92476   IMMUNIZATION  FINANCING  TOOLKIT   A  Resource  for  Policy-­Makers  and  Program  Managers       The  World  Bank  and  the  GAVI  Alliance     December  2010     Table  of  Contents     List  of  Tables                                    ii   List  of  Figures                                    ii   Acknowledgements                                iii     Immunization  Financing  Toolkit:      Introduction                            1     Brief  1:      The  Importance  of  Immunization  Financing                              3   Brief  2:      Immunization  Resource  Needs,  Planning,  and  Budgeting                        5   Brief  3:      Use  of  Tax-­‐Based  Financing  for  Immunization                            9   Brief  4:      Risk-­‐Pooling  Mechanisms                            13   Brief  5:      User  Fees  for  Immunization                            17   Brief  6:      National  Trust  Funds                              20   Brief  7:      Other  Country-­‐Level  Innovative  Financing  Mechanisms                                                                            23                   Brief  8:      Development  Project  Assistance                          25   Brief  9:      Development  Loans  for  Immunization                        28   Brief  10:  Budget  Support                              30   Brief  11:  Debt  Relief                                34   Brief  12:  The  Vaccine  Market  –  Pooled  Procurement                        38   Brief  13:  The  Vaccine  Market  –  UNICEF  Vaccine  Independence  Initiative  (VII)                41   Brief  14:  The  Vaccine  Market  –  Tiered  Market  Pricing                        44   Brief  15:  The  Vaccine  Market  –  Vaccine  Production  and  the  Market                    46   Brief  16:  Innovative  Financing  –  The  International  Facility  for  Immunization  (IFFIm)                49   Brief  17:  Innovative  Financing  –  Advance  Market  Commitments  (AMCs)                  51   Brief  18:  Innovative  Financing  –  Airline  Ticket  Tax                        53   Brief  19:  Innovative  Financing  –  Results-­‐Based  Financing                      54   Brief  20:  Health  Systems  Strengthening  and  Immunization                      58   Brief  21:  Working  with  Parliamentarians                          61   Brief  22:  Comparison  of  Immunization  Financing  Options                      64     Appendix:    Estimating  Cold  Chain  Requirements                          66   List  of  Abbreviations                                70                                 ii     List  of  Tables     Table  2.1      Characteristics  of  financing  options  for  immunization  programs  and  vaccines      8   Table  3.1      Assessment  of  the  value  of  general  revenues  for  immunization  financing                12   Table  4.1      Assessment  of  the  value  of  different  types  of  risk-­‐pooling  mechanisms  for   immunization  financing                            16   Table  5.1      Assessment  of  the  value  of  user  fees  for  immunization                    19   Table  6.1      Assessment  of  the  value  of  trust  funds  for  immunization  financing                  22   Table  7.1      Assessment  of  the  value  of  other  innovative  financing  mechanisms  for   immunization  financing                              24   Table  8.1      Assessment  of  the  value  of  project  assistance  for  immunization  financing                27   Table  9.1      Assessment  of  the  value  of  development  loans  for  immunization  financing              29   Table  10.1  Assessment  of  the  value  of  budget  support  for  health  and  immunization   financing                                  33   Table  11.1  Assessment  of  the  value  of  debt  relief  for  immunization  financing                  37   Table  12.1  Assessment  of  the  value  of  pooled  procurement  for  immunization  financing        40   Table  13.1  Assessment  of  the  Vaccine  Independence  Initiative  (VII)  for  immunization   financing                                43   Table  19.1  Assessment  of  the  value  of  results-­‐based  financing  (RBF)  for  immunization   financing                                57   Table  21.1  Assessment  of  the  value  of  working  with  parliamentarians  for  immunization   financing                                        63   Table  22.1  Comparison  of  immunization  financing  options                                    65   Table  A.1      Vaccine  volume  reference                                          67   Table  A.2      Vaccine  wastage  rates  for  use  in  cold  chain  requirement  calculations                67       List  of  Figures       Figure  2.1      Expanding  fiscal  space  for  immunization                            6   Figure  20.1  Control  knob  framework                                58                     iii   Acknowledgements     The   Immunization  Financing  Toolkit    was  prepared  by  Logan  Brenzel  (World  Bank)  and   Andrew   Jones   (Adeni   Consulting),   on   behalf   of   the   GAVI   Alliance   Immunization   Financing   and  Sustainability  Task  Team.  Editing  of  the  document  was  provided  by  Gabrielle  Hezekiah.     The  authors  are  grateful  to  the  numerous  individuals  who  provided  helpful  comments  and   input   on   earlier   versions   of   this   document,   especially:   Claudio   Politi,   WHO;   Lidija   Kamara,   WHO;   Miloud   Kaddar   WHO;   Claudia   Castillo,   PAHO;   Santiago   Cornejo,   GAVI   Secretariat;   Dragoslav   Popovic,   UNICEF;  Katinka   Rosenbom,   UNICEF;   Robert   Steinglass,   John   Snow,   Inc.;   and  Violaine  Mitchell,  Bill  &  Melinda  Gates  Foundation.     We  appreciate  the  feedback  received  from  Chris  Atim,  Ajay  Tandon,  and  Anthony  Measham   of   the   World   Bank   on   the   draft   document.   We   are   especially   grateful   for   the   feedback   received  from  country  EPI  program  managers  and  WHO  regional  staff.     The   cover   photo   was   provided   by   UNICEF:   Image   UNI43689:     ©   UNICEF/NYHQ2006-­‐ 0087/Noorani.   A   girl   is   vaccinated   against   measles   with   an   auto-­‐disable   syringe   in   the   village   of   Gumdandi   near   the   southern   port   city   of   Chittagong.     In   February   2006   in   Bangladesh,   the   Government   launched   the   second   phase   of   its   national   measles   immunization   campaign.   Despite   great   strides   made   in   the   past   decade,   measles   coverage   stands   at   only   71   per   cent   nationwide   and   nearly   20,000   children   under   age   five   die   annually   from   the   disease.   The   campaign   targeted   some   35   million   children   and   involved   more  than  50,000  skilled  vaccinators  and  750,000  volunteers,  making  it  the  largest  public   health   undertaking   in   the   nation's   history.   UNICEF   and   the   World   Health   Organization   joined   the   government   and   numerous   other   partners   of   the   Expanded   Programme   on   Immunization  (EPI)  to  support  the  immunization  drive.       Preparation   of   this   document   was   supported   by   the   GAVI   Trust   Fund   to   the   World   Bank.   The  views  expressed  in  this  document  reflect  those  of  the  authors  and  not  necessarily  those   of   the   GAVI   Alliance   or   the   World   Bank.   The   many   contributors   may   not   endorse   every   point,   and   they   bear   no   responsibility   for   any   errors   that   remain.   Immunization  Financing  Toolkit:  Introduction     The  purpose  of  this  Toolkit     Financing   is   a   critical   component   of   a   sustainable   immunization   program.   The   Immunization   Financing   Toolkit   is   a   series   of   short   briefs   on   different   options   for   financing   national   immunization   programs   and   vaccines.     It   is   intended   to   serve   as   a   resource  for  program  managers  and  decision-­‐makers  in  ministries  of  health,  planning,  and   finance.  The  Toolkit  brings  together  the  most  up-­‐to-­‐date  knowledge  on  the  characteristics  of   various  types  of  financing  mechanisms  as  well  as  information  on  how  the  mechanisms  are   being   implemented   in   practice,   their   potential   benefits,   and   their   limitations.   Where   possible,  case  studies  on  specific  financing  options  are  included.    The  field  of  immunization   financing   continues   to   evolve   and   the   Toolkit   will   therefore   be   web-­‐based   and   easily   downloaded   from   the   internet.   As   a   web-­‐based   tool,   the   Toolkit   contains   links   to   other   relevant  websites  for  further  understanding.  The  Toolkit  is  also  available  on  a  CD  Rom.       This  version  of  the  Toolkit  is  an  update  of  the  Immunization  Financing  Options  produced  by   the   Global   Alliance   for   Vaccines   and   Immunization   (GAVI   Alliance)   in   2001.   Health   sector   funding  and  management  have  evolved  over  the  last  decade,  making  the  previous  document   out-­‐of-­‐date.   New   and   innovative   financing   mechanisms   to   support   immunization   and   the   health   sector   have   been   developed   and   the   types   and   costs   of   vaccines   have   changed.   In   addition,  policy-­‐makers  and  development  partners  have  become  much  more  knowledgeable   about  health  financing.       What  are  the  topics  covered  in  the  briefing  sheets?     This   Toolkit   is   designed   to   address   questions   that   program   managers   and   policy-­‐makers   might  face,  including:     • What   are   the   available   options   for   financing   immunization   services   and   new   vaccines?     • What   are   the   characteristics   of   each   financing   option?   How   predictable   or   reliable   are  these  options  and  how  technically  feasible  and  equitable  might  they  be?       • Some   mechanisms   might   be   effective   financing   strategies   for   other   parts   of   the   health  sector,  but  are  they  effective  for  immunization?       All   of   these   issues   –   and   others   –   need   to   be   considered   by   ministries   of   health,   planning,   and   finance   as   they   determine   how   best   to   finance   their   immunization   programs.   Some   financing   options   will   be   more   relevant   in   particular   contexts   than   in   others.   Readers   are   encouraged   to   weigh   the   pros   and   cons   of   alternatives   and   assess   them   relative   to   their   specific  country  context.       2     The  Toolkit  contains  the  following  briefs:     • Brief  1:  The  Importance  of  Immunization  Financing   • Brief  2:  Immunization  Resource  Needs,  Planning,  and  Budgeting   • Brief  3:  Use  of  Tax-­‐Based  Financing  for  Immunization     • Brief  4:  Risk-­‐Pooling  Mechanisms   • Brief  5:  User  Fees  for  Immunization   • Brief  6:  National  Trust  Funds   • Brief  7:  Other  Country-­‐Level  Innovative  Financing  Mechanisms   • Brief  8:  Development  Project  Assistance   • Brief  9:  Development  Loans  for  Immunization   • Brief  10:  Budget  Support   • Brief  11:  Debt  Relief   • Brief  12:  The  Vaccine  Market  –  Pooled  Procurement   • Brief  13:  The  Vaccine  Market  –  UNICEF  Vaccine  Independence  Initiative  (VII)   • Brief  14:  The  Vaccine  Market  –  Tiered  Market  Pricing   • Brief  15:  The  Vaccine  Market  –  Vaccine  Production  and  the  Market   • Brief  16:  Innovative  Financing  –  The  International  Facility  for  Immunization  (IFFIm)   • Brief  17:  Innovative  Financing  –  Advance  Market  Commitments  (AMCs)   • Brief  18:  Innovative  Financing  –  Airline  Ticket  Tax   • Brief  19:  Innovative  Financing  –  Results-­‐Based  Financing   • Brief  20:  Health  Systems  Strengthening  and  Immunization   • Brief  21:  Working  with  Parliamentarians   • Brief  22:  Comparison  of  Immunization  Financing  Options     The   briefs   are   followed   by   Appendix:   Estimating   Cold   Chain   Requirements,   and   a   List   of   Abbreviations.   How  to  use  this  Toolkit     This   Toolkit   can   be   read   in   its   entirety   or   separated   by   topic.   Although   the   topics   are   grouped   thematically,   the   briefs   do   not   need   to   be   read   in   sequence.     (We   do,   however,   recommend  that  readers  pay  attention  to  Brief  2:  Immunization  Resource  Needs,  Planning,   and   Budgeting   since   this   document   provides   an   overview   of   the   characteristics   we   have   selected  for  assessing  the  various  immunization  financing  options.)  Where  there  is  overlap   between  the  briefs  –  or  where  there  is  information  in  one  brief  that  can  serve  to  clarify  the   information  provided  in  another  –  we  have  pointed  the  reader  to  the  appropriate  place  in   the  relevant  text.  There  are  also  several  lists  of  documents  that  might  be  useful  for  further   reading.     3   Brief  1:  The  Importance  of  Immunization  Financing     Each   year   a   new   cohort   of   children   is   born   with   the   potential   risk   of   exposure   to   vaccine-­‐ preventable   diseases.   The   World   Health   Organization   (WHO)     and   UNICEF   estimates   that   nearly   24   million   children   remain   unimmunized,1   leading   to   many   deaths   that   could   otherwise   have   been   prevented.   Continued   financing   of   routine   vaccination   programs   is   critical   to   reducing   childhood   death   and   disease.   Many   countries   struggle   to   find   the   necessary   resources   for   their   national   immunization   programs   (NIP)   which   account   for   approximately   5%   of   government   health   expenditures   in   low-­‐income   countries.   Ensuring   adequate  and  predictable  financing  for  programs  is  important  for  several  reasons:       1. The  cost  of  vaccines  is  higher:  New  vaccines  such  as  pentavalent,   pneumococcal,   rotavirus,   and   Human   Papilloma   Virus   (HPV)   vaccines   are   significantly   more   expensive   than   traditional   EPI   vaccines,   such   as   oral   polio   and   measles   that   cost   pennies   a   dose.   While   unit   prices   are   expected   to   decrease   over   time   (as   production   efficiencies   are   found,   emerging   manufacturers   enter   the   market,   and   demand   for   new  vaccines  grows),  they  will  probably  never  be  as  low  as  traditional  vaccines.   2. Scaling   up   programs   is   more   costly   at   higher   coverage   levels:   As   coverage   rates   rise,   children   who   remain   unimmunized   are   often   the   hardest   to   reach.   These   children   may   have   limited   access   to   health   facilities,   live   in   geographically   isolated   areas,   and   have   caretakers   who   are   less   convinced   of   the   benefits   of   vaccination.   National   programs   may   focus   more   on   accelerated   strategies   to   reach   these   children.   The   result   is   that   the   average   cost   per   child   rises   as   countries   focus   on   these  unreached  children,  driving  up  costs  to  the  immunization  system.     How  has  immunization  financing  changed?     In   the   past   few   years,   the   scope   and   cost   of   national   immunization   programs   have   grown   significantly.   New   vaccines   are   driving   the   total   cost   of   national   immunization   programs   up,   and   account   for   the   largest   share   of   total   costs.   A   comprehensive   review   of   immunization   financing   in   50   of   the   poorest   countries   finds   that,   in   2010,   immunization   spending   increased   from   US$6   per   infant   to   US$15   per   infant,   on   average,   because   of   new   vaccines.   The   rate   of   increase   and   level   of   expenditure   vary   by   income   of   the   country   and   region.   Campaigns   are   often   a   significant   portion   of   immunization   costs,   particularly   in   countries   where   the   health   system   is   relatively   weak.   The   encouraging   news   is   that,   in   addition   to   increased   external   financing   for   immunization,   national   governments   are   also   investing   more   in   their   national   programs.   However,   despite   the   rise   in   total   financing   for   immunization,   a   large   financing   gap   still   looms,   and   sustainability   will   be   a   challenge   to   programs.  Policy-­‐  makers  will  need  to  look  at  the  full  menu  of  options  presented  here  and   elsewhere  to  support  the  immunization  system.       1  Okwo-­‐Bele,  J.M.  WHO/HQ.  “Global  Immunization  Overview.”  Paper  presented  at  Global   Immunization  Meeting,  Geneva,  1-­‐3  February,  2010.   4   The   GAVI   Alliance   2   was   created   in   2000   as   a   partnership   between   the   WHO,   UNICEF,   the   World   Bank,   donor   governments,   developing   country   governments,   private   industry,   private   foundations,   the   financial   community,   technical   agencies,   and   non-­‐governmental   organizations  (NGOs).  The  GAVI  Alliance  provides  significant  financial  support  to  72  of  the   world’s   poorest   countries   for   the   introduction   of   new   and   underused   vaccines,   as   well   as   support   for   strengthening   national   immunization   programs   and   health   systems.   3   Since   2000,  it  is  estimated  that  the  GAVI  Alliance  has  immunized  over  300  million  more  children   and   prevented   nearly   4   million   deaths   from   hepatitis,   Hib,   and   pertussis   with   support   of   over  US$3.7  billion  to  eligible  countries.     In   addition,   innovative   financing   mechanisms   for   supporting   both   immunization   and   the   health   sector   have   been   developed   since   2000.   One   such   mechanism,   the   International   Finance   Facility   for   Immunisation   (IFFIm),   leverages   capital   markets   to   frontload   donor   funds  for  immunization.  There  are  others,  such  as  Advanced  Market  Commitments  (AMCs),   which   are   designed   to   address   market   failures   in   the   production   and   manufacture   of   new   vaccines  for  low-­‐income  countries.  AMCs  are  a  pull-­‐funding  mechanism  designed  to  speed   access  to  a  specific  vaccine  that  is  not  widely  available  at  an  affordable  price  for  low-­‐income   countries.   These   two   mechanisms   together   have   brought   an   additional   US$4   billion   to   immunization  and  health  systems  for  low-­‐income  countries.     How  has  health  sector  spending  changed?     Financing   for   health   services   from   domestic   sources   has   increased   substantially   in   low-­‐   income   countries,   from   approximately   $8   billion   to   $18   billion   per   year   in   2006.   While   domestic   (government)   financing   for   health   is   much   higher   than   development   assistance,   health   sector   aid   also   has   increased   significantly   –   more   than   four-­‐fold   –   from   approximately   US$5   billion   in   1990   to   more   than   US$21   billion   in   2009.4     The   increase   in   development  funding  for  health  follows  the  adoption  of  the  Millennium  Development  Goals   (MDGs),   and   is   driven   in   large   part   by   financing   for   HIV/AIDS,   malaria,   and   tuberculosis   prevention,   treatment,   and   control.   Despite   the   rise   in   donor   assistance,   a   large   funding   gap   still   exists   and   international   commitments   for   development   assistance   have   still   not   been   met.   Many   countries   are   off-­‐track   to   reach   the   MDGs   and   recent   research   suggests   that   health  spending  in  low-­‐income  countries  needs  to  more  than  double  from  current  levels  of   about  US$31  billion  to  between  US$67  and  US$76  billion  per  year  by  2015.5       The   global   financial   crisis   that   began   in   the   fall   of   2008   strained   the   resources   of   donor   governments,  and  may  limit  aid  budgets  –  or  at  least  make  further  increases  in  aid  budgets   difficult.  Moreover,  many  of  the  poorest  countries  have  been  affected  by  the  crisis  through   challenges  in  accessing  credit  and  declining  purchases  of  their  exported  goods.     2  Formerly  the  Global  Alliance  for  Vaccines  and  Immunization  (GAVI).   3  Recent  revisions  to  GAVI’s  eligibility  criteria  mean  that  58  countries  will  be  eligible  for  support  as  of   2011. 4  Development  Co-­‐operation  Directorate.    “Aid  for  Better  Health:  What  are  we  Learning  about  What   Works  and  What  we  Still  Have  to  Do?  An  Interim  Report  from  the  Task  Team  on  Health  as  a  Tracer   Sector.”  DCD/DAC/EFF(2009)14,  p.  55.   5  See  Working  Group  1  Report,  “Constraints  to  Scaling  up  and  Costs.”  Task  Force  on  Innovative   International  Financing  for  Health  Systems  (International  Health  Partnerships  (IHP+)).   5     Brief   2:   Immunization   Resource   Needs,   Planning,   and   Budgeting       Immunization   financing   cannot   be   considered   in   isolation   from   overall   health   sector   financing,   planning,   and   budgeting.   The   manner   in   which   health   services   are   financed   will   influence   the   effectiveness   and   outcomes   of   the   health   system.   Health   financing   is   concerned   with   how   financial   resources   are   generated,   allocated,   and   used   in   health   systems.  Health  financing  systems  have  three  important  functions:  to  raise  sufficient  funds   for  health;  to  pool  these  funds  to  spread  the  financial  risks  associated  with  paying  for  care;   and  to  use  the  available  funds  to  purchase  and  provide  the  desired  health  services.     There   are   many   ways   to   classify   the   different   types   of   health   and   immunization   financing   options.   In   this   Toolkit,   we   focus   on   how   funding   for   immunization   programs   and   new   vaccines   is   generated,   organized,   and   used.   Funding   can   come   from   domestic   sources   or   external  agencies.  In  addition,  funding  may  come  from  private  sources  or  public  resources,   such  as  tax  payments.  In  many  cases,  a  financing  mechanism  may  rely  on  a  mix  of  funding   sources.   Funding   can   be   channelled   through   national   budgetary   processes,   pooled   into   managed  funds,  or    used  to  establish  innovative  financing  mechanisms.       Health   financing   systems   focus   on   revenue   collection,   pooling,   and   purchasing.   Mechanisms   available  to  countries  include  health  insurance,  contracting  for  services  between  ministries   of   health   and   NGOs,   performance-­‐based   agreements   between   health   workers   and   their   facilities,   or   purchasing   of   vaccines   through   revolving   funds   or   Advanced   Market   Commitments  (AMCs).       What  needs  to  be  financed?     Each   government   needs   to   determine   the   amount   of   financing   needed   to   support   the   resource   requirements   of   its   national   immunization   program   (routine)   and   of   Supplementary   Immunization   Activities   (SIAs).   Immunization   program   resource   requirements  include  the  cost  of  health  personnel,  including  management  and  supervision;   vaccines;  safe  injection  and  other  supplies;  training,  cold  chain  equipment  and  maintenance;   recording   and   reporting   tools;   social   and   community   mobilization;   transportation   and   vehicles;  and,  cold  stores  and  facilities.     In  late  2005,  as  part  of  the  implementation  of  the  Global  Immunization  Vision  and  Strategy   (GIVS),  the   WHO  and  UNICEF,  together  with  GAVI  Alliance  partners,  established  guidelines   for  developing  a  comprehensive  Multi-­‐Year  Plan  (cMYP)  to  support  countries  in  improving   their   immunization   planning.   This   cMYP   simplified   and   harmonized   various   immunization     planning   activities   at   national   level   to   reduce   duplication   of   efforts   and   transaction   costs,   and   increase   alignment   with   national   systems.   The   cMYP   process   has   streamlined   the   immunization   planning   process   at   national   level   into   a   single,   comprehensive   and   costed   plan.   The   cMYP   Costing   and   Financing   Tool   estimates   the   current   and   past   costs   and   financing   of   immunization   programs,   and   makes   projections   of   future   resource   requirements  and  financing  in  order  to  evaluate  corresponding  financing  gaps.     6   The  resource  requirements  and  financing  gaps  reflected  in  the  cMYP  should  be  more  fully   integrated   into   national   health   planning   and   budgeting   frameworks   such   as   the   annual   or   multi-­‐year  health  budget  and,  ultimately,  Medium-­‐Term  Expenditure  Frameworks  (MTEFs)   which   are   three-­‐year   rolling   planning   and   budgeting   processes.   Too   often   the   cMYP   is   viewed   as   a   stand-­‐alone   and   separate   exercise,   and   the   cost   estimates   contained   therein   are   not   integrated   within   national   budgets.   The   resource   requirements   of   the   national   immunization   program   are   therefore   not   fully   represented   in   health   sector   budget   discussions.  As  a  result,  national  programs  are  underfunded  relative  to  their  requirements.     Since   immunization   programs   are   vying   for   government   resources   alongside   many   other   priority   health   programs,   there   is   interest   to   know   how   the   total   resource   envelope   for   health   may   be   increased.   Fiscal   space   is   the   availability   of   budgetary   room   that   allows   a   government   to   provide   resources   for   a   specific   purpose   without   endangering   the   sustainability  of  a  government’s  financial  position.  There  are  five  ways  for  a  government  to   increase   the   fiscal   space   available   to   the   health   sector,   and   to   national   immunization   programs  more  specifically:   • More  resources  are  allocated  to  the  health  sector,  leading  to  greater  allocations   for  specific  programs  such  as  immunization     • Within   the   health   sector,   resources   are   allocated   from   least   to   more   cost-­‐ effective  services,  such  as  immunization   • The   immunization   program   is   run   more   efficiently   and   can   do   more   with   the   same  level  of  resources   • There  is  new  financing  from  sources  not  previously  tapped,  such  as  new  taxes  or   lotteries   • There  is  new  donor  funding  (grants  or  debt  relief)     Figure  2.1  Expanding  fiscal  space  for  immunization         Source:    Brenzel,  L.  Presentation  to  the  Global  Immunization  Meeting,  2005.   7       How  can  different  immunization  financing  options  be  assessed?     Financing  arrangements  can  be  complex.    They  can  also  differ  greatly  in  their  effect  on  the   efficiency  and  equitability  of  service  delivery  and  resource  mobilization.  Understanding  the   various   characteristics   of   alternative   financing   options   can   help   program   managers   and   policy-­‐   makers   select   the   best   set   of   options   tailored   to   their   specific   country   context   and   priorities.         Countries   will   have   different   goals   for   their   immunization   program,   and   mechanisms   for   financing  the  program  can  contribute  to  achieving  these  goals.  While  the  type  of  financing   mechanism   does   not   directly   determine   how   well   an   immunization   program   performs,   it   can  have  a  substantial  effect  on  performance.  For  example,  user  fees  may  reduce  utilization   of   services   and   project   grants   may   increase   the   transaction   costs   and   reduce   policy   ownership  by  the  national  government.  The  optimal  package  of  financing  mechanisms  will   be  specific  to  each  country  and  national  program.       In  this  Toolkit,  the  range  of  immunization  financing  options  is  assessed  relative  to  a  core  set   of  questions:     • Is  the  financing  option  predictable?   • Is  it  additional  to  current  government  financing?     • Is  the  option  equitable?   • Is  it  efficient?   • Is  it  feasible?   • Is  it  sustainable?   • Does  it  promote  self-­‐sufficiency?   • Does  it  foster  greater  accountability?     These  characteristics  are  outlined  in  Table  2.1.       Further  Reading       Brenzel,  L.,  N.  Halsey,  M.  Miller,  L.  Wolfson,  and  J.  Fox-­‐Rushby,  “Chapter  20:  Vaccine   Preventable  Diseases.”  In  Disease  Control  Priorities  in  Developing  Countries,  edited  by  Jamison   et  al..  Washington,  D.C.:  World  Bank,  2006.       Lydon,  P.,  R.  Levine,  M.  Makinen,  M.,  L.  Brenzel,  V.    