addressed. The widespread problem of limited programming and absorptive capacity must also be addressed urgently. Other wise, increases in budget allocations will not have meaningful impacts. At this critical juncture, only resolute action by national leaders can keep the HIV/AIDS epidemic in Asia- Pacif ic from worsening. Leadership and sustained commitment are crucial if this devastating epidemic is to be overcome. Leaders must: Close resource gaps, Back vital prevention programmes and antiretroviral treatment for low income households, Enable multisectoral responses, Address absorptive capacity constraints, and Tackle advanced sub -national epidemics. page 2 | Asia- Pacif ic ?s Oppor tunit y : Investing To Aver t An HIV/ AIDS Crisis Sec tion I | page 3 A M ake - or- Break Pe riod in E pide mic ?s Scale and Soc io - Economic I mpac t The governments of Asia-Pacific and the donors can still avert a massive increase in infections, limit economic losses and save tens of millions of men, women and children from crushing poverty ? if they act quickly. The countries of Asia and the Pacif ic are at a ?make- or-break? point on HIV/AIDS. If they scale up their responses quickly to the epidemic and bridge the shor tfall in f inancing for comprehensive prevention, care and treatment programmes, the benef its will be enormous. Millions of people will not become HIV positive, lives will be saved and impoverishment aver ted as well as the major economic losses that countries face from large numbers of infections. The levels of infection in this region remain low compared to sub -Saharan Africa, but its countries are home to much larger populations ? well over half the world?s people. Therefore, even at low levels of infection, the course of the epidemic in these populous countries will determine the magnitude of the global HIV/AIDS pandemic over the next decade, as well as its impact. Already, over 7 million people are living with HIV/AIDS in the Asia- Pacif ic region; the annual death toll is 0.5 million. India is home to nearly as many people living with HIV/AIDS as South Africa, the countr y with the greatest number of people infected, even though adult prevalence in India is less than one-t wentieth that of South Africa, there are nearly as many people living with HIV/AIDS in India as in South Africa. Similarly, Viet Nam, with an adult prevalence of 0.4 per cent, has 220,000 people living with HIV/AIDS, significantly more than Swaziland, where adult prevalence is over 38 per cent, and more than double the number in the Congo, where adult prevalence is about 5 per cent. As a result, if prompt action is not taken to put in place an ef fective response, the number of adults becoming newly infected with HIV in Asia and the Pacif ic will be close to that of sub - Saharan Africa (Figure 1). 2 At this rate of increase, a total of 10 million adults and children will be newly infected in the region bet ween 2004 and 2010, and the annual death toll will mount to 750,000 by 2010. In contrast, if comprehensive prevention, care and treatment programmes begin now, the number of people newly infected by 2010 can be contained at 4 million and the number of deaths in 2010 kept to approximately 660,000. 2 Der ived f rom Stover J., et. a l. (20 02), Can we rever se t he HI V/ A I DS pandemic wit h an ex panded response?. T he L anc et ; 3 6 0 : 73 -7 7. Section ONE A Make - or-Break Period in Epidemic?s Scale and Socio -Economic Impact page 4 | Asia- Pacif ic ?s Oppor tunit y : Investing To Aver t An HIV/ AIDS Crisis Sec tion I | page 5 A M ake - or- Break Pe riod in E pide mic ?s Scale and Soc io - Economic I mpac t 3 A DB / UN AIDS (20 0 4), Socio - Economic Impact of H IV / AIDS in Asia and the Pacif ic: Cur rent and Future Scenar io. A DB / UN AIDS Study Ser ies: Paper IV. 4 A DB / UN AIDS (20 0 4), Funding Required to Confront the H IV / AIDS Epidemic in the Asia and Pacif ic Region. A DB / UN AIDS Study Ser ies: Paper I. 5 A DB / UN AIDS (20 0 4), Impact of H IV / AIDS on Pover t y in Cambodia, India, Thailand and Viet Nam. A DB / UN AIDS Study Ser ies: Paper III. The stakes are just as high in terms of economic losses and the impact on pover ty. According to a recent study by ADB / UNAIDS, if prevention, care and treatment ef for ts continue to be as inadequate as at present, by 2010 yearly losses to the region will equal US $17.5 billion compared with the estimate of US $7.3 billion lost in 2001. 