Strengthening health systems during a pandemic: The role of development finance

How global health security was reformed in the wake of the Ebola crisis

Being prepared is the most time and cost-effective way to handle global health risks. Estimates place the expected annual loss from pandemics risk at 0.6% of global GDP, or about USD 500 billion per year (Fan, Jamison and Summers, 2018[11]).2 The economic and social costs of Ebola were estimated at USD 53 billion, most of which represents lives lost (Huber, Finelli and Stevens, 2018[12]), and early estimates of output losses over 2020 and 2021 from COVID-19 reach USD 12.5 trillion globally (Gopinath, 2020[13]).

Taking precautionary measures to manage and pre-empt these recurring risks is important. This would allow faster responses to crises, by unlocking resources in a more streamlined way: humanitarian aid can be slow to mobilise, as was the case during the Ebola outbreak. In its aftermath, a number of rapid response mechanisms were established (Box 2.1), which contributed to improve preparedness.

In the aftermath of the Ebola crisis, the international community launched a number of initiatives to better assess epidemics preparedness. The Joint External Evaluation mechanism (JEE), launched in 2016 by the WHO provides an effective mechanism for conducting a systematic evaluation of a country’s preparedness capabilities and infrastructure, enabling clear identification of gaps and areas for improvement. More than 90 countries were evaluated as part of the JEE process by 2020, revealing important gaps in preparedness. Most worryingly in the current context, 25 countries in Africa were deemed “not ready” in the synthetic score developed by the organisation Prevent Epidemics using JEE data for the subcategory “emergency response operations”, and 16 with “work to do”, and 1 “better prepared (4 had no JEE).

However, progress has remained limited. While the JEE index has been widely applied in many countries, little has been done when gaps were identified. Often, there was no costing of the necessary investment suggested by the JEE, nor robust financing plans attached to it, whether domestic or external. In a recent report, the Global Pandemics Monitoring Board showed that there was no progress in 3 of the 6 preparation areas, all linked to financing: countries have rarely integrated a domestic revenue mobilisation strategy to preparedness, external financing remains limited and poorly targeted, and those indicators are not used in monitoring by multilateral banks and other financing organisations (World Bank Group, 2019[13]).

Pandemic preparedness is prone to a “panic-neglect cycle”, where health donors and national policy-makers rush to allocate emergency funding, which soon ebbs out once a disease seems to be under control, despite risks of resurgence (Yamey et al., 2020[14]). Therefore, mechanisms need to be put in place to incentivise domestic stakeholders to keep investing in pandemic preparedness.

Given the rapidity with which diseases cross borders, recent initiatives have stressed the need for co-ordination capacities at the regional level. Both in Africa and in Asia, regional initiatives have recorded significant support after 2015. The African CDC was launched officially in 2017, with support from the World Bank and the People’s Republic of China among others, and is playing an important co-ordination role in the current coronavirus crisis. IDA also funded the large REDISSE3 programme in West Africa, a USD 400 million project (over five years) to provide co-ordination in health security, surveillance, early-warning systems, and technical capacity to test, in collaboration with the Institut Pasteur. In Asia, the Indo-Pacific Centre for Health Security, supported by Australia with AUD 200 million, is also based on the regional model. These initiatives highlight the gains associated with co-ordination at regional level.

Innovations led to more financing after 2015, but impetus had since slowed down

The aforementioned efforts improved the ability of international institutions to respond to major public health crises, but never managed to reach the levels of ambition needed. Moreover, the global health security system remains fragmented,4 and not well integrated in countries’ planning initiatives. The response mechanisms in place have been subject to criticism.

The World Bank’s “Pandemic Emergency Funding” has not offered the flexibility it was aiming for. Its cash window is relatively limited and the insurance window (so-called “Pandemics Bonds”) was too slow and complex to trigger. This criticism has been made especially in the context of the Ebola re-emergence in the Democratic Republic of Congo in 2019,5 when the requirements to trigger the bond were not met. Indeed, even for the COVID-19 crisis, bonds were triggered only on 19 April, well after countries sought to purchase necessary equipment, undermining the flexibility of the instrument. By mid-May, the World Bank’s emergency operations including through its COVID-19 fast track facility and other forms of finance had been extended to 100 developing economies (World Bank, 2020[16]).

