PEPFAR’s Approach to Maximize Efficiency, Effectiveness and Impact Nalinee Sangrujee, PhD MPH PEPFAR 20 April 2012

PEPFAR Smart Investments to Increase Impact and Efficiency Strengthen use of economic and financial data to ensure efficient use of resources Incorporate innovations that promote efficiency and allocate resources based on impact Increase collaboration with governments, the Global Fund and others to align programs and target investments Reduce costs by streamlining USG operations and supporting increased country ownership Achieve best all-inclusive commodity pricing Leverage creative mechanisms for healthcare finance to bring additional resources to bear Develop and evaluation research agenda that will show how to improve efficiency and impact May have hit the high watermark of HIV/AIDS funding but have not hit the high watermark for HIV/AIDS programming -John Blandford What I will talk about today is our focus since the launch of this Smart Investments Agenda on the generation and use of cost data and how it has impacted policymaking Over its first seven years, PEPFAR has proved that it is possible to overcome health systems barriers and resource limitations to deliver HIV prevention, treatment and care to areas hardest hit by the HIV epidemic. PEPFAR programs have resulted in millions of lives saved, as well as broader economic, workforce, societal and national security benefits. The global economic crisis has forced all partners to do more to meet unmet needs with finite resources. PEPFAR is building upon ongoing work to develop more efficient and impactful programs and save more lives. PEPFAR is working to accelerate these gains through policies and programs to: 1. Strengthen use of economic and financial data to ensure efficient use of resources PEPFAR has conducted extensive costing studies of treatment and other programs and has funded innovative work examining the cost-effectiveness of service delivery models. PEPFAR has also pioneered the use of outcome-linked expenditure analysis exercises among prevention, care and treatment partners in several countries, and is working to quickly routinize this activity PEPFAR-wide. These data are shared with partner governments, and used in decision-analytic and cost-projection modeling sponsored by PEPFAR and other partners to improve national program planning. Better access to updated economic and financial data and indicators will allow for PEPFAR programmers and national governments to better make rapid course corrections to improve planning and effectiveness, and avoid inefficient use of resources. 2. Incorporate innovations that promote efficiency and allocate resources based on impact PEPFAR has been hailed as a learning organization and PEPFAR is actively working to identify, evaluate and incorporate innovations that promote efficiency. As an example, several programs worked with governments to regionalize partners, reducing costs and promoting transition to local leadership. Likewise, integration of services in many circumstances has improved patient outcomes and created efficiencies for both patients and funders -- in Rwanda, a PEPFAR-sponsored pilot of TB/HIV service integration yielded sufficient benefits that it was rapidly scaled to become a true national program. Other examples include task-shifting, health information systems that free up clinician time, better TB and CD4 cell count diagnostics, and algorithms to reduce the frequency of clinical follow-up and laboratory testing while ensuring quality. PEPFAR will heighten efforts to ensure that innovations that truly improve outcomes and save money are adopted and scaled up without delay. Optimizing allocation of resources among programs and interventions is another way to improve effectiveness and efficiency, ensuring that decisions are driven by evidence of impact on the needs at the national and local levels, both within and between program areas. In prevention, with expanding availability of data on new infections, and an increasing array of proven interventions, PEPFAR is moving toward greater efficiency in its mix of programs in order to maximize impact. PEPFAR’s support for development and dissemination of guidelines from organizations such as the World Health Organization (WHO) encourages standard protocols for services, improving outcomes and containing costs by streamlining national systems. 3. Increase collaboration with governments, the Global Fund and others to align programs and target investments PEPFAR Partnership Frameworks map out five-year strategic partnerships with governments and other country partners, including civil society, and align closely with national strategic plans for HIV and health. By clearly outlining partners’ expected contributions, mutual accountability is reinforced and PEPFAR is able to target investments to gaps, while encouraging policy reforms needed for an effective and efficient response (e.g. task-shifting). One example of PEPFAR’s strategic partnerships that increase efficiency is the recent $120 million investment in antiretroviral drugs (ARVS) for the national program of the Government of the Republic of South Africa. The South African Government was able to leverage the best international pricing achieved by PEPFAR to reform their own procurement processes and obtain better pricing for ARVs, saving an estimated $650 million over the next two years and allowing many more people to be treated. PEPFAR is also working closely with the other major funding vehicle for HIV programs worldwide, the Global Fund to Fight AIDS, Tuberculosis and Malaria, in which the USG makes substantial annual investments. One goal is to be sure that investments are complementary, and that both organizations prioritize efficiencies. This work occurs both in the field and at headquarters and is accelerating on technical and policy levels. 