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The Cost of AIDSand the Role of
Business
J2JXIV International AIDS Conference
Barcelona, SpainJuly 4, 2002
Mark Schoofs
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Vicious Cycle Poverty causes
disease
and
Disease causes poverty
DISEASE POVERTY
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Virtuous Cycle:Big bang for the buck
Raising annual per-capita health spending in low-income countries by just $17 could save 8 million lives every year The reason: a third of
deaths in low- and middle-income countries are caused by preventable or easily treatable diseases
HEALTH WEALTH
Per-capita Health Spending in Low-Income Countries
21
38
$0
$5
$10
$15
$20
$25
$30
$35
$40
Current spending Target spending, 2015Source: Macroeconomics and Health: Investing in Health for Economic Development. Report of the Commission on Macroeconomics and Health. World Health Organization, 2001
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AIDS kills people in their prime Most diseases mainly kill children or the
elderly AIDS mainly kills people who are:
Parents, who leave orphans Teachers and professionals with specialized
knowledge Laborers in factories, farms & mines Subsistence farmers, who provide food for
whole families
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HIV slows economic growthGrowth Impact of HIV (1990-97) (80 developing countries)
-1.6
-1.4
-1.2
-1
-0.8
-0.6
-0.4
-0.2
0
0 5 10 15 20 25 30 35
HIV Prevalence Rate (%)
Re
du
cti
on
in
gro
wth
ra
te G
DP
p
er
ca
pit
a (
%,
pe
r y
ea
r)
Source: R. Bonnel (2000) Economic Analysis ofHIV/AIDS, ADF2000 Background paper, World Bank. Slide adapted from UNAIDS: “Socio-Economic Impact of HIV/AIDS in Africa,” presented by Anita Alban and Lorna Guiness, ADF 2000.
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How AIDS weakens economies Business
Individual workers get sick, lowering productivity
Turnover and absenteeism lower profitability beyond direct loss of productivity
Teamwork—stable relationships among key personnel—is disrupted
Extra people must be hired for each position
Society Health consumes more
of govt budget, leaving less for social investment
Families spend down savings, reducing capital
Tax revenues fall Skilled workers &
professionals die or may flee: brain drain
Foreign investment and tourism decline
Mass orphaning
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Orphans as a result of AIDS, Zambia
00
200 000200 000
400 000400 000
600 000600 000
800 000800 000
1 000 0001 000 000
1 200 000 Number of orphans1 200 000 Number of orphans
19801980 19901990 20002000 20102010200520051995199519851985 projectionprojection
Source: HIV/AIDS in Zambia, 1997. Slide adapted from UNAIDS: “Socio-Economic Impact of HIV/AIDS in Africa,” presented by Anita Alban and Lorna Guiness, ADF 2000.
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Rusina Kasongo She lives in Zimbabwe She lost two sons, one
daughter and their spouses to AIDS
Her husband died in an accident
She is raising 10 orphans alone
Studies show orphans are less likely to go to school*
*For example: In the Central Africa Republic, school enrollment rate among orphans was 39%, two thirds of the national rate of 60%. Source: Survey from CAR, UNICEF, 1999, reported in UNAIDS: “Socio-Economic Impact of HIV/AIDS in Africa,” presented by Anita Alban and Lorna Guiness, ADF 2000.
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The orphan problem only gets worse
In Africa, grandparents usually take care of orphans
Orphans are at higher risk for HIV
When orphans produce orphans, these 2nd-generation orphans have no grandparents so are even worse off
HIV destroys the extended-family support system
S e co n d-g en era tion o rp ha nsT h ey h ave no g ran dp aren ts!
W h o w ill ta ke ca re o f th e m ?
O rp ha ns
P a re n tsKilled by AIDS
G ra nd p are n ts
Source: Geoff Foster, Family AIDS Caring Trust, Zimbabwe.
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Cloud & Joseph Tineti
They live in Zimbabwe
They are 14 and 11 years old.