Mitchell,  J.  Milstein,  L.  Kamara,  and  S.  Landry,   2008.  “Introducing  Vaccines  in  the  Poorest  Countries:  What  did  we  Learn  from  the  GAVI   Experience  with  Financial  Sustainability?”  Vaccine  (26):  6706-­‐6716.   http://www.who.int/immunization_financing/analysis/JVAC_8566_LydonP.pdf     World  Health  Organization.    cMYP  Financing  Tool:   http://www.who.int/immunization_financing/tools/cmyp/en/index.html           8       Table  2.1  Characteristics  of  financing  options  for  national  immunization  programs       Characteristic   Description   Predictable   The   extent   to   which   financing   sources   provide   a   steady   stream   of   resources.   Having   predictable   sources   of   financing   will   enhance   overall   planning   and   budgeting   for   the   national  immunization  program  and  improve  its  effectiveness.  Predictable  funding  sources   will  be  those  that  a  national  program  can  count  on,  in  terms  of  volume  and  timeliness.   Additional   to   The   extent   to   which   a   particular   financing   source   provides   resources   that   are   above   and   government   beyond   the   existing   government   financing   levels,   and   so   increases   the   overall   funding   financing   envelope.   Sources   that   do   not   necessarily   add   resources   to   the   funding   envelope   may   be   highly  fungible.   Equitable   The   extent   to   which   financing   sources   will   have   an   impact   on   equity   of   resource   allocation   (by  socio-­‐economic,  geographic,  and  gender,  among  other  criteria).  A  financing  source  that   enhances   equity   would   ensure   that   the   poor   are   not   disproportionately   burdened   by   the   financing   requirement,   nor   denied   access   because   of   their   inability   to   pay.   This   is   particularly  relevant  for  domestic  sources  of  revenue.   Efficient   The   extent   to   which   the   financing   source   creates   additional   transaction   costs,   such   as   additional   reporting   or   auditing   requirements,   as   a   requirement   to   obtain   financing.   Efficiency  refers  to  attaining  the  same  level  of  outcome  for  less  cost.  Efficiency  can  also  be   related   to   how   flexible   the   use   of   funding   is.   Greater   earmarking   may   reduce   efficiency.   Financing   might   also   be   designed   (i.e.,   through   specific   incentives)   to   stimulate   efficient   provision  of  immunization  services.   Feasible   The   extent   to   which   the   option   is   technically   complex,   requiring   development   and   coordination   among   a   variety   of   systems   and   institutions,   and   skilled   personnel   for   implementation.   Sustainable   The   extent   to   which   a   financing   source   provides   long-­‐term   support.   Some   financing   sources  generate  funds  on  an  on-­‐going  basis,  and  others  are  much  more  time-­‐limited.     Promotes   self-­‐ The   extent   to   which   the   financing   source   allows   a   country   to   become   less   reliant   on   sufficiency   external   funding   sources.   Funding   from   domestic   sources   is   by   definition   the   most   self-­‐ sufficient  source.  Self-­‐sufficiency  can  be  related  to  whether  the  financing  source  supports   improved  capacity  to  procure  vaccines  and  inputs.   Fosters   The  extent  to  which  a  financing  option  fosters  open,  transparent,  accurate,  and  shareable   greater   information   regarding   the   source,   allocation,   and   use   of   resources   for   immunization   accountability   services.  Accountability  is  related  to  governance  of  the  health  sector.       9     Brief  3:  Use  of  Tax-­Based  Financing  for  Immunization     What  is  tax-­based  financing?   National   and   sub-­‐national   governments   raise   revenues   through   a   variety   of   taxes,   including   taxes   on   personal   and   business   income,   payroll   taxes,   excise   duties   on   locally   manufactured   products   and   services,   property   taxes,   sales   and   value-­‐added   taxes,   inheritance   taxes,   sin   taxes,   customs   and   import   duties,   and   other   types   of   duties.   The   amount   collected   will   depend   upon   the   structure   of   the   economy   as   well   as   the   efficacy   of   tax   collection   and   enforcement.   Taxes   can   be   characterized   along   a   continuum   between   regressive   and   progressive   tax.   A   regressive  tax  is  one  in  which  lower-­‐income  individuals  pay  a  greater  share  of  their  income,   while  a  progressive  tax  is  one  in  which  higher-­‐income  individuals  pay  a  greater  proportion   of  their  income.  Taxes  that  are  raised  in  a  progressive  manner  are  considered  to  be  equity-­‐ enhancing.   Funds   derived   from   government   revenues,   as   well   as   resources   raised   via   government   borrowing   and   grants,   are   allocated   to   line   ministries   through   a   formal,   annual   budgetary   process.  Government  recurrent  and  investment  budgets  are  prepared  annually  by  ministry   and  by  economic  classification  or  line  item.  Ministry  of  health  budgets  (and  those  of  other   sectors)  are  usually  based  on  historical  spending  patterns.  In  the  ideal  case,  health  budget   planning   should   be   a   ‘bottom   up’   process   from   the   primary   facility   to   district,   province   or   region,   and   national   levels   based   on   actual   resource   needs   for   achieving   specific   health   goals.   The   health   sector   in   most   low-­‐   and   middle-­‐income   countries   tends   to   be   under-­‐ funded  relative  to  needs.   Government   revenues   usually   are   disbursed   to   line   ministries   on   the   basis   of   monthly   requests   for   resources   by   line   item.   Final   budget   approval   may   come   several   months   into   the  fiscal  year  and  ministries  will  be  allocated  previous  years’  monthly  amounts  until  final   budget   approval.   The   potential   lack   of   predictability   of   disbursement   from   the   treasury   to   line  ministries  is  challenging  to  manage.     General  revenues  at  sub-­national  level   Since   the   1990s,   there   has   been   a   trend   towards   decentralization   in   the   health   sector   (as   well  as  other  sectors),  with  a  shift  of  management  and  service  delivery  responsibilities  from   national   to   local   authorities.   The   purpose   of   decentralization   is   to   bring   resources   and   resource  allocation  closer  to  the  population  to  enhance  health  and  development  outcomes.   In   decentralized   contexts,   local   governments   raise   and   allocate   revenues   for   health   through   local  taxation.       10     Uses  of  government  revenues  (national  and  sub-­national)  for  immunization   As  a  country’s  income  increases,  government  revenues  play  an  increasing  role  in  financing   health   care.   Government   budgets   also   account   for   the   largest   source   of   immunization   program  financing  in  most  countries.    Government  budgets  support  the  salaries  and  wages   of   health   workers,   operating   costs   of   service   delivery,   and   procurement   of   vaccines,   supplies,  and  equipment.   Across   countries,   there   is   tremendous   variation   in   the   proportion   of   total   immunization   program   funding   coming   from   the   sub-­‐national   level,   depending   upon   the   extent   of   political   and  fiscal  decentralization.  In  different  countries,  it  may  be  the  case  that  states,  provinces,   departments   and/or   municipalities,   and   districts   have   primary   or   sole   responsibility   for   funding  immunization  services.     In   highly   decentralized   contexts,   the   role   of   the   central   immunization   program   may   be   limited   to   policy-­‐making,   and   perhaps   disease   surveillance   and   national   reporting.   The   central   level   no   longer   has   control   over   the   amount   of   resources   allocated   to   the   immunization   program,   particularly   at   the   local   levels,   though   the   central   level   can   create   guidelines.  Procurement  for  vaccines,  supplies,  and  equipment  may  become  a  sub-­‐national   function.  In  addition,  funding  for  salaries  and  operating  costs  of  the  immunization  program   may  be  the  responsibility  of  the  sub-­‐national  level.       In   less   decentralized   contexts,   the   central   level   may   still   finance   critical   inputs   such   as   vaccines,   supplies,   cold   chain   equipment,   and   surveillance   activities.   Operating   costs   of   facilities  and  salaries  may  be  supported  through  block  transfers  from  central  government  to   complement  local  government  inputs.  Finally,  in  fragile  states,  central  authorities  may  still   retain   full   control   and   financial   responsibility   for   immunization   and   other   priority   programs.   Unless   immunization   is   explicitly   protected   within   a   decentralized   system,   either   through   earmarking   of   inter-­‐fiscal   transfers   or   development   of   performance-­‐agreements   with   sub-­‐ national   authorities,   immunization   service   delivery   may   be   negatively   affected.   Local   priorities   for   use   of   tax-­‐generated   resources   at   sub-­‐national   level   may   not   focus   on   immunization   or   be   in   line   with   global   or   national   level   priorities.   Inputs   required   for   quality   immunization   service   delivery   may   not   be   fully   financed   as   a   result   of   these   differences.  Local  leaders  are  interested  to  fund  projects  and  programs  that  increase  their   visibility   and   enhance   their   ability   to   be   re-­‐elected.   Because   immunization   has   been   successful,  and  communities  see  fewer  and  fewer  cases  of  measles  and  polio,  the  felt  need  to   allocate   resources   to   immunization   programs   may   not   be   as   great   as   was   previously   the   case.     In   these   settings,   it   is   of   critical   importance   that   immunization   policy-­‐makers   effectively  advocate  for,  and  provide  evidence  of,  the  importance  of  immunization  programs   in  order  to  secure  adequate  financing.   One   factor   that   appears   to   have   contributed   to   increased   government   financing   is   the   presence   of   budget   line   items   for   vaccines   and   immunization.   A   recent   evaluation   finds   that   nearly   160   countries   report   the   existence   of   a   vaccine   line   item   in   their   national   health   budget.  Nearly  85%  of  African  countries  report  that  their  governments  have  specific  budget   line   items   for   vaccines   and/or   immunization.   Specific   budget   line   items   for   immunization   may   create   additional   incentives   for   governments   to   ensure   continued   financing.   Budget   11   line   items   also   signal   long-­‐term   political   commitment   to   immunization   and   may   help   to   protect  budget  allocations  during  economic  downturns  and  budget  negotiations.  Budget  line   items  also  facilitate  resource  tracking  and  greater  accountability  for  expenditures.  In  2006,   both  globally  and  in  low-­‐income  countries,  the  share  of  government  financing  for  vaccines   and   routine   immunization   services   was   higher   in   those   countries   that   reported   a   budget   line  item  than  for  countries  without  line  items.  This  finding  suggests  that  budget  line  items   can  contribute  to  overall  financing  and  sustainability  of  immunization.     Why  should  immunization  services  be  financed  from  government  revenues?   There  are  strong  economic  rationales  for  governments  to  invest  in  immunization.  Vaccines   have   been   shown   to   be   a   ‘best   buy’   for   health   resources.   Immunization   is   a   low-­‐cost   and   effective   way   of   preventing   child   deaths   and   disability,   compared   with   other   priority   health   interventions.  Traditional  EPI  vaccines  such  as  measles  and  polio  are  one  of  the  most  cost-­‐ effective  interventions,  with  investments  of  US$2  to  US$20  per  year  of  healthy  life  gained.6   New   vaccines   are   still   considered   to   be   cost-­‐effective,   although   these   estimates   are   higher   owing  to  their  higher  unit  price  per  dose  (US$15  to  US$500  per  year  of  healthy  life  gained).   Immunization  is  also  considered  to  provide  public  good  benefits,  since  immunizing  part  of   the   population   reduces   the   likelihood   that   unimmunized   people   will   become   infected.   As   immunization   coverage   approaches   80%   to   90%,   the   immunized   population   protects   the   unimmunized   population   through   the   mechanism   of   ‘herd   immunity’.   The   public   good   aspect  of  immunization  makes  this  type  of  program  ideally  suited  for  public  (government)   financing,   rather   than   financing   from   private   or   individual   (household)   sources.     7   In   the   case  of  private  financing,  individuals  may  choose  not  to  be  vaccinated  because  they  believe   they  will  be  protected  through  the  ‘herd  immunity’  effect.  According  to  Musgrove8,  private   financing   will   likely   lead   to   under-­‐consumption   of   immunization,   potentially   leading   to   greater   transmission   of   disease.   Therefore,   sustained   financing   of   immunization   programs   from  government  revenues  is  the  ideal  situation.       Immunization   may   also   have   important   spill-­‐over   effects   for   overall   development.   As   parents   observe   that   immunization   protects   their   children   and,   in   fact,   eliminates   some   childhood   diseases,   they   will   continue   to   demand   it.   Providing   high   quality   immunization   tends  to  ensure  high  quality  of  other  basic  health  services.  As  satisfied  users  accumulate,  the   community  will  be  more  likely  to  trust  in  other  services  that  the  government  provides.9   6  Traditional  immunizations  include  measles,  diphtheria,  tetanus,  pertussis,  oral  polio,  and  BCG.   7  Under  the  Convention  on  the  Rights  of  the  Child  (CRC),  governments  are  accountable  to  provide  vaccines  to   children.   8 Musgrove,  P.  "Public  and  Private  Roles  in  Health:  Theory  and  Financing  Patterns."  Health,  Nutrition,   and  Population  (HNP)  Discussion  Paper.    Washington,  D.C.:  World  Bank,  July  1996.     http://siteresources.worldbank.org/HEALTHNUTRITIONANDPOPULATION/Resources/281627-­‐ 1095698140167/Musgrove-­‐PublicPrivate-­‐whole.pdf 9  Gilson,  L.  “Trust  and  the  Development  of  Health  Care  as  a  Social  Institution.”  Social  Science  and   Medicine  56  (2003):  1453-­‐1468.   12   Table  3.1  Assessment  of  the  value  of  general  revenues  for  immunization  financing     Characteristic   Assessment   Predictable   Owing   to   budget   shortages   and   government   procedures,   government   revenues   may   be   predictable   for   planning   purposes,   but   not   as   predictable  in  terms  of  receipt  of  funds.     Additional  to   N/A   government  financing   Equitable   Depends   upon   how   taxes   are   raised   at   national   and   sub-­‐national   levels,   and   whether   financial   transfers   from   central   to   sub-­‐national   level   are   calculated  on  the  basis  of  poverty  and  development  indicators.   Efficient   Budget   allocation   to   cost-­‐effective   services,   such   as   immunization,   improves   allocative   efficiency;   under-­‐funding   of   the   health   sector   from   taxes  may  result  in  technical  inefficiencies  in  program  delivery.   Feasible   Most   governments   have   national   and   sub-­‐national   collection,   budgetary,   disbursement,   financial   management,   audit,   and   reporting   systems   in   place   for   tax   financing.   Strengthening   of   these   systems   will   improve   collection  and  utilization  rates.   Sustainable   Increasing   government   responsibility   for   financing   of   immunization   programs   increases   the   likelihood   for   sustainability.   Also   related   to   overall  growth  and  health  of  the  economy.   Promotes  self-­‐ Yes.   sufficiency   Fosters  greater   As   the   quality   of   the   management   and   procurement   procedures   of   accountability   government  expenditure  improves,  so  too  does  the  level  of  accountability.     Further  Reading       Gottret,  P.  and  G.  Schieber.  “Health  Financing  Revisited:  A  Practitioner’s  Guide.”  Washington,   D.C.:  The  World  Bank,  2008.   http://siteresources.worldbank.org/INTHSD/Resources/topics/Health-­‐ Financing/HFRFull.pdf      World  Health  Organization.  “Tax-­‐Based  Financing  for  Health  Systems:  Options  and   Experiences.”    Discussion  Paper  No.  4,  2004.     http://www.who.int/health_financing/mechanisms/en/index1.html             13     Brief  4:  Risk-­Pooling  Mechanisms   What  is  risk  pooling?   Risk  pooling  is  also  known  as  health  insurance,  which  is  a  group  of  persons  contributing  to  a   common  pool,  usually  held  by  a  third  party.  These  funds  are  used  to  pay  for  all  or  part  of  the   cost   of   providing   a   defined   set   of   health   services   for   members   of   the   pool.   In   low-­‐   and   middle-­‐income   countries,   there   are   relatively   high   out-­‐of-­‐pocket   expenditures   for   health   care   services.   Families   may   go   into   debt   and   sell   critical   assets   in   order   to   finance   health   services.  Risk  pooling  is  the  collection  and  management  of  financial  resources  so  that  large,   unpredictable   individual   financial   risks   become   predictable   and   are   distributed   among   all   members  of  the  pool.  Risk  pooling  can  provide  financial  protection  to  households  in  the  face   of  high  health  care  costs.   What  are  the  different  types  of  risk-­pooling  mechanisms  available?   There   are   several   different   types   of   risk-­‐pooling   mechanisms   that   can   be   used   to   support   and  finance  immunization  services.     National   insurance   systems:   Funding   comes   from   general   revenues   and   medical   coverage   is   provided   to   the   entire   population   for   a   fixed   set   of   services   (benefits   package).  Services  are  delivered  through  a  network  of  public  (and  NGO)  providers.     Social   health   insurance   systems:   Funding   comes   from   mandatory,   earmarked   payroll   contributions   from   individuals   and   employers.   Coverage   is   provided   to   contributors,   usually   in   a   phased   manner.   Services   are   provided   based   on   a   defined   benefits   package   that   can   include   immunization   services.   Additional   subsidies   may   come  from  external  assistance  or  earmarked  taxes.   Mutuelles   or   community-­based   health   insurance   schemes:     These   are   generally   non-­‐profit  prepayment  plans  for  health  care  that  are  managed  at  the  community  level.   Funding  comes  from  prepayment  into  a  pooled  fund,  supplemented  by  government  or   donor   resources.   Coverage   is   provided   to   community   members,   and   services   are   provided   by   NGOs   or   public   facilities.   Benefits   are   based   on   community   preferences   and  they  may  include  preventive  health  care  services,  such  as  immunization.     Private   health   insurance:   Funding   of   insurance   premiums   comes   from   individuals   who   purchase   coverage   (out-­‐of-­‐pocket)   on   a   voluntary   basis.   Coverage   is   limited   to   contributors   and   benefits   are   pre-­‐defined,   and   may   include   immunization.   Service   provision  may  be  through  a  network  of  private  providers.   The  role  of  risk-­pooling  mechanisms  for  immunization     In   the   58th   session   of   the   World   Health   Assembly   (May   2005)   of   the   WHO,   member   states   endorsed   Resolution   WHA58.33.   The   resolution   urges   countries   to   strive   towards   sustainable   health   financing   and   achieving   universal   coverage   through   applying   a   mix   of   prepayment,  social  health  insurance,  and  tax-­‐financed  services.   14   Risk-­‐pooling   mechanisms   provide   protection   against   high   cost,   low   probability   events.   Immunization   services   are   generally   low   cost   and   predictable,   and   are   therefore   not   an   obvious   choice   for   financing   through   risk-­‐pooling   mechanisms.   In   addition,   immunization   services   tend   to   be   delivered   through   vertical   programs   supported   by   donors   and   government.   For   these   reasons,   immunization   is   usually   not   included   in   defined   benefits   packages   provided   to   health   insurance   scheme   enrolees.   For   instance,   the   Ghana   National   Health  Insurance  Scheme  specifically  excludes  immunization.       There   are   a   few   examples   in   Latin   America   and   Europe   where   insurance   mechanisms   support   immunization.   For   instance,   in   Bulgaria,   vaccines   are   procured   directly   by   the   Ministry  of  Health  and  distributed  to  practitioners,  who  are  compensated  through  contracts   with   the   National   Health   Insurance   Fund.   The   Costa   Rican   Social   Security   Administration,   which   raises   funding   from   payroll   contributions   and   tax   revenue   (Ministry   of   Health),   is   required  to  provide  adequate  resources  for  delivery  of  the  National  Immunization  Plan.       Case  Study:  Mutuelles  in  Mali     In  West  Africa,  mutual  health  organizations  (MHOs),  or  mutuelles,  are  voluntary  organizations  that   provide  health  insurance  services  to  enrolees.  MHOs  are  owned,  designed  and  managed  by  the   communities  they  serve.  Households  pay  an  enrolment  fee  and  regular  premiums  into  a  pooled  fund   to  cover  their  use  of  a  defined  benefits  package  and  the  MHO  reimburses  providers  out  of  the  pooled   fund  for  services.  MHOs  generally  are  not-­‐for-­‐profit  organizations  that  are  based  on  notions  of  mutual   aid  and  solidarity.  MHOs  can  provide  additional  sources  of  revenue  mobilization  and  financial   protection  for  households,  increase  financial  access  to  care,  and  promote  equity.       The  experience  of  MHOs  so  far  reveals  that  there  is  an  increasing  demand  for  these  types  of  financial   protection  mechanisms:  MHOs  include  individuals  and  households  from  a  wide  range  of  socio-­‐ economic  backgrounds;  members  tend  to  have  lower  out-­‐of-­‐pocket  expenditures;  and  members  tend   to  use  health  services  more  when  needed.     In  1997,  the  Government  of  Mali  recognized  the  potential  of  MHOs  in  its  10-­‐year  health  and  social   sector  development  plan.  In  these  schemes,  households  pay  a  one-­‐time  membership  enrolment  fee,   and  monthly  premiums  or  an  annual  premium  (related  to  the  number  of  beneficiaries).  On  joining,   members  commit  to  making  use  of  preventive  services  such  as  childhood  immunization.  A  recent   study  found  that  membership  in  MHOs  improved  utilization  of  priority  preventive  and  curative  health   services.  The  total  household  payment  was  between  US$29  and  US$54  per  year,  or  2%  and  8%  of   household  income.  Geographic  barriers  related  to  use  of  preventive  services,  such  as  immunization,   appear  to  have  been  overcome  by  the  scheme.   15   Operationalizing health insurance   Although   health   insurance   schemes   offer   many   benefits   such   as   risk   pooling   and   covering   the   cost   of   catastrophic   illness,   they   are   complex   to   develop   and   implement.     They   require   a   range   of   systems   ,   such   as:   financial   processes   and   management;   contract   management;   enrolment  and  member  services;  utilization  and  quality  management;  claims  management;   information   systems   (to   track   use   of   services   by   beneficiaries   and   their   associated   costs);   accreditation  and  quality  assurance  mechanisms  (to  monitor  services  offered  by  providers);   and  marketing  and  communications.  Some  of  the  dimensions  of  a  health  insurance  scheme   are  listed  below:     Beneficiaries   may   be   enrolled   on   a   voluntary   or   mandatory   basis.   Schemes   may   target  vulnerable  population  groups.  There  is  usually  some  form  of  identification  card   for  each  beneficiary.       Benefits   packages   generally   include   out-­‐patient   and   in-­‐patient   care,   surgical   procedures,   consultations,   and   diagnostic   services.   There   are   excluded   benefits   in   most  schemes  and,  in  some  cases,  vertically  provided  programs  such  as  immunization   may  be  excluded.     Sources   of   funding   may   be   consumption   taxes   and   social   security,   as   well   as   direct   government   subsidies,   payroll   taxes,   donor   support,   and   other   funding.   In   addition,   patients   may   be   required   to   pay   a   deductible   and/or   a   co-­‐payment   at   the   time   of   service.     Payment   of   providers   is   usually   done   on   a   reimbursement   basis.   The   level   of   reimbursement  is  usually  pre-­‐determined  and  may  be  adjusted  for  severity  of  illness,   such  as  a  diagnostic-­‐related  group.  Providers  submit  claims  for  reimbursement.     Selection   of   providers   can   be   made   on   the   basis   of   accreditation   (formal   or   informal).     Governance   and   management   may   be   through   a   national   health   insurance   authority,   including   a   governing   board.   The   ministry   of   health   is   usually   the   responsible   ministry.   In   some   systems,   governance   and   management   are   decentralized  to  district  level  as  well.     Because   health   insurance   reimburses   providers   on   the   basis   of   services   rendered,   there   is   an   incentive   for   providers   to   offer   lower   cost,   perhaps   lower   quality,   services   or   to   only   serve  a  healthier  population  (adverse  selection).  In  addition,  once  a  patient  is  covered  under   a  health  insurance  scheme,  there  is  the  incentive  for  them  to  consume  more  health  care  than   is   otherwise   needed   (moral   hazard)   because   services   are   not   linked   to   price.   Health   insurance  schemes  need  to  be  developed  in  such  a  way  as  to  mitigate  these  two  behavioral   incentives,   for   example   through   requiring   nominal   co-­‐payments   at   the   time   of   service,   instituting   a   waiting   period   before   beneficiaries   can   use   services,   and   reimbursing   providers  based  on  a  contractual  arrangement  of  population  coverage.     16   The   performance   of   a   particular   type   of   risk-­‐pooling   mechanism   against   our   criteria   will   depend   upon   the   number   of   persons   covered,   the   source   of   financing   for   the   risk   pool,   administrative  requirements,  and  the  types  of  benefits.     Table   4.1   Assessment   of   the   value   of   different   types   of   risk-­pooling   mechanisms   for   immunization  financing   Characteristic   Assessment   Predictable   If  immunization  is  included  in  the  benefits  package  of  risk-­‐pooling  mechanisms,   financing   of   services   will   generally   be   predictable   and   reliable.   National   health   insurance   relies   on   budgetary   approval   and   may   be   subject   to   variation   in   national  policies.     Additional   to   Social   health   insurance,   community-­‐based   health   insurance,   and   voluntary   government   health   insurance   are   additional   sources   of   financing   to   national   governments   financing   (general  revenues).   Equitable   National   health   insurance   would   be   the   most   equitable   form   of   risk   pooling   in   that   everyone   is   covered   and   enrolment   is   not   based   on   ability-­‐to-­‐pay.   Access   to   quality   health   care   providers   may   be   a   challenge   for   lower-­‐income   patients.   Social   health   insurance   is   based   on   payroll   tax,   and   would   generally   not   cover   workers   in   the   informal   sector   or   the   medically   indigent   population.   Community-­‐based  health  insurance  targets  the  lowest  level  of  the  health  system,   but   there   is   some   evidence   that   the   very   poorest   may   be   excluded   from   the   scheme.   