Newly published study calls for increased transparency in reporting indirect costs incurred by the U.S. President’s Emergency Plan for AIDS Relief
New York, NY, October 29, 2018 — U.S. funding for global HIV programs has remained static for several years, but the demand to get increasing numbers of people living with HIV on lifesaving treatment remains. Finding creative ways to build in more efficiencies in light of constrained budgets while simultaneously meeting demand is crucial. An analysis conducted by amfAR, The Foundation for AIDS Research, is the first of its kind to attempt to quantify indirect costs charged by organizations implementing the U.S. President’s Emergency Plan for AIDS Relief, or PEPFAR. Examining data from 2007 to 2016, the study found that between $1.85 billion and $4.34 billion was spent on indirect costs. The study was published in the peer-reviewed online journal PLOS One.
Flatlined or restricted funding comes with consequences—especially for infectious diseases.Much of the work of PEPFAR in providing lifesaving HIV treatment and prevention programs in low- and middle-income countries is undertaken by implementing partner organizations. A proportion of the funds awarded to these organizations is allocated to indirect costs—the general costs of administering and running programs that support organizational needs. The need for such costs, which can be associated with items such as buildings, maintenance, depreciation and administrative staff, is widely acknowledged. The authors point out that their analysis is not an indictment of indirect costs but is intended to “quantify the potential range of indirect costs of international organizations and universities to enable more informed debate regarding potential areas for increased efficiencies.”
PEPFAR’s commitment to transparency—both in terms of funding data and programmatic results data—should be regarded as a model for all global development programs. The authors state, however, that “the lack of transparency in indirect costs or rates has made both evaluations of the effectiveness of indirect costs, and organizational accountability for these rates, difficult.” They call for “a re-examination of the current policies and the return on investment in indirect cost recovery across the PEPFAR program.”
“As the funding environment for global HIV programming grows ever more constrained, country programs are having to make difficult decisions about what services they can no longer fund and where they are no longer able to prioritize funding in an effort to have the greatest impact in the short-term,” said Brian Honermann, amfAR’s deputy director of public policy. “Those are good and correct decisions to make in the context of restricted resources – but that’s different from being the right decisions to make in combating the epidemic overall. Flatlined or restricted funding comes with consequences—especially for infectious diseases. Administrative costs and indirect costs are policy decisions as well, and—given the decisions being made in-country—we should be asking hard questions and making hard decisions about how such cost recovery is or isn’t efficient.”
The study comes at a time when funding for global HIV/AIDS programs is stagnating while the number of people on or in need of treatment continues to grow. The issue will only become more acute with any increase in funding unlikely and with 2020 rapidly approaching. That is the target date set by UNAIDS for achieving its 90-90-90 objectives: to have 90% of all people living with HIV aware of their status; 90% of all people with diagnosed HIV on treatment; and 90% of all people receiving treatment achieving durable viral suppression. Yet even with remarkable progress on scaling up antiretroviral therapy in recent years, only 53% of people living with HIV were accessing treatment in 2016.
As the authors note, PEPFAR’s role in low- and middle-income countries cannot be overstated: “The program has reduced drug prices through bulk procurement, changed the narrative around the feasibility and affordability of treatment programs in developing countries, and made great strides in HIV prevention. PEPFAR and its implementing partners unlocked the ability to deliver programs, fundamentally changing the course of the HIV epidemic and fueling new research and knowledge that have made the current 90-90-90 aspirations achievable.”