They have no adult living with them
The second generation of orphans will likely be in a similar predicament
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Solution: Keep the parents alive
360
66
$0$50
$100$150$200$250$300$350$400
Invest
ment
in H
ealt
h
Eco
nom
icG
ain
Investing $66 billion in health (including AIDS) per year by 2015 yields a 6-fold return: $360 billion in direct earning of individuals and faster economic growth
$66 billion = $13 extra per person per year in poor countries, and this money saves 8 million lives annually
Plan: Poor countries invest extra 2% of GDP, rich countries invest 0.1%
USD, billions
Per-capita Health Spending in Low-Income Countries
21
38
$0
$5
$10
$15
$20
$25
$30
$35
$40
Current spending Target spending, 2015
Poor- country share: $28 bn
Rich-country share: $38 bn
Economic gain
Source: Macroeconomics and Health: Investing in Health for Economic Development. Report of the Commission on Macroeconomics and Health. World Health Organization, 2001
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Russia: the next crisis?
Overall HIV adult prevalence is still below 1%
But between 1996 and 2001, new infections rose 5000%
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Drug use drives the current Russian HIV epidemic
Most current HIV infections are in injection drug users (IDUs), who often end up in the institutions least able to deal with AIDS: overcrowded, underfunded jails where addiction treatment is scarce and needle-sharing is common.
In Russia, sexually-transmitted disease (STD) rates are high. Will HIV stay in drug users or spread?
Sources: Russian Federal AIDS Center. Ministry of Justice.
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Russia’s demographics Russia’s population is declining, even
without HIV African countries show population growth
despite HIV adult prevalence rates of up to 30% HIV exacerbates Russia’s population decline
A declining population slows economic growth HIV mainly kills young people, so fewer
productive Russians will be alive to generate income for social security systems (such as pensions and health care)
Source: Ruehl C., Pokrovskiy V., Vinogradov V., “The Economic Consequences of HIV in Russia,” The World Bank Group, 2002, www.worldbank.org.ru
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Modeling the economic effect
17 key variables, such as:
Rate of transmission among IDUs and from IDUs to the general population via sex
Cost of antiretroviral treatment
Economic parameters such as the share of the labor force with HIV, the share of govt revenues used for public investment, & minimum budgetary expenditures
Cumulative HIV optimistic 1.23 2.32 3.64 5.36(millions) pessimistic 2.24 5.25 9.61 14.53GDP level baseline 10.88 13.5 16.42 19.61(rubles, tillions) optimistic 10.88 13.5 16.33 19.37
pessimistic 10.69 13 15.27 17.54optimistic 0 -0.15 -0.55 -1.22
pessimistic -1.75 -4.14 -7 -10.6GDP growth baseline 4.71 4.09 3.7 3.42(percent) optimistic 4.7 4.05 3.6 3.26
pessimistic 4.23 3.55 3.02 2.55optimistic -0.21 -0.98 -2.7 -4.68
pessimistic -10.19 -13.2 -18.4 -25.4
%change (compared to baseline)
%change (compared to baseline)
World Bank Model for HIV in Russia
available at www.worldbank.org.ru
Source: Ruehl C., Pokrovskiy V., Vinogradov V., “The Economic Consequences of HIV in Russia,” The World Bank Group, 2002, www.worldbank.org.ru
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Modeling the economic effect
17 key variables, such as:
Rate of transmission among IDUs and from IDUs to the general population via sex
Cost of antiretroviral treatment
Economic parameters such as the share of the labor force with HIV, the share of govt revenues used for public investment, & minimum budgetary expenditures
Cumulative HIV optimistic 1.23 2.32 3.64 5.36(millions) pessimistic 2.24 5.25 9.61 14.53GDP level baseline 10.88 13.5 16.42 19.61(rubles, tillions) optimistic 10.88 13.5 16.33 19.37
pessimistic 10.69 13 15.27 17.54optimistic 0 -0.15 -0.55 -1.22