3 (Estimated losses in 2001 comprised over US $7 billion in lost income and additional expenses borne by HIV/AIDS -af fected households ? over whelmingly the result of the sickness and death of adults ? as well as US $250 million in government spending on HIV/AIDS prevention and care.) Conversely, the study estimates that the establishment of a successful response today will hold the region?s losses to US $15.5 billion by 2010, implying a savings of nearly US $2 billion in 2010 alone. 4 These t wo scenarios are detailed in Table 1. Failure to curb the epidemic now will force tens of millions of people into pover ty and national ef for ts to achieve the Millennium Development Goal of pover ty reduction will be set back. Studies detailing the pover ty impact of HIV/AIDS in Cambodia, India, Thailand and Viet Nam show that signif icant numbers of households that are not poor are being pushed into pover ty and households that are already poor are being rendered destitute, par ticularly in provinces and areas where the epidemics are more advanced. 5 Figure 1: Two scenarios for the number of new infections in Asia-Pacific, 2004 -2010 page 4 | Asia- Pacif ic ?s Oppor tunit y : Investing To Aver t An HIV/ AIDS Crisis Sec tion I | page 5 A M ake - or- Break Pe riod in E pide mic ?s Scale and Soc io - Economic I mpac t Table 1: The cost of inaction: Burden of disease and direct and indirect financial costs of HIV/AIDS, 2001 and 2010 Asia and t he Pacif ic Cur rent (20 01) a Baseline response 2010 Comprehensive response does not begin by 2010 b Comprehensive response 2010 Comprehensive response begins in 20 0 4 b Dif ference 2010 Cost of inaction Direct Health Cost s ( Public / Pr ivate) Prevention (US $ m) 218 3,338 3,18 0 158 Care (US $ m) 35 1,9 9 9 1,743 256 Sub total (US $ m) 253 5,33 6 4,923 413 Indirect Costs by Households Funeral, transpor t, etc. (US $ m) 171 272 238 3 4 Carer (lost inc ome) (US $ m) 17 28 25 4 Suf ferer (lost inc ome) (US $ m) 6,9 07 11,8 69 10,352 1,517 Sub total (US $ m) 7,0 95 12,170 10,615 1,556 Total Cost ( US $ m) 7,3 4 8 17,5 07 15,538 1,9 6 8 Cost per person with HIV (US $) 1,129 1,513 2,511 - Burden of Disease People living with HIV ( ?0 0 0) 6,510 11,570 6,189 5,381 DA LYs ( ?0 0 0) c 13,6 6 0 24, 201 19,85 4 4,3 47 Deaths ( ?0 0 0) 431 76 0 6 63 97 Sourc e: A DB / UN AIDS Study Ser ies: Paper IV. N otes: a) HI V prevalenc e t aken f rom U N A I DS (20 02) b) Der ived f rom Stover J., et. a l. (20 02), Can we rever se t he HI V/ A I DS pandemic wit h an ex panded response?. T he L anc et ; 3 6 0 : 73 -7 7. Baseline prevent ion as sumes a c omprehensive approac h has not begun by t he end of 2010, in c ont rast to t he c omprehensive sc enar io, in whic h an ex panded approac h is implemented f rom 20 0 4. c) DA LYs are Disabilit y Adjusted Life Year s, c alculated by estimating the year s of life lost to a specif ic disease or disease in aggregate. The same studies estimate that, in ever y year from 2003 to 2015, an average of 5.6 million people in Cambodia, India, Thailand and Viet Nam will become poor or fall deeper into pover ty if the epidemic is not checked now. As much as 88 per cent of the increase in pover ty will occur in India. (Figure 2) The scale of devastation wrought by HIV/AIDS on the countries of sub -Saharan Africa is already visible in the worst-hit areas of several Asian- Pacif ic countries: large numbers of young adults have died, many years have been shorn of f the rate of life expectancy, and hospitals are f illed with people sick or dying of HIV/AIDS -related illnesses. N ote: Dat a on t he est imated los s of inc ome due to HI V- related illnes s and deat h are cur rent ly ver y limited in t he A sia - Pac if ic region. Similar ly, as sumpt ions made in order to est imate pover t y ? for example, t he pat ter n of inc ome dist r ibut ion of HI V infec ted people, c oping mec hanisms used wit hin a household c ont aining PLW H A , and t he ex penditures required in seek ing t reat ment and buying medic ines ? are based on cur rent ly available dat a f rom t he c ount r ies. Section ONE page 6 | Asia- Pacif ic ?s Oppor tunit y : Investing To Aver t An HIV/ AIDS Crisis Sec tion I | page 7 A M ake - or- Break Pe riod in E pide mic ?s Scale and Soc io - Economic I mpac t The studies estimate that in Cambodia, pover ty reduction will be slowed by up to 60 per cent ever y year bet ween 2003 and 2015; in Thailand, by 38 per cent annually; and in India, by 23 per cent annually (Figure 3). 