The State Department's Office of the Global AIDS Coordinator issued this week the second annual report to Congress on PEPFAR (download as pdf / 2 meg). Like last year's report, the current publication is quite clear about tactics, and laden with descriptions of accomplishment conveyed both through aggregated data and anecdote. There is useful detail throughout.

The most puzzling exclusion, once again, is the lack of detailed financial information. In 166 pages there are only six tables addressing finance. There still is little breakdown on funding by topic or program type, and almost nothing about the many contractors that carry out the bulk of the work. While the report overall is helpful, better financial information would make it a true "annual report".

Does AIDS crowd out funding for other global infectious diseases? The current issue of PloS Medicine has an article which discusses "rapid impact interventions", a strategy which combines effective treatments for seven common infectious diseases in Africa. Because costs are low ($0.40 per year per patient, vs. nearly $1,000 for ARV -- see graph at left) and the treatments are proven, the authors argue that funding for these interventions is a highly effective strategy in combatting poverty.

The Global Fund makes many grants (over 300 to date representing $3.5 billion). Some don't perform. Global Fund staff monitor grant progress, and if things don't proceed, they stop the grant.

The most recent high-profile example is this week's termination of a $36 million package of grants to Myanmar. In canceling the grants, the Global Fund issued both a press release and a detailed five-page factsheet describing the situation.

There is a maxim in grant programs that if some grants don't go bad, you're not doing your job. The Global Fund, to its credit, publicizes failed grants along with successful ones, allowing other donors and grant recipients to learn from their circumstances.

Two new reports by UNAIDS provide a detailed current description of global AIDS coordination and finance issues. The first, "Global Task Team on Improving AIDS Coordination Among Multilateral Institutions and International Donors" (PDF / 717 kb) describes the necessary framework for effective coordination. The second, "Resource Needs for an Expanded Response to AIDS in Low and Middle Income Countries" (PDF / 573 kb), presents current estimates on available and required resources to combat global AIDS.

The two documents are interrelated -- it is necessary to have credible coordination before expecting increased AIDS funding. The two documents also pivot on one key point: current estimates show funding growing about 10% per year, while need is growing at about 20% per year. UNAIDS estimates a funding gap 2006 - 2008 of $22 billion.

PEPFAR periodically makes the news not because of program accomplishments, but because of program restrictions. Last week the Administration reversed policy requiring grant recipients of the Global Fund, World Bank, and other multilaterals to sign a number of declarations required by the US Congress. Earlier this month Brazil rescinded a $40 million grant because of similar PEPFAR requirements.

Because PEPFAR's web site is so limited, it is difficult to find the actual language relating to prostitution, condoms, abstinence policies, and other declarations. Since the prostitution declaration has been the most contentious topic recently, we tracked down the relevant language and include its text with this posting (from PDI Project RFP / M-OQQ-GH-POP-05-527).

Brazil last week cancelled the remaining $40 million of a five year $48 million dollar USAID grant because of a refusal to pledge to oppose commercial sex work. Brazil has also cited concerns about agreeing to US government principles concerning sexual abstinence and drug use. The policies stem from two 2003 US laws, one involving HIV/AIDS funding and another regarding sex trafficking. Pedro Chequer, Director of Brazil's AIDS program, explains:

We can't control (the disease) with principles that are Manichean, theological, fundamentalist and Shiite.

He goes on to describe US policies as:

Interference that harms the Brazilian policy regarding diversity, ethical principles and human rights.

Further coverage in today's Wall Street Journal and also on the Kaiser Network.

Last week's joint announcement by the major AIDS donors of reaching 700,000 people in developing countries with ARV is a welcome sign of (at least modest) progress in the 3x5 effort. What becomes more confusing is when individual donors start claiming direct credit for subsets of those numbers. For example, PEPFAR claims credit for "support" of treatment of 155,000 people, although that figure includes the entire ARV population of nine countries, despite many of those patients paying privately or receiving ARV prior to PEPFAR. An excellent analysis by Bernard Rivers of Aidspan digs deeper into the claims:

The explanation for these strange figures is that some of the funding provided by PEPFAR does not go to local projects that "put pills in people's mouths."  Instead, it goes to national projects – e.g. training of medical staff, or provision of lab facilities – that PEPFAR believes indirectly benefit all people who are on treatment in that country.  It may be that the Global Fund takes a similar position regarding some of its own grants.

Kudos to donors for increasing ARV. Trying to claim individual credit, however, only diverts attention from important infrastructure and cooperative efforts. In the future they should give ARV totals, describe their own programs, but not try to tease out individual numbers.

A group of economists and organizations, spurred by Professor Alan Whitesite, has launched the "Free by 5" initiative calling for the free provision of ARVs to any patient that can't afford to pay. Making their arguments on both humanitarian and pragmatic grounds, the economists urge both policymakers and funders to recast the current "3 by 5" program to a free variant. A description of the initiative is downloadable as a PDF document. Fuller details and a petition are available at the University of Kwazulu-Natal.

PEPFAR has previously announced a drug procurement and distribution program worth up to $7 billion. While proposals were initially scheduled to be submitted October 15th, the due date was changed to "indefinite" (amendment 2) -- with no further news as to when or if the program will proceed.

