Journal Issue

Guest Article AIDS: Invest Now or Pay More Later

International Monetary Fund. External Relations Dept.
Published Date:
January 1994
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AS DEVELOPING countries seek the most cost-effective ways to control the spread of AIDS, the World Development Report 1993 argues that no country is immune. Delaying action will sharply raise the cost of intervening and increase the threat the epidemic poses to development. Without a cure, prevention holds the key, along with research on vaccines and treatments

Although the first cases of AIDS were not identified until 1981, the virus has now spread worldwide, with cases reported in 173 countries. The World Health Organization (WHO) estimates that, currently, over 12 million persons—90 percent of whom live in developing countries (see table)—are infected with the human immunodeficiency virus (HIV). Since the beginning of the epidemic, over 14 million persons have probably been infected and over 2 million have died.

The HIV epidemic is still growing—unlike many other relatively stable diseases such as malaria—and holds the potential to become one of the most costly and debilitating epidemics for developing countries. While HIV is still less common than diseases such as malaria, its economic impact per case is far greater because it mainly affects productive young adults, and the resultant illnesses lead to demands for costly care.

Developing countries bear the heaviest burden

Estimated distribution of HIV prevalence in adults, late 1993


Sub-Saharan Africa7.00+
South and Southeast Asia2.00
Latin America and the Caribbean1.00+
North America.80
Western Europe.40
North Africa and Middle East.08
Eastern Europe and Central Asia.05
East Asia and Pacific.03
Global total11-12
Source: World Health Organization.
Source: World Health Organization.

There are cost-effective interventions to slow the epidemic, yet current annual worldwide expenditure on AIDS prevention is only about $1.5 billion a year, with perhaps less than $200 million of this spent in developing countries. Among them, Thailand spends the most ($45 million in 1992, 75 percent of which was from government funds), whereas total spending throughout Sub-Saharan Africa was only double this amount, a mere 10 percent of which came from government funds.

A recent WHO study suggests that comprehensive services to prevent AIDS and sexually transmitted disease (STD) in all developing countries would cost $1.5 billion to $2.9 billion a year. While this would be a substantial increase in current spending, WHO estimates that the number of new adult HIV infections averted could be as high as 9.5 million over the next decade. This article looks at the most cost-effective ways to fight the spread of AIDS, drawing heavily upon the studies undertaken for the World Bank’s World Development Report 1993.

Why a special case?

For developing countries, a key question these days is how much of limited government funds should be spent on fighting AIDS, especially given that there are other diseases that currently exact a higher toll. The WDR 1993 argues that the spread of HIV and AIDS merits special and immediate attention for several reasons:

The HIV epidemic is bad and getting worse. The HIV virus is spread in three ways: through sexual contact, through contact with contaminated blood or blood products, and from mother to child during the perinatal period with an additional risk during breast-feeding. In developing countries, HIV is ostensibly an STD, with over 85 percent of infections occurring through heterosexual intercourse.

Available evidence suggests that all HIV-infected individuals will ultimately suffer from AIDS and that all AIDS patients will die within a few years. Because, on average, it takes six to ten years for an HIV-infected adult to develop AIDS, regardless of future changes in HIV transmission, there will be an increasing number of AIDS cases over the next few years. Already, the estimated 12 million infected individuals constitute about 2.4 percent of the world’s global burden of disease—the present value of future streams of disability-adjusted life years (DALYs) lost as a result of death, disease, or injury. This measure attempts to gauge the full loss of healthy life.

But even these figures obscure the true magnitude of the epidemic. In young adults in developing countries, HIV/AIDS is already the greatest cause of disease burden in males and the fourth greatest cause in females. Conservative projections indicate that the number of persons infected with HIV will increase to more than 26 million in the year 2000, with 1.8 million deaths that year alone, contributing about 3.3 percent to the global burden of disease. Given the short time it takes infection rates to double in many developing countries and the recent spread to countries with low infection levels, total figures in 2000 could even be two or three times higher.

