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Saving Lives, Buying Time: Economics of Malaria Drugs in an Age of Resistance (2004)
Board on Global Health (BGH)

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97
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Saving Lives, Buying Time: Economics of Malaria Drugs in an Age of Resistance

levels. Estimates suggest that US$80 per person per year (in PPP dollars) are needed for effective health services (Commission on Macroeconomics and Health Working Group 3, 2002). This is equivalent to about US$33-40 in current (and not PPP) dollars.

In most of Africa, US$30 to US$40 per capita health spending translates into more than 10 percent of GNP, a figure far in excess of what such low-income countries attain in practice, and far beyond what most countries can reasonably be expected to generate. Most African countries spend less than 5 percent of GDP on health, and some, less than 3 percent. Spending on health in Africa is probably below the amounts needed to maintain health at present levels, much less improve it.

Those countries where out-of-pocket expenditures represent a large proportion of the total spent on health would seem to have the least hope for improvement unless substantial increases can be made in resources for health flowing through the health system as a whole. The sacrifices already being made to spend household moneys on medicines and health care, often for catastrophic illnesses, suggest that the availability of additional funds for even more expensive treatments must be slight. To raise health spending, including spending on antimalarial drugs, in those poorer countries will require an increase in public health spending that, in turn, will demand either increased government revenues, a marked reordering of government spending priorities, or an increase in external aid designed to reach the ultimate consumer.

Potential for Increased Tax Revenues

In Africa, tax revenue as a proportion of GDP can range from below 10 percent (Burkina Faso, Cameroon, the Democratic Republic of the Congo, the Republic of the Congo, Madagascar, Rwanda, and Sierra Leone) to much higher figures, such as 25 percent for the Gambia, 23 percent for Kenya, and 29 percent for Namibia. The unweighted average is 17.7 percent. Notwithstanding the considerable problems with international comparisons of taxation, the large differences in the tax-to-GDP ratio among countries in Africa suggest that scope exists for many to increase revenue through higher tax rates, better compliance, and improved tax administration. However, the structure of tax rates in any country reflects a complex mix of judgments as to what the government considers politically tenable, what the population perceives as fair, the margin beyond which evasion defeats rate increases, and the capacity of officials to administer the tax system.

If the argument that more government funds should be spent on health was persuasive, could those funds come from taxation? Almost certainly

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