The WHO Contingency Fund for Emergencies has a capitalisation target of USD 100 million in windows of three months that should be replenished through flexible voluntary contributions, but remains underfunded. The situation improved recently, but as of March 2019, only 77% of the WHO Health Emergencies Programme was funded – a shortfall of over USD 100 million. There is also a relative narrowness of the donor base for major preparedness programmes: three donors support the majority of the WHO CFE (Japan, Germany, and the United Kingdom) and, there are only three donors for the World Bank’s PEF (Japan, Germany, and Australia).

Finally, although progress has been made in raising awareness about preparedness through the JEE exercise, countries’ responsiveness to filling the gaps has been limited. One area of important reform could be to make pandemics preparedness a part of macroeconomic surveillance. The current COVID-19 crisis clearly shows that pandemics have both health health-related and economic dimensions. Putting this risk on the radar of finance ministers, for example in IMF (in countries’ Article IV reports) or World Bank Systematic Country Diagnostics, would reinforce the impetus for investing in health security.

Shortcomings are not only at individual country level: Development co-operation in support of epidemics control is difficult to track. There are widely divergent estimates of commitments to global health security in developing countries, varying from USD 240 million to USD 11.1 billion (Global Pandemics Monitoring Board, 2019[18]). A key issue is the definition of preparedness – which varies from a narrow lens on “epidemics prevention and response” to a much broader concept of “whole-of-government readiness”; with the sectoral approach “robust health systems” in between. The following chapter takes the latter perspective by analysing how development assistance can help strengthen health systems as a whole. The OECD Creditor Reporting System provides one possible – though imperfect – estimate of development finance, both official and private. Using the “infectious disease control” category, a relatively “narrow” field (excluding HIV, Tuberculosis, and Malaria), financing increased sharply after 2014: official and private development finance increased from USD 2.2 billion in 2014 to USD 3.2 billion in 2015 and reached USD 3.7 billion in 2017 (Figure 2.1). According to the International Working Group (2017[17]), accounting for different sources yields to total financing of USD 4 billion, with USD 2.5 billion for preparedness and USD 1.5 billion for research and development. Better tracking those different estimates, including better identification of activities beyond “infectious disease control”, would help identify how much is spent, and how much is needed to fill the gap.

 

Figure 2.1. Development finance for infectious disease control, excluding HIV, Tuberculosis and Malaria

USD billion, constant 2017

Note: Excluding official development finance to HIV/AIDS, Tuberculosis and Malaria. Infectious disease control refers to aid classified under purpose code 12250.

Source: OECD (2020[18]), Creditor Reporting System (database), https://stats.oecd.org/Index.aspx?DataSetCode=crs

As of 2018, the multilateral system, DAC members, and private foundations (mainly the Bill & Melinda Gates Foundation) each finance a third of the expenses related to epidemics control6. However, 2018 witnessed the first major decline in financing for epidemics control in years. The United States, which emerged as the major funder for preparedness after the Ebola crisis, especially through technical assistance by the Centre for Disease Control (CDC), reduced its international funding by USD 450 million in 2018. While it represented more than half of bilateral funding in 2015-2017, its share fell to 24% in 2018.

Global mobilisation: timely but still insufficient

As of May the multilateral system has mobilised strongly against COVID-19 in support of developing countries: the WHO set-up a “Strategic Preparedness and Response Plan (SPRP)” in February 2020, which outlined the main operational needs to fight the epidemics. It then estimated the funding needs for this plan at USD 675 million, requested through the Contingency Fund for Emergencies (CFE). The DAC strongly responded to this call, with above USD 125 million of funds provided. For the period starting in April, the WHO launched a “Coronavirus Response Fund” and estimates its total funding requirement for WHO’s COVID-19 response at USD 1.7 billion until the end of 2020 (WHO, 2020[19]). The UN Secretary General has launched a UN framework for the immediate socio-economic response to COVID-19, outlining the UN Development System’s social and economic support during the pandemic (UN, 2020[20]).The humanitarian response is co-ordinated at the level of the United Nations and guided by UN OCHA’s Global Humanitarian Response Plan (GHRP), pooled between several of international organisations and NGOs (WHO, UNICEF, WFP, etc.) (UNOCHA, 2020[21]). The GHRP initially called for USD 2 billion targeting fragile settings but given the burdens of the virus spread total requirements have risen to USD 6.71 billion (UNOCHA, 2020[22]). In early May, only 13% of the GHRP funding appeal had been received. The Global Fund against AIDS, Malaria and Tuberculosis has allowed recipient countries to reallocate parts of its grants to the current pandemics.