6 As the HIV/AIDS epidemic is likely to af fect pover ty in a similar way in other Asia- Pacif ic countries, the grim scenario of millions of people in the region being impoverished within a decade is all too possible. Policymakers in the Asia Pacif ic region have not recognized the level of the devastation, assuming that the epidemic only has a serious impact when it is a large scale, nationwide HIV/AIDS epidemic, not when national HIV prevalence is relatively low. Figure 2: Projected impact of HIV/AIDS on pover t y headcount in Cambodia, India, Thailand and Viet Nam, 2003 -2015 Sourc e: A D B / U N A I DS Study Ser ies: Paper III. Figure 3: Projected pover t y reduction achievements with and without AIDS, Cambodia and India, 2003 -2015 Sourc e: A D B / U N A I DS Study Ser ies: Paper III. 6 Ibid. page 6 | Asia- Pacif ic ?s Oppor tunit y : Investing To Aver t An HIV/ AIDS Crisis Sec tion I | page 7 A M ake - or- Break Pe riod in E pide mic ?s Scale and Soc io - Economic I mpac t Countr y studies by ADB and UNAIDS show this assumption to be false: aggregate losses are found to be severe in provinces /states and areas with higher than average prevalence f igures, even in countries where the generalized national epidemic has not yet reached over 1 per cent of adults infected nationally. The studies cover t wo countries with generalized epidemics ? Cambodia (2.6 per cent adult prevalence) and Thailand (1.5 per cent) ? and t wo with concentrated epidemics, India (0.9 per cent) and Viet Nam (0.4 per cent). 7 The f indings underline the impor tance of focusing on sub -national epidemiological and socio - economic trends in populous countries (Figure 4). Thus: In Thailand?s Chiangmai province, at the epidemic?s peak in 1993, HIV prevalence amongst adults reached 8 -10 per cent, three- to four-fold higher than national prevalence in the same year. Some sur veys indicate that as many as 15 per cent of the men aged 18 -50 have died in the villages of this region. 8 On several other fronts, the impact in Chiangmai has been far more severe than national indicators would suggest. Life expectancy at bir th has fallen by nearly f ive years, in contrast to a t wo year reduction nationally. Death rates for young adults have risen 120 per cent in the province compared with 90 per cent nationally. The propor tion of children orphaned by AIDS is three times 7 A D B / U N A I DS (20 0 4) C ompar ison of I mpac t of H IV / A I DS a t N a tiona l and S elec ted S u b - na tiona l Pr ovi nc es Level i n Cambo dia , India , T hai land and Viet N am. A D B / U N A I DS Study Ser ies : Paper II. 8 U N ESCO, Bangkok: (unpublished) Sur vey dat a c ollec ted as par t of Nat ional Rural Development C ommit tee ( N R D2C) sur vey of villages in nor t her n T hailand (Zone 10 ), 19 9 9. Figure 4: HIV prevalence among antenatal women at national and selected sub -national provinces in Myanmar, Cambodia, Thailand and India Section ONE page 8 | Asia- Pacif ic ?s Oppor tunit y : Investing To Aver t An HIV/ AIDS Crisis Sec tion II | page 9 Success H inges on E nding Resource Shor t falls : A sia - Pac i f ic Can Close t he Resource G aps higher in Changmai than the national average, as is the rate of increase in tuberculosis cases. In Cambodia?s Siem Riep province, HIV prevalence is nearly double the national average. The ADB / UNAIDS countr y study estimates that life expectancy in Siem Riep in 2007 will be 7.3 years lower because of HIV/AIDS than it would other wise have been, whereas national life expectancy will be 2.3 years lower (Figure 5). This reduction in life expectancy in Siem Riep is as severe as that experienced by some sub -Saharan Africa countries ? for example in Ethiopia and Nigeria, which have far higher national prevalence rates than Cambodia (6.4 per cent and 5.8 per cent, respectively, at the end of 2001). Adult prevalence in India?s Andhra Pradesh state is close to 2 per cent, more than double the national rate. By 2004, one in eight hospital beds in the province will be needed for people sick with HIV/AIDS -related illness ? nearly f ive times the national average. The impact of HIV/AIDS is already so severe in these areas that it could be argued that they need special programmes of emergency assistance. These programmes should, at the ver y least, include scaled-up prevention, care and treatment programmes as well as multisectoral ef for ts to mitigate the impact on households and communities through, for example, subsidized schooling, establishing programmes to suppor t and care for orphans, female and child-headed households, and expanding income- generation projects. Finally, the evidence from India and Viet Nam indicates that localized HIV/AIDS epidemics are probably also taking a severe toll in seriously af fected areas of other Asia- Pacif ic countries with relatively low national prevalence. These would include: People?s Republic of China, Indonesia, Lao PDR, Nepal, Pakistan and Papua New Guinea. Figure 5: Cambodia?s life expectancy trends with and without AIDS, national figures compared to one province (Siem Riep) page 8 | Asia- Pacif ic ?s Oppor tunit y : Investing To Aver t An HIV/ AIDS Crisis Sec tion II | page 9 Success H inges on E nding Resource Shor t falls : A sia - Pac i f ic Can Close t he Resource G aps Section TWO Success Hinges on Ending Resource Shor t falls : Asia-Pacif ic Can Close the Resource Gaps A core message of the ADB / UNAIDS studies is that if the leaders of the Asia- Pacif ic are to succeed in curbing the HIV/AIDS epidemic in the region, they must f irst tackle the enormous shor tfall in the f inances needed to establish comprehensive prevention, care and treatment responses in ever y countr y. Comprehensive prevention, care and treatment responses include, as a minimum, programmes for vulnerable groups and young people, treatment of sexually transmitted infections, condom promotion, the use of disposable syringes and the provision of highly- active antiretroviral therapy. The par ticular risks faced by women must be identified and addressed, and all programmes must safeguard and promote human rights. In both principles and practices, for example, combating stigma and discrimination against people living with HIV/AIDS. In 2003, the countries of Asia- Pacif ic needed more than US $1.5 billion 11 to f inance a comprehensive response to the epidemic, but only US $200 million was available from the public sector, donors and government combined. This funding gap is likely to be even greater in coming years, because of the backlog in providing for prevention, care and treatment needs. 12 By 2007, regional resource needs for HIV/AIDS prevention, care and treatment will rise to US $ 5.1 billion 13 ? about US $2.00 per capita (Figure 6). 14 11 A D B / U N A I DS (20 0 4), Fu ndi ng Requ i r ed to C onfr ont the H IV / A I DS Epi demic i n the As ia and Pac i f ic Reg ion. A D B / U N A I DS Study Ser ies: Paper I. 12 T he studies use c onser vat ive est imates of resourc e needs. For inst anc e, t he c ost s of ex panding or st rengt hening inf rast r uc ture so t hat ser vic es c an be provided broadly, or for t he c apac it y building required to sc ale up f rom small to nat ional - level pro grammes, are not inc luded. 13 T his f igure has been rec ent ly revised to US $ 5.9 billion ( U N A I DS G lobal Repor t, 20 0 4). 14 Ibid. Figure 6: Resources required to fight HIV/AIDS in Asia and the Pacific will triple by 2007 Sourc e: A D B / U N A I DS Study Ser ies: Paper I. M it igat ion of impac t inc lude pro grams for or phans and ot her ac t ivit ies for af fec ted families page 1 0 | Asia- Pacif ic ?s Oppor tunit y : Investing To Aver t An HIV/ AIDS Crisis Sec tion II | page 1 1 Success H inges on E nding Resource Shor t falls : A sia - Pac i f ic Can Close t he Resource G aps Rapidly increasing resource needs are a fundamental characteristic of HIV/AIDS epidemics. Both the numbers of people contracting HIV and the numbers falling sick from HIV/AIDS increase exponentially each year, par ticularly when epidemics reach the generalized stage, as do the costs of providing comprehensive prevention, care and treatment programmes. The escalation in resource needs also ref lects the fact that care and treatment ? par ticularly antiretroviral therapy ? are more expensive than prevention. Such considerations make it all the more essential that governments and donors in the Asia- Pacif ic region f inance and facilitate comprehensive responses while HIV prevalence is still relatively low in their countries. In many cases, public health budgets are dispropor tionately skewed towards secondar y and ter tiar y care ignoring the need for home based care, outreach for treatment and VCT ser vices. The resources needed are considerable. But, when viewed from the perspective of the savings that result ? nearly US $2 billion annually by 2010, as shown in Table I ? they are modest and fully justif ied investments. 