Efficient   National  and  social  health  insurance  schemes  are  thought  to  be  efficient  in  the   sense  that  administrative  structures  are  already  in  place.  However,  establishing   risk-­‐pooling  mechanisms,  including  setting  up  new  institutions,  may  be  costly.   Feasible   Health  insurance  schemes  are  complex  to  develop  and  implement,  and  require   management  capacity  and  skill  in  ministries  of  health  and  at  district  levels.   Sustainable   Sustainability  will  depend  upon  the  size  of  the  risk  pool,  the  health  conditions  to   be   managed   within   the   pool,   and   the   revenues   collected   to   finance   the   cost   of   service  provision.   Promotes   self-­‐ These   schemes   promote   greater   self-­‐sufficiency   in   financing   to   the   extent   that   sufficiency   they  are  financed  by  national  sources.   Fosters   greater   Insurance  mechanisms  are  heavily  information-­‐dependent  and  require  tracking   accountability   of   contributions,   services   provided,   and   providers,   all   of   which   would   enhance   accountability.  Community-­‐based  schemes  are  managed  at  the  community  level   and  would  foster  greater  accountability  at  that  level.  To  the  extent  that  service   provision  is  contracted  out  to  providers  on  the  basis  of  the  quantity  and  quality   of  care  provided,  this  can  improve  accountability  within  the  system.     Further  Reading       World  Health  Organization.  2010.  The  World  Health  Report-­‐  Health  systems  financing:  the   pth  to  universal  coverage.  Geneva,  Switzerland.   http://www.who.int/whr/2010/en/index.html     Doetinchen  O.,  G.  Carrin,  and  D.  Evans.  “Thinking  of  Introducing  Social  Health  Insurance?   Ten  Questions.”  Geneva:  World  Health  Organization,  2009.   http://www.who.int/health_financing/mechanisms/en/index2.html     Wagstaff,  A.  2009.  “Social  Health  Insurance  Re-­‐Examined.”  Health  Economics  19(5):  503-­‐   517.   http://www3.interscience.wiley.com/journal/122365593/abstract?CRETRY=1&SRETRY=0   17   Brief  5:  User  Fees  for  Immunization     What  are  user  fees?     User  fees  are  charges  faced  by  users  of  health  care  services  in  public  and  private  health  care   facilities.   These   include   consultation   fees,   charges   for   drugs   and   lab   tests,   and   informal   payments   to   providers.   User   fees   are   generally   applied   at   the   point-­‐of-­‐service   and   may   be   retained   at   facility   level   to   improve   services.   User   fees   can   act   as   signals   to   patients,   causing   them  to  use  certain  health  services  over  others.  For  instance,  lower  fees  at  primary  health   care   level   compared   to   hospitals   may   encourage   greater   use   of   priority   public   health   services.     What  is  the  evidence  around  user  fees?     Many   countries   struggle   to   find   adequate   resources   to   fund   the   health   system.   In   some   cases,   cost-­‐recovery   through   user   fees   is   employed   to   supplement   available   resources,   particularly  for  lower-­‐level  health  care  facilities  in  the  system.         Studies  have  shown  that  user  fees  generate  modest  amounts  of  additional  financing  for  the   health   sector:   an   average   of   about   5%   of   total   health   system   expenditure   minus   administrative  costs.  User  fees  also  are  associated  with  lower  utilization  of  health  services,   and   result   in   the   poorest   not   seeking   appropriate   care   when   needed.   A   review   of   studies   undertaken   between   1999   and   2005   on   user   fees   in   Africa   and   Asia   suggests   a   negative   overall  trend  in  terms  of  the  impact  of  user  fees  on  access.       Importantly,  out-­‐of-­‐pocket  health  expenditures  can  cause  significant  health  shocks,  driving   households  into  poverty.  In  some  cases,  this  comes  through  the  imposition  of  informal  user   fees  that  are  not  part  of  the  health  system  sanctioned  by  the  government.  Nonetheless,  the   potential   impact   is   important   –   households   can   be   pushed   into   poverty   through   health   expenses.  In  Vietnam  and  Bangladesh,  more  than  15%  of  households  have  health  expenses   that  exceed  25%  of  non-­‐food  spending.  While  immunization  is  a  modest  part  of  the  health   system,  user  fees  for  immunization  can  add  to  an  already  significant  burden  on  the  poorest   households,  and  families  may  simply  choose  not  to  immunize  children  rather  than  face  the   additional  cost.     Waivers   and   exemption   policies   for   the   poorest   households   can   help   to   maintain   use   of   services.     However,   evidence   suggests   that   waiver   programs   are   challenging   to   implement   and   often   exclude   many   of   the   neediest.   Further,   waiver   programs   introduce   additional   administrative  requirements  that  might  be  more  costly  than  the  resources  gained  through   the  user  fees.       Despite  these  concerns,  fees  have  the  potential  to  improve  access  to  better  quality  services  if   the  extra  revenue  from  fees  is  re-­‐invested  into  the  health  system.  Studies  have  linked  user   fees   in   the   Bamako   Initiative   in   West   Africa   with   improved   drug   availability   and   greater   accountability   of   providers.   In   some   cases,   user   fees   simply   formalize   an   already   existing   informal   fee   system.   This   is   also   important   to   bear   in   mind   –   informal   fees   can   result   in   drops   in   utilization,   and   a   poorly   resourced   health   and   immunization   system   may   cause   providers  to  seek  funds  from  patients.   18     User  fees  and  immunization  services     Because  curative  services  can  provide  a  tangible  benefit  to  patients,  these  types  of  services   are  better  suited  for  user  charges.  A  visit  to  the  doctor  or  the  purchase  of  a  drug  can  result   in   an   immediate,   positive   health   outcome.   However,   since   vaccination   protects   a   child   against  an  infection  that  may  never  occur   –  or  may  occur  only  months  or  years  in  the  future   –  there  is  no  discernible  immediate  benefit,  and  paying  for  vaccination  does  not  appear  to   be   a   good   expenditure   decision.   Many   of   the   poorest   households   would   simply   choose   to   save  the  money  until  their  child  becomes  sick,  rather  than  pay  for  a  vaccine  up  front.         Policies  of  various  agencies  on  user  fees     The  5th  Board  Meeting  of  the  GAVI  Alliance  recommended  that  “in  the  absence  of  compelling   country   or   regional   data   unequivocally   documenting   their   value,   user   fees   should   not   be   levied   in   publicly   financed   national   immunization   services.”   Several   organizations,   such   as   The  Commission  for  Africa,  Department  for  International  Development  (DFID),  UNICEF,  and   Save   the   Children   –   UK,   do   not   support   user   fees.   The   WHO   emphasizes   the   need   for   a   broader   reliance   on   pre-­‐payment   in   order   to   ensure   universal   coverage.   The   World   Bank   has  indicated  its  willingness  to  help  countries  remove  user  fees  if  this  will  also  address  long-­‐ term  financial  sustainability,  benefit  the  poorest  and  provide  high  quality  services.  The  Bank   has   also   indicated   that   countries   should   use   insurance   and   pre-­‐payment   mechanisms   to   protect   the   poorest   against   catastrophic   expenditure.   Much   work   has   been   done   to   examine   how   risk-­‐pooling   mechanisms   can   reduce   indebtedness   and   the   decline   in   utilization   associated   with   out-­‐of-­‐pocket   expenditures   by   households.   More   recently,   the   global   consensus   on   MDG5   endorsed   the   removal   of   financial   barriers   to   access   (user   fees)   as   a   goal,  encouraging  free  services  at  the  point  of  use.       Removing   user   fees   within   the   context   of   sustainable   and   accountable   financing   arrangements,  such  as  social  health  insurance,  has  greater  potential  to  ensure  that  services   are  provided  to  target  groups.  Insurance  schemes  not  only  bring  additional  resources  to  the   health   sector,   but   also   are   useful   for   identifying   target   groups   at   the   community   level.   For   instance,   Ghana   implemented   exemptions   from   user   fees   for   pregnant   women,   children,   the   aged,  and  the  poor;  and  Rwanda  exempts  the  poorest  from  user  fees.                                 19     Table  5.1  Assessment  of  the  value  of  user  fees  for  immunization  financing     Characteristic   Assessment   Predictable   Revenue   generated   from   user   fees   tends   to   be   a   small   proportion   of   overall  service  delivery  cost.  It  also  tends  to  be  dependent  upon  the  level   of   fees   and   the   population’s   relative   ability   to   pay,   which   can   vary   significantly,  seasonally  and  from  year  to  year.     Additional  to   This   stream   of   revenue   comes   from   the   population   directly   and   should   be   government  financing   additional  to  government  financing.   Equitable   User   fees   place   a   significant   burden   on   the   poorest   citizens   and   have   a   negative  effect  on  utilization  of  services.   Efficient   Collection   and   management   of   user   fees   will   add   administrative   costs;   waivers   and   exemption   systems   for   the   poorest   also   require   additional   administrative  capacity.     Feasible   User   fee   systems   require   financial   management   and   other   information   systems.   User   fees   should   be   removed   within   a   context   of   other   sustainable  and  accountable  health  financing  mechanisms.   Sustainable   Can  be  a  sustainable  source  of  financing,  depending   upon  the  level  of  fees   and   the   ability   of   the   population   to   pay.   However,   user   fees   generate   15%   or  less  of  needed  resources.   Promotes  self-­‐ User   fees   are   domestically   generated,   and   can   therefore   reduce   the   sufficiency   dependence  of  a  government  on  external  donor  financing.   Fosters  greater   The   act   of   paying   for   services   means   that   a   population   is   more   likely   to   accountability   demand   appropriate   provision   of   services.   User   fees   make   payment   explicit  and  this  usually  eliminates  under  the  table  payments.     Further  Reading     World  Health  Organization.  Special  Theme  Issue  (“Health  Financing”)  of  Bulletin  of  the   World  Health  Organization,  86(11):  817-­‐908.   http://www.who.int/bulletin/volumes/86/11/en/index.html     England,  S.,  K.  Miloud,  A.  Nigam,  and  M.  Pinto.  “Practice  and  Policies  on  User  Fees  for   Immunization  in  Developing  Countries.”  Geneva:  World  Health  Organization,  2001.   http://www.who.int/vaccines-­‐documents/DocsPDF01/www564.pdf       20   Brief  6:  National  Trust  Funds     What  is  a  national  trust  fund?       National  trust  funds  are  a  pool  of  funds  set  aside  for  a  particular  purpose  with  specific  rules   about  how  the  proceeds  can  be  used.  Trust  funds  pool  resources  from  one  or  more  sources   of  funding.  For  instance,  domestic  taxes,  donor  funds,  and  private  sector  contributions  can   be  combined  within  a  specific  legal  arrangement  that  specifies  how  the  initial  capital  of  the   fund   and/or   interest   is   used   over   time.   The   amount   and   sources   of   the   financing   will   determine  its  use.  Possible  uses  include:  a  straight  income  stream  (money  used  on  a  regular   basis   such   as   quarterly   or   annually   to   fund   the   immunization   program);   short-­‐term   credit   support  (to  cover  shortfalls  in  other  funding  sources);  or  loan  guarantees  (where  the  money   in  the  trust  fund  is  used  to  guarantee  loans  to  support  immunization).     What  would  the  policies  around  a  trust  fund  look  like?     A  trust  fund  is  usually  legally  incorporated  and  has  a  funding  base,  statutes,  and  articles  of   constitution  that  specify  its  purpose,  beneficiaries,  and  governance  processes.  The  policies   around  trust  funds  can  vary  significantly  depending  upon  the  context.  The  governance  and   structure  are  usually  set  up  in  a  memorandum  of  understanding  (MOU)  which  lays  out  the   responsibilities,  rights,  and  obligations  of  the  founding  partners  and  contributors,  the  goals   of  the  fund,  reporting,  and  oversight.       The   establishment   of   the   governing   board   and   the   selection   of   members   are   critical   first   steps.   The   governing   board   oversees   the   strategy,   business   plan,   management,   and   operations.   The   trustees   or   directors   who   oversee   reporting,   controls,   planning,   and   evaluation   activities   should   be   appropriately   selected   to   provide   policy   and   financial   management.   The   management   of   the   funds   themselves   (asset   management   and   investment)   is   usually   handled   by   professional   investment   managers   to   ensure   the   appropriate  rate  of  return  at  the  levels  of  risk  that  are  consistent  with  the  charter  and  the   recommendations   of   board   members.   Lastly,   appropriate   technical   expertise   in   the   use   of   the  funds  (those  with  an  understanding  of  health  and  immunization)  needs  to  be  included  in   the  board.     What  are  the  key  benefits  of  trust  funds  for  immunization  financing?     Trust   funds   have   the   potential   to   be   innovative   financing   instruments   for   immunization   because  they  can  protect  resources  over  the  long  term.  In  cases  where  the  interest,  rather   than  the  principal,  is  used,  the  idea  is  particularly  attractive.  Using  interest  proceeds,  a  trust   fund   can   provide   a   predictable   and   reliable   source   of   immunization   financing,   since   a   balanced   set   of   investments   can   generate   a   steady   return,   as   the   principal   remains   untouched.       In   the   case   where   vaccine   costs   are   rising   significantly   over   time,   the   fund   size   (capital)   will   need  to  be  increased  over  time.  If  international  organizations  such  as  the  World  Bank  or  a   United  Nations  (UN)  agency  hold  the  trust  fund,  they  are  not  subject  to  taxation.  However,   national  governments  can  create  the  appropriate  legal  precedents  to  exempt  the  trust  fund   from  taxation,  as  Bhutan  has  done.     21     Nonetheless,   tying   up   funds   to   generate   a   trust   fund   needs   to   be   weighed   against   the   alternative  uses  of  the  funds.  Creating  a  trust  fund  makes  particular  sense  when  there  is  a   sudden   availability   of   new   resources   that   cannot   be   spent   rapidly   (debt   relief   is   an   example).   Making   the   determination   to   create   a   trust   fund   to   generate   a   resource   stream   requires  that  a  number  of  issues  be  taken  into  account:  how  well  the  resource  requirements   can   be   estimated   over   time;   whether   the   risks   associated   with   the   investment   policy   are   reasonable;   and   whether   reserves   can   be   built   up   to   buttress   the   fund’s   operational   purchasing   power   against   the   effects   of   inflation   and   currency   fluctuations.   Lastly,   trust   funds   require   administrative   resources.   Countries   with   limited   management   and   operational   capacity   can   pool   multiple   donor   contributions   into   a   trust   fund   and   reduce   the   need  for  individual  rules  for  each  donor.       Case  Study:  The  Health  Trust  Fund  in  Bhutan     In   the   late   1990s,   the   Government   of   Bhutan   (RGOB)   noted   that   the   cost   of   vaccines   and   drugs   accounted  for  almost  50%  of  all  expenditures  in  the  national  health  sector,  leaving  uncertainties  in   the  future,  given  the  volatility  of  much  donor  funding.  In  1998,  the  RGOB  established  the  Health  Trust   Fund   with   the   goal   of   eliminating   funding   uncertainties   and   generating   sufficient   income   to   meet   the   cost  of  critical  components  of  the  health  services  in  Bhutan.  The  Health  Trust  Fund  is  an  innovative   and   viable   model   to   provide   a   sustainable   –   and   stable  –   form   of   financing   for   purchasing   items   such   as  vaccines  that  are  extremely  sensitive  to  fluctuations  in  financing.   The  Health  Trust  Fund  is  used  to   ensure  several  key  components  of  a  functioning  health  system.     • Provision   of   primary   health   care   items   such   as   vaccines,   essential   drugs,   needles,   syringes,   cold  chain  equipment,  and  other  related  drugs  and  equipment  in  uninterrupted  supply.   • Financing   of   training,   and   strengthening   of   programme   management   and   human   resource   development.   • Development   and   implementation   of   management   plans   for   drugs   and   vaccines,   and   strengthening  of  the  monitoring  capacity  with  regard  to  pharmaceuticals.     The   Health   Trust   Fund   in   Bhutan   is   an   important   tool   in   ensuring   the   timely   availability   of   critical   vaccines,  essential  drugs,  and  needles  and  syringes.  These  components  together  form  the  backbone   of  primary  health  care  services.    Providing  these  components  through  a  trust  fund  allows  the  RGOB   to   re-­‐direct   the   national   health   budget   to   other   key   areas,   such   as   supporting   the   health   system,   developing  human  resources,  and  strengthening  monitoring  and  surveillance  systems.       The   Government   agreed   to   finance   half   of   the   needed   US$24   million,   with   the   rest   coming   from   a   combination   of   different   private   and   public   donors.   Economic   growth   in   Bhutan   is   anticipated   to   raise   overall   income   levels   (and,   correspondingly,   the   capacity   of   the   Government   to   spend   on   the   health  sector)  over  the  next  15-­‐20  years,  at  which  point  the  RGOB  and  its  Fund  partners  will  review   the  impact  of  the  Fund  and  determine  the  best  way  forward.     The  Bhutan  Health  Trust  Fund  was  legally  incorporated  in  April  2000  with  a  secretariat  consisting  of   the   Executive   Director,   one   Program   Officer,   two   Office   Secretaries   and   one   Messenger.   In   addition,   a   Board   of   seven   members   governs   the   overall   direction   of   the   Fund.   The   Board   includes   members   from  the  Ministry  of  Health  (including  the  Minister),  the  aid  and  debt  management  department,  and   the   monetary   authority   of   Bhutan.   The   Fund   enjoys   tax   free   status   within   the   country   and   invests   both   within   and   outside   Bhutan,   under   the   governance   of   its   Board.   The   Fund   became   operational   in   2003/04,   after   building   capital   through   a   series   of   contributions,   primarily   from   external   donors   and   the  RGOB,  with  some  support  from  private  donors  within  Bhutan.     22   Table  6.1  Assessment  of  the  value  of  trust  funds  for  immunization  financing     Characteristic   Assessment   Predictable   This  type  of  financing  provides  a  clear,  long-­‐term  stream  of  resources.  If  it   is   based   on   interest   earned   off   the   principal,   rather   than   the   principal   itself,  it  is  highly  predictable.   Additional  to   This  depends  upon  the  source  of  the  trust  fund  monies.  If  the  principal  of   government  financing   the  trust  fund  is  used,  and  comes  from  a  dedicated  tax  or  charge,  this  will   represent  a  reallocation  of  resources  rather  than  a  new  source.  If  the  trust   fund  is  used  to  generate  interest  earnings,  these  can  be  new  monies,  and   therefore  additional.   Equitable   This  depends  upon  how  these  funds  are  administered  and  spent.   Efficient   Trust   funds   require   resources   for   administration.   Depending   upon   the   design,   separate   governance   and   accounting   structures   may   be   required   and  this  incurs  transaction  costs.   Feasible   Requires   fund   raising   and   establishment   of   a   fund   mechanism,   with   governing  and  oversight  bodies,  as  well  as  fund  management  to  generate   returns  on  investments.   Sustainable   If  set  up  to  use  interest  earnings,  trust  funds  are  a  highly  sustainable  form   of  financing.   Promotes  self-­‐ This  type  of  financing  encourages  capacity  building  in  the  country  and  the   sufficiency   financing  can  even  grow  over  time,  depending  upon  the  size  of  the  initial   capital  investment.   Fosters  greater   The   creation   of   a   trust   fund   as   a   separate   entity,   with   governance   and   accountability   accounting  rules,  provides  significant  accountability.     23   Brief  7:  Other  Country-­Level  Innovative  Financing   Mechanisms       There  is  a  range  of  innovative  financing  mechanisms  that  can  use  existing  revenue  channels   to   support   immunization.   A   number   of   countries   have   experimented   with   this,   including   Mexico  (oil  revenues)  and  Costa  Rica  (lotteries).    Tajikistan,  Vietnam,  and  Haiti  are  raising   resources  for  immunization  through  tax  levies  on  luxury  goods  and  on  products  harmful  to   health,  such  as  alcohol  and  tobacco.       The   idea   of   using   sin   taxes   on   products   that   are   deemed   to   have   a   harmful   impact   on   health   is  not  new.  Tobacco  taxes  have  long  been  a  policy  tool  of  governments  to  reduce  smoking,   while   at   the   same   time   supporting   public   health   efforts   to   combat   their   spread.   The   same   is   true   for   alcohol.   Specifically   earmarking   these   types   of   taxes   for   immunization   can   be   an   effective  way  to  raise  new  resources.  In  addition,  earmarked  taxes  are  generally  acceptable   to   the   public   because   they   are   designed   for   a   clear   priority   goal   that   will   benefit   the   population.   In   addition,   an   earmarked   tax   may   be   perceived   as   more   transparent   and   accountable  and  less  subject  to  waste.     The  concept  of  sin  taxes  is  expanding,  particularly  in  high-­‐income  countries  where  taxes  are   being  leveraged  against  fatty  foods,  sodas,  and  other  items  that  have  a  deleterious  impact  on   health  status.  These  types  of  taxes  can  have  the  twin  benefit  of  reducing  a  health-­‐damaging   behavior   while   providing   additional   resources   for   health   programming.   However,   some   governments   oppose   earmarked   taxes   on   principle,   as   they   limit   government   flexibility.   Depending   upon   how   they   are   set   up   or   legislated,   earmarked   taxes   may   not   allow   a   government   the   power   to   allocate   resources   as   needed   in   emergencies,   when   dropouts   in   donor  funding  occur,  or  when  there  are  changes  in  country  context.  As  a  single  instance,  an   earmarked   tax   for   immunization   is   relatively   simple   but,   when   multiplied   across   several   efforts,  it  can  significantly  limit  a  government’s  ability  to  effectively  plan  and  budget.     Innovative  Financing  of  Immunization:  Lottery  Funds  in  Costa  Rica   Costa   Rica’s   National   Immunization   Act   of   August   2001   regulates   the   selection,   procurement,   and   availability   of   vaccines   throughout   Costa   Rica,   with   the   aim   of   enabling   the   State   to   protect   public   health.   The   Act   establishes   the   National   Immunization   Fund.   Monies   are   to   be   used   to   support   health   promotion,   education,   and   research   activities   in   the   field   of   immunization   and   vaccine-­‐preventable   diseases,   and   to   purchase   and   acquire   equipment   to   enhance   the   operation   of   the   immunization   program.   In   2009,   close   to   US$19.3   million   was   spent,   and   the   figure   for   2010   will   be   higher   because   of  the  introduction  of  23-­‐valent  pneumococcal  vaccine.     The  sources  of  funding  for  the  National  Immunization  Fund  include  earmarked  allocations  of  general   revenues  from  the  Ministry  of  Health  and  the  Costa  Rican  Social  Security  Administration  (CCSS).  Both   agencies   are   required   to   include   an   adequate   budget   to   acquire   vaccines   and   defray   immunization   program  costs.    In  addition,  the  National  Immunization  Fund  is  financed  from  surpluses  held  in  the   Costa  Rican  Social  Security  Administration  (2%).  Most  of  the  resources  in  the  National  Immunization   Fund  come  from  the  CCSS.   In  the  last  five  years,  proceeds  from  the  November  drawing  of  the  National  Lottery  (overseen  by  the   San   José   Social   Protection   Board)   have   been   earmarked   for   the   National   Immunization   Fund.   Since   2009,   these   resources   have   been   used   to   purchase   vaccines   to   pursue   the   ‘Cocoon   Strategy’   24   (cessation   of   vertical   transmission   of   pertussis)   and   to   fund   unplanned   expenditures.   Lottery   resources  have  provided  a  small  portion  of  the  immunization  budget.   The   National   Commission   on   Immunization   and   Epidemiology   is   a   fully   deconcentrated   agency   attached   to   the   Ministry   of   Health.   The   National   Immunization   Act   sets   out   the   membership   and   terms  of  reference  of  this  commission,  that  includes  defining  the  vaccination  schedule,  overseeing  the   quality   of   vaccines,   the   supply   and   cold   chain,   and   administering   the   National   Immunization   Fund.   The  Commission  has  representatives  from  the  Ministry  of  Health,  the  National  Pediatric  Association,   and  the  National  Children’s  Hospital.     Table   7.1   Assessment   of   other   innovative   financing   mechanisms   for   immunization   financing   Characteristic   Assessment   Predictable   Depends  upon  the  consumption  levels  of  the  population.  As  tobacco   use   or   lottery   purchases   declines,   the   total   revenues   generated   will   decline.   Additional  to  government   Yes.   financing   Equitable   Earmarked   taxes   tend   to   be   regressive   as   they   are   based   on   consumption  of  alcohol,  tobacco,  and  lottery  tickets  which  makes  up   a   disproportionately   larger   share   of   total   income   for   the   poorest   in   the  population.     Efficient   If   mechanisms   are   created   specifically   for   immunization   financing,   there  may  be  additional  administrative  costs,  but  resources  would  be   allocated  and  targeted  in  an  efficient  manner.   Feasible   Generally,  yes,  as  tax  collection  is  a  routine  function  of  government.   Sustainable   Depends   upon   how   much   of   the   national   immunization   program   is   financed  by  these  schemes.   Promotes  self-­‐sufficiency   These   schemes   promote   greater   self-­‐sufficiency   in   financing   to   the   extent  that  they  are  financed  by  national  sources.   Fosters  greater   Earmarked   taxes   may   be   perceived   as   more   transparent,   more   accountability   accountable,  and  less  subject  to  waste  and  diversion.     25     Brief  8:  Development  Project  Assistance       What  is  development  project  assistance?       Project  assistance  is  a  set  of  resources  (money,  technical  assistance,  and/or  goods  in-­‐kind)   that   are   usually   transferred   from   higher-­‐income   countries   (donor   countries)   to   low-­‐   and   middle-­‐income   countries   (recipient   countries).   Unlike   a   loan,   there   is   no   expectation   that   the   value   of   project   assistance   will   be   repaid.     The   amount   and   type   of   project   assistance   offered  are  based  on  donor  aid  policies  and  the  needs  within  developing  countries.     Project   assistance   derives   from   bilateral   aid   (often   from   development   agencies)   or   multilateral   channels   such   as   UN   agencies   or   the   European   Union.   The   World   Bank   and   regional   development   banks   (such   as   the   African   Development   Bank   (AfDB))     also   offer   grant   financing.   