The global effort to prevent, treat, and test has received a major boost with EU support, bilateral and private donors. Relaying the call for action by several global health organisations, the Access to COVID19 Tools Accelerator raised EUR 7.4 billion on 4 May 2020.7 It includes a commitment for equal access to vaccines or therapeutics, which will allow the rapid distribution to developing countries. The initiative made clear that more will be needed: this sum meets initial needs, but will not be sufficient to manufacture and deliver solutions.

Multilateral development banks are responding both to the health emergency, and the economic shock. While figures are changing rapidly, the largest commitments so far stemmed from international financial institutions. The IMF raised its emergency lending capacity to USD 100 billion magnitude targeting shortfalls in low and middle-income countries (IMF, 2020[23]). The World Bank Group’s total emergency commitment is of USD 16 billion, through IDA (USD 1.3 billion) and the IBRD (USD 2.7 billion), as well as the IFC (USD 12 billion), but aims at deploying about USD 160 billion over the next year and a half (World Bank, 2020[24]). Regional development banks8 are estimated to have redeployed about USD 120 billion.

DAC members have a role in supporting the international effort, both through the multilateral system and their field operations. The global interventions outlined above have the advantage of scale, and rapid mobilisation. Supporting the global efforts should be a priority, to avoid fragmentation of effort. This is especially the case for procurement of goods that have become scarce – personal protective equipment, ventilators, etc. – where fragmentation would increase the already destructive market disruption. However, DAC members as bilateral donors should adapt their operations to the ongoing pandemic. The French Development Agency (AFD) announced that it would raise about EUR 1.5 billion to support countries in sub-Saharan Africa through expertise and direct support to health systems through grants and loans, and the German development ministry announced USD 1.2 billion in support. The EU prepared a EUR 15.6 billion to address both the immediate health impact and economic disruption. Other DAC members have also stepped up – Netherlands with USD 114 million, mostly for Africa, and Canada with USD 100 million.

Philanthropy and private sector actors have also made commitments. Jack Ma of Alibaba has provided equipment to African countries, Jack Dorsey of Twitter pledged USD 1 billion, while the Bill & Melinda Gates foundation, already a major funder of both multilateral initiatives, research, and evidence, has released USD 100 million in early February for Africa and South Asia, before most global organisations had begun to mobilise.9 During emergencies, philanthropic organisations can be more nimble and try untested solutions (see Box 2.2 on the role of the BMGF R&D), and increase their commitments. Corporations have also contributed to the effort of shifting certain production lines to production of essential medical supplies such as hydro-alcoholic gels and medical masks.

Development co-operation has helped fight infectious diseases and promote health through various channels

Development co-operation promotes health in a variety of ways, both directly through health-targeted programmes, and indirectly through programmes targeting water, sanitation and hygiene (WASH) or nutrition. Official development finance to the health sector has mainly supported programmes targeting specific infectious diseases (Figure 3.1). Between 2014 and 2017, for instance, around 53% of official development assistance commitments to health targeted the control of sexually transmitted diseases (including AIDS/HIV), infectious disease control, malaria and tuberculosis. The creation of various so-called “vertical funds” in the early 2000s and the large-scale engagement of private philanthropic foundations underscores this focus on specific disease intervention. Vertical funds target specific programmes and disease interventions and often channel support through private, non-public systems. In the meantime, development finance towards health policy and health systems more generally has increased from USD 5.2 billion to USD 8.6 billion between 2010 and 2018, representing an increase from 26% to almost 33% as a share of total development assistance to health.

 

Figure 3.1. Development finance to health by purpose and type of aid

As share of total development finance to health (disbursements)

Note: Bilateral allocable aid including bilateral DAC and non-DAC donors, multilateral donors and philanthropic development finance. Detailed methodological notes in the footnote at the end of the paper.

Source: OECD (2020[18]), Creditor Reporting System (database), https://stats.oecd.org/Index.aspx?DataSetCode=crs

The importance of financial support to health systems will increase along with the disease burden in low- and lower-middle income countries and the risk of recurring epidemics and pandemics. For example, responding to the ongoing COVID-19 pandemic largely depends on the medical infrastructure and the ability of the health sector as a whole to respond to the emergency. This depends on the number of medical personnel and personnel protective equipment, intensive care units, and equipment such as ventilators, which all depend on adequate financing. Testing and tracing of infected persons is critical to stop chains of infections.