15 Moreover, the region as a whole can well af ford to close this large shor tfall in f inancial needs, now and for the rest of the decade. Even the peak resource needs of US $ 5.1 billion annually for the years 2007-2010, amount to only 4.4 per cent of present regional health expenditure (2001) and 0.2 per cent of the region?s US $2 trillion gross national income of 2001. Rather than af fordability, the main constraint in Asia- Pacif ic is that too little health spending is publicly f inanced and provided. 16 Bet ween 1997 and 2000, about three- quar ters of total health spending in the region involved private payments to private providers of healthcare, with the public sector f inancing just one- quar ter of health ser vices. 17 Households bear large out- of-pocket costs which, as a propor tion of household income, are among the highest in the world. 18 (Thailand is the exception in the region, with a large propor tion of healthcare costs borne by the government through tax, insurance or other prepayment mechanisms.) 19 In the case of HIV/AIDS -related care and treatment, this pattern is especially inequitable as persons living with HIV/AIDS, and their families, are of ten the least able to bear large additional expenses. 15 A D B / U N A I DS (20 0 4), Fu ndi ng Requ i r ed to C onfr ont the H IV / A I DS Epi demic i n the As ia and Pac i f ic Reg ion. A D B / U N A I DS Study Ser ies: Paper I. 16 Ibid. 17 A D B / U N A I DS (20 0 4), Fu ndi ng Requ i r ed to C onfr ont the H IV / A I DS Epi demic i n the As ia and Pac i f ic Reg ion. A D B / U N A I DS Study Ser ies: Paper I, c it ing Wor ld Bank 20 03. 18 A D B / U N A I DS (20 0 4), I mpac t of H IV / A I DS on Pover t y i n Cambo dia , India , T hai land and Viet N am. A D B / U N A I DS Study Ser ies: Paper II, c it ing Wor ld Bank 20 03. 19 A D B / U N A I DS (20 0 4), I mpac t of H IV / A I DS on Pover t y i n Cambo dia , India , T hai land and Viet N am. A D B / U N A I DS Study Ser ies: Paper III. page 1 0 | Asia- Pacif ic ?s Oppor tunit y : Investing To Aver t An HIV/ AIDS Crisis Sec tion II | page 1 1 Success H inges on E nding Resource Shor t falls : A sia - Pac i f ic Can Close t he Resource G aps Section TWO Sharing resources fairly, and focusing public resources on well-targeted programmes that of fer general rather than patient-specif ic benef its, will ensure that comprehensive prevention and care programmes can be successfully expanded. 20 The ADB / UNAIDS studies describe the likely scenario as sharing of f inancing bet ween governments, donors, insurance and households, assuming that f inancing from donors and the Global Fund to Fight AIDS, Tuberculosis, and Malaria does not increase. Table 2 details this for 2007, based on the US $ 5.1 billion needed for that year. National and local governments have an impor tant role to play in f inancing comprehensive HIV/ AIDS programmes. It is a role that can cer tainly be fulf illed by the governments of the larger or better- of f countries of Asia- Pacif ic. Without far greater investment of public resources and rationalization in the use of current budgets, the region?s response to the epidemic will remain inadequate and inef f icient. Key priorities will remain neglected. Nor will a genuinely multisectoral response develop, as this hinges on a broad range of line ministries allocating ? or receiving ? funds for HIV/AIDS ef for ts. Thus, the ADB / UNAIDS studies indicate that public sector investments should increase ten-fold from 2003 levels to, at least, US $2 billion in 2007 to meet the unmet needs. These sums should contribute both to f inancing a large par t of all prevention ser vices and ? crucially impor tant in terms of blunting the pover ty impact of HIV/AIDS ? to subsidizing and expanding health care, including antiretroviral therapy, for poor and low-income households. Poorer households are the least able to af ford care and treatment and are most severely af fected by the loss of income resulting from HIV/AIDS -related sickness and death. 