The   World   Bank   offers   grant   financing   through   the   International   Development   Association   (IDA)   which   is   responsible   for   lending   to   the   poorest   countries   through   highly   concessional   terms.   JICA   and   USAID   are   two   agencies   that   routinely   use   project  assistance  to  support  different  components  of  the  national  immunization  program.     Project  assistance  and  immunization  services     Project   assistance   is   provided   through   a   negotiated   agreement   between   the   financier   and   the   recipient   government   for   a   specified   time   period.   In   some   cases,   project   assistance   supports   third   party   technical   assistance   (through   a   private   agency   or   non-­‐governmental   organization)   to   carry   out   work   on   behalf   of   the   government.   In   other   situations,   project   assistance  may  be  a  combination  of  grant,  commodity  support,  and  technical  assistance  to   the  recipient  government.  Project  assistance  for  immunization  can  fund  essential  vaccines,   cold   chain   equipment,   technical   assistance,   recurrent/operating   costs,   monitoring   and   evaluation,   and   other   inputs.   Project   assistance   is   generally   not   used   to   support   health   worker   salaries,   although   the   practice   of   ‘topping   up’   low   government   salaries   or   hiring   temporary  workers  might  be  part  of  the  grant  agreement.       Assessing  the  value  of  project  assistance       Project   assistance   is   aimed   directly   at   immunization   services   –   and   it   is   therefore   usually   straightforward   to   see   returns   on   investment   for   a   particular   program   or   project   activity.   Project  assistance  may  also  be  the  preferred  mechanism  for  donors  in  post-­‐conflict,  fragile   states   or   settings   where   country   systems   need   strengthening   in   order   to   deliver   services.   In   such  cases,  technical  assistance  is  provided  to  build  capacity  and  systems  at  national  level.       On  the  other  hand,  project  assistance  is  usually  off-­‐budget,  and  is  not  captured  as  part  of  a   national  government’s  annual  budgeting  and  planning  process.  This  limits  the  ability  of  the   national   government   to   plan   and   budget   effectively   for   the   program   and   the   sector.   In   general,  project  assistance  requires  specific  reporting  processes  which  are  parallel  to  usual   government   procedures.   Separate   program,   administrative,   accounting,   and   auditing   reports   may   be   required   for   each   donor,   thereby   increasing   the   transaction   costs   for   26   countries   in   managing   this   support.   If   the   amount   of   funding   is   small   relative   to   other   types   of  support,  the  administrative  burden  may  not  be  worthwhile.       In   addition,   grant   funding   may   reflect   donor   priorities,   rather   than   those   of   the   national   government.  At  times  the  two  can  overlap,  but  when  they  do  not,  the  difference  can  distort   program   budgeting   and   activities.   Furthermore,   political   forces   can   cause   a   significant   degree  of  volatility  in  donor  funding.  Donor  priorities  may  change  through  policy  reviews  or   a   change   in   political   leadership.   Unfortunately,   the   need   for   program   assistance   and   its   availability   are   rarely   coordinated.   Many   policy-­‐makers   believe   that   multi-­‐year   commitments  tied  to  broader-­‐based  goals  can  improve  this.  Sometimes,  a  targeted  grant  can   be  processed  relatively  quickly  compared  to  a  larger,  more  complex  source  such  as  budget   support,   which   can   take   time   to   negotiate   and   fine-­‐tune.   Project   assistance   can,   in   some   cases,   serve   as   a   mechanism   to   cover   a   gap   –   particularly   when   there   is   a   shortfall   in   government  resources.     Case  Study:  IMMUNIZATIONbasics  Project  in  India     Project  grants  often  come  from  bilateral  agencies  in  the  form  of  programs  that  support  technical   assistance   or   other   efforts   that   can   allow   the   national   government   to   reach   its   immunization   goals.  IMMUNIZATIONbasics  was  a  5-­‐year  project  (2004-­‐2009)  supported  by  USAID  that  aimed  to   improve   the   ability   of   governments   and   collaborating   organizations   to   deliver   and   maintain   the   coverage  of  quality  immunization  services.   IMMUNIZATIONbasics   provided   technical   support   to   ministries   of   health,   USAID   missions,   bureaus   and   projects,   international   and   national   NGOs,   and   other   international   partners.   In   India,   IMMUNIZATIONbasics  carried  out  a  series  of  projects  that  included  developing  micro-­‐planning  tools   and   routine   immunization   job   aids   that   could   help   train   workers   across   India.     In   addition,   one   project   created   a   program   that   helped   health   workers   to   establish   goals,   monitor   performance,   recognize   good   practices,   and   identify   and   correct   problems.   The   project   grant   produced   a   manual   for   program   managers   implementing   supportive   supervision   as   well   as   several   Excel   tools   and   checklists.       Through  Immunizationbasics,  PATH  developed  and  implemented  a  model  for  supportive  supervision   in   the   state   of   Andhra   Pradesh,   which   consisted   of   teams   of   trained   supervisors   visiting   all   health   facilities   in   a   district   and   a   few   randomly   selected   outreach   immunization   sessions,   in   a   defined   time   period   (2-­‐3   days),   and   collecting   specific   programmatic   information   through   structured   checklists.   It   also   involved   instruction   in   correct   practices   through   on-­‐site   demonstration   and   training   of   staff.     Information   was   entered   into   an   electronic   spreadsheet   that   generates   graphical   reports.   The   findings   can   be   shared   with   managers   at   different   levels   for   corrective   action.   The   reports   allowed   ranking  of  health  facilities  in  terms  of  overall  performance  and  the  status  of  individual  indicators.       Vaccine  donations     Vaccine  donations  are  sometimes  offered  to  countries  by  vaccine  manufacturers  and  donor   governments.   While   the   acceptance   of   a   free   health   product   may   seem   straightforward,   there   are   some   considerations   that   governments   should   bear   in   mind   when   making   a   decision.  The  GAVI  Alliance  has  adopted  a  policy  of  not  accepting  vaccine  donations,  except   when   countries   are   experiencing   emergency   situations,   and   for   countries   where   GAVI   would  have  funded  procurement  of  the  new  vaccine.  Perhaps  most  obviously,  a  donation  of   vaccines   from   a   manufacturer   provides   short-­‐term   financial   savings,   depending   on   the   length   of   the   donation.   In   addition,   it   can   relieve   short-­‐term   supply   constraints.   Finally,   it   27   can   add   to   the   evidence   base   by   supporting   demonstration   products   or   trials   in   specific   areas  of  the  countries  and  providing  information  on  the  effectiveness  of  the  vaccine  in  the   local  context.       On   the   other   hand,   donations   can   distort   the   market   by   increasing   uptake   of   one   manufacturer’s   product   over   another,   even   though   this   product   potentially   could   be   more   expensive  or  less  effective.  Moreover,  it  could  have  significant  sustainability  issues,  since  a   vaccine  that  is  provided  free  for  the  short-­‐term  is  unlikely  to  be  affordable  for  the  country  in   the   long-­‐term.   This   means   that   a   country   is   either   likely   to   have   to   drop   the   vaccine,   with   significant   consequences,   or   seek   external   funding.   If   a   national   government   already   has   external   financing   ready,   or   can   use   the   time   of   the   donated   vaccine   to   line   up   the   appropriate   financing,   then   a   donation   may   enable   a   country   to   introduce   the   vaccine   earlier  than  originally  planned.     Table  8.1  Assessment  of  the  value  of  project  assistance  for  immunization  financing     Characteristic   Assessment   Predictable   Provides   clarity   of   funding   for   the   length   of   the   project,   although   this   is   often   short-­‐term   in   nature;   can   be   a   volatile   source   of   funds   because   of   shifting  donor  priorities.   Additional  to   Project   grants   are   often   off-­‐budget,   separating   financing   from   the   government  financing   government.   They   are   therefore   above   and   beyond   existing   government   financing.   Equitable   This  will  differ  depending  upon  the  grant  design.   Efficient   Project   grants   usually   require   detailed   reporting   to   each   donor,   creating   additional  transaction  costs  for  governments.     Feasible   Depends   upon   the   reporting   requirements   of   each   donor   organization,   and  the  conditionalities  that  might  be  associated  with  project  assistance.   Sustainable   Project  grants  come  to  an  end  upon  completion  of  the  project  (often  less   than  5  years)  and  are  therefore  not  a  sustainable  resource.   Promotes  self-­‐ With   external   funds   provided   for   immunization   (often   off-­‐budget,   as   sufficiency   noted),   governments   may   shift   resources   away   from   immunization   to   other  sectors.  Grants  are  often  short-­‐term  as  well,  limiting  the  flexibility  of   the  government  and  the  ability  to  build  capacity  over  time.   Fosters  greater   Project   grants   include   significant   monitoring   and   oversight,   promoting   accountability   accountability   to   donors.   However,   much   donor   assistance   remains   ‘off-­‐ budget’   and   is   invisible   to   governments   and   parliaments.   This   prevents   more  holistic  planning,  budgeting,  and  management  of  the  health  sector.   Further  reading:   Vaccine Donations WHO-UNICEF Joint Statement August 7, 2010 (WHO/IVB/10.09) http://whqlibdoc.who.int/hq/2010/WHO_IVB_10.09_eng.pdf 28     Brief  9:  Development  Loans  for  immunization       What  is  a  development  loan?     A   development   loan   is   money   borrowed   by   a   government   from   a   regional   development   bank  or  from  the  World  Bank.  The  government  guarantees  the  loan  and  is  responsible  for   repaying   it   in   full,   with   the   interest   rate   varying   according   to   the   country’s   economic   situation.  Loans  may  also  be  referred  to  as  debt  financing.  No-­‐interest  loans  are  referred  to   as   soft   loans   or   credits.   Loans   usually   are   negotiated   by   the   lending   agency   with   the   ministry  of  finance,  and  used  to  support  financing  of  a  sector  ministry,  such  as  the  ministry   of  health.  There  are  several  types  of  loans:     Loans  offered  at  market  or  near-­market  interest  rates:   These  include  loans  such   as  those  from  the  International  Bank  for  Reconstruction  and  Development  (IBRD)  of   the  World  Bank,  the  African  Development  Bank  (AfDB),  the  Asian  Development  Bank   (ADB),   and   the   Inter-­‐American   Development   Bank   (IADB).   IBRD   loans   are   typically   taken   by   middle-­‐income   countries.   The   repayment   period   is   between   15   and   20   years   with  a  5-­‐year  grace  period.     Highly   concessionary   loans:   These   are   loans   with   a   below-­‐commercial   market   interest  rate  charge,  repayment  periods  of  up  to  40  years,  and  an  administrative  fee.   The   International   Development   Association   (IDA)   of   the   World   Bank   provides   these   interest-­‐free   loans   (soft   loans   or   credits).   IDA   loans   are   specifically   targeted   to   countries   with   per   capita   income   less   than   US$885,   with   exceptions   for   small-­‐island   states.   Of   the   world’s   poorest   countries   (GNI   less   than   US$1,135   per   capita),   79   are   currently  eligible  for  IDA  loans.     Development   loans   typically   require   some   level   of   matching   counterpart   funding   to   demonstrate  commitment  of  governments  to  the  project  or  program  being  financed.       When  might  it  be  appropriate  to  use  development  loans  for  immunization?     All   loans   must   be   repaid.   Since   loans   are   debt   financing,   loans   make   sense   when   a   government  is  not  already  heavily  indebted,  and  when  there  is  little  danger  of  a  substantial   currency   devaluation   that   would   make   repayment   difficult.   Loans   make   sense   from   an   economic   point   of   view   when   the   value   of   the   immediate   and   long-­‐term   benefits   to   be   generated  is  greater  than  the  sum  of  the  loan,  fees,  and  interest  paid  over  time.       There   are   clear   cases   when   financing   immunization   through   loans   makes   sense.   For   instance,   when   a   normally   strong   economy   is   hit   with   a   financial   crisis   and   is   temporarily   short  of  funds  to  support  the  national  program,  a  short-­‐term  loan  to  cover  this  period  can  be   a  useful  strategy.  This  was  the  case  for  Argentina  in  the  1990s.  Loans  may  also  make  sense   in  order  to  cover  the  high  costs  of  short-­‐term  investments  likely  to  provide  big  pay-­‐offs  in   the  long-­‐term,  such  as  taking  loans  for  polio  eradication  as  was  the  case  for  Pakistan,  India,   and  Nigeria.     29     However,   for   economies   that   are   struggling   on   a   continued   basis   to   make   ends   meet,   debt   financing   to   meet   recurrent   costs   is   not   usually   the   best   alternative.   Where   additional   financing  is  needed,  the  decision  to  take  a  loan  should  be  based  on  an  evaluation  of  several   factors,   such   as:   costs   and   benefits   associated   with   maintaining   or   increasing   coverage   or   introducing   new   vaccines;   availability   of   other,   lower-­‐cost   financing   options;   strength   and   growth  of  the  national  economy;  and  capacity  of  the  national  economy  to  support  the  debt   load  when  the  repayment  comes  due.     What  is  the  experience  of  using  development  loans  for  immunization?     The   World   Bank   and   regional   banks   are   able   to   provide   loan   financing   in   support   of   immunization.  Generally,  loans  for  immunization  are  part  of  a  broader  set  of  activities  that   are  financed  through  a  health  sector  loan.  While  difficult  to  tease  out  of  overall  lending  for   maternal   and   child   health,   the   most   conservative   estimate   is   that,   since   2000,   the   World   Bank   has   provided   over   US$500   million   in   loans   in   support   of   national   immunization   programs  and  campaigns  for  polio  eradication.       Table  9.1  Assessment  of  the  value  of  development  loans  for  immunization  financing       Characteristic   Assessment   Predictable   Development   loans   provide   access   to   resources   over   a   relatively   long   period   of   time   with  a  high  degree  of  certainty.  Development  loans  can  provide  needed  access  to  foreign   exchange.   Additional   to   Yes,   but   development   loans   also   require   government   counterpart   funding   of   activities   government   and  programs.   financing   Equitable   Depends   upon   the   extent   to   which   the   development   loan   will   be   used   to   finance   activities  and  programs  to  improve  the  plight  of  the  poor  and  to  reduce  poverty.   Efficient   Due   to   the   interest   rate,   loan   financing   is   more   expensive   than   grant   financing.   Accessing  funds  through  loans  requires  a  government  to  meet  conditions  for  readiness,   use   particular   mechanisms   and   procedures   for   procurement,   and   produce   quarterly   financial  and  program  reports.  Increased  transaction  costs  are  envisioned.   Feasible   Large   loan   programs   may   require   establishment   of   a   separate   project   unit   or   team   within  the  MOH  to  manage  implementation,  reporting,  and  fiduciary  aspects  of  the  loan.   Sustainable   If   a   country   is   not   laden   with   unsupportable   debt   repayments,   loans   may   be   part   of   a   package  of  sources  for  sustainable  financing.   Promotes   self-­‐ Loan  financing  may  imply  greater  government  financial  and  political  commitment  to  the   sufficiency   immunization  program  because  of  the  counterpart  funding  requirement.  Repayment  of   the  loan  implies  a  long-­‐term  commitment.   Fosters   greater   Funds   from   development   loans   are   channelled   through   governments   and   their   use   accountability   would   be   based   on   the   current   public   expenditure   management   system.   However,   if   disbursement   of   loans   to   a   country   is   tied   to   performance   indicators   or   triggers,   then   this  increases  accountability  and  use  of  funds.         30   Brief  10:  Budget  support       What  is  budget  support?   General   budget   support  is  donor  funding  that   goes   directly   to   the  national   treasury   and  is   allocated  to  sector  budgets  along  the  lines  of  national  priorities  and  processes.  This  type  of   support  has  become  a  more  prominent  form  of  development  assistance  since  the  late  1990s,   and   is   part   of   an   overall   movement   towards   aid   effectiveness.   In   this   approach,   poverty   reduction   support   papers   (PRSPs)   are   used   as   the   basis   for   prioritizing   government   and   partner   development   investments.   The   PRSPs   are   often   the   basis   for   sectoral   budget   allocations.       Funds   provided   through   general   budget   support   are   disbursed   through   the   recipient   government’s   own   financial   management   system   and   are   not   earmarked   for   specific   uses.   However,  they  are  accompanied  by  agreements  and  conditions  for  disbursement  that  focus   on  the  policy  environment  and  government  development  strategy.  Rather  than  monitoring   the   narrow   use   of   aid   funds,   government   and   its   partners   work   together   to   monitor   implementation  of  the  national  strategy.       What  is  sectoral  budget  support?       Sectoral   budget   support   is   donor   assistance   paid   directly   into   the   account   of   the   ministry   in   question   and   then   allocated   according   to   sectoral   priorities.   In   the   case   of   health,   donor   assistance   is   paid   directly   into   the   account   of   the   ministry   of   health   and   then   allocated   to   sectoral   priorities   according   to   the   national   health   sector   strategic   plan   (NHSSP).   Disbursement   of   sectoral   budget   support   may   be   made   upon   achievement   of   targets   or   conditionalities   such   as  policy,   output,   or   outcome.   Monitoring   of   sectoral   budget   support   is   done  jointly  by  government  and  development  partners.  In  the  health  sector,  budget  support   is   related   to   improving   harmonization   and   alignment   of   priorities   and   funding,   as   well   as   mutual  accountability,  as  outlined  in  the  Paris  Declaration    and  the  Accra  Agenda  for  Action.   The   design   of   sectoral   budget   support   is   related   to   a   general   sector   policy   document   –   Medium   Term   Expenditure   Framework   (MTEF)   –     a   sector   coordination   mechanism   for   policy  dialogue,  joint  planning,  monitoring,  and  evaluation.       What  is  a  sector-­wide  approach?     Many   countries   are   moving   towards   a   sector-­‐wide   approach   (SWAp)   in   the   health   sector.   SWAps   are   coordination   mechanisms   for   planning,   budgeting,   and   monitoring   progress   towards   achievement   of   sectoral   objectives   as   expressed   in   the   national   health   sector   strategic   plan.   SWAps   are   not   financing   mechanisms,   but   coordination   mechanisms   for   mobilizing   and   allocating   resources   to   sectoral   priorities.   SWAps   work   differently   in   different   countries   but   there   are   typical   characteristics:   1)   all   significant   government   and   donor   funding   for   the   sector   supports   a   single   sector   policy   and   expenditure   program;   2)   government  leads  the  process  and  its  implementation;  3)  common  approaches  are  adopted   across  the  sector  by  all  funding  parties  (government  and  donors);  and  4)  there  is  progress   towards  relying  on  government  procedures  to  disburse  and  account  for  donor  funds.     31   It   is   common   for   countries   with   SWAp   mechanisms   to   also   have   a   pooling   mechanism   for   government   and   donor   resources.   Pooling   with   government   funding   implies   that   government   systems   will   be   used   for   transferring   and   monitoring   resources,   financial   reporting,  and  audit.  A   Joint  Financing  Arrangement  (JFA)  sets  out  the  terms  and  conditions   for  pooling  of  resources,  including  eligible  expenditures  out  of  the  pool,  financial  reporting   and  audit  arrangements,  planning  and  budgeting  processes,  and  annual  review  procedures.   The  ideal  is  for  all  stakeholders  to  support  one  national  health  strategy  through  on-­‐budget   resources,  using  a  common  monitoring  framework.     Relationship  of  immunization  financing  to  budget  support     Increasingly,  the  global  health  community  is  moving  away  from  direct  project  assistance  for   health  and  towards  sectoral  or  general  budget  support.    This  is  in  response  to  the  perceived   failings   of   classical   project   support.   Projects   often   suffer   from   slow   and   delayed   implementation,   high   transaction   costs,   and   limited   sustainability.   They   also   tend   to   undermine   government   structures   and   processes.   Projects   are   designed   to   respond   to   the   preferences   of   donors   rather   than   national   priorities.   This   undermines   ownership   and   the   setting   of   national   priorities,   and   compromises   the   sustainability   of   project   results.   (See   Brief  8:  Development  Project  Assistance.)     In  the  case  of  sectoral  and  general  budget  support,  immunization  resources  fall  less  and  less   under   the   purview   of   national   immunization   program   managers   (as   is   the   case   with   project   assistance)   and   increasingly   under   the   control   of   the   ministry   of   health   or   the   national   treasury.  It  is  therefore  important  to  ensure  that  program  needs  are  adequately  prioritized   within   the   national   strategic   plan   and   budget.   This   has   been   a   challenge   for   national   programs  as  they  introduce  new  vaccines,  particularly  since  they  are  outside  of  the  national   planning   and   budgeting   framework   (i.e.,   they   are   off-­‐budget).   Efforts   need   to   be   made   to   ensure  the  evidence  base  for  the  introduction  of  new  vaccines,  to  facilitate  adequate  policy   dialogue   on   priority   setting,   and   to   roll   these   resource   requirements   into   annual   or   multi-­‐ year   budgets   to   the   extent   possible.     Greater   advocacy   between   ministries,   parliamentarians,  and  donor  agencies  may  help  in  this  regard.     Evidence  on  the  effectiveness  of  budget  support   Budget   support   has   contributed   to   greater   policy   alignment   and   harmonization   of   development   aid.   General   budget   support   has   been   linked   to   increases   in   pro-­‐poor   development   expenditures,   and   reduced   earmarking   of   government   budgets.   General   budget   support   has   also   been   an   effective   instrument   in   strengthening   public   financial   management   and   improving   transparency   and   accountability.   By   increasing   needed   expenditures,  budget  support  has  helped  to  expand  service  delivery.  An  additional  expected   benefit   of   budget   support   is   reduced   transactions   costs.   There  is  no  specific  evidence  on  the   effectiveness  of  budget  support  for  immunization  programs.     Recent   reviews   of   the   effectiveness   of   SWAp   mechanisms   in   improving   health   outcomes   have   found   both   strengths   and   areas   for   improvement.   Sector   programming   is   becoming   better   integrated   within   the   budget   planning   process   and   there   is   improved   diagnosis   of   barriers   to   service   utilization.     There   is   also   evidence   of   closer   links   between   policy   and   implementation.   However,   SWAp   mechanisms   explicitly   require   ministry   of   health   32   leadership   and,   in   some   contexts,  limited   capacity   coupled   with   high   turnover   of   leadership   and  weak  relationships  with  the  ministry  of  finance  has  made  this  difficult.   SWAp   coordination   has   led   to   better   planning   and   budgeting   of   the   sector   but   vertical   health  initiatives  still  operate  outside  of  these  mechanisms  to  a  large  extent  and  this  could   potentially   undermine   gains.   There   is   also   a   lack   of   information   on   the   health   impact   of   SWAp   mechanisms.   Broad   participation   in   SWAp   mechanisms   has   been   limited   in   some   cases,   particularly   in   civil   society.   Weaknesses   in   monitoring   systems   persist   and   some   donors   are   unable   or   unwilling   to   provide   funding   through   government   systems.   In   addition,   budget   support   may   increase   the   leverage   of   donors   over   national   health   policy   since  they  participate  more  actively  in  planning,  budgeting,  and  monitoring  of  the  national   health  strategic  plan.         Case  Study:  Development  Policy  Lending  in  Senegal     Development  policy  lending  (DPL)  aims  to  help  a  borrowing  country  achieve  sustainable   reductions  in  poverty  through  a  series  of  program  and  policy  actions  that  promote  growth  and   enhance  the  incomes  of  poor  people.  DPL  lending  at  the  World  Bank  is  a  quick-­‐disbursing   financing  mechanism  in  the  form  of  loans,  credits,  and  grants  to  cover  specific  expenditures.   Development  policy  operations  (DPOs)  are  provided  in  the  form  of  unearmarked  loans,  credits,   or  grants  that  are  consistent  with  the  country’s  economic  and  sectoral  policies.  These  operations   generally  support  strengthened  financial  management,  improved  investment  climate,  improved   service  delivery  (health  and  education),  employment  creation,  and  other  priority  areas  of   investment.  Funding  is  in  the  form  of  general  budget  support  directed  to  the  national  treasury.       With  DPOs,  countries  access  financing  by  meeting  certain  triggers  or  targets  based  on  a  pre-­‐ determined  time  frame.  Immunization  coverage  –  either  DTP3  or  measles  coverage  rates  –  is   often  included  as  one  of  the  triggers  for  disbursement  of  funds.  In  this  sense,  the  strength  of   immunization  programs  will  have  wider  benefits  for  the  society  and  economy  as  a  whole.     Development  policy  lending  in  Senegal  (through  a  series  of  Poverty  Reduction  Strategy  Credits   (PRSCs))  supported  a  number  of  key  policy  and  institutional  actions  in  the  area  of  health  services.   The  series  supported  the  Government  in  improving  access  to,  and  use  of,  basic  health  services  by   strengthening  outreach  activities,  implementing  improved  infant  and  child  health  care   management,  extending  services  for  maternal  care  (increased  attended  birth  and  development  of   obstetrical  emergency  care),  and  making  additional  progress  in  the  prevention  of  infectious   diseases.  The  authorities  continued  their  efforts  to  improve  the  monitoring  of  health  sector   performance,  both  collecting  data  and  measuring  the  quality  of  health  services  throughout  the   country  (producing  statistical  reports  for  2003  and  2004).  These  actions  contributed  to  positive   results:  an  increase  in  DTP3  immunization  coverage,  improvements  in  the  attended  birth  rate,   and  a  reduction  in  the  share  of  underweight  children.     