An impending medicine subsidy fiasco


Nairobi village

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  • Access to quality #malaria medicines may be about to decline for the first time in over a decade

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  • Access to good #malaria treatments has lowered deaths from well over a million to under 800k. This may be about to change

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  • AMFm's products are being handled illegally all around #Africa

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The malaria community has done a great job over the past decade to combat the disease. Increasing bed net distribution and insecticide spraying has brought the incidence down by tens of millions of cases. And the availability of good treatments has lowered deaths from well over a million to under 800,000. But this may be about to change.

Most Africans buy their drugs in the private sector, yet most donor efforts have focused on increasing access to medicines in the public sector, and with good reason.

First, diagnosing malaria is more expensive than treating it (at least with older medicines), so unless diagnosis is free, most Africans will presumptively treat, assuming any fever is malarial. While this is understandable and has saved countless lives, it has also contributed to the development of drug resistance, making older and far cheaper treatments, like chloroquine, useless over time. Therefore, donor efforts to identify and treat malaria in public clinics have probably slowed resistance.

"The AMFm products are turning up all over Africa, having been stolen, transported under poor conditions and illegally traded, with the result that many probably won’t work."--Roger Bate

Second, the public sector is relatively straightforward to procure drugs for, whereas the private sector in Africa has thousands of distributors, many with limited skill at handling drugs and probably hundreds of thousands of retailers, if one includes kiosks, and rural traders. Many of the drugs they sell are fakes containing nothing more than chalk and road paint, others are clinically substandard due to poor manufacture and also often because the drugs are stored so badly that they degrade rapidly, often making them useless. Hence making sure that donated drugs are used properly by patients in the private sector is largely impossible.

About a decade ago the best new drug on the market, artemisinin, was starting to be deployed across Africa. To lower the chances of resistance developing to this new drug, it was combined with an older malaria drug to make an artemisinin combination therapy or ACT. But these drugs were expensive, over ten times the price of the cheapest drugs. So companies, notably from China and India started selling the artemisinin on its own. Malaria experts, and notably, a group at the Institute of Medicine headed by Nobel economic laureate Kenneth Arrow, suggested that a subsidy on ACT drugs to wholesalers in the private sector would increase the sales of ACTs and crowd out the other inferior drugs.

And so the Advanced Malaria Financing (AMFm) was born. A few critics on the left, such as Doctors Without Borders, bemoaned the system predominantly because it revolved around the private sector; others, such as myself, were concerned that although the idea was appealing, the IOM simply didn’t know enough about the private sector to predict with any likelihood what would happen to the subsidized medicines, at what prices they would be sold, and the impact on access to medicines and drug resistance. Citing similar concerns, the US Government decided not to support the initiative. But other western donors did and earlier this year, armed with $225m, several countries, including Kenya, Tanzania, Ghana and Nigeria, started to benefit from the AMFm subsidy.

The first thing to note is that the price of ACTs has fallen, and therefore access to better drugs is probably occurring on a significant scale. But this one expected benefit of the AMFm is being outweighed by numerous other problems, some of which were entirely foreseeable.

First, demand for subsidized ACTs is now dominating all demand, which means that public sector clinics, backed by unreliable government payers, are no longer able to procure the drugs they require. After all, if you sell medicines, why wait to possibly sell to a government clinic with a poor payment track record when there are private wholesalers with cash willing to buy now? This means public clinics, which test patients to check they really are carrying malaria before giving treatment, have no drugs, while the private sector is awash in the products and perhaps half the people they sell to do not actually have malaria.

Second, the drugs are being sold at are far higher prices than those envisaged by AMFm. From my research team’s study of Accra in Ghana and Lagos in Nigeria, the price ranges from two to six times expected price. And monotherapy artemisinin is still on average cheaper. So while more ACTs will be bought, the resistance-driving monotherapies remain.

Third, and most worrying of all, is that the AMFm products are turning up all over Africa, having been stolen, transported under poor conditions and illegally traded, with the result that many probably won’t work. Of a limited analysis of the best products several fail quality control tests, while still containing much active ingredient, enhancing resistance. Such quality problems are most likely due to degradation in transit and not production. Although no francophone country is participating in the subsidy scheme, we found AMFm products in every location we’ve looked (Cote d’Ivoire, Togo and Benin). Ok, so at least these people are getting good quality products, at lower prices than normal, but legitimate wholesalers in these countries are being undercut by traders in stolen products. The AMFm is enabling both corruption and drug resistance.

The AMFm is run out of the Global Fund to Fight AIDS, TB and Malaria, a UN-backed multi-billion dollar initiative. The Fund changes direction very slowly, if at all, and it is quite possible that it will continue to ignore criticism of the AMFm. The AMFm is in its pilot phase at the moment, but its backers seem to be so wedded to the initiative that it seems likely to be pushed forward even if, on balance, as seems most likely, it is counterproductive. As a result access to quality malaria medicines may be about to decline for the first time in over a decade.

Roger Bate is the Legatum Fellow in Global Prosperity at AEI.

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