21 Even with adequate resources, countries are likely to increase their pover ty head count unless a pro -poor programme is implemented for treatment, care and alleviation of impact. Governments must ensure that suf f icient public funds are available for ef fective prevention programmes for vulnerable populations, par ticularly sex workers and their clients, injecting drug users, men who have sex with men, young people and migrant and mobile populations. (Possible exceptions may be found in the Pacif ic Islands, where the epidemic type ref lects those of Africa in nature.) The critical overall goal for governments is to ensure wide and equitable access to prevention and care. Table 2. Likely share of funding for HIV/AIDS programmes in Asia- Pacific, 2007 Source US $ millions Percentage Dist r ibution National and Loc al Gover nments 2,0 0 0 39 Donor Assistanc e 50 0 10 Global Fund AIDS, TB, Malar ia 10 0 2 Pr ivate out- of- pocket spending, pr ivate insuranc e and social insuranc e 2,50 0 49 TOTAL 5,10 0 10 0 Sourc e: A D B / U N A I DS Study Ser ies: Paper I. 2 0 A D B / U N A I DS, Fu ndi ng Requ i r ed to C onfr ont the H IV / A I DS Epi demic i n the As ia and Pac i f ic Reg ion. A D B / U N A I DS Study Ser ies: Paper I. 21 A D B / U N A I DS (20 0 4) I mpac t of H IV / A I DS on Pover t y i n Cambo dia , India , T hai land and Viet N am. A D B / U N A I DS Study Ser ies: Paper III. page 1 2 | Asia- Pacif ic ?s Oppor tunit y : Investing To Aver t An HIV/ AIDS Crisis Sec tion II | page 1 3 Success H inges on E nding Resource Shor t falls : A sia - Pac i f ic Can Close t he Resource G aps International assistance must also increase. Resources from the GFATM (Global Fund to Fight AIDS, Tuberculosis and Malaria), for example, are likely to be in the order of US $100 million annually, although the total grants, which cover periods of up to f ive years, are substantially larger. There are also substantial of f icial bilateral and private assistance operations already in place that can be expected to increase. International assistance cannot substitute for government f inancing in the region because of the massive scale of resources needed. Studies emphasize that in the poorer countries, donors may have to take on the responsibility for covering funding shor tfalls or even fully funding national ef for ts. The need for signif icant international and donor suppor t is especially relevant to the Pacif ic Island States, many of which are burdened by severe budgetar y constraints and infrastructures too weak to ser ve their dispersed populations. Together, private out- of-pocket payments, private insurance and social insurance will be required to cover half of the spending on HIV/AIDS prevention and care in 2007. Governments can ef fectively promote private and social insurance coverage for HIV/AIDS care and treatment through policy and legislative changes, for instance, by requiring insurance policies to cover treatment and care for HIV/AIDS or sexually-transmitted infections. And, although the remaining burden on households appears enormous, they will have been spared signif icant additional costs. Without the increase in public sector f inancing of comprehensive HIV/AIDS programmes, households would have been burdened with another US $1.5 billion annually in lost income and additional expenses. (This sum is the dif ference bet ween the burden on households in the ?baseline? and ?comprehensive? response scenarios por trayed in Figure 1.) page 1 2 | Asia- Pacif ic ?s Oppor tunit y : Investing To Aver t An HIV/ AIDS Crisis Sec tion II | page 1 3 Success H inges on E nding Resource Shor t falls : A sia - Pac i f ic Can Close t he Resource G aps Box 1. National approaches to resource mobilization: some examples Governments in Asia- Pacif ic have used a variety of approaches to address resource mobilization needs. Thailand established itself as a leader in committing public funds to its HIV/AIDS response. Public f inancing was key to building a genuinely multisectoral response, with a broad range of line ministries allocating funds for HIV/AIDS ef for