4. Reduce costs by streamlining USG operations and supporting increased country ownership PEPFAR has always insisted that funds be spent as efficiently and as close to the field level as possible. By accelerating the use of systematic analyses of USG costs and staff structures to ensure efficient allocation of staff to match the intensity of need for oversight and planning functions in particular areas, PEPFAR is working to optimize human resource and other investments. In addition, PEPFAR is collaborating with USG implementing agencies involved in reforming procurement processes that will ultimately maximize benefits to PEPFAR programs. In addition, where possible, PEPFAR is promoting transition of service delivery responsibility to the local level, supporting leadership by governments and indigenous NGOs. This has the potential to reduce costs while reflecting PEPFAR’s strategic vision of country ownership (country-led prioritization, implementation, and accountability) for sustainability. Steps to build capacity and continued monitoring for quality are needed to prepare for successful transitions, and external partners play an ongoing key role in developing local capacity to oversee programs. While there are substantial potential savings from these transfers, such as overheads that can increasingly be used for programming, other costs will increase, including monitoring and evaluation and capacity-building and support of local governments and NGOs, often through external partners. Over time, governments may assume increasing financial responsibility for programs, particularly in middle-income settings with substantial resources. 5. Achieve best all-inclusive commodity pricing PEPFAR has used its technical and regulatory expertise and scale of implementation to reduce the costs of commodities for use in PEPFAR programs. Initially, a hurdle to rapid treatment scale-up was the cost of antiretroviral drugs (ARVs), and PEPFAR worked closely with FDA to modify an existing mechanism for approving pre-market generic drugs for use in PEPFAR programs. By 2009, generic formulations accounted for almost 90% of the approximately 20 million ARV packs purchased with PEPFAR funds, up from 14.8% in 2005. With ARV prices accounting for approximately one-third of the total costs of ART, PEPFAR will also continue to address other elements of purchasing and delivery methods and the regulatory environment to further reduce costs. Aggregating orders and leveraging the buying power of a large program has increasingly allowed PEPFAR to negotiate discounts. In 2009, PEPFAR purchased 50% of ARVs through pooled procurement via the Supply Chain Management System (SCMS), a consortium of organizations developed and supported by PEPFAR. Another factor in costs is the method of delivery. Through SCMS, PEPFAR has been able to pioneer the use of overland routes for ARV and other commodity delivery, allowing PEPFAR to avoid the high costs of air freight incurred by many programs. Improving regulatory environments in countries is also an important factor in the ability to use new drug formulations and generic versions, with limited government capacity often delaying adoption of new generic drugs. PEPFAR support for well-functioning regulatory structures is especially important as many countries change their clinical guidelines and make major investments in new drug regimens. PEPFAR has developed and is piloting a process, known as the PaATH (Pre-approval Access to HIV/AIDS Therapies). This process allows governments to use standard packages of drug approval information provided by a stringent regulatory authority such as FDA to “pre-approve” new ARVs and allow for their importation while the regulatory approval process is ongoing. 6. Leverage creative mechanisms for healthcare finance to bring additional resources to bear The magnitude of the HIV epidemic, uncertainties around funding streams, and the chronic nature of the disease require resources through multiple mechanisms. In addition to massive funding through traditional mechanisms, PEPFAR and other donors have responded with innovative approaches, including performance-based funding, sliding-scale cost-recovery for service delivery, health insurance schemes, public-private partnerships, and taxes for health revenue generation. Through evaluation and partnerships, PEPFAR is working to move beyond pilot programs to systematic adoption of these innovative mechanisms at regional and national levels in order to increase benefits. 7. Develop an evaluation and research agenda that will show how to improve efficiency and impact PEPFAR has revitalized its implementation science (IS) agenda, including evaluation, operations research and impact evaluation, issuing a joint PEPFAR/NIH request in 2010 for applications, and planning new rounds of country-based and other proposals open to implementers, academics, and consortia. To generate new information directly linked to program implementation, PEPFAR is prioritizing IS, including comparative studies of efficiency and effectiveness of service delivery models and innovative technologies, and partnering with other funders and research partners to accelerate the work.   Source: http://www.pepfar.gov/smart/index.htm PEPFAR Finance and Economics Work Group