It is not surprising that a large contract faces delays. What is surprising is that, despite USAID officials' interest in transparency, there is little to be learned in the news or online about the program. This is after all the world's largest AIDS program to date. It has significant implications for AIDS programs and planning everywhere. PEPFAR could assist by providing more information about all of its efforts.

The Wall Street Journal reports (October 29, subscriber only) that the PEPFAR program is currently paying twice as much for many AIDS drugs as equivalent programs at the Global Fund or World Bank. A principal reason for this is PEPFAR does not yet buy many generic drugs, particularly from India, because they have not received FDA approval. More generic drugs are likely to be approved next year.

The issue of procurement price and practices by PEPFAR will become increasingly important once the $7 billion "Supply Chain Management System" contract is awarded in coming months. In the bidders conference for the contract, USAID official Carl Hawkins made this comment:

And finally -- this has already been stated, but I think it's worth stating -- there will be a high degree of interest in this activity, both inside and outside of government. The way this activity is managed will require, really, complete transparency. I think that it's going to have such visibility that we may have to think about this issue more than with virtually any other project that we've been involved with.

The Global Fund's efforts at transparency around procurement are promising, with their "Price Reporting Mechanism" showing increased data and usage.

Kaiser provides an excellent summary of the PEPFAR drug price issue, including comments from Mark Dybul, Chief Medical Office of the Office of the US Global AIDS Coordinator.

The current issue of Global Fund Observer by Aidspan offers an excellent review and commentary on Global Fund grant performance to date. The Fund has signed 212 grant agreements. On review, 22 have been identified as '"well-performing" and 25 as "slow moving". One important finding:

Sixty percent of all grant agreements have a Principal Recipient (PR) from the governmental sector, and 40% have a PR from civil society, the private sector, or a multilateral agency.  But GFO found that every one of the 25 "slow-moving" grants is one of those that has a governmental PR.  This confirms the views of many that although at times there is no choice but to use a governmental PR, when there is an option, it is often better to use some other kind of PR.

Additional progress reports are available on the Global Fund site.

One characteristic of the global AIDS response is that funding is mostly limited to a small number of very large donors: Global Fund, World Bank, PEPFAR, and the Gates Foundation. These organizations make grants which are generally very large -- several million dollars each or more. Complementary small grants programs, common in other policy sectors (such as environment or education) hardly exist in global AIDS.

This creates two problems. First, many good ideas and opportunities require smaller amounts of funding than these organizations can provide. Second, and more importantly, programs and individuals need time to grow and demonstrate their worth. Only in an environment of small grants can good ideas flourish.

It is unrealistic to expect these organizations to develop small grants capabilities -- they are configured wrong for the task. What should happen instead is that one or more of them fund a small grants facility -- call it the Global AIDS Foundation -- to fund project ideas and individuals in the $5,000 - $500,000 range. Such a foundation could operate efficiently at $20 - $50 million per year.

There are good examples of such "small grants" foundations supported by larger entities. In the 1950s the US Government founded the Asia Foundation to support programs in across Asia, an effort which served as a model for subsequent organizations. Most recently, USAID (and subsequently other donors) have supported the Eurasia Foundation, which operates small grants programs in twelve countries of the former Soviet Union.

The collective funding for global AIDS totals billions of dollars annually. The entire effort would benefit from an effective small grants facility.

As AIDS treatment programs grow throughout the developing world, drug procurement costs will represent a larger and larger percentage of AIDS budgets. Having an idea of future drug costs would be very helpful for planning. AIDS drug costs, however, have proven hard to predict. How might policymakers better estimate future drug prices?

One way would be to build an "AIDS Drug Futures Market", an online venue in which users can compete in predicting drug prices. Such futures markets have proven useful in predicting other pharmaceutical prices, such as in the market run by NewsFutures.com. (Futures markets have proven effective in predicting many things, such as presidential elections and economic growth -- all described in the excellent book "The Wisdom of Crowds").

The Global Fund is now providing excellent retrospective data on AIDS drug prices. A futures market could help provide prospective estimates, allowing policymakers to maximize resources.

The world's greatest problem is AIDS, and the most effective organization to date to combat AIDS is the Global Fund. Unfortunately, the Global Fund depends on donations, principally from governments, and governments have short attention spans. With this comes Friends of the Global Fight, a DC-based advocacy group with the mission of increasing donations to the Global Fund. It will do this through working with legislators and also raising the Fund's profile with the general public. The organization is new and still getting the kinks out (low profile, early generation Web site -- and a somewhat peculiar name), but it has three potent things going for it: star power (Jack Valenti, the new President, is well-connected in both DC and Hollywood), competent leadership (Anil Soni was Richard Feachem's well-regarded deputy at the Fund), and a narrow mission that is clear to measure and vital to achieve. They are bound to play an important role.

There currently are three main sources of funds for global AIDS. Two of these are well-known (and frequently discussed on this site): the US Government (principally PEPFAR), and the Global Fund. The third, the World Bank, is less-well understood. Through 2003 the Bank has provided more than two billion dollars in loans and grants to developing countries to combat AIDS. The largest program, the "Multi-Country HIV-AIDS Program" (MAP), has provided over one billion dollars in grants to 28 African countries. There is quite a bit of information about the programs online, including a commendable level of detail about individual projects (although it is all admittedly difficult to decipher if you are not highly familiar with the Bank). As is the case with both US Government and Global Fund funding, World Bank financing for global AIDS is expected to ramp up with time and continue to be a major source of global AIDS finance.