Health Reform and Drug Financing. Selected Topics - Health Economics and Drugs Series, No. 006
(1998; 49 pages) [French] [Spanish]
Table of Contents
View the documentAcknowledgements
View the documentExecutive summary
Open this folder and view contents1. Introduction
Close this folder2. Financing reforms
View the document2.1 Public financing though general revenues
View the document2.2 Health insurance
View the document2.3 User charges
View the document2.4 Voluntary and other local financing
View the document2.5 Donor financing and drug donations
View the document2.6 Development loans
Open this folder and view contents3. Affordability and efficiency
Open this folder and view contents4. Organizational reforms
View the documentConclusions
View the documentReferences
View the documentBack Cover

2.5 Donor financing and drug donations

Donor assistance comes from bilateral and multilateral sources as well as from NGOs (which were discussed above). The percentage of aid which contributes to health expenditures varies considerably from country to country. In the Sub-Saharan region, the average percentage contribution of aid is nearly 30%, whereas in Asia (excluding China and India), it is 11%, and in Latin America, it is under 8%. However, these averages can hide quite large variations. For example, in some countries in Latin America, aid contributes 20% or more of total health expenditures. In Sub-Saharan Africa, there are several countries in which nearly half or over half of all health expenditures are attributed to aid sources [25].

Donor cooperation in health can cover assistance to hospitals and clinics, medical services, disease control, vaccination programmes, etc. It may also be in the form of technical cooperation which is used to transfer knowledge, experience, and skills. In pharmaceuticals, donors may support policy development and implementation, as well as the establishment of supply systems, the development of quality control methods and laboratories, the promotion of rational drug use, and training.

Drug donations are also possible although they are frequently related to emergency relief or initial seeding for rotating drug funds. Some bilateral and multilateral partners prefer not to support recurrent costs such as drugs, due to sustainability issues. Other donors are revising their policy in recognition that this assistance may be of great value to some countries - particularly those whose immediate needs for essential drugs cannot be met despite efforts to improve the functioning of the health system. This aid serves to relieve human suffering and allows countries breathing space to contemplate long-term solutions to their problems.

The challenge with all external financing, but particularly when it involves the financing of recurrent costs, is to not allow this to substitute for efforts by countries to develop sustainable financing mechanisms. Addressing this issue requires a joint commitment from the parties involved to developing solutions, and depends upon an overall re-evaluation of health sector priorities, structures, and mechanisms as well as economic development and political will. Transitions from external mechanisms to internal mechanisms need to be incorporated in assistance plans from their conception. For example, the commitment by a recipient country to contribute small but increasing amounts of funding to a project can be a means of achieving this transition. But it should be recognized that sustainability may not be attainable in a relatively short time period (five years or less), particularly if economies are not growing, and longer commitments by donors may be required.

Another issue which exists centres on in-kind drug donations. Problems have been widely noted. Among these are the donation of medicines not relevant to the local situation, with unreadable labels or no labels, which are expired or are soon to expire, of substandard quality, or in quantities totally inappropriate for the situation [17]. Interagency guidelines have been published which set out the following four core principles for drug donations, along with 12 specific guidelines: (1) maximum benefit to the recipient; (2) respect for wishes and authority of the recipient; (3) no double standards in quality; and (4) effective communication between donor and recipient [40]. These guidelines are meant to maximize the benefits of drug donations.

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