Using Cost Data to Increase Efficiency PEPFAR is adapting to achieve more with finite resources Need timely financial monitoring data Identify efficient models of service delivery that maximize value PEPFAR programs typically had limited program area-specific financial data/indicators at their disposal for decision-making Maturing programs, new guidelines, new prevention interventions, support sustainable health systems We realized that we needed to get an even deeper understanding about costs PEPFAR will achieve efficiencies with strong accountable management practices informed by good cost data Moving into second phase of PEPFAR Shift from emergency to more sustainable models Global health budgets not growing as fast as prior years Looking for tools to improve program planning, effectiveness and impact with existing resources Demonstrate efficiencies and fiscal responsibility to PEPFAR’s funders, US Congress / White House “PEPFAR is …identifying and implementing efficiencies in its work” PEPFAR Finance and Economics Work Group

PEPFAR Expenditure Analysis Initiative Provide timely cost data and build capacity of USG teams to use cost data for improved management and efficient operation of programs Understanding the full cost to support National HIV/AIDS Programs Match achievements and actual expenditures to estimate USG expenditure per beneficiary Country USG –level: inform program planning (COP, GF rounds, MOH budgeting cycle, identify efficiencies etc.) PEPFAR HQ-level: inform global budgeting National – level: contribute to national expenditure processes PEPFAR Expenditures Other External Partner Expenditures National Government Expenditures Piloted in 8 countries over all program areas, thought we have more data on treatment Plan to create a routine systems that can produce timeline information and easily produce information that can help inform planning and resource allocation Dialogue with governments, Global Fund, UNAIDS, World Bank, Gates Foundation on the coordination of expenditure data so that there is harmonization and an understanding of what data is useful to share at the national level for planning and what data we need for internal planning purposes (at some point it is not going to be technical efficiency that will be easy to extrapolate but we can look at potential areas of duplication of funding by bringing timely expenditure data to the table. NASA collects expenditure data but it is time consuming because it is not part of a routine system and the data gets old quite quickly. Work with other stakeholders to ensure integration and use of PEPFAR data in broader national cost analysis efforts PEPFAR Finance and Economics Work Group

What is PEPFAR Expenditure Analysis? Routine financial monitoring of PEPFAR programs Provides annual data on expenditures by program area and cost category Not a panacea: Puts the “M” in financial M&E and highlights the need for “E” Total PEPFAR Expenditures for Fiscal Year … VMMC PMTCT ART Investment Recurrent Program Management Monitoring and Evaluation Health System Strengthening Site-level Above Site-level THIS SLIDE MIGHT BE DROPPED AND TURNED INTO TALKING POINTS Global Budgeting Informs allocation of resources by PEPFAR program areas, including prevention, care, treatment and system strengthening Tracking resource use (over time) Provides fresh economic data that is fed into resource projection models shaping policy and budget requests Over time, keeps record of how cost structures change and allows the USG to better plan for meeting needs that maximize impact Documents efficiencies and country transition/ownership to better advocate for continued support Budgeting ***Not linked to current budget codes Assessing the budgetary impact of policy shifts Portfolio management for improving allocative efficiency Implementing Partner (IP) Management Benchmarking IP expenditures and linking to proposed budgets Improving technical efficiency in delivery of services and support Validating work plans and country priorities/policy shifts Assessing the evolving cost structure Assessing changes in unit expenditures Assessing impact of efficiency measures/improved IP management Feed into national program expenditure estimates and costing Build local capacity/lay groundwork for financial monitoring systems Resource Tracking (over time) Ex: Has the relative share of program resources devoted to MMC in X, Y and Z provinces increased as planned? Ex: How has the relative share of expenditures for program management changed as we move more towards country ownership and TA-based models? Ex: Has the unit expenditure for ART increased or declined? Note: EA results cannot tell you why, but it may not matter as much Ex: Has reducing UE for outliers had an impact on the PA average? Feed into national program estimates Ex: Has PEPFAR’s share of support for HIV programs been decreasing as expected? PEPFAR Finance and Economics Work Group

PEPFAR Finance and Economics Work Group Use of Expenditure Analysis Results for Partner Management to Improve Efficiency Goal to ensure IPs that are providing similar services/support are adopting best practices and using PEPFAR resources optimally Step 1: Identify outliers Step 2: In–depth analysis to identify cost drivers Step 3: Agreement to lower UE by $X in coming year by decreasing expenditures or increasing targets Step 1: Identify outliers Consensus on acceptable range for unit exp. (criteria for outliers) walk through example of Moz with 2 standard deviations Does not need to be absolute amounts Can vary over time – which allows for shifts in programming and flexibility to respond but still keep an eye on efficiency Step 2: In–depth analysis to identify cost drivers Summary report highlighting IP expenditures AM/COTR to work with each outlier Are there cost drivers that explain the disparity (location, population, etc.) and are these acceptable reasons? Are there cost drivers that are unexplained? Tell story of COTR and partner in Mozambique Step 3: Agreement to lower UE by $X in coming year by decreasing expenditures or increasing targets PEPFAR Finance and Economics Work Group

