Every year, some $455 billion of the world’s health care spending is lost to fraud—an amount that is more than the GDPs of Finland and Sri Lanka combined. Although a portion of this abuse occurs in rich states, a large share takes place in developing countries, where lost money can have major costs for public health.
In 2011, UN Secretary-General Ban Ki-moon estimated that “corruption prevented 30 percent of all development assistance from reaching its final destination.” There is reason to believe that a similar figure holds in the global health sector. In 2011, for instance, the Global Fund, the world’s largest clearinghouse for funds related to the treatment of HIV/AIDS, malaria, and tuberculosis, asked the governments of Djibouti, Mali, Mauritius, and Zambia to repay some $34 million it claimed was misspent, fraudulently accounted for, or had simply disappeared. GAVI, a global vaccine alliance, has been reimbursed by 11 countries for misused funds; this year, it expects to receive $5.4 million from the Nigerian government.
For too long, donors have focused on getting grants out the door instead of maximizing the returns on their investments.
Fraud and misuse also occur on the donor side. In 2014, Columbia University reached a $9 million settlement with the U.S. government for fraud related to grants the university received through the President’s Emergency Plan for AIDS Relief program, or PEPFAR. And then there is the matter of inefficiency, which often results from the weaknesses of health care systems rather than from malfeasance. In 2016, the Global Fund found that 70 percent of the affiliated facilities it visited in Uganda had run out of antiretroviral drugs for HIV/AIDS for periods of at least three weeks over the previous year. GAVI’s 2017 annual report showed that in 19 national audits performed over the previous two years, 47 percent of the programs it had backed were using funds ineffectively. Sixty-eight percent of those programs had failed to properly manage their vaccine stocks.
These problems hold back the health care systems of developing countries and corruption and inefficiency help explain why most of the world’s health care systems are underfunded—and why many states continue to suffer preventable outbreaks of deadly diseases, as the countries of West Africa did during the Ebola outbreak of 2014.
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