pessimistic -1.75 -4.14 -7 -10.6GDP growth baseline 4.71 4.09 3.7 3.42(percent) optimistic 4.7 4.05 3.6 3.26
pessimistic 4.23 3.55 3.02 2.55optimistic -0.21 -0.98 -2.7 -4.68
pessimistic -10.19 -13.2 -18.4 -25.4
%change (compared to baseline)
%change (compared to baseline)
World Bank Model for HIV in Russia
available at www.worldbank.org.ru
Decline in Russian GDP Growth due to HIV
-30
-25
-20
-15
-10
-5
0
2005 2010 2015 2020
Optimistic Pessimistic
Source: Ruehl C., Pokrovskiy V., Vinogradov V., “The Economic Consequences of HIV in Russia,” The World Bank Group, 2002, www.worldbank.org.ru
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Effect of HIV Prevention
16
17
18
19
20
2020
Russian GDP:4 Prevention
Scenarios
No HIV
Pessimistic
Effective prevention
Reducing drug use
Effective prevention (cutting HIV transmission four-fold) results in modest GDP gain
Key reason: Drug use, with negative impact on economic productivity continues
Reducing drug use, which would also slow the spread of HIV, results in much larger improvement
Could this data be misused to stigmatize drug users and to justify not implementing needle exchange? If so, HIV could spread more rapidly to general population
GDP (in rubles, trillions)
Source: Ruehl C., Pokrovskiy V., Vinogradov V., “The Economic Consequences of HIV in Russia,” The World Bank Group, 2002, www.worldbank.org.ru
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Effect of antiretroviral treatment
At Western prices, $9000 per patient per year, treating with antiretrovirals (ARVs) actually lowers GDP.
It would also consume more than 80% of the Russian federal government budget
At $3000, plausible with negotiation, using ARVs boosts GDP.
At $333, close to the current lowest price, GDP improves and ARVs consume only slightly more of the govt budget than treating AIDS without ARVs
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16.5
17
17.5
18
Russian GDP:4 ARV Cost Scenarios
No ARVs (pessimistic)
ARVs at $9000
ARVs at $3000
ARVs at $333
GDP (in rubles, trillions)
Source: Ruehl C., Pokrovskiy V., Vinogradov V., “The Economic Consequences of HIV in Russia,” The World Bank Group, 2002, www.worldbank.org.ru
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Who can take action? Governments NGOs Individuals Business
Multinationals definitely have the resources
Mid-size firms usually have the resources 20,000 South Africans are on ARVs paid
by their companies’ medical schemes Often neglected by the press
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Coca-Cola & Anglo American Coke (beverages)
Offered marketing expertise to help frame prevention
Offered ARVs to its workers in Africa
But only to its 1,000 directly employed workers, not to the 100,000 workers employed by its bottlers
Anglo (mining) Offers good TB
and OI treatment & prevention
2001: Committed to run a feasibility study of ARVs on its mines
2002: Anglo back-tracked, despite 20% of its African workers having HIV
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Migrant labor spreads HIV Mines needed cheap
labor
Housed men in crowded “hostels” and didn’t allow families. This system still exists.
Hard and dangerous work
Prostitution spreads STDs
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Conclusions Disease causes poverty
But relatively small investments in health can save lives and bolster economies
HIV kills the most productive people, adults in their prime, which hurts all economies But local factors matter: Russia & Africa have
different epidemics, demographics & economies Hold business accountable
Are companies shouldering their responsibilities? Do labor practices promote health or illness?
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Acknowledgements Gabriel Rugalema, United Nations
Development Programme Joint United Nations Programme on
HIV/AIDS (UNAIDS) The World Bank Group in Russia Laurie Garrett, Newsday, & Omololu
Falobi, Journalists Against AIDS Nigeria Bob Meyers & Nena Uche, National Press
Foundation The Wall Street Journal and The Village
Voice