33   Table  10.1  Assessment  of  the  value  of  budget  support  for  health  and  immunization     financing     Characteristic   Assessment   Predictable   Budget   support   can   increase   predictability   of   financing   through   multi-­‐ party  planning  and  budgeting  of  health  sector  priorities.  If  budget  support   is   conditional   on   achievement   of   targets,   there   is   some   risk   that   disbursements  will  be  less  than  commitment  levels.   Additional  to   Yes.   government  financing   Equitable   Depends   upon   the   extent   to   which   budget   support   will   be   allocated   towards  activities  and  programs  to  improve  the  plight  of  the  poor  and  to   reduce  poverty.   Efficient   Budget  support  is  expected  to  reduce  the  transaction  costs  of  dealing  with   the  financial  and  programmatic  reporting  and  audit  requirements  of  each   individual  donor  separately.  The  initial  costs  of  establishing  coordination   mechanisms   may   be   high   in   terms   of   time   and   effort,   but   these   should   decrease  over  time.   Feasible   SWAp   mechanisms   require   significant   investment   in   time   and   coordination  –  both  in  the  initial  stages  and  for  continued  maintenance.   Sustainable   Budget   support   is   thought   to   be   a   sustainable   mechanism   as   it   creates   a   sense   of   ownership   of   the   national   plan   and   of   financing   of   the   health   sector.   Promotes  self-­‐ Budget   support   from   development   partners   is   usually   matched   with   sufficiency   government   financing   of   the   sector   (and   of   the   program)   and   would   contribute  to  self-­‐sufficiency.   Fosters  greater   Given  that  planning,  budgeting,  and  monitoring  of  use  of  budget  support   accountability   are   integral   to   sector   coordination,   this   will   contribute   to   greater   accountability.         34   Brief  11:    Debt  Relief     What  is  debt  relief?       Debt  relief  is  a  process  by  which  the  debtor  country  is  relieved  of  the  burden  of  repaying  the   principal   and/or   interest   on   past   loans.   Debt   relief   may   take   the   form   of   cancellation,   rescheduling,  refinancing,  or  reorganization  of  debt.  The  eligibility,  degree  of  conditionality   attached,  and  implementation  procedures  vary  based  on  the  specific  initiative.       What  types  of  institutions  provide  debt  relief?     There  are  two  international  institutions  –  the  IMF  and  the  World  Bank  –  that  provide  debt   relief.  There  are  also  various  bilateral  debt  relief  initiatives.  These  initiatives  are  designed,   to  different  degrees,  to  reduce  or  eliminate  the  debt  of  the  poorest  countries  and  so  provide   national   governments   with   more   resources   to   finance   services   for   their   populations.   The   result   is   that   governments   are   freed   from   paying   debts   that   often   consume   significant   portions   of   already   strained   budgets,   providing   an   opportunity   to   increase   spending   on   a   variety  of  sectors,  including  health.       The  HIPC  Initiative     The  IMF  and  World  Bank  jointly  launched  the  Heavily  Indebted  Poor  Countries  (HIPC)   Initiative  in  1996  in  IDA  countries.  The  aim  of  the  initiative  was  to  reduce  the  debt  of   qualifying   countries   to   sustainable   levels   (although   this   did   not   extend   to   full   debt   relief).  Countries  were  required  to  draft  and  implement  a  poverty  reduction  strategic   plan  (PRSP)  and  use  the  funds  made  available  by  debt  relief  to  increase  spending  on   poverty   reduction   and   activities   that   helped   meet   the   MDGs   (such   as   reducing   child   mortality  through  immunization).       The   total   committed   debt   relief   to   all   potentially   eligible   countries   (currently   40)   amounts   to  US$73.9  billion  in  end-­‐2008  net  present  value  terms  (NPV),  of  which  53%   relates  to  the  26  countries  at  completion  point.  Eligibility  for  the  HIPC  Initiative  was   based  on  the  levels  of  income  and  external  debt  prevailing  at  the  end  of  2004.     The  Multilateral  Debt  Relief  Initiative     The   Multilateral   Debt   Relief   Initiative   (MDRI)   was   initiated   by   the   G8   countries10   in   June   2005   and   complements   the   HIPC   Initiative   in   order   to   help   countries   advance   towards   the   MDGs.   Countries   eligible   for   the   MDRI   receive   100%   debt   relief   on   eligible   debt   owed   to   the   IDA,   IMF   and   African   Development   Fund   (AfDF).   In   early   2007,   the   Inter-­‐American   Development   Bank   (IADB)   also   decided   to   provide   similar   debt  relief  to  the  5  HIPCs  in  the  Western  Hemisphere.  Importantly,  only  countries  that   have  graduated  from  the  HIPC  Initiative  process  (i.e.,  HIPCs  at  completion  point)  will   10  The  Group  of  Eight  (G8)  Industrialized  Nations  is  made  up  of  France,  Germany,  Italy,  Japan,  the   United  Kingdom,  the  United  States  of  America,  Canada,  and  Russia.   35   benefit   from   the   MDRI.   The   total   committed   debt   relief   from   the   4   multilateral   creditors  amounts  to  US$28.5  billion  (in  end-­‐2008  NPV  terms),  of  which  86%  relates   to  the  26  post-­‐completion  point  countries  that  have  already  qualified.     Bilateral  debt  relief  initiatives     Many  creditors  such  as  Japan,  Switzerland,  France,  and  Spain  have  offered  up  to  100%   debt   relief   on   remaining   official   development   assistance   (ODA)   debt.   Bilateral   debt   relief   initiatives   are   usually   based   upon   the   same   conditions   as   the   HIPC   initiative.   Bilateral  creditors  often  provide  their  debt  relief  as  general  budget  support  or  specific   targeted  sector  support.       Debt  relief  and  immunization  programs     Debt  relief  does  not  always  translate   into  a  direct  increase  in  spending,  since  money  from   debt  relief  may  be  used  for  other  purposes  such  as  to  reduce  taxes  or  pay  down  domestic   debt.   The   size   of   this   funding   mechanism   varies   significantly,   depending   upon   the   level   of   debt   a   country   holds   and   the   terms   of   the   agreement.   Given   the   variation   in   public   expenditure   management   systems,   many   countries   receiving   debt   relief   set   up   specific   mechanisms   or   institutions   (such   as   trust   funds)   to   manage   the   savings.   (See   Brief   6:   National   Trust   Funds.)   These   can   include   institutional   funds   and   virtual   poverty   funds   which   ring-­‐fence   debt   relief   funding.   The   alternative   is   a   comprehensive   expenditure   tracking   mechanism   which   provides   debt   relief   resources   through   traditional   budgetary   processes.       Debt   relief     has   been   centered   on   a   Poverty   Reduction   Strategy   Paper     (PRSP)     that   includes   many   sectors,     including   health.     In   order   to   ensure   allocation   of   debt   relief   to   the   health   sector,   officials   will   need   to     be   engaged   in   the   process   and   to   actively   advocate   how   investment  in  immunization  can  contribute  to  poverty  reduction.         In  theory,  debt  relief  is  designed  to  be  additional.  That  is  to  say,  funds  provided  by  a  donor   for   debt   relief   should   be   in   addition   to   existing   forms   of   aid,   rather   than   replacing   this   funding.  Determining  whether  this  is  the  case  is  quite  challenging.  The  WHO  has  carried  out   work  on  debt  relief  and  immunization  in    ten  case  study  countries  with  data  sheets  available   on  each  country.       What  are  the  key  benefits  of  using  debt  relief  as  a  tool  to  support  immunization?     Debt   relief   can   be   a   new,   and   potentially   significant,   source   of   funds   for   the   immunization   system.   It   can   significantly   reduce   countries’   long-­‐term   debt   service,   allowing   them   to   transition   to   sustainable   indebtedness,   thereby   improving   their   credit   rating   and   encouraging   greater   foreign   investment.   Lastly,   it   can   strengthen   development   efforts   through  an  increased  allocation  of  funds  to  the  social  sectors.               36     Debt  Relief  in  Cameroon     Cameroon   currently   benefits   from   debt   relief   under   the   Heavily   Indebted   Poor   Countries   (HIPC)   Initiative,  the  Multilateral  Debt  Relief  Initiative  (MDRI),  and  additional  bilateral  debt  relief  initiatives.   The   Government   committed   to   allocate   resources   made   available   from   debt   relief   to   priority   expenditures  in  the  fight  against  poverty  as  outlined  in  the  Poverty  Reduction  Strategy  Paper  (PRSP).   Cameroon   will   receive   a   total   of   US$4917   million   from   HIPC,   in   nominal   terms,   between   now   and   2020.  In  addition,  it  received  US$1297  million  from  MDRI,  in  nominal  terms,  up-­‐front.  Finally,  it  also   received   debt   relief   from   bilateral   creditors   such   as   France.   The   health   sector   received   an   increase   in   debt   relief   monies   from   about   US$9   million   in   2001/02   to   US$40   million   in   2007.   A   proportion   of   these  funds  has  gone  to  the  immunization  sector,  totalling  US$14  million  between  2001  and  2006.       In   order   to   manage   the   HIPC   Initiative   savings,   Cameroon   set   up   a   special   framework   consisting   of   the  following  elements:     • A   special   treasury   account   at   the   Bank   of   Central   African   States   (BEAC)   to   deposit   the   savings  from  HIPC  relief   • A  special  code  for  HIPC  funds  in  the  budget  which  makes  them  easily  distinguishable  from   other  budget  lines     • An   independent   institution   for   HIPC   allocation   and   tracking,   the   ‘Comité   Consultatif   et   de   Suivi   de   la   Gestion   des   Ressources   PPTE’   (CCS/PPTE),   consisting   of   representatives   from   the  ministries,  development  partners  and  civil  society   • Specific   tracking   and   monitoring   of   projects   financed   through   HIPC   funds   via   dissemination   of  regular  technical  and  financial  audits       The   preparation   of   a   solid,   comprehensive   multiyear   plan   (cMYP)   for   immunization,   including   a   detailed  costing  of  activities  and  statement  about  future  secure  and  probable  financing  sources,  was   instrumental  in  convincing  the  Ministry  of  Finance  and  the  HIPC  Committee  of  the  need  for  additional   funding   and   its   efficient   use.   The   latest   cMYP   (2007-­‐2011)   anticipates   annual   contributions   from   the   HIPC   account   between   US$3.5   million   and   US$7.3   million.   In   addition,   the   EPI   is   benefiting   from   significant   allocations   resulting   from   the   French   bilateral   debt   relief   program   C2D.   Together,   these   two   sources   of   debt   relief   cover   30%   of   total   immunization-­‐program-­‐specific   financing   needs   over   the  5-­‐year  period.       Potential  policy  implications  for  health  officials     The  presence  of  an  institutional  fund  mechanism  to  manage  savings  from  the  HIPC  Initiative/MDRI   allows   health   officials   to   target   advocacy   efforts   specifically   at   these   resources.   The   following   strategies  proved  to  be  helpful  in  accessing  the  funds:   • Ensure   that   health   priorities   are   adequately   identified   in   strategic   national   documents   such   as  PRSPs   • Be   well   informed   about   the   annual   amount   of   debt   relief   savings   in   the   budget   and   the   procedures  in  place  to  allocate  these  resources   • Submit   coherent   health   projects   which   are   well   harmonized   with   the   national   health   sector   strategic  plan  and  budget   • Ensure   participation   of   key   health   officials   on   specific   committees   and   in   institutions   in   charge  of  the  management  and  tracking  of  debt  relief  funds   • Carefully  monitor  the  trend  of  debt  relief  allocations             37   What  are  the  problems  associated  with  using  debt  relief?       The   most   significant   challenge   is   securing   the   use   of   debt   relief   funds   for   immunization.   Both   within   and   beyond   the   health   sector,   many   essential   investments   compete   for   the   funds,   and   effective   advocacy   with   ministries   of   finance   is   critical.   Health   and   immunization   officials  must  strive  to  ensure  that  the  money  provided  through  debt  relief  is  additional  to   ordinary  foreign  assistance  and  also  to  ordinary  government  budget  allocations.  In  addition,   debt   relief   has   a   mixed   impact   on   health   sector   spending   because   governments   do   not   necessarily  prioritize  health  in  their  poverty  reducing  activities.     Table  11.1  Assessment  of  the  value  of  debt  relief  for  immunization  financing     Characteristic   Assessment   Predictable   Debt   relief   provides   clear   long-­‐term   estimates   of   the   money   saved   that   would  otherwise  have  been  spent  on  financing  debt  payments.   Additional  to   This   increases   the   overall   size   of   government   revenues   and   is   therefore   government  financing   additional.  However,  at  the  sector  level,  the  government  may  decide  to  re-­‐ allocate   funds   to   other   sectors   to   compensate   for   debt   relief   funds,   negating  the  impact.     Equitable   If   debt   relief   funds   are   used   as   intended   –   for   investments   that   alleviate   poverty  –  they  can  improve  conditions  for  the  poorest.   Efficient   Debt   relief   usually   has   low   transaction   costs   although   directing   the   monies  to  a  special  fund  can  incur  some  costs.   Feasible   Requires   prioritization   of   health   and   immunization   as   part   of   poverty   reduction,   and   compliance   with   triggers   and   conditions   on   the   part   of   government.   Sustainable   Debt  relief  can  be  a  sustainable  resource  because  it  increases  the  overall   size  of  resources  rather  than  re-­‐allocating  amongst  different  priorities.   Promotes  self-­‐ Can   support   country   capacity   because   it   provides   additional   resources   sufficiency   without  reliance  on  donors.   Fosters  greater   The   structure   established   by   the   government   to   use   debt   relief   will   accountability   influence   accountability,   with   specific   poverty-­‐focused   funds   being   more   transparent.       38   Brief  12:  The  Vaccine  Market  –  Pooled  Procurement       Pooled   procurement   combines   several   buyers   into   a   single   entity   that   purchases   vaccines   on  behalf  of  those  buyers.  For  example,  several  countries  within  a  region  could  combine  as  a   single   buying   bloc,   combining   their   resources   and   total   request   for   doses.   The   countries   together   could   purchase   a   greater   number   of   doses   than   each   could   individually   and,   because   of   larger   volumes   in   a   pooled   procurement,   there   is   generally   a   lower   price   per   dose.  Furthermore,  taken  as  a  whole,  the  group  of  countries  represents  a  greater  proportion   of  a  given  manufacturer’s  business  than  a  single  country,  increasing  negotiating  leverage.       There  are  several  examples  of  pooled  procurement  in  the  purchase  of  vaccines.  The  oldest  is   UNICEF   Supply   Division,   which   procures   on   behalf   of   lower   and   lower-­‐middle   income   countries   through   a   public   tender   system.   Since   1977,   the   Pan   American   Health   Organization   (PAHO)   has   operated   a   regional   pooled   procurement   system,   working   with   Latin   American   and   Caribbean   (LAC)   countries.   The   Revolving   Fund   is   critical   for   several   small  island  states  and  territories  in  the  Caribbean.  The  Gulf  Cooperation  Council  has  been   working  with  six  countries  in  the  Middle  East  since  1978  to  buy  a  range  of  goods,  including   vaccines.   The   Eastern   Mediterranean   Region   of   WHO   (EMRO)   is   beginning   an   effort   to   coordinate   vaccine   procurement   more   broadly,   and   the   WHO   African   Region   (AFRO)   and   European  Region  (EURO)  have  also  explored  the  idea.       How  does  pooled  procurement  work?     Pooled   procurement   can   cover   a   range   of   different   activities.   When   combining   their   resources,  as  described  above,  countries  can  use  an  external  provider  as  procurement  agent   or   set   up   the   structure   themselves.   However,   traditionally,   the   concept   of   pooled   procurement   has   been   linked   to   associated   activities   such   as   currency   exchange,   technical   assistance,  financial  support,  and  forecasting  expertise.    In  general,  a  request  for  proposals   (RFP)  is  developed  which  specifies  the  specific  type  of  vaccine,  time  period,  and  number  of   doses   to   be   delivered.   Manufacturers   are   requested   to   submit   an   offer   meeting   these   requirements.   In   some   cases,   a   range   of   dose   and   price   combinations   will   be   provided.   Manufacturers   traditionally   give   lower   prices   as   volumes   increase.   Manufacturers   usually   make   significant   up-­‐front   costs   and,   as   these   are   spread   over   larger   numbers   of   doses,   prices  will  fall.  In  addition,  price  reductions  are  related  to  market  uncertainties  and  whether   suppliers  are  dealing  with  multiple  antigens  or  a  simpler  vaccine.       What  are  some  examples  of  pooled  procurement  mechanisms?     • UNICEF:   UNICEF   procures  vaccines   for   between   80   and  100   countries   annually.   The   majority   of   its   vaccine   purchases   are   made   through   donor   funding,   although   a   small   number   of   countries   pay   in   full   for   their   vaccine   purchases   through   national   budgets.   Those   countries   that   pay   for   their   own   procurement   use   UNICEF   as   a   procurement  agent,  gaining  access  to  its  skills  and  expertise,  along  with  its  market   leverage.   Countries   are   requested   to   pay   UNICEF   an   administrative   fee   of   between   3%   and   6%   to   cover   operating   costs.   UNICEF   buys   approximately   40%   of   the   global   volume  of  vaccine  doses,  although  this  represents  only  5%  of  the  market  revenues,   39   given   the   relatively   low   cost   of   vaccines   procured.   Vaccines   procured   by   UNICEF   must   be   prequalified   by   the   WHO.   UNICEF   usually   purchases   vaccines   on   a   multi-­‐ year   tender,   considering   length   of   contract   and   type   of   procurement   arrangement   for  each  vaccine,  to  optimize  the  process.     • PAHO   Revolving   Fund: Forty Latin   American   and   Caribbean   countries   and   territories   procure   vaccines   through   the   PAHO   Revolving   Fund   (RF)   created   in   1977.  Member  States  have  designated  a  3.5%  recapitalization  fee  in  addition  to  the   price  of  the  vaccine.  This  recapitalization  builds  a  funding  pool  that  provides  a  line   of   credit   to   of   allow   countries   to   place   orders   in   a   timely   manner   and   to   pay   suppliers   (with   national   currency   when   needed)   60   days   after   delivery   of   vaccine.     In   2009,   the   RF   purchased   US$304.7   million   of   vaccines.   The   Revolving   Fund   generally  buys  vaccines  on  an  annual  tender.    The  existence  of  the  Revolving  Fund   has  been  cited  as  a  critical  component  in  the  success  of  immunization  across  LAC,  as   PAHO   countries   have   consistently   introduced   new   vaccines   earlier   and   more   widely   than   is   the   case   in   other   developing   countries.   The   RF   is   an   attempt   to   promote   competitive  conditions  and  lower  prices  through  earlier  entry  of  new  suppliers.     The   objectives   and   methods   of   PAHO’s   Revolving   Fund   and   UNICEF’s   Supply   Division   are   broadly  similar,  with  some  exceptions.       • UNICEF  procures  mainly  for  lower-­‐income  countries  globally  whereas  the  Revolving   Fund  procures  primarily  for  middle-­‐income  countries  in  LAC.   • The   Revolving   Fund   is   financed   almost   entirely   from   national   budgets,   whereas   UNICEF  is  primarily  donor-­‐funded.     • Tiered   pricing   is   not   a   feature   of   the   PAHO   Revolving   Fund.   (See   Brief   14:   The   Vaccine  Market  –  Tiered  Vaccine  Pricing.)   • UNICEF   may   procure   using   multi-­‐year   tenders   (though   not   always),   while   PAHO   purchases  annually.     •   What  are  the  benefits  of  pooled  procurement?     Pooled  procurement  has  a  price-­‐reducing  effect.  For  instance,  Hepatitis  B  was  introduced  in   the  1980s,  but  recent  evidence  suggests  that  prices  have  fallen  more  dramatically  since  the   creation  of  the  GAVI  Alliance  and  the  PAHO  Revolving  Fund,  as  the  pooling  of  vaccines  has   increased.  Pooled  procurement  has  additional  benefits.     • Strengthens  the  negotiating  position  of  countries  when  operating  as  a  single  bloc   • Reduces   the   need   for   specialized   skills   required   for   national   vaccine   procurement   (such  as  forecasting  demand,  defining  vaccine  specifications  and  requirements,  and   preparing   appropriate   bid   documents)   that   may   not   be   available   in   all   countries   but   may  be  easier  to  build  through  a  combined  entity   • Allows   for   greater   stability   in   vaccine   supply   through   pooled   resources   and   purchasing   • Results  in  lower  unit  prices,  generating  cost  savings  for  countries           40   What  are  the  drawbacks  of  pooled  procurement?     Pooling  vaccine  procurement  does  present  some  challenges.       • Capacity  is  not  always  built  up  within  countries  for  purchasing  of  vaccines  and  this   can   create   long-­‐term   dependence   on   an   external   body   for   expertise.   Countries   typically   do   have   some   capacity   for   forecasting,   budgeting   and   planning   which   are   critical  activities  in  the  overall  procurement  process.   • Reporting  and  record-­‐keeping  may  need  to  be  maintained  according  to  procedures   determined  externally  rather  than  using  national  processes.   • National   procurement   legislation   is   required   and   this   must   be   aligned   across   participating  countries.   • The  range  of  products  procured  through  the  pooled  mechanism  may  be  limited  and   not  completely  tailored  to  country  needs.   • The  buying  power  of  pooled  procurement  can  shift  market  balances  and  result  in  a   shrinking  supplier  base  overall.     Table   12.1   Assessment   of   the   value   of   pooled   procurement   for   immunization   financing     Characteristic   Assessment   Predictable     If   the   structure   is   set   up   with   a   working   capital   to   bridge   shortfall,   this   type  of  instrument  can  smooth  over  potential  interruptions  and  allow  for   a  stable  flow  of  funds.   Additional  to   Depends  upon  the  structure  of  the  financing  flow.   government  financing   Equitable   Provides   low-­‐income   or   small   countries   with   access   to   quality   and   affordable  vaccines  that  otherwise  would  be  very  difficult  to  obtain.   Efficient   By  combining  resources,  cost  savings  can  be  achieved  through  efficiencies   in  procurement  operations  and  a  lower  vaccine  cost.   Feasible   Requires   initial   capitalization   of   a   fund   and   fund   management.   Also   requires  national  procurement  legislation.   Sustainable   If  properly  constructed,  it  can  be  used  over  the  long-­‐term.   Promotes  self-­‐ Depends   upon   the   structure   of   the   system;   those   that   rely   on   donor   funds   sufficiency   for  vaccine  purchase  do  not  promote  self-­‐sufficiency.   Fosters  greater   Accountability   may   be   increased   as   information   is   shared   among     accountability   countries  using  standard  reporting  formats  and  procedures.       41   Brief  13:  UNICEF  –  Vaccine  Independence  Initiative  (VII)       The  Vaccine  Independence  Initiative  (VII)  was  established  by  UNICEF  and  WHO  in  1991  to   support   lower-­‐middle   income   countries   working   to   become   self-­‐reliant   in   vaccine   procurement.   The   VII   offered   four   advantages:   participation   in   a   pooled   procurement   mechanism  (through  UNICEF);  benefitting  from  economies  of  scale;  payment  after  delivery   instead   of   in   advance;   and   payment   in   local   currency   (as   permitted   by   the   UNICEF   Treasurer).     In   the   current   vaccine   market   dynamics,   access   to   a   pooled   procurement   system   supporting   a   vaccine   security   strategy   is   of   high   value.   Participation   in   the   VII   provides  such  assurances  through  UNICEF  vaccine  procurement.   The  VII  started  as  a  revolving  fund  with  a  donation  held  in  a  ‘Funds  in  Trust’  account  that   serves   as   the   guarantee,   or   capital   fund.   Today,   the   VII   capital   totals   US$9   million.   The   current  approval  period  for  the  VII  will  expire  in  2015.   How  does  the  VII  work?     The   VII   capital   fund   allows   pre-­‐delivery   financing   for   member   countries   wishing   to   buy   vaccines   through   UNICEF.   The   goal   of   the   fund   is   to   help   member   governments   become   independent  in  vaccine  funding  and  procurement  without  disruption  to  the  vaccine  supply.   The  VII  can  provide  this  service  by  rotating  the  capital  quickly  and  often  enough  to  finance   the  countries’  routine  needs  while  they  reimburse  UNICEF.     The   UNICEF   Programme   Division/Health   Section   invites   member   countries   to   enter  into   a   VII   Procurement   Service   (PS)   agreement.   The   VII   agreement   allows   countries   to   make   payment  after  the  vaccine  is  delivered  and,  if  necessary,  with  local  currency.     While  VII  offers  its  members  financial  incentives,  UNICEF  absorbs  the  risk  of  non-­‐payment   (default)  and  holds  onto  currency  that  may  lose  its  value  due  to  fluctuations  in  the  market   exchange.   To   offset   these   risks,   the   VII   capital   fund   provides   a   guarantee   to   countries   against  any  loss  in  value  of  their  resources.     Which  countries  are  the  intended  targets  of  the  VII?     The   diversity   among   developing   countries   means   that   they   face   a   wide   range   of   different   needs   and   challenges.   At   one   end   of   the   spectrum   are   the   least-­‐developed   countries   that   cannot   finance   their   own   vaccines   and   require   donor   support.   At   the   other   end,   are   more   independent,   industrialized   countries   that   can   procure,   produce   and   finance   their   vaccine   needs   independently.   Countries   between   these   two   poles   were   originally   targeted   by   the   VII,  though  today  only  a  small  number  of  countries  in  this  category  (such  as  the  small  island   states)  participate.     Member   countries   often   face   specific   vaccine   financing   and   management   challenges,   such   as:     • Accessing  necessary  hard  currency  from  scarce  foreign  currency  sources   42   • Working  with  ministries  of  finance  or  planning  that  do  not  recognize  immunization   as  a  priority   • Working   within   government   regulations   that   often   require   receipt   of   goods   before   payment   • Vaccine  forecasting  which  is  often  under-­‐  or  over-­‐estimated   • Managing  shortages  due  to  poor  planning     The  VII  offers  4  types  of  services  to  address  these  challenges:  preplanning  support  to  define   vaccine   needs;   access   to   a   dependable,   affordable   vaccine   procurement   system;   providing   alternative   financing   terms;   and   handling   inter-­‐ministry   relations   to   ensure   cooperation   and  facilitate  the  transaction  process.     