Of course, there are large differences in infection rates among regions and within regions. For a long time, Africa, where it is estimated that HIV accounts for 6.3 percent of the burden of disease, had to contend with the most rapid spread of the virus. In some African populations, 1 in 40 adults is already infected, whereas in certain capital cities, the prevalence of infection is as high as 1 in 3 sexually active women. The deaths of their infected offspring as well as the loss of the care giver for those infants not infected will contribute to a reversal of the long-term downward trend in child mortality. In these heavily affected countries, population growth rates will decline substantially, although due to the high fertility rates, growth will still be positive. But it is in Asia where the virus is spreading fastest (Chart 1). In Thailand, 2 percent of the adult population is already infected, and India is in the midst of an explosive epidemic.

Chart 1.The shifting trend among regions

(estimated global annual AIDS incidence)

Source: World Health Organization.

AIDS is an especially costly disease. At the macro level, AIDS poses a threat to economic growth in many countries already in distress. Indeed, World Bank simulations indicate an annual slowing of growth of income per capita by an average 0.6 percentage point per country in the ten worst affected countries in Sub-Saharan Africa.

The powerful negative impact of AIDS on households, productive enterprises, and countries stems partly from the high costs of treatment, which divert resources from productive investments, and mostly from the fact that AIDS primarily affects people during their economically productive adult years, when they are typically responsible for the support and care of others.

One study in a rural African community has shown that 89 percent of the deaths in the population of those 25-34 years can be attributed to HIV infection (an excess mortality of 13/1,000). These adult deaths can tip vulnerable households into poverty. Even in Tanzania, where the government pays a large share of health costs, a Bank study shows that affected rural households in 1991 spent $60—roughly the equivalent of annual rural income per capita—on treatment and funerals. Moreover, the effects of losing an adult persist into the next generation as children are withdrawn from school to help at home.

Preventing AIDS prevents other key transmissible diseases. Efforts to slow the spread of HIV will also reduce the magnitude of the STD and tuberculosis (TB) epidemics. STDs are extremely common (over 250 million new infections worldwide per year), are harder to treat in HIV-infected individuals, and have severe, often irreversible consequences that disproportionately compromise women. Besides their enormous burden, STDs increase by three-to fivefold the transmission and acquisition of HIV.

For individuals previously infected with the tuberculosis bacillus, infection with HIV is one of the most important factors promoting the development of active tuberculosis. There are estimated to be more than four million persons dually infected. TB is already the first and second ranked cause of disease burden in young and middle-aged males. In females, it ranks second and third in the same age groups. Increasing numbers of active TB infections will lead to further spread in both the HIV and non-HIV infected populations.

The cost-effectiveness of the available interventions rapidly declines as the epidemic spreads. Since there is no vaccine or cure for AIDS, primary prevention is the only current method of fighting the epidemic. Without it, AIDS spreads rapidly in the transmission, or “core,” groups—those particularly vulnerable to acquiring and transmitting infection due to high-risk activities—followed by a slower and then accelerating spread in the general population (Chart 2). Thus, early and effective targeting of HIV interventions is critical because the cost-effectiveness of these interventions diminishes as the infection moves out of the high transmission groups into the general population.

Studies in nine developing and seven high-income countries suggest that preventing one case of AIDS saves, on average, about twice the GNP per capita in discounted lifetime costs of medical care. In some urban areas, the savings may be as much as five times GNP per capita. Moreover, indirect costs are an estimated five to ten times higher. In Thailand, for example, calculations suggest that if we could slow transmission rates by just 20 percent, discounted savings in medical costs by the year 2000 would be $1,250 per currently infected person, or a potential total of $560 million. As fewer persons overall would be infected in the future, the stream of savings would continue to grow.

Prevention involves sensitive, politically charged issues. Preventing HIV infection often necessitates working with socially marginalized groups (including, in many cultures, homosexuals) and people who practice illegal activities (e.g., drug use or prostitution). This means that unusually strong government commitment is essential to implement effective prevention programs. In addition, because of the stigma attached to HIV infection and the long time lag between infection and the onset of AIDS symptoms, governments often do not assign high priority to HIV prevention until the epidemic has spread deeply into the population.

What can be done?

A combination of strategies, backed by adequate resources, is required to stem AIDS.

Providing information. Informing people about how to protect themselves against HIV infection is central to any AIDS strategy. They need to know that the risk of infection can be minimized by reducing the number of new sexual partners, choosing partners of the lowest risk, refraining from risky sexual practices such as anal sex, seeking treatment for other STDs, and avoiding contact with infected blood.

