Development bank loan
What is it?
A loan to a country from a Development Bank, the World Bank or another external financing institution would allow a large amount to be spent in the next few years which would then be paid off over time as the cost savings are realised.
How is it applicable to hepatitis?
A loan could be requested to cover the initial cost of scaling up treatment and diagnosis. This would then be paid back over time allowing for a better synchronisation between costs and benefits in regards to hepatitis.
Advantages:
- Investment in human capital and health has the highest rate of economic return making a loan attractive to the banks
Challenges:
- Cost savings may not be realised till after the loan repayments are due
Grant
What is it?
Countries can apply for grants for a specific intervention or programme. Large global funders in health include the Global Fund, UNITAID, GAVI and Overseas Development Agencies. Grants could also be requested for healthcare from large regional or global development funds.
How is it applicable to hepatitis?
A limited number of global funders in health are engaged with hepatitis but some are working in cross-cutting areas such as harm reduction or HIV/HCV co-infected populations and so this has the potential to fund part of the programme.
Advantages:
- These can help countries to start addressing specific areas of their hepatitis programme
Challenges:
- There are a limited number of global funders in health and even fewer that work in hepatitis
- External funding in the form of grants is decreasing
Case study
Using financing received from the EU Structural Funds, the Romanian Ministry of Health is launching five national screening programmes which includes hepatitis B, C and D and will be training health personnel. In the first phase EUR 5 million will be allocated towards developing screening methodology and registers. Romania will then spend a further EUR 20 million on testing for HCV and HBV, investigations, treatment and follow up for patients infected with the hepatitis virus. Treatment will be provided exclusively for uninsured patients.
Development impact bonds (DIBs)/Social impact bonds (SIBs)
What are they?
These are financing mechanisms that operate by investors providing funds to implement social interventions, service providers working to deliver outcomes and outcome funders repaying investors the principal and financial return only if specific outcomes are achieved. These three parties enter into a partnership agreement establishing the mechanism for the bond. As all terms are negotiable, it is the responsibility of the partners to clearly set the terms. In each case the initial investor takes the risk that the project will not be successful. The key difference between the two bonds is that the outcome funder for a SIB is the government but the outcome funder for a DIB can be government, development agencies or philanthropic organisations.
How is it applicable to hepatitis?
In the first instance a SIB or DIB could be initiated using a small group to assess the financing aspects and preliminary results, making a larger project more appealing to an investor. This initial project could target a specific cohort, defined by age or liver disease stages. This approach may be more attractive to investors and could form part of a step-wise approach to scale-up.
Advantages:
- Funding is tied to the success of the programme, meaning they are results focused and encourage innovation
Challenges:
- Consistent and reliable monitoring is required for which countries may not have the capacity
- It may not be easy to find initial investors
Case study
DIBs and SIBs are a relatively new financing mechanism. One example of this is the Educate Girls Development Impact Bond (DIB) which is implemented by the Indian NGO Educate Girls. It aims to help improve education for 15,000 children, 9,000 of them girls, in Rajasthan, India by 2018. The DIB is focused on a set of societal impact outcomes that are measured by an independent evaluator with UBS Optimus foundation providing the up-front capital and the Children’s Investment Fund Foundation (CIFF) acting as the outcome payer. The objectives are being closely measured and CIFF will pay up to 15% interest depending on how far the children’s learning targets are achieved. Educate girls will also receive part of this bonus payment if it achieves its targets.
Pay for performance
What is it?
Pay-for-performance mechanisms directly link financial incentives to performance targets.
How is it applicable to hepatitis?
In the case of hepatitis, this would work through a funder agreeing to pay for each cure achieved, diagnosis made, clinician trained etc.
Advantages:
- It financially incentivizes health facilities to achieve results and increases efficiency and accountability
- Can promote improved quality of care and increase efficiencies across the value-chain
- Decreases risk to government/donors by only paying upon agreement of pre-determined targets
Challenges:
- Still requires an up-front capital investment from the patient/government/facility
- Places some risk on funders who may have to pay for more cures than planned
- Requires a strong monitoring and evaluation system and careful system design
Case study
This has not been used in hepatitis, outside of risk-sharing agreements with pharmaceuticals, but is common in maternal and child health. Further details on pay for performance, including examples, can be found here.