In  the  short  term,  the  VII  provides  member  countries  with  a  smooth  and  reliable  means  of   vaccine  procurement  while  they  learn  to  manage  and  assume  the  responsibilities  associated   with  the  process  and  develop  their  own  budgeting  and  planning  capacity.  In  the  long  term,   the   VII   enables   and   encourages   countries   to   become   independent   with   respect   to   vaccine   financing,  procurement,  and  management.       Country  Experiences  with  the  VII:  Pacific  Island  Countries  (PICs)       UNICEF   provides   assistance   to   21   Pacific   Island   Countries   (PICs),   and   manages   a   pooled   vaccine   procurement   for   14   of   those.   These   countries   are   highly   diverse   in   development   and   population   size   and   face   several   logistics   constraints.   There   is   a   very  limited  and  expensive  airfreight  service,  which  often  results  in  a  doubling  of  the   landed   cost   of   the   vaccines   after   shipping.   (Due   to   the   population   size,   some   shipments  are  only  a  handful  of  vials.)       Pooling  procurement  through  VII  includes  vaccine  needs/supply  planning,  purchase,   and  stock  management  in  Suva  for  all  countries.    It  also  includes  managing  an  offsite   cold   store   facility   and   arranging   freight   forwarding   to   final   destinations.     This   is   a   complex   undertaking   currently   managed   by   UNICEF   Suva   with   a   locally   contracted   cold  storage  facility.         The   key   benefit   of   VII   to   participant   countries   is   the   ability   to   make   payment   after   delivery.    Most  of  the  PIC  members  will  not  agree  to  pay  a  supplier  in  advance.                             43     Table   13.1   Assessment   of   the   value   of   the   Vaccine   Independence   Initiative   (VII   )   for   immunization  financing     Characteristic   Assessment   Predictable   Countries   receive   information   on   ‘annual   funds   ceilings’   in   advance   and   before  signing  the  MOU  for  the  current  year.   Additional  to   Because   local   currency   is   substituted   for   hard   currency,   there   is   no   government  financing   additionality  with  this  financing  mechanism.   Equitable   Candidate   countries   that   are   not   benefiting   from   other   partnerships   are   prioritized.   Efficient   There   is   room   for   improvement.   Higher   annual   turnaround   of   available   funding  is  desired.   Feasible   Relies   upon   existing   mechanisms   for   procurement   through   UNICEF   and   this  is  a  complex  undertaking.   Sustainable   Yes,  as  long  as  it  is  recapitalized.  However,  the  VII  is  meant  to  be  a  short-­‐ term   mechanism   to   help   countries   during   a   transition   period   towards   greater  self-­‐sufficiency  in  vaccine  procurement.     Promotes  self-­‐ The   mechanism   assists   countries   to   procure   using   local   currency,   and   sufficiency   encourages   countries   to   become   more   self-­‐sufficient   in   vaccine   procurement.   Fosters  greater   Potentially  improves  stock  management  and  procurement.   accountability     Further  Reading     Chang-­‐Blanc,  D.,  R.  Matthews,  and  S.  Schmitt.    “Assessment  Report  on  Vaccine  Procurement   and  Supply  in  the  Pacific  Island  Countries  (PIC)”.    UNICEF/WHO.  May  2010.     44   Brief  14:  The  Vaccine  Market  –  Tiered  Vaccine  Pricing     What  is  tiered  pricing?     Tiered   pricing   is   a   form   of   price   differentiation:   charging   different   prices,   in   different   markets,   for   the   same   product.     Generally,   manufacturers   charge   higher   vaccine   prices   in   wealthier  countries,  while  keeping  prices  lower  for  countries  that  cannot  afford  the  price  on   the   open   market.   In   this   manner,   manufacturers   can   use   the   revenues   generated   in   industrialized   country   markets   to   support   the   research   and   development   costs   that   are   required  to  bring  new  products  to  market.       How  does  tiered  pricing  work?       The   costs   of   vaccines   can   vary   enormously.   Costs   are   linked   to   production   as   well   as   to   research   and   development.   (See   Brief   15:   The   Vaccine   Market   –   Vaccine   Production   and   the   Market.)   The   cost   of   production   is   linked   to   volume.   The   production   cost   of   a   particular   vaccine  is  a  flat  cost,  therefore  the  higher  the  number  of  doses  produced,  the  lower  the  cost.   In   the   case   of   the   traditional   EPI   vaccines,   the   technology   is   relatively   simple   and   the   required   investment   in   research   and   development   is   not   high.   In   the   case   of   the   newer   vaccines,  there  is  considerable  new  investment  and  the  capitalization  required  is  high.  The   costs  of  research  and  development  are  built  into  the  price  of  the  vaccine  and  lower-­‐income   countries   are   necessarily   able   to   afford   the   open-­‐market   price.   Tiered   pricing   allows   for   price  differentiation  based  on  ability  to  pay.       In   the   most   common   form   of   tiered   pricing,   low-­‐income   countries   are   able   to   purchase   vaccines   through   the   bulk   procurement   facility   offered   by   UNICEF   (See   Brief   12:   The   Vaccine  Market  –  Pooled  Procurement.)  For  example,  it  is  estimated  that  the  price  of  the  EPI   vaccines   in   low-­‐income   countries   through   bulk   procurement   can   be   less   than   10%   of   the   price   in   wealthy   countries.   In   the   case   of   the   EPI   vaccines,   there   is   a   market   in   both   high-­‐ income   and   low-­‐income   countries   and   manufacturers   are   able   to   recuperate   the   costs   of   production   both   through   volume   and   the   ability   to   charge   higher   prices   in   the   wealthy   countries.  GAVI-­‐eligible  countries  are  able  to  introduce  new  vaccines  at  lower-­‐than-­‐market   prices.     What  are  the  challenges  involved  in  tiered  pricing?     There   is   an   inherent   tension   between   vaccine   manufacturers’   accountability   to   their   shareholders   and   profit-­‐making,   and   the   global   public   good   benefits   of   immunizing   populations   in   low-­‐income   countries.   Because   of   this,   the   actual   price   of   vaccines   that   should  be  set  in  different  markets  is  unclear.       In  general,  the  price  of  vaccines  is  high  when  a  new  product  is  introduced.  New  vaccines  are   often   based   on   new   production   techniques   that   are   complex   and   expensive.   In   addition,   there  is  often  only  a  single  supplier,  which  limits  supply  and  gives  the  manufacturer  power   to  set  the  price.  Over  time,  the  cost  of  production  may  drop,  new  manufacturers  may  come   on  stream  and  the  volume  of  supply  may  increase,  thus  lowering  prices.         45   Historically,   low-­‐income   countries   have   adopted   newer   vaccines   at   lower   prices.   This   limits   the   market   for   the   manufacturer   and   means   that   low-­‐income   countries   do   not   have   early   access   to   the   most   recently   developed   vaccines.   Tiered   pricing   may   help   alleviate   the   problem  of  access  by  allowing  manufacturers  to  charge  different  prices  in  different  markets.   In  addition,  donor  subsidies  may  bring  the  price  down  further  for  the  poorest  countries.       Pooled   procurement   is   another   strategy   that   low-­‐income   countries   can   use   to   bring   down   the   price   of   their   new   vaccines.   (See   Brief   12:   The   Vaccine   Market:   Pooled   Procurement.)   Pooled   procurement   has   been   an   effective   tool,   alongside   tiered   pricing,   to   increase   the   access   of   low-­‐income   countries   to   newer   vaccines.   Consolidating   orders   has   increased   the   leverage  of  these  countries  by  sending  clear  demand  signals  to  suppliers.       Other   challenges   in   tiered   pricing   include:   re-­‐importation;   and   the   role   of   middle-­‐income   countries.   In   order   for   tiered   pricing   to   work   properly,   the   manufacturer   will   want   to   guard   against   having   low-­‐income   country   products   sold   in   high-­‐income   countries   (known   as   re-­‐ importation).  Among  the  current  issues  under  debate  is  how  much  middle-­‐income  countries   should  contribute  to  the  cost  of  developing  new  vaccines.   46   Brief  15:  The  Vaccine  Market  –  Vaccine  Production  and  the   Market     What  does  the  vaccine  manufacturing  landscape  look  like?     The  global  vaccine  market  is  expected  to  increase  by  more  than  100%,  from  US$24  billion  in   2009   to   US$56   billion   in   2016.11   Multinational   vaccine   companies   historically   have   conducted   much   of   the   innovation,   research,   and   development   in   the   field   of   vaccine   production.    They  have  used  significant  revenues,  global  size,  and  deeper  expertise  to  fund   the  development  of  new  technologies  for  vaccine  development  –  an  expensive  and  relatively   time-­‐consuming   process.   Biotechnology   companies   have   also   had   a   role   in   vaccine   development   –   particularly   in   the   early   stages   during   discovery,   though   these   firms   lack   the   capacity  to  bring  a  vaccine  to  market.     Local   manufacturers   in   low-­‐   and   middle-­‐income   countries,   primarily   in   Latin   America   and   Asia,   have   supplied   traditional   EPI   vaccines   to   countries   for   many   years.   These   suppliers   produce   vaccines   using   relatively   simple   technology   and   are   able   to   do   so   without   significant  research  and  capital  investment.       In  recent  years,  a  few  local  manufacturers  have  begun  to  export  their  products  to  other  low-­‐ income  countries  and  international  agencies,  such  as  PAHO  and  UNICEF.  As  many  of  them   remain  state-­‐owned,  they  are  obligated  to  supply  domestic  needs  first  and  can  export  only   the  remainder  of  their  supply.  Well-­‐known  examples  of  state-­‐owned  vaccine  producers  are   Brazil’s  BioManguinhos  (the  biologics  arm  of  Fiocruz)  and  Butantan,  Indonesia’s  Biofarma,   Mexico’s   Birmex,   and   Cuba’s   Finlay   Institute.   While   initially   focusing   on   production   of   existing   vaccines,   many   manufacturers   are   considering   greater   research   and   development   investments   as   they   look   to   develop   new   vaccines.     In   order   for   local   manufacturers   to   supply  their  products  internationally  through  regional  and  international  organizations,  they   must  become  prequalified  with  the  WHO.     In  addition  to  state-­‐owned  firms,  a  number  of  private  manufacturers,  particularly  in  India,   have   expanded   and   now   supply   a   significant   proportion   of   traditional   EPI   vaccines   purchased  by  UNICEF  for  distribution  worldwide.       How  is  vaccine  cost  linked  to  price?       There   are   two   broad   types   of   vaccine   costs:   manufacturing   costs;   and   research   and   development  costs.  Often,  the  focus  is  on  the  cost  of  production,  with  an  assumption  that  the   cost   of   the   vaccine   should   be   close   to   the   cost   of   production.   However,   this   ignores   the   research  and  development  costs.       For   many   of   the   newest   vaccines,   manufacturers   will   invest   many   years   and   several   hundreds   of   millions   of   dollars.   For   vaccines   that   have   both   an   industrialized   country   and   11  http://centerforvaccineethicsandpolicy.wordpress.com/2010/01/17/global-­‐vaccines-­‐revenues-­‐ projected-­‐to-­‐more-­‐than-­‐double-­‐by-­‐2016/     47   developing  country  market,  research  and  development  costs  are  often  borne  through  higher   priced   sales   to   wealthier   countries,   in   line   with   tiered   pricing.   (See   Brief   14:   The   Vaccine   Market   –   Tiered   Vaccine   Pricing.)   In   addition,   research   costs   are   often   subsidized   by   governments   and   other   organizations   through   subsidies,   rebates,   and   tax   exemptions   to   local  firms.     In   addition,   manufacturers   often   price   vaccines   without   a   link   to   the   cost   of   production,   focusing   instead   on   what   the   market   will   bear   and   setting   prices   in   line   with   the   avoided   costs   of   treatment.   This   is   particularly   the   case   in   wealthy   countries.   For   example,   a   pneumococcal  vaccine  can  prevent  substantial  expenses  from  treatment  of  pneumonia  and   this   is   often   considered   by   manufacturers   in   developing   a   pricing   strategy.   The   cost   of   producing   a   given   vaccine   is   closely   guarded   by   manufacturers   and,   in   the   case   of   new   vaccines,   the   cost   is   rarely   known   by   the   public   sector.   Moreover,   early   in   the   production   of   a   new   vaccine,   when   there   is   often   only   one   manufacturer,   the   public   sector   has   limited   leverage.  Thus,  vaccine  prices  often  begin  at  very  high  levels.     Vaccine  manufacturing  has  significant  economies  of  scale,  meaning  that  producing  a  bigger   volume   reduces   the   price   per   dose.   For   example,   even   if   a   manufacturing   plant   is   producing   at   only   20%   of   its   capacity,   it   still   has   to   pay   the   operating   costs   of   the   plant   and   those   costs   are  divided  over  fewer  doses,  therefore  driving  up  the  cost  per  dose.     The   costs   of   producing   a   vaccine   can   therefore   vary   enormously.   For   instance,   a   polio   vaccine  that  is  developed  from  a  relatively  simple  technology,  has  a  high  global  demand,  and   is   produced   by   multiple   suppliers   will   have   a   much   lower   unit   price   per   dose   than   a   multivalent   conjugate   vaccine,   like   pneumococcal,   that   requires   a   complex   manufacturing   technology,  and  is  produced  globally  in  smaller  quantities.  However,  it  is  worth  noting  that   over   time,   costs   generally   drop   as   efficiencies   are   found   in   production,   and   as   manufacturing  plants  increasingly  operate  at  full  capacity.         Types  of  costs  relevant  for  national  immunization  programs       Variable  costs  have  a  steady  unit  cost  and  could  include  such  items  as  vials.    Every  dose  of  vaccine   increases  cost.    A  larger  volume  means  a  higher  total  cost.     Semi-­fixed  costs  have  a  consistent  batch  (generally  a  size  of  several  thousand  doses)  cost  regardless   of   dose   number.   So,   if   a   manufacturer   is   able   to   produce   a   bigger   batch   size,   the   cost   per   dose   will   drop.     Fixed  costs  are  the  biggest  proportion  of  production  costs.  These  costs  are  independent  of  volume   and  so,  as  the  number  of  doses  produced  goes  up,  unit  costs  go  down.  In  general,  this  means  that  a   larger  scale  of  production  is  cheaper.     Most  vaccine  production  costs  are  either  fixed  (60%)  or  semi-­‐fixed  (25%)  with  the  remainder  (15%)   being  variable.           48     What  does  this  mean  for  newer  vaccines?     High   fixed   costs   and   increasingly   complex   production   techniques   make   it   difficult   for   new   manufacturers   to   enter   the   market.   In   addition,   these   new   vaccines   are   simply   more   complex,  making  it  possible  that  they  may  never  reach  the  low  prices   at  which  traditional   vaccines  are  set  in  developing  countries.  To  date,  new  vaccines  have  come  to  the  market  at  a   high   price,   reflecting   the   complexity   of   the   technology   and   the   limited   supply   (often   there   is   a   single   supplier   initially).   Then   over   time,   the   technology   becomes   cheaper   and   efficiencies   are   found   in   production   that   maximize   yield   and   lower   costs.     Additional   manufacturers   enter  the  market,  driving  up  supply  level  and  increasing  competition  to  lower  costs.       With   newer   vaccines   this   may   be   a   slower   process.   A   case   in   point   is   DTP   combination   vaccines.   Initially,   GAVI   expected   prices   of   this   vaccine   to   drop   quickly.   But   producing   the   pentavalent   (DTP-­‐HepB-­‐Hib)   vaccine   used   widely   by   GAVI   required   conjugation   technology   for   which   many   emerging   manufacturers   lacked   expertise.   For   several   years,   only   a   single   manufacturer   produced   the   vaccine.   While   a   second   manufacturer   entered   the   market   in   2006,   real   price   reductions   did   not   emerge   until   additional   manufacturers   entered   the   market.  Now  –  after  almost  ten  years  –  the  price  of  pentavalent  is  beginning  to  drop.       There   are   a   series   of   steps   that   can   be   taken   to   ameliorate   this   situation.   First   of   all,   manufacturers   who   are   first   to   market   with   new   vaccines   can   be   encouraged   to   define   transparent  pricing  criteria  for  various  markets  from  the  outset.  International  organizations   are   advocating   for   this   approach   with   manufacturers.   In   addition,   efforts   can   be   taken   to   support   emerging   manufacturers   through   technology   transfer   and   advice   on   intellectual   property   and   regulatory   issues.   Organizations   such   as   PATH   and   other   product   development   partnerships   are   making   efforts   to   partner   with   manufacturers   to   increase   supply   and   reduce   prices.   In   some   cases,   support   to   manufacturers   from   public   sector   organizations   comes   with   specific   requirements   regarding   a   price   ceiling   for   the   product   that  is  eventually  developed.     Further  Reading       Oxfam  International  and  MSF.    “Giving  Developing  Countries  the  Best  Shot:  An  Overview  of   Vaccine  Access  and  R&D.”  April  2010.   http://www.msfaccess.org/fileadmin/user_upload/diseases/other_diseases/06_04%20MS FOxfam_Vaccine_Report_A4_Web%20FINAL.pdf      “Supply  and  Procurement  Report  for  GAVI  Board.”  GAVI  Alliance,  2002.   http://www.gavialliance.org/resources/Supply_Background.doc         16th  GAVI  Board.  “Global  Vaccine  Supply:  The  Changing  Role  of  Suppliers.”  Meeting  held  in   Paris,  2005.  http://www.gavialliance.org/resources/16brd_08._Supplier_study.pdf         49   Brief   16:   Innovative   Financing   –   The   International   Finance   Facility  for  Immunisation  (IFFIm)     Since   the   adoption   of   the   Millennium   Development   Goals   (MDGs)   in   2000,   the   global   community  has  recognized  the  need  for  additional  resources  to  achieve  these  goals.  Donor   financing   for   the   health   sector   has   increased   significantly.   However,   the   cost   of   vaccines   has   increased  and  scaling  up  programs  is  more  costly  at  higher  coverage  levels.  New  sources  of   development   financing   needed   to   be   tapped   to   allow   for   greater   predictability   of   financial   support  for  recipient  countries  and  more  flexibility  for  donors.       The   health   sector   has   been   a   testing   ground   for   a   number   of   new   innovative   financing   mechanisms.   Immunization,   in   particular,   was   the   focus   of   two   of   the   new   tools:   the   International   Finance   Facility   for   Immunisation   (IFFIm),   which   borrowed   against   donor   funds  in  the  capital  markets;and  the  Advanced  Market  Commitment  (AMC),  which  sought  to   accelerate   the   development   of   new   vaccines   for   developing   countries.   (See   Brief   17:   Innovative  Financing  –  Advance  Market  Commitments  (AMCs).)       What  is  the  IFFIm?       The   International   Finance   Facility   for   Immunisation   (IFFIm)   is   one   of   the   funding   sources   for  the  GAVI  Alliance.  The  IFFIm  is  supported  by  the  World  Bank  in  fiduciary  matters  and  by   GAVI   on   programmatic   issues. Currently,   the   governments   of   the   UK,   France,   Italy,   Spain,   Norway,   Sweden,   The   Netherlands,   and   South   Africa   have   pledged   resources   that   will   generate  approximately  US$3.2  billion  over  the  period  2006-­‐2015.  Each  donor  has  made  a   multi-­‐year   commitment   (most   are   20   years)   that   is   flexible   in   terms   of   its   shape.   Some   donors   pay   the   same   every   year,   while   others   pay   lower   amounts   in   the   early   years   and   higher  amounts  in  the  later  years.  The  IFFIm  then  bundles  all  of  these  commitments  –  which   are   legally   binding   –   together.   The   chance   of   default   (non-­‐payment)   by   the   donors   is   considered  very  low-­‐risk  and  the  bonds  are  therefore  rated  as  very  safe  investments.     The  IFFIm  then  issues  bonds  in  the  capital  markets.  When  these  bonds  are  purchased,  the   investor   provides   money   up   front   in   exchange   for   a   stream   of   payments   over   the   next   20   years  (the  length  of  donor  commitments),  plus  a  borrowing  cost.  This  borrowing  cost  can  be   very   low   because   of   the   low   risk   of   default   noted   above.   This   is   important   because   it   minimizes   the   costs   of   the   mechanism.   The   bond   issuances   are   done   periodically   –   when   funds   are   needed   –   to   generate   money   for   GAVI   programs.   Over   the   period   of   the   IFFIm,   the   bonds   will   be   issued   within   10   years   and   paid   back   to   investors   over   20   years.   GAVI   therefore   gains   the   benefit   of   front-­‐loading   its   funds   in   a   flexible   manner,   without   being   constrained   by   individual   donor   budgeting   limitations,   in   exchange   for   paying   a   modest   borrowing  cost.       Some   critics   point   out   that   the   borrowing   cost   could   be   avoided   entirely   if   donors   were   willing   to   be   more   flexible   with   their   financing   and   simply   front-­‐load   it   at   the   outset.   Others   are  also  concerned  that  when  the  bond  issuances  are  finished  and  the  front-­‐loading  of  cash   50   to   GAVI   has   been   completed,   resources   will   suddenly   drop,   since   donors   will   still   be   committed  to  making  payments  to  the  bondholders  for  an  additional  10  years.     Key  benefits  of  the  IFFIm     • Front-­loading:   Long-­‐term   donor   resources   can   be   provided   up   front   –   through   the   issuance   of   bonds   –   allowing   more   children   to   be   immunized   in   the   near   term,     in   exchange  for  a  small  borrowing  cost     • Predictability:   The   predictability   of   IFFIm   funding   is   expected   to   yield   a   number   of   specific  benefits:   Improved  planning  and  budgeting  in  country:  Predictability  enables  GAVI  to  make   longer  term  commitments  to  national  governments,  enabling  these  governments  to   make  longer-­‐term  budgeting  and  planning  decisions.     Leveraging   the   market:     The   predictable   funding   of   the   IFFIm   provides   strengthened   negotiating   power   and   the   ability   to   negotiate   longer-­‐term   arrangements   with   suppliers.   This   increases   the   potential   for   lowering   prices   and   obtaining  more  vaccines  for  the  same  envelope  of  funds.     51     Brief  17:  Innovative  Financing  –  Advance  Market   Commitments  (AMCs)       Advance   Market   Commitments   (AMCs)   are   a   mechanism   designed   to   accelerate   the   development   of   priority   new   vaccines   and   their   availability   to   developing   countries.   The   process  of  developing  a  new  vaccine  entails  significant  scientific  challenges.  The  process  can   take   up   to   20   years   and   requires   a   series   of   large   investments   in   research,   product   development  and  production.    The  risks  and  costs  of  each  of  these  investments  are  normally   recouped   through   sales   once   the   vaccine   is   on   the   market.     (See   Brief   15:   The   Vaccine   Market   –   Vaccine   Production   and   the   Market.)   However,   industry   has   no   assurance   of   recouping   investments   to   serve   developing   country   markets   because   the   markets   are   perceived  by  private  industry  to  be  small  and  risky.    The  result  is  that  children  and  adults  in   poor   countries   often   do   not   have   access   to   new   vaccines   for   10-­‐15   years   after   initial   licensure   in   rich   countries.     Further,   the   development   of   vaccines   targeted   for   diseases   prevalent   in   Africa   may   be   either   untouched   or   on   a   much   slower   track   than   vaccines   for   more  profitable  markets.           An   AMC   for   vaccines   is   a   financial   commitment   to   subsidize   the   future   purchase   of   a   currently   unavailable   vaccine   (up   to   a   pre-­‐agreed   price)   –   if   an   appropriate   vaccine   is   developed  and  if  it  is  demanded  by  developing  country  governments.    By  guaranteeing  that   the  funds  will  be  available  to  purchase  vaccines  once  they  are  developed  and  produced,  the   AMC  mimics  a  secure  vaccine  market  and  takes  away  the  risk  that  countries  will  not  be  able   to   afford   a   high   priority   vaccine   that   they   would   like   to   introduce   into   their   national   program.  A  pilot  AMC  for  pneumococcal  vaccine  was  launched  by  GAVI  in  2009.  This  pilot   project   is   designed   to   accelerate   the   availability   of   pneumococcal   vaccines   in   developing   countries   by   stimulating   the   building   of   additional   manufacturing   capacity.   The   Governments   of   the   UK,   Italy,   Canada,   Norway,   and   Russia   and   the   Bill   &   Melinda   Gates   Foundation  have  provided  US$1.5  billion  to  this  pilot  AMC.     Some   of   the   criticisms   of   the   AMC   regard   its   cost   relative   to   alternative   models.   The   Meningitis  Vaccine  Program  (MVP)  has  been  cited  as  a  potentially  more  efficient  example,   since  this  worked  with  a  single  supplier  to  develop  a  cheap  vaccine.  Proponents  argue  that   donors   could  have  worked   with   a   single  supplier   to  set  up  a  binding  agreement,  resulting  in   lower   vaccine   prices.   While   a   binding   agreement   with   a   single   supplier   may   well   have   lowered   the   vaccine   price,   it   would   have   limited   vaccine   choice   by   countries   and   required   significant,   binding   financial   commitments   from   GAVI   up   front.   Other   criticisms   have   focused  on  the  fact  that  pneumococcal  vaccine  was  in  too  late  a  stage  to  effectively  test  the   mechanism,   which   is   more   appropriate   for   products   that   are   in   earlier   research   phases   (such  as  malaria  or  tuberculosis).  While  this  is  true  to  a  certain  extent  –  the  AMC  is  expected   to  have  an  impact  on  expanding  manufacturing  capacity  to  fit  the  global  need,  and  to  induce   manufacture  of  vaccine  presentations  relevant  for  low-­‐income  countries  as  well  –  the  AMC   may  also  provide  some  stimulus  to  local  manufacturers.         52           Key  benefits  of  AMCs     • Address   a   current   market   failure:   By   establishing   a   secure   market,   AMCs   create   incentives  for  investment  in  specific  vaccines  for  poor  countries.  In  this  way,  AMCs   will  mobilize  additional  private  resources  to  fight  poverty  and  global  diseases  even   before  donors  disburse  any  money.     • Stimulate  competition:  AMCs  are  open  to  all  firms.  Therefore,  they  can  be  designed   not   only   to   accelerate   the   development   of   new   and   effective   vaccines,   but   also   to   develop   second   and   possibly   even   third   generation   products   that   improve   on   the   first  and  ensure  a  competitive  market.       • Encourage   lower   vaccine   prices:   AMCs   can   also   provide   incentives   for   firms   to   invest   in   more   efficient,   large   volume   production   facilities,   thus   allowing   firms   to   incur  lower  costs  per  dose.      These  lower  costs  can  then  be  passed  on  through  the   provision  of  vaccines  at  lower  prices  in  the  long  term.   • Complement   a   range   of   interventions:   AMCs   are   particularly   effective   when   combined   with   push   interventions   such   as   the   public   and   philanthropic   funding   of   research   through   academia,   public-­‐private   partnerships,   and   other   bodies.   