Encouraging condom use. Condom use is effective in slowing the spread of both HIV and STDs and needs to be encouraged in all risky sexual encounters. Programs to promote condom use in highly vulnerable groups are very cost-effective. One such program, geared to low-income prostitutes in Nairobi, reduced the mean annual incidence of gonorrhea from 2.8 cases per woman in 1986 to 0.7 cases in 1989. A model of HIV transmission indicates that use of condoms averted 6,000-10,000 new HIV infections per year, at an approximate cost per DALY of about $0.50 per year of life saved. This compares favorably with the most cost-effective of all health interventions.

Social marketing—the marketing of a consumer good to fulfill a public health or other social need, with retail costs subsidized by the public sector—is another strategy. In Zaire, distribution outlets—from pharmacies to traditional healers and from nightclubs to street vendors—were saturated with subsidized condoms. Condom sales rose from 20,000 in 1987 to 18.3 million in 1991: 90 percent of the condoms were bought by men and 60 percent were intended for casual sex. In 1991 alone, the program averted an estimated 25,000 HIV infections. Similar programs have been developed in many other countries, including at least 22 in Sub-Saharan Africa.

Reducing blood-borne transmission. Only about 5 percent of all HIV infections occur as a result of blood transfusions, but transmission with infected blood almost always leads to infection. Preventive measures include reducing the need for transfusions, selecting low-risk blood donors, eliminating payments for donated blood (because paid donors tend to have a higher risk of HTV), and screening blood. Effective early treatment of health problems, combined with the education of health care providers, can reduce blood transfusions by up to 50 percent. Intravenous drug users can lower their risks by using clean needles.

Chart 2.Early AIDS intervention is crucial Simulated AIDS epidemic in a Sub-Saharan African country

Source: Adapted from Potts. Anderson, and Boily. Lancet 338 (September 7, 1991).

Integrating AIDS prevention and STD services. Little of the AIDS prevention budgets has been allocated for preventing and treating other STDs. Yet, because the efficiency of transmission of HIV is increased by STDs, and STD patients and their partners are an important high-risk group to target, the wide availability of STD services is crucial for fighting AIDS. Treatment of STDs is also important in its own right: these diseases alone account for the second largest disease burden (behind maternal causes) in women aged 15-44 in developing countries.

Because many STDs are asymptomatic, especially in women, infected individuals frequently are unaware and do not seek treatment. For those with symptoms who seek treatment, charges for clinical services may reduce access to adequate care, thereby increasing the spread of STDs. Because of the primary and secondary benefits of beating STDs, it would make good sense to subsidize the delivery of STD services, including case management and counseling, condom promotion, and partner notification. Combining STD and family planning services is another good strategy.

Providing voluntary testing and counseling. Easy and inexpensive voluntary access to HIV testing gives people an opportunity to take responsibility for their own sexual behavior and ensure their partner is not infected. Studies suggest that counseling and testing help individuals and couples adopt safer sexual behavior. The once prohibitive cost of testing has declined sharply thanks to new technology—testing now costs around $2 a couple (excluding counseling). Experience from Uganda, where a voluntary testing center was set up in 1990, shows the demand is high.

HIV testing, however, is not always reliable because there is a short period when HIV may not be detected in a newly infected person. Furthermore, a negative test result is no guarantee of continuing risk-free behavior. This means that testing is most useful for couples in or planning a long-term monogamous relationship. Governments will need to ensure that testing remains voluntary and anonymous, is of high quality, and is accompanied by the appropriate counseling.

Caring for the infected. Individuals who are ill from HIV-related illnesses demand care, and, unless this care is planned for, AIDS treatment has the potential to over-whelm clinical capacity and result in a deterioration of care for other illnesses. In 1992, developing countries spent about $340 million to care for AIDS patients. While this is only a small fraction of the $4.7 billion spent by developed countries to care for their AIDS patients, it is still nearly twice the amount spent on AIDS prevention in the developing world. If spending per patient remains constant, the amount spent on the care of AIDS patients in developing countries will more than quadruple to $1.5 billion in the year 2000. Strategic planning for care programs, including the use of a small number of relatively inexpensive drugs and outpatient or community treatment where possible, can greatly reduce costs. Palliative home care using a basic visitation program is relatively inexpensive but imposes a heavy burden on family members.