Loan or bond guarantee
What is it?
A loan or bond guarantee is made by organisations such as the USAID Development Credit Authority or foundations with health investment priorities. This allows governments to borrow money more easily by offering protection for lenders willing to invest capital in important social sectors, such as health, in case of default.
How is it applicable to hepatitis?
Loan or bond guarantees can be used in hepatitis to help scale up treatment.
Advantages:
- It can mobilise private sector investment in the health sector by minimising their risk
- Can be used for both lending to governments and healthcare facilities
- It can also be used to catalyse the scale-up of microfinance lending and insurance schemes to clients by guaranteeing a loan to a microfinance bank directly or guaranteeing a loan to a financial institution lending to one
Challenges:
- Requires a strong domestic financial system that has an interest in lending to the health sector
- Need to find actors in the health system that are capable of managing and effectively utilising a large infusion of capital
Case study
The USAID Development Credit Authority has been partnering with private financial institutions since 1999 to share the risk on loans to both underserved borrowers and sectors. In 2015, they entered into a new agreement with Ecobank Cameroon, guaranteeing loans to the health sector, which includes private hospitals, clinics and pharmacies. This guarantee will overcome the reluctance traditionally held by banks in Cameroon to grant loans of up to 5 years to small and medium enterprises in the private health care sector without significant collateral. In guaranteeing the loans the USAID Development Credit Authority helps to allow private health care providers to scale up and improve the quality of care.
Debt conversion instruments
What are they?
Debt conversion instruments convert credits/loans to grants with the agreement that this will be used to meet a health or social target. Debt2Health is one such instrument and an initiative of the Global Fund. It works by donors granting debt relief to countries in exchange for a commitment from that country to invest an agreed amount in Global Fund-approved health programmes. Buy-downs are another form of debt conversion and examples of this would be an International Development Association Buy-Back or ODA Loan Conversion. These allow a third party to buy down either all or a proportion of a loan, releasing the beneficiary country to reallocate those resources to health care. Part of the agreement between the third-party and the beneficiary country will be a set of health related outcomes that need to be met, such as a treatment coverage target.
How is it applicable to hepatitis?
Different debt conversion instruments could be used by low income countries as a way to fund in part a hepatitis programme.
Advantages:
- Enables countries to reallocate funds from loan repayments to healthcare
Challenges:
- Is dependent on donors’ willingness to grant debt relief
Academic/Research grants
What are they?
Academic/research grants are funding for scientific research.
How is it applicable to hepatitis?
There is significant academic interest in hepatitis, especially where data is poor (for example incidence) or where the feasibility of scale-up remains unknown
Advantages:
- They can provide an opportunity to explore different interventions before they are widely implemented
- The results you get may be more robust and/or allow you to tease out in detail some of the implementation barriers that you may otherwise have faced
Challenges:
- The scope is limited by the grant giver’s priorities
- They can use a level of resource that is not replicable at the end of the study
Case study
Hepatitis B infection is endemic in much of Sub-Saharan Africa but access to screening and treatment programmes is very limited. To address some of the research needs the Prevention of Liver Fibrosis and Cancer in Africa (PROLIFICA) project was established. This research project covers Senegal, The Gambia and Nigeria and is funded by the European Union Framework 7. The project has a number of aims including to investigate the epidemiology and burden of disease, demonstrate the feasibility of mass screening and subsequent linkage to care. The outcomes of this study will be used to develop screening and treatment guidelines which are relevant to the African region.
Source: J Howell, Y Shimakawa, S Nayagam, S Taylor-Robinson, M Thursz, ‘Prevention of Hepatitis B-related liver fibrosis and liver cancer in Africa: The PROLIFICA project’, Cancer Control, http://www.cancercontrol.info/cc2015/prevention-of-hepatitis-b-related-liver-fibrosis-and-liver-cancer-in-africa-the-prolifica-project/