ts. Sustained public f inancing for HIV/AIDS dates back to the early 1990s, when the government initiated a high-prof ile campaign to control HIV and, by 1996, reversed the ratio of 90 per cent external funding to 5 per cent. 2 2 In spite of substantial reductions (more than a third) in national funding, Thailand continues to spend approximately US $ 0.63 cents annually per person on prevention and treatment, over nine-tenths of it from public sector funds. To help close funding shor tfalls for key priorities, the Global Fund to Fight AIDS, Tuberculosis, and Malaria (GFATM) has recently approved substantial funding for Thailand?s ef for ts. The Government of the People?s Republic of China has allocated US $1.2 billion to HIV/AIDS prevention, treatment and care for 2003 -2004. For the f iscal year 2004, this is expected to represent a four-fold increase in funding. In Nepal, the Government developed a f ive-year multisectoral national framework on HIV/AIDS for which it successfully sought donor par ticipation. The framework and resource targets are predicated on ensuring that at least 60 per cent of all vulnerable populations are covered by comprehensive prevention and care programmes. Par ticipating donors include AusAID, DFID and USAID. The UN system is providing technical assistance and the mechanism for fund disbursement . In Myanmar, UNAIDS has helped to organise a special fund to tackle the epidemic over the next three years. The fund advances joint programming as well as donor coordination. Finance is received from donors based on agreed priority and a common plan of action, and distributed bet ween the public sector, non- governmental organizations and UN agencies. 2 2 Wor ld Bank 19 97; C onf ront ing A I DS: Public Pr ior it ies in a G lobal Epidemic, page 276. Section TWO page 1 4 | Asia- Pacif ic ?s Oppor tunit y : Investing To Aver t An HIV/ AIDS Crisis Sec tion III | page 1 5 Poli t ic a l l ea d e r s a re cr i t ic a l to re sourc e m ob ili z a t ion an d ac t ion Box 2: Programming and absorptive capacity constraints must be addressed in tandem with resource mobilization With few exceptions, the countries of the Asia Pacific region (like many around the world) are hampered in their response to HIV/AIDS not just by resource shortfalls but also by insufficient capacity to effectively use what funds are available. An exploratory study of the situation in several countries in the region highlighted the nature of some of these constraints and the implications for HIV/AIDS related programming. In many cases, the physical and human resources of health systems are insufficient to utilize major new programmes. In addition, effective HIV/AIDS programme responses require innovative multisectoral public and private engagement, and the administrative and organization capacity needed to enact such partnerships is not available. An outcome of this situation is that funds are not disbursed as planned and needed. For example, several countries in the region have received large World Bank IDA credits for HIV/AIDS programme responses but been unable to disburse these funds at an acceptable rate. This is despite long experience with implementing health and nutrition programmes and the availability of many capable non-government organizations. In some cases, the systems established for HIV/AIDS donor funds remain centrally controlled and encumbered by requirements for complex disbursal procedures. As a result, credit lines have been reduced while programme needs continue to increase. Reforms and innovative management procedures are possible and have been enacted. Decentralization of funds administration and de-linking management bodies from the regular government administrative procedures can greatly expedite funds disbursal. Human resources are critical for the enhancing and scaling up the success of programmes. Managers at national and provincial or state levels need training and the capacities of non-government organizations need to be enhanced and expanded. Given the key role of health systems in achieving priority goals, specific attention to strengthening the health care workforce is also required. For most countries, it will take several years to build up the human, organizational and infrastructure capacity to deliver expanded responses. This, therefore, must be an