Risks associated with the COVID-19 crisis are associated with trade-offs as much as general disruptions of health systems

While the response to COVID-19 is pushing healthcare systems to and beyond their limits, global efforts to end other communicable diseases such as HIV, TB and malaria risk are being severely affected. The DAC has been a key supporter of the fight against these diseases and provided USD 6 billion in ODA for infectious disease control (including malaria and tuberculosis) in 2018. As such, this is a clear priority for bilateral donors, and the DAC should play a role in helping to minimise the disruption to this agenda and to ensure continued progress.

Risk of co-infection: While medical research into COVID-19 is still ongoing, people already infected with other communicable diseases such as HIV and TB could be among the most vulnerable. (GBC Health, 2020[29]) As the virus seems to have a more severe impact on people with underlying health conditions, there might be specifically high vulnerability throughout parts of the world with a high incidence of HIV, TB and malaria which puts Africa notably, at high risk.

Disruption to health systems: COVID-19 could derail progress on other diseases, through disruptions in treatment or other interventions, or disruptions in supply chains of critical medicines and medical supplies. The latter could also be amplified by measures taken in higher income countries to ban exports of essential supplies in response to their own shortage of supplies in times of pandemics. A recent study estimated the indirect effects of the pandemic on maternal and child mortality in LMICs, and found that COVID-related disruptions to the health system can cause an increase of 9.8–44.7% in under-5 child deaths, and an 8.3–38.6% increase in maternal deaths per month. (Roberton et al., 2020[30])

With local health systems under stress, countries will lack the resources and capacity to cater to patents of other infectious diseases. People with a medical condition may not be able to be treated due to hospital occupancies being reached, and health workers focusing on the treatment of patients infected by COVID-19. Experience from the 2015 Ebola outbreak in West Africa suggests that additional deaths from existing diseases such as malaria could be comparable to or even greater than those from the outbreak itself.

Supply chain disruptions caused by the pandemic and countries’ response can affect the ongoing fight against infectious diseases through procurement delays and long stock outs of drugs and other commodities. With many health commodities being produced in East and Southeast Asia, the production of pharmaceutical and other health-related products has significantly slowed down, in some cases even coming to a halt. China is the dominant global supplier of pharmaceuticals, and Wuhan, where the virus originated, is significant centre of the biotechnology and pharmaceutical industry. With factories in Asia on lockdown due to quarantines to contain the spread of COVID-19, many commodities are being produced and shipped late. (GBC Health, 2020[29]) While some high-income countries are struggling to ensure the adequate supply of medical equipment, the situation is exacerbated in countries where there are already supply chain issues.

Development co-operation should take into consideration the potential collateral damage of COVID-19 in designing its response to the crisis. Diversion of resources from other essential forms of support to targeted disease programmes, nutrition or health systems at large could amplify the death toll from COVID-19. Possible solutions to minimise health system disruptions are currently being discussed. Examples include the expansion of telemedicine, better primary healthcare, etc. Donors can actively encourage this discussion by investing in research and integrating the solutions in their health programmes.

Development partners finance and support the health sector in low- and lower middle-income countries

A variety of sources are available to finance healthcare including domestic and international, private and public resources. In 2017, global spending on health amounted to USD 7.8 trillion, representing about 10% of the world’s GDP (WHO, 2019[2]). While representing less than 1% of global health spending, aid represented 29% of health spending in low-income countries and 12% in lower middle-income countries. This clearly demonstrates the important role of development co-operation and finance to support these countries responding to the COVID-19 pandemic. In total, development assistance to health more than quadrupled since 1990, and amounted to more than USD 26 billion in 2018 (OECD, 2020[18]). Within this total spending, members of the DAC provided USD 14.6 billion; in addition to USD 8.3 billion from multilateral donors, USD 3.1 billion from private philanthropic donors, and USD 0.4 billion from bilateral non-DAC donors.

Non-communicable diseases present a growing threat to countries supported by the DAC, but they remain under-prioritised. Even as global epidemics have been top priority of the global health agenda, there is an array of urgent health needs in developing countries that remain underfunded and under-prioritised. One of these is the response to non-communicable diseases and injuries, which are on the rise globally, and are especially burdensome for low- and lower middle-income countries. In 2016, non-communicable diseases (NCD) such as cardiovascular disease, cancer, chronic respiratory disease, and diabetes accounted for 73% of global deaths (40 million people), of which 75% (30 million) were in low-income and middle-income countries. (Hatefi and Allen, 2018[34]) In low-income countries, the share of total deaths caused by NCDs rose from 23% in 2000 to 37% in 2016. As observed during the COVID-19 crisis, those non-communicable diseases could also be a factor of vulnerability to pandemics.