Need for urgent action

Despite national and international attention and the significant effort by WHO to help design and implement plans for controlling AIDS, most national AIDS programs are currently inadequate. They often remain limited to ministries of health, are too standardized, and—until recently—lack STD control as a significant contribution to AIDS prevention. Because of its vast demographic, social, economic, and political implications, AIDS is not simply a health problem; it is a national development issue. National leadership and the involvement of multiple sectors are thus crucial. The most effective programs, such as Thailand’s, pursue strategies that involve many agencies, both inside and outside governments, in an atmosphere of openness and frankness.

Each country will have to tailor its AIDS control plans to a number of local factors—including the epidemiology of HTV, the capacity of the health system and other related sectors, and the available financial resources. Countries with a significant burden of HIV disease will also need to develop strategies for financing and providing care for infected individuals, as well as for those indirectly affected (e.g., orphans whose parents have died of AIDS).

Three main criteria can be used by resource-constrained developing countries to prioritize HIV/AIDS interventions: current HIV prevalence, risk of future spread based on the prevalence of STDs, and existing AIDS burden. According to these criteria, four distinct situations emerge.

  • Areas at low current risk, with little spread of HIV and few STDs (e.g., rural China and North Africa), should emphasize comprehensive reproductive health education for youth and some AIDS prevention among high-risk groups and should establish sensitive HIV and STD surveillance to provide early warning of impending spread.

  • Areas at high risk of an epidemic from early spread of HIV or little HIV but a high prevalence of STDs (e.g., Yunnan Province in China and Surabaja, Indonesia) should undertake massive, targeted preventive activities for high-risk groups, including prostitutes, supplemented by general education and testing of the blood supply.

  • Areas with a current epidemic, but as yet little incidence of disease (e.g., urban areas of India), need to develop AIDS prevention programs for the entire population while continuing to target high-risk groups. Voluntary HIV testing and counseling and preparation for the care of AIDS patients should also begin.

  • Areas with a major epidemic and a high disease burden (e.g., Uganda and Zambia) have to combine a broadly based preventive strategy with attention to care for AIDS patients.

Preventive efforts must be targeted at populations with diverse needs. For the high-risk groups (e.g., mobile population groups such as long-distance truck drivers, migrant workers, young urban adults, prostitutes and their clients, and injecting drug users), key interventions include providing education on safer sex, promoting condom use, and treating STDs. For young people—half of all HIV infection has occurred in people under age 25—there is an urgent need for comprehensive education on reproductive health issues, both in and out of school. In addition, preventive efforts should be truly sensitive to the needs of women and young girls, helping them to protect themselves. Women are biologically more susceptible to acquiring infection through heterosexual intercourse than men, and they are also epidemiologically more vulnerable as they tend to marry or have sex with older men, who are more likely to be infected. Social factors such as double standards for virginity and for fidelity after marriage, along with the sexual subordination of women, represent additional risks. In Uganda, more than 60 percent of HIV-infected persons are women, many of whom are faithful to one partner.

NGOs—many of which have initiated rapid and innovative responses to the epidemic—can play a vital role in prevention, care, and community support, using their credibility and access to reach those at highest risk. Governments should maximize this advantage by providing a supportive environment for NGO activities.

Although effective interventions now exist, research is urgently needed to further develop new prevention technologies such as female-controlled barrier methods (e.g., vaginal microbicides) and vaccines that are appropriate and affordable for developing countries. Although current antivirals are only partially effective and too expensive for most persons in developing countries, new agents are being developed. It will be critical to formulate strategies that make these affordable for those living in developing countries.

In addition, many critical questions remain unanswered. Why is the efficiency of heterosexual transmission higher in some settings (e.g., Africa versus the United States)? What percentage of transmission is caused by breast-feeding, male noncircumcision, and various STDs? What factors enhance infection from mother to child, and can the mechanism be blocked? And are there really those who are “resistant” to, or have developed immunity to, infection?

The danger right now is that although most of the world’s population—excepting parts of Africa and Southeast Asia—still live in communities that have low levels of HIV, these areas are nonetheless at great risk. If these communities wait until they recognize significant illness from HIV before acting, the epidemic will most likely have penetrated deeply into the population, at which point HIV will be much more costly and difficult for the world community to halt. Without a major increase in resources, as well as political will and leadership, the HIV epidemic is likely to become a development disaster of unprecedented proportions.

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