PEPFAR Finance and Economics Work Group Trend Analysis Talk about efficiency in terms of reduced unit expenditure but also reduced variation among partners PEPFAR Finance and Economics Work Group

Evidence-Based Approach to Increase Effectiveness Recent PEPFAR COP Guidance to focus on uptake of core interventions “E” dependent on good outcomes/output measures PEPFAR is exploiting more of its data to more effectively allocate resources PEPFAR continues to support studies to evaluate programs including multi- country randomized community trial on combination prevention Optimal combination of goods and services to be produced, and how these are distributed, in order to maximize the benefit/impact Longer-term process Informed by resource allocation models PEPFAR Finance and Economics Work Group

Use of Expenditure Analysis Data to Inform Effective Programming PEPFAR Finance and Economics Work Group

Leveraging PEPFAR’s Resources Optimal use of PEPFAR resources to maximize the reach, quality and impact of global HIV programs Strategic coordination of donors Crowding-in of internal and other external resources Recognizes that HIV programs may achieve greater scale and reach with contributions from other sources Partnership Frameworks is PEPFAR’s move towards a dialogue of partnership including the development of strong financing frameworks Promote national ownership Feasible, affordable, transparent, and sustainable Efficient and smart Easily implemented and monitored Not an efficiency per se – but could be thought of as the fourth ‘efficiency’ (the first three being technical, productive, and allocative.) Promote national ownership: Stronger role for country governments, as the AIDS response transitions to domestic control, funding Feasible, affordable, transparent, and sustainable: Ensure financial targets are feasible and achievable by all partners, are fair, and sustainable beyond the 5 year PFIP time horizon Efficient and smart: Build on the latest epi and effectiveness data and best strategic options to obtain value for money and high impact Easily implemented and monitored: By both host governments, the USG, and other key donors, with check-ins, incentives, and sanctions PEPFAR Finance and Economics Work Group

PEPFAR Finance and Economics Work Group Scale-Up of ART Access and Declining PEPFAR Per-Patient Costs, 2004-2009 Since PEPFAR was initiated, investments from the USG, partner countries, and governments have created conditions that reduce the overall costs associated with programming, particularly antiretroviral therapy (ART) for HIV. The lower ART unit costs allow us to achieve greater coverage with available resources. These conditions include: Decreasing commodity costs Licensing, approval, and competitive manufacture of generic formulations of ARVs has resulted in an environment of rapidly declining pricing for these commodities. PEPFAR, utilizing bulk-purchasing mechanisms, has been aggressive in taking advantage of these lower ARV prices to extend treatment to additional patients. PEPFAR is working with partner countries and existing multilateral and foundation efforts to encourage the policy changes needed to continue this downward trajectory of drug prices. As part of the GHI, PEPFAR will also explore possible efficiencies in supply chain management. Increased Efficiency of Programs and Healthcare Personnel PEPFAR programs benefited from economies of scale as patient cohorts expanded. Increasing numbers of patients are often treated by the same number of health workers as a result of several factors, such as improved worker efficiency after the start-up period. More recently, there is indication of the effects of task-shifting upon improving efficiencies. Over the next phase, PEPFAR is identifying additional efficiencies to assist health workers to care for patients. Through the GHI, it will also explore mechanisms like appropriate co-location of services to reduce recurring personnel and facility costs. Return on Health Systems investments in equipment, infrastructure, training Overall, per-patient financial costs of treatment have dropped as global AIDS efforts have matured. Much of the infrastructure and equipment required for a site to function was established before patients were enrolled, and any expansion in patient numbers was preceded by expansions in clinic capacity. As PEPFAR works with the Global Health Initiative (GHI) to expand and build health systems, it will build upon the country infrastructure platform to continue to reduce costs for increased coverage of care. Note: Per-patient budget allocation is estimated as treatment allocation divided by lagged end-of-reporting direct patients. PEPFAR Finance and Economics Work Group

PEPFAR Continues to Develop Measures of Efficiency and Effectiveness Our ability to improve efficiency and effectiveness is correlated with our ability to define and link interventions to measurable outputs Clear service delivery models No standard intervention models Treatment PMTCT Counseling and Testing Health System Strengthening Behavior Change and Communication OVC Number of Economic Studies A challenge to the HIV/AIDS community. While metrics may not be perfect, they are needed to start the dialogue as indicators rather than determinants of efficient and effective policymaking PEPFAR Finance and Economics Work Group

Thank you! Acknowledgements: PEPFAR country teams and Implementing Partners for participation in Expenditure Analysis Pilots PEPFAR Finance and Economics Work Group For additional information: www.PEPFAR.gov