Despite the growing urgency, NCD response attracts only a limited amount of external resources, especially from DAC members. In 2018, support for NCDs represented a mere 0.1% of ODA disbursements from DAC members targeting the health sector.17 Only a limited number of donors provide assistance to cope with NCDs, and the bulk of the funding comes from three private foundations (World Diabetes Foundation, Wellcome Trust, Bill and Melinda Gates Foundation) rather than from official providers. Of DAC members, 12 countries report their support for NCDs, with Germany, New Zealand, Norway and Switzerland being among the largest.

The mobilisation of funds for the COVID-19 response should not divert funds from support for the fight against NCDs. In the medium to long-term, calls for more funding for pandemic preparedness in developing countries will likely rise, as an important prerequisite to ensuring the global public good of health security. However, while the importance of global health security cannot be contested, experience shows that a narrow targeting of development assistance for health risks could be unsustainable, and could have negative side effects. A forthcoming OECD paper on health sector financing explores how countries who receive development assistance run the risk of sliding back on their progress in health outcomes as they become wealthier and lose access to external resources. For example, after graduating from the Global Fund in 2010, Romania saw a rapid rise in HIV prevalence among persons who inject drugs. The HIV prevalence among this group, estimated at 1.1% in 2009 increased to 6.9% in 2012 and spiked at 53% in 2013 (ICASO, 2016[36]).

Assistance to address the consequences and prevent a resurgence of COVID-19 and similar epidemics need to be carefully and smartly designed. If donors target narrowly confined objectives related to the control of COVID-19 and pandemic preparedness, the gains and progress achieved with their support could be quickly reversed.

Investing in stronger health systems is critical to managing this trade-off

Health security efforts for prevention, alert, and response to disease outbreaks such as COVID-19 need to be pursued in parallel with health system strengthening, as part of the same mutually reinforcing approach to developing resilient health systems. Health system strengthening aims to ensure that the individual building blocks of the health system (i.e. service delivery; health workforce; information; medical products, vaccines, and technologies; financing; and leadership and governance) function smoothly and interact well with each other. Universal health coverage, which allows everyone to access affordable and quality health services, is an important element of a strong health system (WHO, 2007[37]).

Donor support for health system strengthening is rather limited. In 2018, the categories “general health” and “other basic health”, which would include health system strengthening made up 15.8% and 16.7%, respectively, of overall development assistance targeting the health sector. During emergency responses, this percentage is also likely to decline, although crises could also be a wake-up call and benefit support to health programmes at large.

A strong health system is critical to ensure effective crisis response and prevention. Successfully functioning health systems underpin countries’ ability to detect and respond to disease threats. To improve developing countries’ resilience to health crises, donors need to invest in stronger health systems. (Wenham et al., 2019[38]) By focusing their post-COVID support on health system strengthening activities, DAC members and other donors could also help to address the tension between competing health priorities. There is a strong link between universal health coverage and NCD control, as enabling access to affordable healthcare could allow more people to be diagnosed and treated early. Similarly, support for health system strengthening should integrate concerns for gender inequalities in order to ensure that the entire population is able to access services. Over the past decade, the share of DAC members’ ODA in the health sector that integrated gender equality has never surpassed 50%. In 2017-18 the figure was 42%, which seems surprisingly low. In the area of infectious disease control, only 24% of aid focussed on gender equality and women’s empowerment in 2017-18.

Health system strengthening is often focused on upstream support for governance and policy making; however, downstream projects can be designed in a way that is conducive to strengthening. Assistance for specific diseases, for instance, can also be used in order to maximise systemic benefits. For example, Ethiopia and Malawi have channelled HIV funding to train health workers who can manage multiple conditions, to build primary health care centres, develop monitoring and evaluation systems, and strengthen supply chain management to improve patient outcomes for a range of diseases. In sub-Saharan Africa, TB programmes have provided suitable platforms to introduce screening and scale up management of NCDs such as chronic respiratory diseases. (Atun et al., 2013[40])

Synergies especially exist between achieving universal health coverage and enhancing health security. For example, universal health coverage supports health security by preventing outbreaks through high immunisation coverage, providing early alert by facilitating access to healthcare for the entire population, better response thanks to reliable infrastructure and healthcare workforce. At the same time, effective prevention and response to health crises is key to achieving universal health care. Health crises tend to divert resources to focus on crisis response and lowers trust in the health system. Therefore, they cause barriers to accessing healthcare. By avoiding and better managing such health crises, countries can ensure that patients have access to healthcare. (Kluge et al., 2018[41])