Lower-Priced ARV Drugs, Economies of Scale, and Program Maturity Have Helped Reduce Per-Patient Costs and Contributed to Expanding Treatment Programs PEPFAR’s Reported Per- Patient Treatment Costs Have Declined Substantially

Declining prices for ARV drugs have been a key source of per-patient  cost savings, with most of these savings coming from the purchase of  generic ARV drugs. OGAC has reported a substantial decline in PEPFAR per-patient  treatment costs, from $1,053 in 2005 to $339 in 2011. 1). The calculation also does not capture funds from other funding sources. PEPFAR estimates that in fiscal years 2005 to 2011, it saved almost $934  million by buying generic versions of ARVs instead of equivalent branded  products. As Per-Patient Costs Have Declined, PEPFAR Has Supported Treatment for More People

As per-patient treatment costs have declined in PEPFAR-supported  programs, savings have contributed to substantial increases in the  number of people on ARV treatment, including both people directly  supported by PEPFAR and those who receive treatment through country  programs (see fig. 3). However, there are three key  limitations. Although PEPFAR has taken steps to strengthen cost estimation, country  treatment-cost studies have been conducted in only a small number of  countries (eight partner countries) and delivery sites (usually about nine  clinics per country). In addition, although PEPFAR-supported treatment  programs are changing rapidly, for five of the eight studies that have been  completed, data were collected between 2006 and 2007. PEPFAR  currently does not have a plan for systematically conducting or repeating  country treatment-cost studies, as appropriate, in partner countries. Without such a plan, PEPFAR may be missing opportunities to identify  potential savings, which are critical for expanding HIV treatment programs  to those in need. Using an OGAC-developed budgetary formula, PEPFAR has  met this treatment spending requirement. Since PEPFAR was  reauthorized in 2008, PEPFAR country teams’ budgets allocated to  capacity building have increased. As a result, it is not possible to determine the full  amount of PEPFAR funds that are allocated to support the HIV treatment  and care services identified in the spending requirement. Using OGAC’s Budgetary Formula, PEPFAR Has Met the Treatment Spending Requirement

Budgets for “treatment and care for people living with HIV”  (Budgets for Treatment + Care + Prevention program areas)
To determine the amount of the PEPFAR budget that constitutes  “treatment and care for people living with HIV,” OGAC sums the amounts  allocated by all country teams each year to six of the seven budget codes  within the Treatment and Care program areas (see app. By fiscal year 2012, budgets in the Other program  area represented more than 21 percent of all program area budgets, up  from about 15 percent in fiscal year 2008. However, the  treatment spending requirement expires at the end of September 2013. Conclusions

PEPFAR has supported rapid expansion of HIV programs since 2008,  providing direct support for more than half of the estimated 8 million  people on ARV treatment in low- and middle-income countries. However,  because OGAC cannot fully account for the contributions that its country  capacity building activities have made to the HIV treatment and care  services identified in the treatment spending requirement, it cannot  provide complete information on how PEPFAR funds are being allocated  to meet both the treatment spending requirement and the goal of  promoting country ownership. Recommendations for Executive Action

To improve PEPFAR’s ability to help countries expand their HIV treatment  programs to address unmet need, and do so through the efficient  allocation of resources and effective program planning, the Secretary of  State should direct PEPFAR to develop a plan to do the following:  systematically expand the use of country treatment-cost studies to  additional sites and partner countries, where it is cost-effective to do  so, to help estimate costs and examine country-specific  characteristics of comprehensive HIV treatment that may result in cost  savings; and work with partner countries, where feasible, to broaden PEPFAR’s  expenditure analysis to capture treatment costs across all partners  that support each country program and develop more timely  information on the full costs of comprehensive HIV treatment. State’s comments also emphasized that, because in-depth cost studies  are time- and resource-intensive to conduct, those studies should be  complemented with more timely data from expenditure analysis to help  ensure that PEPFAR-supported programs have a portfolio of information  that can be used to inform program decision making. Global AIDS Coordinator. To describe how per-patient costs have changed and their effect on  program implementation in treatment programs supported by the  President’s Emergency Plan for AIDS Relief (PEPFAR), we focused our  work on PEPFAR’s reported trends in cost information relating to fiscal  years 2005 through 2011. We  selected these countries on the basis of program size, estimates of HIV  disease burden, travel logistics, and other factors. To describe how PEPFAR’s cost information supports countries’ efforts to  expand treatment, we assessed the timeliness and completeness of  information generated through PEPFAR’s cost estimation and  expenditure analysis approaches. See: Department of State, Office of the U.S.
Why GAO Did This Study