This   is   because   of   the   network   effects   of   the   increased   number   of   scientific   researchers   working   on   the   target   diseases,   as   well   as   the   enhanced   probability   that   scientific   research  will  swiftly  translate  into  the  production  of  effective  and  safe  vaccines.       53   Brief  18:  Innovative  Financing  –  Airline  Ticket  Tax     Since  2004,  a  group  of  countries  led  by  France  has  considered  implementing  an  additional   tax,   called   the   airline   solidarity   contribution,   to   existing   airline   taxes   in   order   to   generate   resources  for  global  health.  The  additional  airline  tax  is  not  a  global  tax  in  the  strict  sense  of   having   a   single   agreed-­‐upon   tax   and   a   global   authority   that   has   the   power   to   levy   it   and   allocate   proceeds.   Rather,   it   is   a   domestic   tax   that   participating   countries   have   agreed   to   coordinate   and   allocate   to   support   UNITAID,   an   International   Drug   Purchase   Facility   for   AIDS,   tuberculosis,   and   malaria.   To   date,   UNITAID   has   not   supported   vaccines,   although   the   current  malaria  vaccine  in  late  stage  development  may  provide  such  an  opportunity.     UNITAID   is   supported   mainly   (70%)   through   the   airline   ticket   tax,   though   a   total   of   29   countries   support   UNITAID.   It   is   particularly   unique   in   that   it   has   support   from   both   traditional   donor   countries   and   developing   countries   themselves.   Chile,   Côte   d’Ivoire,   France,   Republic   of   Korea,   Madagascar,   Mauritius,   and   Niger   apply   the   airline   tax   to   passengers.   Norway   allocates   part   of   its   tax   on   carbon   dioxide   emissions   from   fuel   to   UNITAID.   Additional   countries   aiming   to   introduce   an   airline   ticket   levy   include   Benin,   Burkina   Faso,   Cameroon,   Central   African   Republic,   Gabon,   Guinea,   Kenya,   Liberia,   Mali,   Morocco,  Namibia,  Senegal,  São  Tomé  and  Principe,  and  Togo.     The  airline  solidarity  contribution  is  an  innovative  attempt  to  gain  the  benefits  of  a  global   tax  (MassiveGood).  An  airline  tax  can  be  introduced  using  pre-­‐existing  airport  tax  systems,   with   relatively   low   implementation   costs   and   possibly   limited   negative   effects   on   the   industry.   The   tax   can   be   largely   ‘exported’,   for   example,   if   developing   countries   tax   only   international  first-­‐  and  business-­‐class   passengers.   Globally,   air   traffic   has   grown   historically   at  a  rate  of  about  8%  a  year,  so  it  can  become  a  consistent  and  growing  source  of  revenue   for   global   health.   UNITAID   has   also   worked   with   the   Clinton   Health   Access   Initiative   to   negotiate  lower  prices  for  HIV/AIDS  drugs.     Key  benefits  of  the  airline  tax     • Broad   participation:   By   gaining   participation   from   both   traditional   donors   and   developing  countries,  the  tax  expands  the  concept  of  development  assistance.     • Sustainable  financing:  Unlike  budget  allocations  that  are  typically  only  a  few  years  in   length,   and   can   be   stopped   when   the   donor   country   has   budgetary   constraints   or   the   government  changes,  the  airline  tax  is  a  dedicated  and  sustainable  source  of  funds.     • Leveraging   the   market:   Barring   massive   changes   in   air   travel,   the   ticket   tax   provides   a   predictable   source   of   funding   for   development   that   can   enable   UNITAID   to   negotiate   better  prices  for  drugs  and  diagnostics.   54   Brief  19:  Innovative  Financing  –  Results-­Based  Financing     Results-­‐based  financing  (RBF)  for  health  is  a  cash  payment  or  non-­‐monetary  transfer  that  is   made  to  a  provider,  manager,  or  consumer  as  an  incentive  to  deliver  or  use  priority  health   care  services.  Payment  is  made  conditional  on  measureable  actions  being  undertaken.  RBF   is   an   umbrella   term   that   includes:   pay-­‐for-­‐performance   contracts   with   health   care   providers;   output-­‐based   aid;   and   conditional   cash   transfers   and   other   demand-­‐side   schemes.  Payment  can  be  made  to   a  national  or  sub-­‐  national  government,  NGO,  manager,   health  care  provider,  payer,  or  consumer  of  health  services.     The   international   community   is   increasingly   focused   on   achieving   the   health   MDGs   within   the   next   five   years,   and   RBF   is   gaining   increasing   attention   as   a   strategy   to   scale-­‐up   provision  of  essential  child  and  maternal  health  services.  RBF  schemes  tie  financing  to  the   attainment   of  specific  results  or  targets.    It  therefore  offers  a  way  to  make  service  providers   more   accountable   and   also   provides   funding   agencies   with   a   clear   method   to   determine   the   impact   of   their   financing.   RBF   represents   a   shift   from   a   ‘business   as   usual’   approach   of   funding  inputs  of  health  services  such  as  medical  equipment  and  supplies,  pharmaceuticals   and   vaccines,   training,   vehicles,   and   buildings.   With   RBF,   the   funds   are   provided   as   an   incentive  to  produce  results.       Overall,  the  impact  of  RBF  on  health  outcomes  is  mixed.  Demand-­‐side  mechanisms,  such  as   conditional   cash   transfers   (CCTs)   which   link   household   payments   to   use   of   essential   child   health   and   education   activities,   have   been   associated   with   positive   health   outcomes.   One   study  showed  that  the  CCT  was  associated  with  increased  immunization  rates  in  Mexico  and   Nicaragua,   particularly   for   households   with   less   educated   mothers   and   those   situated   furthest  from  health  facilities.       The   results   of   supply-­‐side   interventions   are   less   clear,   and   in   some   cases   have   not   shown   improvement  in  health  outcomes.  In  Rwanda,  the  RBF  scheme  was  associated  with   positive   health   outcomes.   Interventions   such   as   performance-­‐based   payment   for   providers   are   harder   to   study   because   they   often   lack   a   fair   comparison:   what   would   have   happened   in   the  absence  of  the  scheme?  Implementation  of  supply-­‐side  mechanisms  is  dependent  upon   availability   of   quality   health   services,   which   may   be   a   constraint   in   low-­‐income   countries.   Weak   institutional   arrangements,   management   information,   and   monitoring   and   evaluation   systems   can   make   initiating   an   RBF   scheme   challenging.   In   addition,   the   cost   of   establishing   an   RBF   scheme   –   and   the   long-­‐term   financial   implications   of   the   scheme   –   needs   to   be   carefully  considered.       Country  experiences  of  results-­based  financing     Examples   of   RBF   schemes   include   the   pay-­‐for-­‐performance   contracts   between   the   Haitian   government   and   NGOs   providing   health   and   family   planning   services.   This   scheme   began   as   a  pilot  in  1999  with  the  support  of  USAID.  The  scheme  covers  approximately  2.7  million  of   the  population.  NGOs  are  contracted  to  provide  a  set  of  health  and  family  planning  services   and,   each   year,   pre-­‐defined   health   and   management   targets   are   established   against   which   performance   is   measured.   NGOs   lose   funding   if   they   do   not   achieve   their   performance   targets,  and  receive  a  bonus  payment  if  they  achieve  or  exceed  their  targets.     55   Plan  Nacer   in  Argentina  began  by  providing  basic  health  services  to  the  poorest  groups  in   the   poorest   provinces   in   the   north   of   Argentina   through   a   maternal   and   child   health   insurance  program.  Funding  was  provided  by  the  MOH  to  provincial  level  health  insurance   agents   on   the   basis   of   the   agents   achieving   enrolment   targets.   In   addition,   health   facilities   were  given  financial  incentives  upon  achievement  of  targets  on  10  tracer  conditions.     In  Rwanda,  a  broad-­‐based  RBF  scheme  was  put  in  place.  This  included  providing   financial   payments  to  participating  health  facilities  for  incremental  increases  in  the  quantity  of  basic   health  services  provided,  such  as  immunization,  prenatal  care,  and  assisted  deliveries.  The   overriding   goal   was   to   improve   the   utilization   of   health   services   by   motivating   providers   to   deliver   services.   Health   facilities   receive   payments   above   routine   budget   levels   based   on   achievement   of   pre-­‐defined   targets   for   both   the   quantity   and   quality   of   specific   services   achieved,  such  as  institutional  deliveries.       GAVI   employs   RBF   through   its   immunization   services   support   (ISS),   providing   countries   with  a  bonus  payment  per  additional  immunized  child  above  their  current  coverage  rates.   This   has   been   successful   in   raising   coverage   in   GAVI   countries.   In   addition,   immunization   coverage  rates  are  usually  one  of  the  target  indicators  against  which  provider  or  consumer   achievements  are  measured  and  payment  is  made.     Case  Study:  Results-­Based  Financing  in  Rwanda       Rwanda  is  one  of  the  pioneers  of  results-­‐based  financing.  RBF  was  adopted  as  a  national  policy  as  part   of   the   2005–09   National   Health   Strategic   Plan   and   subsequently   incorporated   into   the   National   Finance   Law.   The   Government   also   allowed   bonus   payments   to   staff   at   both   public   and   NGO   health   facilities   and   district   hospitals.   Under   the   scheme,   district   steering   committees   negotiate   3   types   of   performance   contracts:   those   between   the   Ministry   of   Health   and   the   30   administrative   districts;   performance   contracts   between   district   steering   committees   and   the   health   center   management   committees;   and   motivation  contracts  between  the  health  center  committees  and  individual  health  workers.     Sources   of   health   center   revenue   are   derived   from   government   funding   of   health   workers,   user   fees,   mutuelle   membership   fees,   donor   contributions,   and   payments   from   the   RBF   scheme.   (See   Brief   14:   Risk-­‐Pooling   Mechanisms,   for   a   discussion   of   the   mutuelle   approach.)   In   the   scheme,   facilities   are   reimbursed  for  the  quantity  of  services  provided  according  to  a  standardized  fee  structure  for  a  list  of   14   services   (including   immunization   services),   adjusted   by   a   quality   score.   Health   centers   can   raise   revenues  by  increasing  the  quantity  and  quality  of  these  services  delivered.  Bonus  payments  to  health   centers  are  calculated  as  follows:     RBF  earnings  per  facility  =  (fees  x  quantity  of  target  services  delivered)  x  (%  quality  score)     Quality   is   assessed   quarterly   by   the   district   hospital   team   examining   14   services   and   185   variables.   Scores  of  less  than  100%  discount  the  negotiated  payment  proportionately.  Validation  of  facility  reports   of  achievements  is  done  through  district  committees  and  transfers  are  made  directly  into  facility  bank   accounts.  The  staff  in  facilities  makes  decisions  about  the  use  of  the  funds:  directed  towards  improving   the   facility   or   salary   bonuses.   In   addition   to   provider-­‐based   incentives,   the   Rwandan   Government   provides  free  institutional  deliveries  to  women  who  participate  in  regular  antenatal  clinics.     During   the   period   of   the   scheme,   contraceptive   prevalence   increased   from   7%   to   28%,   and   assisted   deliveries  increased  from  29%  to  52%.  HIV  prevalence  and  malaria  incidence  declined.  Between  2005   and  2007,  under-­‐5  mortality  declined  from  198  to  103  per  1000  live  births,  and  immunization  (DTP3)   coverage   increased   from   83%   to   nearly   100%.   An   impact   evaluation   showed   that   the   RBF   was   associated  with  improved  health  outcomes,  such  as  weight  for  age  and  child  height.   56     Lessons  learned  in  results-­based  financing     The   development   and   implementation of RBF   schemes   can   be   complex.   As   in   the   case   of   health   insurance   schemes,   RBF   schemes   require   detailed   and   interlocking   systems   and   procedures:   financial   and   health   management   information   systems;   verification   mechanisms;   payment   mechanisms;   contracting   capacity;   quality   assurance;   and   fund   management  capacity,  among  others.  Based  on  a  review  of  RBF  mechanisms  supported  by   the  World  Bank  world-­‐wide,  the  following  lessons  have  been  learned:     Political   commitment   and   country   ownership   at   national   and   sub-­‐national   levels   are   essential  to  good  design,  effective  implementation,  and  sustainability  of  RBF  elements.     Involvement   of   all   relevant   stakeholders   in   the   design   of   the   RBF   scheme   helps   to   mitigate  resistance  and  facilitate  understanding  of  the  mechanism.     A   focused   and   gradual   approach   appears   useful   for   layering   reforms   and   facilitating   the   institutional   changes   required   to   create   the   right   environment   for   RBF   implementation.   However,   RBF   mechanisms   have   been   established   quickly   to   fulfill   needs  in  fragile  states  and  post-­‐conflict  environments.       Adequate   organizational   structures   and   institutional   capacity   are   key   for   RBF   mechanisms  to  work  well.     RBF  projects  need  to  focus  on   improving  quality  of  services  provided,   in  addition  to   increasing  overall  service  provision  and  utilization.      Selection   of   performance   indicators   is   critical.   Independent   validation   of   achievement   of   indicators   linked   to   performance-­‐based   contracts   is   necessary   to   mitigate  ‘gaming’  and  perverse  incentives  to  over-­‐report  results.     Adequate   and   appropriate   monitoring   and   evaluation   frameworks   are   critical   for   demonstrating  results  to  stakeholders  and  for  fostering  sustainability.                                 57   Table  19.1  Assessment  of  the  value  of  results-­based  financing  (RBF)  for  immunization   financing     Characteristic   Assessment   Predictable   The   amount   and   timing   of   resources   generated   depends   upon   achievement,   and   verification  of  achievement,  of  results.  RBF  may  be  less  of  a  predictable  source  of   financing  in  an  environment  where  achieving  results  is  challenging.   Additional  to   If   the   RBF   is   donor-­‐supported,   resources   can   be   additional   to   government   government   financing.   financing   Equitable   Unknown   at   present,   as   evidence   is   weak.   Financial   incentives   may   enhance   targeting  of  previously  underserved  populations.   Efficient   Because   of   the   focus   on   results   rather   than   paying   for   inputs,   this   mechanism   might   enhance   the   efficiency   of   service   delivery.   The   cost   and   cost-­‐effectiveness   of  these  mechanisms  both  need  to  be  evaluated.   Feasible   RBF  mechanisms  can  be  highly  complex  undertakings  which  require:  tracking  of   provision/use   of   the   quantity   and   quality   of   services   provided;   verification   of   achievements;   contracting   with   providers;   and   establishing   funds   flow   and   financial  management  mechanisms.   Sustainable   Sustainability   depends   upon   whether   there   are   adequate   resources   to   cover   the   cost   of   paying   households   for   use   of   services,   or   paying   providers   for   services   rendered.   Promotes  self-­‐ Depends   upon   whether   a   country   can   afford   the   long-­‐term   cost   of   the   financial   sufficiency   incentive.  Countries  may  feel  pride  in  –  and  ownership  of  –  their  RBF  mechanisms   and  this  may  enhance  self-­‐sufficiency.     Fosters  greater   RBF   mechanisms   require   verification   of   achievement   of   results   and   this   may   accountability   enhance  accountability.  However,  there  will  be  an  incentive  to  over-­‐state  results   which  may  lead  to  creative  ways  of  ‘gaming  the  system’.     Further  Reading       RBF  for  Health:    www.rbfhealth.org.     58     Brief  20:  Health  Systems  Strengthening  and  Immunization     What  are  health  systems?     Success   in   achieving   health   results   requires   a   well-­‐organized,   well-­‐financed   and   well-­‐ functioning   health   system   capable   of   responding   to   the   needs   of   the   population   in   an   equitable   manner.   Traditionally,   governments   and   donors   have   attempted   to   improve   service   delivery   by   investing   in   two   principal   areas:   increasing   the   availability   of   critical   inputs  (such  as  infrastructure,  equipment,  vehicles,  training,  supplies,  drugs,  and  vaccines);   and  building  household  knowledge  on  the  use  services  (through   information   and   education   strategies  designed  to  increase  access,  coverage,  and  quality  of  services).     Despite  significant  global  and  domestic  investments,  the  poor  often  have  unequal  access  to   health  services.    In  low-­‐  and  middle-­‐income  countries,  the  quality  of  services  is  low,  service   delivery  is  inefficient,  management  capacity  is  weak,  and  households  face  impoverishment   due  to  limited  financial  protection.       The   WHO   has   identified   six   building   blocks   or   elements   of   a   health   system:   good,   quality   service   delivery;   a   well-­‐performing   health   workforce;   a   functioning   health   information   system;   availability   of   drugs,   medicines,   and   supplies;   good   governance;   and   health   systems   financing.   In   addition   to   these   building   blocks,   there   are   several   critical   functions   undertaken   within   a   health   system   that   affect   performance   and   these   can   be   described   by   a   framework   of   ‘control   knobs’   in   which   financing,   payment,   organization,   regulation,   and   behavior  are  incorporated.       Figure    20.1  Control  knob  framework         Source:   Adapted   from   Figure   2.2   in   Roberts,   Hsiao,   Berman   and   Reich,                             “Getting  Health  Reform  Right”,  2008.   59           Investing  in  health  systems  to  achieve  immunization  goals     Investment  in  critical  inputs,  together  with  careful  planning  and  resource  mobilization,  has   contributed   to   achieving   immunization   program   goals.   However,   reaching   and   sustaining   universal   coverage   requires   good   integration   with   the   broader   health   system,   and   investments  in  those  systems  to  support  immunization  outcomes.  Health  care  workers  need   to   be   retained   in   rural   areas   and   they   need   to   receive   appropriate   support   and   incentives   in   order   to   do   their   job   well.   Appropriate   supply   chain   management,   warehousing,   and   distribution   of   vaccines   and   supplies   need   to   function   without   interruption.   Effective   management  and  information  systems  are  also  integral  to  immunization  service  delivery.       Between  1995  and  2006,  there  was  a  substantial  increase  in  public  financing  for  health  from   domestic   sources,   in   low   income   countries,   from   approximately   $8   billion   to   $18   billion   per   year.   Domestic   (government)   financing   for   health   is   much   higher   than   development   assistance,   which   topped   $5   billion   in   2006.   12   Nevertheless,   there   has   been   renewed   interest   in   development   support   for   health   systems.     In   2005,   the   GAVI   Alliance   Board   opened  a  $500  million  window  of  cash  support  for  health  systems  strengthening  (HSS)     ,  to   help   countries   overcome   institutional   bottlenecks   and   barriers   to   service   delivery.    An   additional   US$300   million   was   added   to   the   HSS   window   in   2008.   Since   2006,   more   than   US$568  million  has  been  committed  to  GAVI-­‐eligible  countries  for  HSS.       The   GAVI   Alliance   encouraged   countries   to   use   HSS   funding   to   address   bottlenecks   in   a   number  of  areas:     • Health  workforce  mobilization  and  distribution   • Providing  incentives  to  health  personnel  engaged  in  immunization  and  other  health   services  at  the  district  level  and  below   • Organization   and   management   of   health   services   at   the   district   level   and   below   (including  financial  management)   • Supply,   distribution,   and   maintenance   systems   for   drugs,   equipment,   and   infrastructure  for  primary  health  care     The  importance  of  better  coordination  of  HSS  investments       The   total   donor   investment   in   health   systems   strengthening   is   difficult   to   quantify.   The   World  Bank  recently  reported  new  lending  of  over  US$4  billion  in  2010,  but  not  all  of  this   was  in  the  area  of  HSS.  Other  UN  agencies,  and  bilateral  agencies  such  as  USAID  and  DFID,   support   some   aspect   of   health   system   strengthening,   as   do   the   Global   Fund   and   GAVI.   Estimates   suggest   that   an   additional   US$10   billion   is   needed   each   year   to   tackle   health   systems  and  the  health  MDGs.   12  C.  Lu,  M.T.  Schneider,  P.  Gubbins,  K.  Leach-­‐Kemon,  D.  Jamison,  and  C.J.L.  Murray.  2010.  “Public   Financing  of  Health  in  Developing  Countries:  A  Cross-­‐National  Systematic  Analysis.”  The  Lancet  375:   1375–87.   60     In   2009,   at   the   recommendation   of   the   High   Level   Taskforce   on   Innovative   International   Financing  for  Health  Systems  (HLTF),  the  Health  Systems  Funding  Platform  was  established.   The  task  of  the  Platform   is  to  use  new  and  existing  funds  for  health  systems  strengthening   more   effectively,   and   to   leverage   additional   funding   for   HSS   to   help   achieve   better   health   results   for   MDGs   4,   5   and   6.   The   process   will   be   led   by   countries   and   supported   by   their   partners.  The  Platform  supports  three  vital  elements  at  country-­‐level:         • One   national   health   plan,   including   identification   of   necessary   technical   support   needs   • One  financial  management  and  procurement  arrangement,  with  shared  audit   • One   performance   assessment   framework,   one   shared   annual   report   linked   to   a   joint   annual  review  and  aligned  with  national  cycles,  and  one  monitoring  and  evaluation   (M&E)  system.     A   key   characteristic   of   the   Health   Systems   Funding   Platform   is   that   donor   funds,   whether   provided   through   bilateral   or   multilateral   mechanisms   at   the   country   level,   global   health   initiatives,  or  innovative  financing  mechanisms,  will  be  allocated  based  on  a  single  national   results-­‐based   strategy   to   tackle   MDG   4,   5   and   6   through   HSS.  Funds  will  be  subjected  to  a   common,  annual  monitoring  and  evaluation  framework  and  a  collective  tracking  system  of   donor   and   domestic   financing   that   flows   through   the   Health   Systems   Funding   Platform.   The   principles  underlying  the  Platform  are  those  of  the  International  Health  Partnership  (IHP+).     With   these   criteria   firmly   in   place,   the   new   Platform   will   improve   harmonization,   significantly   reduce   transaction   costs   for   countries,   and   provide   incentives   for   comprehensive   HSS   planning   and   implementation   in   support   of   greater   progress   towards   achieving  the  health  MDGs.  With  input  from  the  WHO  and  other  partners,   GAVI,  the  Global   Fund   (GF),   and   the   World   Bank   will   coordinate   their   existing   HSS   resources   towards   this   effort.     An   additional   US$1   billion   has   been   pledged   by   Norad,   AusAID   and   the   United   Kingdom   through   an   expanded   IFFIm.   (See   Brief   16:   Innovative   Financing   –   The   International  Finance  Facility  for  Immunization  (IFFIm).)     Further  Reading       World  Health  Organization  (Health  Systems  Topics):   http://www.who.int/healthsystems/topics/en/index.html   World  Bank  Institute  (Health  Systems):   http://wbi.worldbank.org/wbi/about/topics/health-­‐systems   Roberts,  M.,  W.  Hsiao,  P.  Berman,    and  M.  Reich.  Getting  Health  Reform  Right:  A  Guide  to   Improving  Performance  and  Equity.  Oxford:  Oxford  University  Press,  2008.       61   Brief  21:    Working  with  Parliamentarians     What  do  parliamentarians  do?     Parliaments   play   three   fundamental   roles:   oversight,   representation,   and   legislation.       All   three   are   important   for   immunization   financing.   As   overseers   of   government,   parliaments   scrutinize  program  and  budget  performance.         Oversight:   In   practice,   most   oversight   activities   center   on   examining   and   approving   the   government’s   proposed   annual   budget.   Parliament   approves   all   revenue   collection  and  budgets  put  forward  by  the  executive.       Representation:   As   representatives,   members   of   parliament   (MPs)   look   after   the   interests  of  their  constituents.  They  frequently  travel  to  their  respective  jurisdictions   where  they  periodically  stand  for  election.  In  most  countries,  ordinary  citizens  know   little   about   their   parliaments.   Their   expectations   of   government   in   general   are   low   due  to  historical,  cultural,  and  other  factors.       Legislation:   As   legislators,   MPs   can   introduce   new   bills   or   propose   amendments   to   existing  bills.  Most  bills,  such  as  the  annual  budget,  are  introduced  by  government.    No   bill,   however,   can   become   law   without   parliament’s   approval.   Parliaments   sometimes   adopt  declarations  and  resolutions  which  may  act  as  milestones  to  eventual  laws.  An   example   is   the   2010   Kathmandu   Resolution,   in   which   the   Parliament   of   Nepal   expresses  its  support  for  the  sustainable  immunization  goal.       How  do  parliaments  work?     Parliaments   do   most   of   their   work   through   committees.   Parliamentary   committees   often   ‘shadow’   particular   ministries.   For   immunization   and   other   essential   health   programs   the   key   permanent   committees   are   usually   budget,   finance,   and   health.   Health   is   sometimes   subsumed  under  social  affairs  or  social  welfare  or  grouped  with  women  and  youth,  or  labor.     A   well-­‐functioning   committee   will   review   and   approve   budgets   and   maintain   contact   with   its  highest-­‐level  executive  branch  counterparts,  usually  permanent  secretaries.  Committees   receive  at  least  quarterly  performance  reports  from  the  particular  ministries  and  programs   they   oversee,   and   will   hear   from   outside   experts   on   substantive   issues.   Committees   may   also   conduct   field   investigations.   There   is   a   trend   towards   more   active   committee   oversight   of  actual  program  implementation  although  this  depends  upon  the  resources  available.     Key   committees   and   individual   MPs   are   supported   by   secretariat   staff.     Though   not   generally  technically  qualified,  the  secretariat  is  keenly  aware  of  important  issues  and  acts   as   the   institution’s   memory.   Key   staffers   schedule   the   MPs’   workloads,   ensure   that   they   receive  background  documents  and  sometimes  schedule  witnesses  for  committee  hearings.   All   updates   and   communications   to   MPs   should   be   copied   to   their   respective   secretariat   staff.         62     How  and  when  to  engage  parliamentarians     Parliamentarians  have  a  perpetual  need  to  know  –  about  policy,  government  performance,   and   conditions   in   their   respective   districts.   