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R4D Study on the Economic Returns to Investment in AIDS Treatment

5 October, 2011

U.S. Secretary of State Hillary Rodham Clinton delivered a major speech calling for an AIDS-free generation, on November 8, 2011, at the National Institutes of Health. In making her case, Sec. Clinton referenced a recent R4D study on the economic returns to investing in AIDS treatment:

Treating HIV-positive people before they become ill also has indirect economic benefits. It allows them to work, to support their families, contribute to their communities. It averts social costs, such as caring for orphans whose parents die of AIDS-related illnesses. A study published just last month weighed the costs and benefits and found that – I quote – “the economic benefits of treatment will substantially offset, and likely exceed, program costs within 10 years of investment.” In other words, treating people will not only save lives, it will generate considerable economic returns as well. (Read the full transcript here)

While highlighting the leading role that the U.S. government has played in fighting AIDS over the past 30 years, Sec. Clinton issued a challenge to not cut back on financial support for the Global Fund and other mechanisms for fighting AIDS, and called on emerging powers to join such efforts rather than remaining on the sidelines.

Earlier that same day, a Wall Street Journal article previewing Sec. Clinton’s speech also referenced the findings from R4D’s study, with additional commentary from R4D Managing Director Robert Hecht:

The study was done before the research was published showing how strongly early access to AIDS drugs can prevent transmission, a finding that could raise returns, [Hecht] said.

"We intend to keep working on this," he said. "We want to factor in the preventive effect." (Read the full story here).

Despite the remarkable scale-up of AIDS treatment and prevention programs in low and middle income countries in recent years, each year two million people die from AIDS (most without ever having received antiretrovirals ART) and 2.7 million are newly infected by HIV.

The R4D study, The Economic Returns to Investment in AIDS Treatment in Low and Middle Income Countries, is one of the first efforts to look systematically at the expected economic benefits (returns) to large scale investment in AIDS treatment.

The study models three streams of future economic benefits accruing to the roughly 3 million persons who were on Global Fund supported treatment in 2010 in 98 countries around the world: (1) restored labor productivity amongst workers with AIDS, (2) orphan care expenditures avoided because parents remain alive on ART, and (3) delayed end-of-life care costs associated with death from AIDS. These streams of economic benefits were selected because they offset the cost of treatment over short time horizons and therefore may be especially salient to policy-makers concerned with health budgets, household economic stability and societal-level economic growth.

Using recent ART prices and program costs, the study estimates that the discounted resource needs required for this cohort of patients over the coming decade are US$14.2 billion.This investment is expected to save 18.5 million life years and return $12-34 billion. This yields economic benefits from ART ranging from 80% to 290% of program costs.

In an interview with the Guardian, R4D Managing Director and study co-author Robert Hecht said: “These results suggest that, in addition to the large health gains generated, the economic benefits of treatment will substantially offset, and likely exceed, program costs within 10 years of investment."

The study's lead author is Stephen Resch, Deputy Director, Center for Health Decision Science, Harvard School of Public Health and R4D Senior Consultant. Fellow co-authors are Robert Hecht, R4D Managing Director; Rifat Atun, Director, Strategy, Performance and Evaluation Cluster, Global Fund; John Stover, President and founder of Futures Institute; Eline Korenromp, Officer Scientific and Performance Policy, Global Fund; Matthew Blakley, Global Fund; Carleigh Krubiner, Johns Hopkins Bloomberg School of Public Health; Kira Thorien, Senior Program Associate, Results for Development Institute.

To download a copy of the study click here

To read press coverage of Sec. Clinton’s speech in The Guardian click here.

To read press coverage of the report in the Wall Street Journal click here.

View the video of Sec. Clinton's Speech:

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