Through PEPFAR--first authorized in 2003--the United States has supported major advances in HIV/AIDS treatment, care, and prevention in more than 30 countries, including directly supporting treatment for almost 5.1 million people. However, millions more people still need treatment. Congress reauthorized PEPFAR in 2008--authorizing up to $48 billion over 5 years--making it a major policy goal to help partner countries develop independent, sustainable HIV programs. Congress also set spending and treatment targets. OGAC leads PEPFAR by allocating funding and providing guidance to implementing agencies. As requested GAO reviewed PEPFAR-supported treatment programs. GAO examined (1) how perpatient treatment costs have changed and affected program implementation, (2) how PEPFAR cost information supports efforts to expand treatment, and (3) how PEPFAR has met a legislated treatment spending requirement. GAO reviewed cost analyses and reports and analyzed ARV drug data relating to fiscal years 2005 through 2011; conducted fieldwork in three countries selected on the basis of program size and other factors; and interviewed PEPFAR officials and implementing partners.

What GAO Found

The Department of State's (State) Office of the U.S. Global AIDS Coordinator (OGAC) has reported that per-patient treatment costs declined from about $1,053 to $339 from 2005 to 2011. Purchasing generic antiretroviral (ARV) drugs, together with declining drug prices, has led to substantial savings. OGAC estimates that the President's Emergency Plan for AIDS Relief (PEPFAR) has saved $934 million since fiscal year 2005 by buying generic instead of branded products. PEPFAR's analyses of data from eight country treatment-cost studies indicate that per-patient costs also declined as programs realized economies of scale while taking on new patients. Furthermore, the analyses suggest that costs decreased as countries' treatment programs matured, particularly in the first year after programs expanded, and reduced one-time investments. Per-patient cost savings have facilitated substantial increases in the number of people on ARV treatment. In September 2012, an estimated 8 million were on treatment in lowand middle-income countries, of which PEPFAR directly supported 5.1 million-- an increase of 125 percent since 2008, the year the program was reauthorized.
Despite substantial declines in per-patient treatment costs, it is important that countries continue to improve the efficiency of their programs to expand to meet the needs of the estimated 23 million people eligible for ARV treatment under recent international guidelines. PEPFAR's cost estimation and expenditure analysis approaches provide complementary information that can help partner countries expand treatment and identify potential cost savings. However, as currently applied, these approaches do not capture the full costs of treatment. Cost estimation provides in-depth information, but data are limited because detailed cost studies have been done in only eight partner countries, at a small number of sites. Moreover, although treatment programs are changing rapidly, key data for most of the studies are no longer timely, since they were collected in 2006 and 2007. PEPFAR does not have a plan for systematically conducting or repeating cost studies in partner countries. Data from expenditure analyses, while more timely, are limited because they do not include non-PEPFAR costs. Without more timely and comprehensive information on treatment costs, PEFPAR may be missing opportunities to identify potential savings, which are critical for expanding HIV treatment programs to those in need.
Using an OGAC-developed budgetary formula, PEPFAR has met the legislative requirement that more than half of its funds be spent each year to provide specific treatment and care services for people living with HIV. From fiscal year 2008 to fiscal year 2012, PEPFAR funds allocated to capacity building--to strengthen health systems, laboratory capacity, and strategic information systems--increased from 15 percent to 21 percent of PEPFAR's total funds to support country programs. However, the current formula does not include the capacity building funds. These funds--which support PEPFAR country teams' efforts to meet another legislative goal of promoting sustainable country-owned programs--and other PEPFAR activities also contribute to HIV treatment and care services. PEPFAR does not currently have a methodology to account for those contributions. Without such a methodology, it is not possible to determine the full amount of PEPFAR funds that are allocated to support the HIV treatment and care services identified in the spending requirement. However, the treatment spending requirement expires at the end of September 2013.

What GAO Recommends

GAO recommends that State develop a plan for (1) expanding the use of indepth cost studies to additional countries and sites, where appropriate, and (2) broadening expenditure analysis to include non-PEPFAR costs, as feasible. State generally agreed with the report's recommendations.