Public Funds Perverting Market for Malaria Drugs

By trying to do too much, the disease-fighting Global Fund has run into problems. It is spending public funds in a way that is perverting the market for malaria drugs and could do more harm than good, say Roger Bate, the Legatum Fellow at the American Enterprise Institute, and Richard Tren, the director of Africa Fighting Malaria.

  • The Fund has been highly successful in getting life-saving medicines and other commodities into poor countries.
  • However, it has crept away from its core mission of funding commodities for the public sector and toward the more complex task of building health systems.
  • The Fund is now throwing money at a speculative financing mechanism that amounts to an expensive experiment.
  • By trying to do too much, it has run into problems with stolen money and drugs.

    The Global Fund has served as a clearinghouse, ensuring that funds were distributed according to need and trying to prevent overlap and inefficiencies. However, since last year, it has used a new approach that ignores human nature with damaging results.
  • The Fund has been subsidising valuable products, which are then easily, if illegally, traded into non-subsidised private markets, profiting drug sellers and middlemen.
  • The new system is encouraging the wholesalers and retailers that receive the subsidy to buy large amounts of the medicines, which often go to patients without malaria, while malaria victims go untreated.

    As the evidence mounts that the subsidy scheme is causing actual harm to existing malaria treatment programs, the Global Fund must be prepared to scale it back. Furthermore, the Fund and its governing board should be prepared to rigorously investigate all thefts and diversions and hold the private shops and suppliers to account.

    Source: Roger Bate and Richard Tren, A Lethal Subsidy, The American, September 8, 2011.

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    First published by the National Center for Policy Analysis, United States

    FMF Policy Bulletin/ 22 September 2011
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