early priority of new and expanded programmes. page 1 4 | Asia- Pacif ic ?s Oppor tunit y : Investing To Aver t An HIV/ AIDS Crisis Sec tion III | page 1 5 Poli t ic a l l ea d e r s a re cr i t ic a l to re sourc e m ob ili z a t ion an d ac t ion At this crucial juncture, only resolute action by all leaders can keep the HIV/AIDS epidemic in the countries of Asia- Pacif ic from worsening. National leaders must: (1) Close the resource gaps: There is simply no substitute for political leadership on this front. Only national leaders in each countr y ? with the suppor t of regional and global donors and par tners ? have the power to end the resource shor tfalls. Far greater investments in the public sector are needed both to strengthen the health sector and to expand coverage with comprehensive HIV/AIDS prevention and care programmes. (2) Guarantee political backing for vital programmes: Governments must ensure full funding for ef fective prevention programmes for vulnerable populations, including sex workers and their clients, injecting drug users, men who have sex with men, young people, and migrant and mobile populations. Political suppor t for research and evidence-based policies is crucial. In addition, governments should consider using legislation and policy to expand private and social insurance coverage of HIV/AIDS and STI care and treatment. Antiretroviral programs for poor and low income households must be financed by the public sector. (3) Enable a multisectoral response: Sustained and adequate public sector investments are essential to build a genuinely multisectoral response to HIV/AIDS. A broad range of line ministries, including the uniformed ser vices, education, labour and transpor t ministries, must have their own budgets and targets for prevention, care and mitigation ef for ts. Political leadership is essential to encouraging and enabling a multisectoral response that includes gender responsive, anti- discriminator y and pro -poor institutional, policy and legal frameworks. (4) Address programming and absorptive capacity: Leaders must draw attention to and address the governance, human, organizational, and infrastructural constraints in current procedures and regulations that impede the receipt of funds and ef fective utilization of resources, in the health sector as well as non-health sectors. (5) Respond to sub -national epidemics: National leaders must identif y, acknowledge and address the localized epidemics that are taking a signif icant human and socio - economic toll even in low-prevalence nations. Leaders should focus attention on sub - national epidemiological and impact data, and fund HIV/AIDS -focused ?disaster relief ? programmes for these areas, including scaled-up prevention, care, treatment and impact-mitigation ef for ts. Section THREE Political Leaders Are Critical to Resource Mobilization and Action page 1 6 | Asia- Pacif ic ?s Oppor tunit y : Investing To Aver t An HIV/ AIDS Crisis The ADB / UNAIDS Studies Series The repor ts featured in this paper are par t of an ef for t by the Asian Development Bank and UNAIDS to improve understanding of the scale of f inancial resource requirements to successfully respond to HIV/AIDS in the Asia- Pacif ic and the implications of failure to achieve these resource needs. This series of repor ts include: ? An estimation of resource needs ? Funding Required to Confront the HIV/AIDS Epidemic in the Asia and Pacific Region , ADB / UNAIDS Study Series: Paper I ? An assessment of the sub -national impact ? Comparing of Impact of HIV/ AIDS at National and Selected Sub -national Levels in Cambodia, India, Thailand and Viet Nam. ADB / UNAIDS Study Series: Paper II. ? Estimates of the impact on pover ty rates in several countries of the region ? The Impact of HIV/AIDS on Pover ty in Cambodia, India, Thailand and Viet Nam . ADB / UNAIDS Study Series: Paper III. ? A review of the socio - economic impact of HIV/AIDS, detailing the current and potential impact in the region ? The Socio - Economic Impact of HIV/ AIDS in Asia and the Pacific: Current and Future Scenario. ADB / UNAIDS Study Series: Paper IV. ? An analysis of absorptive capacity in several countries ? ADB / UNAIDS. 2004. An Explorator y Study of the Current Absorptive Capacity and Fund Flows within a National Response. ADB / UNAIDS Study Series: Paper V.