New Blended Financing Partnerships to Unlock Investment in Global Health
It is estimated that USD 270 billion will be needed every year to achieve the SDGs. Three-quarters of this vast sum will, according to some estimates, go toward building the effective health systems needed to achieve SDG3.
Development aid can only help with a small fraction of this funding gap: most must come from governments spending more on health, and through governments working with businesses to build cost-effective health systems.
This topic was addressed at a session organized yesterday by the Center for Global Health and Diplomacy at the World Economic Forum in which I participated, entitled New Blended Financing Partnerships to Unlock Investment in Global Health.
Misgivings surrounding the integration of these two sectors are widespread and understandable. At the roundtable, Vas Narasimhan — incoming Novartis CEO — acknowledged there is often skepticism when pharmaceutical companies engage in social business. “There is always an assumption — rightly so — from the public sector and civil society that private institutions like Novartis have the profit motive which overtakes their motive to help society.” In fact, Vas argued that “it’s the opposite.”
The Novartis Social Business model pivots on the idea that those at the base of the pyramid are consumers like any other. If these people can’t access essential medicines, it is bad for business on several fronts. As Vas observed:
“the only way we can deliver profits to our shareholders is if we positively impact society… the relevance we have as a company in the long term depends on if we can dramatically affect public health.”
I couldn’t agree more.
This is not just a role for the pharmaceutical industry. Private equity firms such as the Abraaj Group are also investing heavily in health systems that deliver care to the poor. Abraaj partner Khawar Mann (also present at the roundtable) noted that it was through private-sector funding that some villagers in Punjab (Pakistan) received their first ever diagnostic tests.
Private sector has a role to play in the move toward global health equity and universal access, but there has to be a balance.
Peter Sands from the Global Fund expressed it this way: “For companies such as Novartis to make profits they have to demonstrate they are doing something relevant and helpful to society. If we expect them to accept that, we too should accept that they have to make profits. We have to have an understanding of the challenges and constraints of people on both sides of this debate.” He continued: “We have to be clear there will be tensions — I want cheap but I also want quality [for the Global Fund], they want to make a return. How we manage those tensions and appreciate our differences is how we work in the long term to effect positive health outcomes.”
But it would be unwise not to acknowledge the hurdles to overcome:
1. At the meeting, many thought that the biggest challenge may be the lack of data — particularly data showing the benefit that patients gain from treatment. Improving lives is the real added value that healthcare companies can offer — but that is something that many rich-world health systems find difficult to measure, let alone those in lower-income countries. As moderator Jan-Willem Scheijgrondof Philips put it, there is “no shortage of money, but more a shortage of data” — we should be moving from ‘blended finance’ to ‘blended data’.
2.The second hurdle is scaling up. There are dozens of public-private pilots running all over the world, but the challenge is to deliver at scale.
Public-private cooperation will be a key route to achieving the SDGs. We need models that will deliver a triple win — a win for the public sector, a win for the private sector, and most of all a win for patients.