Investing Health for Economic Development: Report of the Commission on Macroeconomics and Health

Jeffrey D. Sachs, Director, Center for International Development

Galen L. Stone
Professor of International Trade Harvard University

One of the United States' preeminent economists told a Wilson Center audience that the international community must address shortcomings in global health if it is serious about addressing global poverty. Jeffrey Sachs, Harvard University professor and chair of the World Health Organization's Commission on Macroeconomics and Health, said that $35-$40 per capita annually—one penny out of every ten dollars of developed-country GNP—would alleviate the world's most fatal diseases and allow poor countries to participate fully in the global economy.

Three Truths About Global Disease
In outlining the findings of the commission's December 2001 report (Macroeconomics and Health: Investing in Health for Economic Development), Sachs said that the last two decades have seen the world divide into not only rich and poor but healthy and diseased. While life expectancy in rich countries is approaching 80, it hovers near 50 in the poorest developing countries. One out of every five children dies before the age of five in poor countries, versus one for every 165 in the developed world.

By the end of the 1990s, developing-country public health systems that were already woefully underfunded were overwhelmed with the pandemic of HIV/AIDS and resurgent diseases such as malaria. Sachs said that the WHO commission, made up of finance and public health experts, reached a consensus on the health crisis based on three basic truths:

1. Fighting disease is vital to economic success. "This seems so obvious," said Sachs. "But we kind of pretended that, well, AIDS is something that's here, but we're going to work on trade and finance and so forth as if that AIDS pandemic could be put into a corner. Well, trade alone won't work if 20 percent of your labor force is dying of HIV/AIDS. Either we're going to get the disease pandemics under control, or the economic crisis—particularly in Africa—is going to continue to deepen."

2. The vast part of the health gap is explained by a few conditions—infectious diseases, nutritional deficiencies, and unsafe childbirth—that are overwhelmingly related to poverty. "And one of the things that's known about these conditions is a set of effective interventions," said Sachs. "People don't have to die of these diseases in anywhere near the numbers they are."

For example, Sachs noted, almost one million children are dying of measles in developing countries because immunizations aren't reaching them and poor nutrition may already have suppressed their immune systems. Perinatal tetnus, said Sachs, does not even exist in the United States but kills 500,000 annually in the developing world. And the inexpensive drug chloroquine continues to be the first-line treatment for malaria in many countries despite its increasing ineffectiveness.

3. Poor people cannot afford even the inexpensive and readily-available measures against these diseases. The WHO commission concluded that $25 billion annually would pay for 41 essential health interventions that would cover perhaps two-thirds of the population of the poorest 46 countries over the next ten years. But Sachs stressed that even this figure was too expensive for poor countries to afford. "When you're at $200 per capita income, like Malawi, $40 per capita is 20 percent of GNP," he said. "Twenty percent of GNP is typically more than the entire public-sector budget for developing countries, especially at that income level."

How the Developed World Has Fallen Short

Sachs called on donor countries to bridge this funding gap. "Let's stop merely lecturing these countries and realize that they can't get serious about these problems until we do," he said. "It's not a matter of telling countries what you hear endlessly—cut your military budget and provide for health, or the president bought an airplane rather than investing in the health sector, or if it weren't for the dialysis machines you'd have primary health," he said. "These are lies. The story of what's happening is that at $200 per capita or $300 per capita [income], you cannot afford to stay alive in a malarial, tubercular, HIV/AIDS-ridden environment. And therefore millions of people die. It's no more complicated than that."

Sachs, who is also special advisor to UN Secretary-General Kofi Annan on the Millennium Development Goals, estimated that meeting the goals for health would cost well under the standard donor target of 0.7 percent of developed-country GNP. But he lamented that the international community has been less than responsive to this mission as well as to reducing the debt-burdens of poor nations.

"In my opinion," said Sachs, "the rich countries, led by the U.S., have basically used the [structural adjustment policies of the] IMF and World Bank as their buffer against the clamoring masses. For 20 years we've kind of faked it. But the pathogens don't care. The AIDS pandemic got totally out of control in front of our eyes, with all of the science and medicine that we have, and we stood by and watched 25 million people die without giving a single person in a poor country access to antiretroviral drugs from U.S. money."

Sachs went on to criticize the strictures donors place on their current health investments. "We've had rules that donors would support capital costs, but not recurrent costs—we won't pay for doctors, nurses, and drugs," he said. "We have these strange norms which are a little hard to believe if you're not in this business." Sachs also said that the international public health community has been conditioned to ask for far too little funding to address these problems. "I explained to Peter Piot, head of UNAIDS, that we don't even talk about millions anymore," said Sachs. "That's rounding error in the modern economy. We do $1.6 trillion dollar tax cuts. We talk about hundreds of billions. We don't even deal in millions—that's off the decimal points."

"What the rich world has not done until now," he added, "is to ask what would really be needed to solve the real problems, including the specific targets that we have set for ourselves. So what I am hoping to do [as special advisor] is study how the Goals can be accomplished and ask actually how much they cost."

"It seems to me that [striving to meet the Goals] is the essence of global solidarity," Sachs concluded. "And that seems to me the essence of living in a peaceful and humane world."

By Robert Lalasz and Naomi Greengrass

Glossary

Chloroquine: Chloroquine is the cheapest and most commonly used antimalarial drug. Where the parasite has not become resistant to it, chloroquine is effective and relatively safe for the prevention and treatment of malaria. Unfortunately, due to increasing resistance, it has become ineffective for many malaria patients.

0.7 percent of GDP target for ODA from developing nations: In 1969, the Commission on International Development—more commonly known as the Pearson Commission—published its final report, "Partners in Development," which called for a second United Nations Development Decade. The report suggested that, with strong economic growth, developing countries would not need aid by the end of the century. To achieve such growth, the report recommended that donor countries increase their official development assistance (ODA) flows to 0.7 percent of donor-country GNP. The report also recommended the promotion of foreign direct investment to developing countries as well as the enactment of trade measures that favor developing countries.

In 1970, the UN General Assembly accepted the 0.7 percent target, and it has since become the international standard. But in reality, average ODA flows in 1970 (as a percentage of GNP) were already falling, stabilizing between 0.3 and 0.35 percent until the early 1990s when they began to decline again. Only four countries (Denmark, the Netherlands, Norway, and Sweden) have consistently met the 0.7 percent target. In 2000, Organization for Economic Cooperation and Development (OECD) members gave an average of 0.22 percent of GNP in ODA. The United States spent 0.10 percent of GNP on ODA.

Antiretroviral drugs: Antiretroviral drugs combat HIV by limiting the damage the virus does to the immune system. These drugs are most effective when used in combination; a triple drug therapy is currently the standard recommended in wealthy countries. But in poor countries, most patients do not have access to these drugs because they or their national health systems cannot afford them. Because HIV/AIDS is a relatively new disease, all antiretroviral drug treatments remain under patent and thus prohibitively expensive. Even with a recent agreement by major pharmaceutical companies to provide the drugs to sub-Saharan Africa at a discount or at cost, many poor countries lack the infrastructure necessary to bring these drugs to their citizens.