Much   of   the   information   they   receive   comes   from   the   government   ministries   they   oversee.   Other   sources   include   public   hearings,   contacts  with  constituents,  lobbyists  and  colleagues,  and  occasional  international  exchanges   and   fact-­‐finding   missions.   All   of   these   mechanisms   can   be   used   to   inform   them   about   immunization  financing  and  other  health  issues.         Three  metrics  determine  the  best  times  to  engage  MPs:  the  budget  cycle,  parliament’s  own   schedule,   and   the   electoral   calendar.   Although   parliaments   are   not   always   in   session,   committee   leaders   and   parliamentary   secretariats   are   usually   accessible   year   round.     Committees  only  meet  when  parliament  is  in  session.    At  various  times  during  a  session,  the   committee   chairperson   reports   on   the   committee’s   work   to   the   full   parliament.   Parliamentary  briefings  should  be  timed  with  these  dates  in  mind.     MPs   exchange   experiences,   strengthen   capacities   and   elaborate   global   policy   statements   through   a   growing   array   of   international   parliamentary   institutions.   Advocacy   work   with   these  inter-­‐parliamentary  institutions  is  essential.  At  its  July  2010   summit,  for  instance,  the   Pan   African   Parliament   (PAP)   adopted   a   resolution   in   support   of   the   African   Union   Campaign   for   Accelerated   Reduction   of   Maternal   Mortality   in   Africa   (CARMMA).   The   PAP   will   work   with   national   parliaments   and   other   stakeholders   towards   implementation   of   policy  and  budget  support  for  this  initiative.       Every  MP  wishes  to  keep  constituents  informed  about  what  government  does  for  them,  for   example,   how   well   it   delivers   immunization   and   other   public   health   programs.     As   part   of   their  oversight  role,  MPs  should  be  invited  to  participate  in  immunization-­‐related  district-­‐   or  community-­‐level  events  in  their  jurisdictions.    Efforts  should  be  made  to  publicly  praise   any  MP  who  champions  immunization  and  other  essential  health  programs.         Parliamentarians   are   busy   people.   As   their   elections   approach   they   are   even   harder   to   reach,   but   their   need   for   timely   and   accurate   information   increases.   Whenever   possible,   important   immunization-­‐related   events   should   be   scheduled   well   before   or   after   parliamentary   elections.   If   this   is   not   possible,   a   key   MP   should   nevertheless   be   invited,   particularly  if  the  event  is  in  that  MP’s  jurisdiction.     Experience  of  working  with  parliamentarians  for  immunization  financing     Over   the   past   year,   the   Sabin   Vaccine   Institute’s   Sustainable   Immunization   Financing   Program   has   organized   19   national   briefings   for   parliamentarians   in   11   pilot   countries.   The   Program   also   arranges   peer   exchanges   among   the   countries.   In   these   activities,   MPs   are   updated  on  national  immunization  program  operations  and  financing.  They  learn  about  the   economics   of   immunization   and   see   what   other   countries   are   doing.   The   Program   strives   to   strengthen   links   among   three   national   institutions:   ministry   of   health,   ministry   of   finance,   and   parliament.   Immunization   is   presented   as   an   applied   case   study   for   health   sector   financing  requiring  inter-­‐sectoral  solutions.       63   These   advocacy   activities   are   already   having   an   impact.   In   Sierra   Leone,   Nepal,   Senegal,   and   DR  Congo,  MPs  successfully  argued  for  larger  health  budgets  during  2010  budget  hearings.   Immunization   budgets   correspondingly   increased.   In   DR   Congo   and   Sierra   Leone,   MPs   induced  governments  to  release  delayed  GAVI  co-­‐payments  totalling  nearly   US$2  million.  In   Cameroon,   as   part   of   the   country’s   recently   launched   decentralization   program,   MPs   are   working  with  sub-­‐national  elected  officials  (maires)  to  form  regional  immunization  budgets.   They   have   recommended   the   creation   of   a   national   immunization   fund   to   be   financed   by   federal  and  district  revenues.                 Table   21.1   Assessment   of   the   value   of   working   with   parliamentarians   for   immunization  financing   Characteristic   Assessment   Predictable   Parliament   must   review   and   approve   proposed   government   budgets   annually.   Committee  membership  may  change  year-­‐to-­‐year,  necessitating  regular  briefings   for  key  committees  to  ensure  adequate  and  predictable  funding.     Additional  to   Advocacy   messages   educate   parliamentarians   on   the   need   for   an   adequate   government   immunization   budget.   If   the   government   share   is   less   than   100%   of   need,   financing   additional  government  funding  would  be  expected.     Equitable   Since  resources  are  allocated  through  government  processes,  this  would  depend   upon   how   well   the   resources   are   targeted   to   particular   groups.   Based   on   the   information   received   through   advocacy   efforts,   parliamentarians   might   improve   equity  by  ensuring  that  services  reach  all  areas  of  their  constituencies.     Feasible   This   approach   is   feasible   but   requires   preparation   of   evidence   for   policy   dialogue   and  advocacy.   Efficient   Lobbying  efforts  with  parliamentarians  can  be  time-­‐consuming  and  they  require   effort.    However,  there  could  be  big  pay-­‐offs.  Since  funding  would  come  through   usual  government  channels,  efficiency  of  disbursement  would  be  related  to  public   expenditure  management  practices.   Sustainable   Financing  from  additional  allocations  approved  by  parliaments  could  be  either  a   one-­‐time  event  or  a  long-­‐term  commitment,  depending  upon  the  country  and  the   context.   Promotes  self-­‐ Working  with  parliamentarians  to  increase  immunization  financing  can  improve   sufficiency   parliamentary   capacity   for   budget   review,   oversight,   and   health   legislation.   Added  parliamentary  involvement  lessens  the  need  for  external  expertise.  .   Fosters  greater   As   funding   would   be   channelled   through   government   systems,   accountability   accountability   would   be   the   same   as   it   is   in   the   case   of   general   tax   resources.   However,   if   parliamentarians  are  concerned  about  the  results  of  these  additional  investments,   there  could  be  greater  incentives  for  accountability  and  reporting.     Further  Reading       Hudson,  A.  and  C.  Wren.  “Parliamentary  Strengthening  in  Developing  Countries:  Final   Report  for  DFID.”  London:  Overseas  Development  Institute,  2007.   http://www.odi.org.uk/pppg/politics_and_governance/publications/ah_Parliamentary_stre ngthening.pdf   Africa  All  Party  Parliamentary  Group.  “Strengthening  Parliaments  in  Africa:  Improving   Support.”Unpublished  Report,  2008.   http://siteresources.worldbank.org/EXTPARLIAMENTARIANS/Resources/Strengthening-­‐ Parliaments-­‐in-­‐Africa.pdf   64   Brief  22:  Comparison  of  Immunization  Financing  Options     Making  decisions  on  the  best  strategies  for  immunization  financing  is  not  easy.  This  set  of   briefs  has  provided  a  short  overview  of  the  main  types  of  financing  mechanisms  available  to   program   managers   and   policy-­‐makers.   It   is   intended   as   a   reference   and   tool.   The   mechanisms  vary  in  their  utility  depending  upon  the  context  in  which  they  are  implemented   and   the   decisions   made   around   their   use.   In   practice,   national   governments   will   want   to   employ   several   complementary   strategies.   A   range   of   country   conditions   will   affect   decisions  about  financing  mechanisms.  Some  of  these  are  listed  below.     The   health   sector   context:   How   does   immunization   fit   within   other   priorities   for   the   health  sector  that  the  government  has  identified?  How  adequately  are  these  other  priorities   funded?   What   is   the   balance   between   preventive   and   curative   services?   Will   EPI   investments   help   strengthen   health   systems?   How   strong   is   the   health   system?   Are   there   significant  barriers  within  the  system  that  need  to  be  resolved?  Considering  the  answers  to   these  questions  will  enable  governments  to  properly  consider  the  best  types  of  mechanism   for  their  program  –  and  which  criteria  are  most  important  to  examine.     Financial   management   and   accounting:   Is   the   financial   system   transparent   and   accountable?  Is  it  possible  to  track  funding  flows  in  a  timely  manner?  Are  systems  reliable?   Can   immunization   be   used   as   a   case   study   for   improving   financial   management   practices?   These   types   of   issues   will   be   important   in   considering   which   types   of   tools   will   be   most   suitable.     Macroeconomic   context:   The   national   income   level   determines   the   eligibility   for   various   funding  mechanisms,  such  as  IDA  from  the  World  Bank  and  the  GAVI  Alliance.  The  degree  of   indebtedness  can  affect  the  impact  of  debt  relief  as  well  as  the  feasibility  of  taking  additional   loans.  The  potential  for  economic  growth  affects  the  potential  for  the  resource  base  through   taxes   to   grow   over   time.   In   addition,   the   overall   stability   of   the   country   is   going   to   affect   the   balance  of  different  funding  mechanisms  and  the  capacity  for  self-­‐sufficiency  over  time.     Relationship   with   donors:   The   historical   and   current   relationship   with   bilateral   donors,   regional   and   global   development   banks,   and   other   multilateral   organizations   and   NGOs   will   impact   the   potential   for   pursuing   some   of   the   different   funding   opportunities.   Can   government  and  parliament  work  together  to  sustainably  finance  immunization  and  other   key  health  programs?  If  so,  this  will  lessen  donor  dependency.       The   purpose   of   this   Toolkit   is   not   to   be   proscriptive   or   to   recommend   which   mechanisms   are   the   most   suitable.   However,   the   table   below   can   serve   as   a   rough   guide   by   summarizing   the  various  options  presented.    The  table  uses  ‘Y’  and  ‘N’  to  indicate  how  particular  options   stand   up   to   the   eight   characteristics   that   we   have   been   using   throughout   the   briefs:   predictable;   additional   to   government   funding;   equitable,   feasible;   efficient;   sustainable;   promotes  self-­‐sufficiency,;  and  fosters  greater  accountability.    A  ‘0’  indicates  a  neutral  score.   A  ‘D’  indicates  that  the  outcome  depends  upon  how  the  mechanism  is  structured  or  whether   the   existing  system  has   the   conditions   necessary   to   meet  the   criteria   once   the   mechanism  is   in  place.  A  question  mark  ‘?’  is  used  when  the  evidence  is  mixed  and  ‘N/A’  indicates  that  the   question  is  not  applicable.       65   Table  22.1  Comparison  of  immunization  financing  options     Immunization   Predictable   Additional   Equitable   Feasible   Efficient   Sustain-­ Promotes   Fosters   Financing   to   able   Self-­ Account-­   Option   Government   sufficiency   ability     Funding   General   D   N/A   D   Y   D   Y   Y   D   revenues  (taxes)     Risk  Pooling   Y   Y   Y   N   D   D   D   Y   User  Fees   D   Y   N   Y   N   D   ?   Y   Trust  Funds     Y   Y   D   N   N   Y   Y   Y   Other   Innovative   D   Y   D   Y   Y   D   Y   Y   Financing   Mechanisms   Project   N   Y   D   Y   ?   N   N   N   Assistance   Development   Y   Y   D   Y   N   Y   Y   Y   Loans     Budget  Support   Y   Y   D   N   Y   Y   Y   Y   Debt  Relief   Y   Y   D   N   Y   Y   Y   Y   Pooled   Y   D   Y   Y   Y   D   Y   Y   procurement   Vaccine   Y   N   Y   Y   0   Y   Y   Y   Independence   Initiative   Results-­‐based   D   D   ?   N   Y   ?   Y   Y   Financing   Working   with   D   Y   D   Y   0   D   Y   D   Parliamentarians     This  table  suggests  that  the  impact  of  an  immunization  financing  option  on  equity  depends   upon  how  it  is  designed  and  how  funds  are  allocated  and  channelled.  Many  of  the  financing   options  promote  self-­‐sufficiency  and  accountability.  The  extent  to  which  a  financing  option   is  sustainable  will  depend  upon  how  it  is  designed  and  implemented,  and  how  it  is  situated   within   the   mix   of   financing   of   the   health   sector.   Most   of   the   financial   options   considered   were   additional   to   current   government   funding   (except   for   general   revenues   and   the   VII).   There  is  a  mixed  picture  on  whether  options  contribute  to  efficiency:  many  options  may  add   transaction  or  administrative  costs,  while  at  the  same  time  being  a  more  effective  channel   for  immunization  financing.     National  immunization  managers  and  policy-­‐makers  are  encouraged  to  consider  a  range  of   immunization   financing   options   and   to   identify   the   best   mix   of   options   for   the   national   program.   Identifying   the   best   options   will   require   making   tradeoffs   among   the   potential   effects  and  characteristics  of  the  options.     Further  Reading       Kamaral,   L.,   J.   Milstein,   M.   Patyna,   P.   Lydon,   A.   Levin,   and   L.   Brenzel.   2008.   “Strategies   for   Financial   Sustainability   of   Immunization   Programs:   A   Review   of   the   Strategies   from   50   National  Immunization  Program  Financial  Sustainability  Plans.”  Vaccine  (26):  6717-­‐6726.       GAVI   Alliance.   “Financial   Sustainability   for   Immunisation   in   the   Poorest   Countries:   Lessons   from  GAVI  2000-­‐2006.”     http://www.who.int/immunization_financing/analysis/fctc_report_web_simple_pages.pdf 66   Appendix:  Additional  Information:  Estimating  Cold  Chain   Requirements   Logistics   is   central   to   a   well-­‐functioning   national   immunization   program   (NIP).   The   key   areas   of   logistics   support   include   vaccine   management   and   monitoring,   cold   chain   management,  and  immunization  safety.  Logistics  ensures  that  vaccines  are  available  at  the   right  time,  in  the  correct  amount,  and  in  the  correct  condition.  Timely  availability  requires   timely   demand   forecasts,   transport,   and   delivery.   Estimating   and   delivering   the   correct   amount  involves  proper  demand  forecasts  and  communication  within  the  country.  Ensuring   that   vaccines   are   received   in   the   correct   condition   requires   ensuring   cold   chain.   Taken   together,   these   elements   can   save   programme   costs   and   ensure   efficient   implementation   without  compromising  the  quality  of  service  delivery.  A  poorly  functioning  logistics  system   can   result   in   unnecessary   vaccine   wastage   rates,   stock-­‐outs,   or   improper   management   of   waste,   thus   driving   up   immunization   program   costs   and   potentially   reducing   the   number   of   immunized  children.     What  does  cold  chain  encompass?   The   cold   chain   refers   to   the   storage   and   transportation   of   vaccines   at   recommended   temperatures   from   the   manufacturing   location   to   where   they   will   be   used.   An   effective   cold   chain  ensures  that  vaccines  will  remain  effective  and  usable  when  they  are  administered  to   children   and   their   mothers.   Cold   chain   includes   staff   to   manage   the   vaccine   distribution,   equipment  for  vaccine  storage  and  transport  (i.e.,  fridges),  maintenance  of  that  equipment,   and  effective  monitoring  of  the  system.     Cold   chain   needs   are   changing   with   the   introduction   of   new   vaccines   that   often   require   large   volumes   of   storage   space.   This   factor   is   often   overlooked   or   under-­‐budgeted   by   national   immunization   programs,   and   could   compromise   the   efficacy   of   new   vaccines   and   lead   to   high   wastage   costs.   Evaluating   cold   chain   requirements   may   help   governments   determine  which  types  of  vaccines  to  introduce  based  on  cost  and  affordability  criteria.     A   number   of   issues   need   to   be   taken   into   account   when   considering   cold   chain   requirements  for  new  vaccines.  They  include:     • Storage  conditions  (temperatures,  Vaccine  Vial  Monitor  (VVM))   • Presentation  (prefilled  device,  single-­‐/multi-­‐dose  vials)   • Packaging  (particularly  the  volume  of  packaging)   • Cost  per  dose     Determining  vaccine  volumes   The   vaccine   volume   per   child   is   determined   by   the   packed   volume   (bearing   in   mind   that   vaccines  are  stored  in  secondary  packaging)  multiplied  by  the  number  of  doses,  multiplied   by   a   wastage   factor.   The   package   volumes   and   wastage   rates   can   vary   significantly,   with   larger   volume   vials   generating   higher   wastage   rates.   On   the   other   hand,   with   larger   vial   sizes,  the  cost  of  cold  chain  storage  per  dose  drops  dramatically.       67   Parameters  Needed  to  Estimate  Cold  Chain  Storage  Requirements     The   following   information   is   useful   in   estimating   cold   chain   requirements   and  comes  from  the  UNICEF  Supply  Division.     Example  calculation   A   single-­‐dose   vial   vaccine   that   requires   three   doses   per   child   on   the   EPI   schedule   would   total   40.64   cm3   per   child   (12.9   cm3   x   3   doses   x   1.05   wastage).                                Table  A.1  Vaccine  volume  reference     Presentation   Maximum  Packed  Volumes   Pre-­‐filled  (PF)  syringe   60.0  cm3/dose   Compact  PF  device   11.0  cm3/dose   Single-­‐dose  vial   12.9  cm3/dose   2-­‐6  dose  vial   6.0  cm3/dose   10-­‐dose  vial   3.0  cm3/dose   20-­‐dose  vial   2.5  cm3/dose     50-­‐dose  vial   1.5  cm3/dose                                                        Table  A.2  Vaccine  wastage  rates  for  cold  chain  requirement  calculations                                                     Vial  Size Presentation Lyophilized   Liquid  Vaccines   Vaccines   20  doses   50%   -­‐   10  doses   40%   25%   2  doses   -­‐   10%   1  dose   -­‐   5%       Determining  country  readiness   The  introduction  of  new  vaccines  is  placing  significant  pressure  on  the  cold  chain.  Analysis   by   UNICEF   shows   that   the   volume   per   child   will   triple   to   180   cm3   with   rotavirus,   pneumococcal,   and   pentavalent   vaccines   added   to   the   schedule.   This   is   compared   with   only   60  cm3  before  their  introduction.   Many  countries   currently  face  challenges  in   increasing  the   capacity  of  their  existing  cold  chain  in  order  to  accommodate  the  pentavalent  vaccine.  The   introduction   of   pneumococcal   and   rotavirus   vaccines   will   require   further   significant   investment   in   the   cold   chain,   from   central   storage   facilities   to   vaccine   carriers   used   by   health  workers.  Given  the  relatively  high  cost  per  dose  of  these  new  vaccines,  there  is  a  need   to  minimize  vaccine  wastage.  The  current  WHO  Open  Vial  Policy,  which  encourages  opening   vaccine   vials   even   to   immunize   one   child,   may   be   associated   with   high   vaccine   wastage   if   vial  sizes  are  large.  Therefore,  it  is  likely  that  new  vaccines  will  be  introduced  in  smaller  vial   68   sizes   (1-­‐   or   2-­‐dose   vials)   to   minimize   wastage   and   associated   costs.   This   will   require   investment  in  additional  cold  chain  storage  capacity.  Recent  analysis  suggests  that  only  51%   of  countries  analyzed  had  sufficient  capacity  for  both  rotavirus  and  pneumococcal  vaccine   introduction.   Of   the   remaining   countries,   34%   could   introduce   1   of   the   2   vaccines,   and   29%   could  not  introduce  either  vaccine.     Estimating  costs   There  are  a  number  of  tools  available  to  policy-­‐makers  and  immunization  managers  seeking   to  determine  the  state  of  their  cold  chain.  A  logistics  and  planning  tool  has  been  developed   by   WHO   to   guide   governments   in   understanding   the   issues   around   vaccine   management,   including  cold  chain.  In  addition,  a  specific  tool  to  calculate  vaccine  volumes  is  available  as   an   Excel   spreadsheet.   Fixing   the   current   gap   in   cold   chain   can   be   achieved   in   one   of   two   ways:   through   complementing   existing   facilities   (lower   cost)   or   rebuilding   the   stores   (higher   cost).   The   cost   of   rehabilitating   the   existing   vaccine   stores   is   a   relatively   modest   US$1.3   per   child.   In   total,   across   the   countries   analyzed   in   WHO   regions,   the   full   investment   required   to   rebuild   (acquire   new   stores)   is   just   under   US$100   million;   the   investment   required  to  complement  existing  facilities  is  US$19.2  million.      Case  Study:  Estimating  Cold  Chain  Requirements  for  Pakistan     A  recent  study  in  Pakistan  compared  the  relative  cost-­‐effectiveness  of  Hib,  pneumococcal,  and   rotavirus  vaccines  and  undertook  an  analysis  of  the  fiscal  implications  of  introducing  these  new   vaccines.  The  assessment  of  the  financial  implications  included  an  analysis  of  the  cold  chain   requirements  associated  with  each  new  vaccine,  particularly  the  rotavirus  vaccine  which  is  much   more  bulky  than  others.       Across  different  scenarios,  investments  in  cold  chain  development  and  maintenance  were  found   to  be  highly  efficient  in  Pakistan.  For  the  pentavalent  vaccine  alone,  an  initial  investment  of  about   US$300,000,  followed  by  US$50-­‐100,000  per  year,  would  reduce  wastage  from  10%  to  5%  and   result  in  annual  cost  savings  of  around  US$2  million.  With  the  introduction  of  additional  new,   more  costly  vaccines,  savings  from  reduced  wastage  would  be  even  greater.  Whatever  decisions   are  made  about  adding  new  vaccines  to  the  program,  the  cold  chain  investments  required  would   remain  well  under  US$1  million  per  year  and,  in  most  years,  under  US$500,000.  This  is  small  in   comparison  with  the  commitments  involved  in  vaccine  purchase  that  during  the  co-­‐financing   period,  are  of  the  order  of  US$10-­‐20  million.  The  case  for  investment  in  cold  chain  infrastructure   is,  therefore,  very  clear.     As  new  fridges  have  been  developed  and  prequalified  for  use  in  the  cold  chain,  the  emphasis   has  often  been  on  small  fridges  that  can  be  deployed  to  small  health  centers  such  as  those   that   work   on   solar   power   or   absorption.   However,   with   the   increasing   volumes   of   new   vaccines,  this  trend  needs  to  be  reversed:  larger  machines  for  cold  chain  need  to  be  rolled   out   ,   in   country,   to   support   the   transport   and   delivery   of   the   new   vaccines.   In   the   longer   term,   more   radical   changes   such   as   re-­‐designing   the   supply   chain,   creating   mobile   69   warehouses,   or   alternatives   to   cold   storage   will   need   to   be   considered.   These   are   options   currently  being  explored  by  Optimize,  a  joint  WHO/PATH  project.  This  project  is  looking  at   creating   a   more   flexible   and   robust   cold   chain   for   the   future,   and   is   carrying   out   demonstration   projects   in   several   countries.   Its   efforts   should   provide   information   for   countries  considering  how  to  modify  their  cold  chain  effectively  for  the  future.   70     List  of  Abbreviations     ADB Asian Development Bank AfDB African Development Bank AfDF African Development Fund AFRO WHO African Region AMC An Advanced Market Commitment provides a commitment to purchase a vaccine at a certain price if it meets certain specifications and is demanded by developing countries. AusAID Australian Agency for International Development BEAC Bank of Central African States BCG Bacillus-Calmet Guerrin vaccine for tuberculosis C2D French bilateral debt relief program operating within the HIPC Initiative CARE A leading humanitarian agency fighting global poverty CARMMA Campaign for Accelerated Reduction of Maternal and Child Health in Africa CCS/PPTE Comité Consultatif et de Suivi de la Gestion des Ressources PPTE’, an independent consultative committee for allocation and tracking of the HIPC Initiative in Cameroon CCSS Costa Rican Social Security Administration cMYP Comprehensive Multi-Year Plan which sets out a 3-5 year budget and plan for the immunization system Co-payment Used by GAVI as part of its efforts towards financial sustainability. Countries are requested to provide a small co- payment of no more than US$0.30 per dose currently, depending on their income and the grouping into which they fall. DFID United Kingdom Department for International Development DPL Development Project Lending DPO Development Policy Operations DTP3 Diphtheria-Tetanus-Pertussis vaccine (third dose) EMRO WHO Eastern Mediterranean Region EPI Expanded Program on Immunization EURO WHO European Region FSP A country-level Financial Sustainability Plan that preceded the cMYP and was used by GAVI as a mechanism for countries to set out how they would support the costs of new vaccines. G8 Group of Eight Industrialized Nations – France, Germany, Italy, Japan, the United Kingdom, the United States of America, Canada, and Russia. GAVI GAVI Alliance (formerly the Global Alliance for Vaccines and Immunization) 71   GF Global Fund for HIV/AIDS, TB and Malaria GIVS Global Immunization Vision and Strategy GNI Gross National Income GNP Gross National Product Hib Haemophilus Influenza type b vaccine HIPC Initiative The Heavily Indebted Poor Countries Initiative was launched jointly by the World Bank and the IMF to provide debt relief (although not complete relief) to eligible countries HLTF High Level Task Force for International Innovative Financing HSS Health systems strengthening. A broad based support for strengthening health systems to reduce challenges, where these present a bottleneck for delivering better immunization services. IADB Inter-American Development Bank IBRD International Bank for Reconstruction and Development IDA International Development Assistance IFFIm The International Financing Facility for Immunisation borrows in the capital markets, based on long-term pledges from donors, in order to frontload resources for immunization. IHP+ International Health Partnership+ IMF International Monetary Fund ISS Immunization Services Strengthening. Provided as a payment, by GAVI, of US$20 per additional child immunized in order to support the strengthening of the immunization system. JFA Joint Financing Agreement or Joint Financing Arrangement JICA Japan International Cooperation Agency M&E Monitoring and Evaluation MDG Millennium Development Goal MDRI The Multilateral Debt Relief Initiative expanded the HIPC program to cover the IDA, IMF and African Development Fund (AfDF) and offer 100% debt relief to eligible countries MHO Mutual Health Organizations, or ‘mutuelles’, in West Africa. Voluntary organizations providing insurance to enrolees. MOH Ministry of Health MOU Memorandum of Understanding MP Member of Parliament NGO Non-Governmental Organizations NHSSP National Health Sector Strategic Plan NIP National Immunization Program Norad Norwegian Agency for Development Cooperation NPV Net Present Value ODA Overseas Development Assistance PAHO Pan American Health Organization PAP Pan African Parliamnet PATH Program for Appropriate Technology for Health PF Pre-filled (syringes for vaccine doses) PRSC Poverty Reduction Strategy Credit 72   PRSP Poverty Reduction Strategy Paper RBF Results-based financing provides development aid to countries based on outcomes rather than inputs. Countries can therefore be paid based on the number of children immunized or number of attended birth deliveries. SIA Supplemental Immunization Activity UN United Nations UNICEF United Nations Fund for Children USAID United States Agency for International Development SWAp Sector Wide Approach VF Vaccine Fund VVM Vaccine vial monitor that is used to monitor the temperature of the vaccine during transport and storage. The VVM changes colour if it has been stored outside of its temperature range. WHO World Health Organization