Economic Assessment of investing in a Bridge Facility Fund for Reproductive Health Supplies in Latin America and the Caribbean countries

Publication date: 2020

1 Economic Assessment of investing in a Bridge Facility Fund for Reproductive Health Supplies in Latin America and the Caribbean countries1 Although Third Party Procurement of contraceptives through UNFPA Procurement gives proven advantages for LAC countries many of them still can´t replace their domestic acquisitions because national procurements laws prohibit payment in advance. To habilitate a Bridge Facility Fund could allow LAC countries to take advantage of TPP through UNFPA without breaking national legislation. This report provides an economic assessment of this Bridge Facility Fund for LAC countries considering both, its impact on Reproductive Health Outcomes, its impact on reducing the burden of disease due to maternal and child mortality and morbidity, and also the Cost-Benefit of the investment based on a social perspective. The analysis is based on the data on public contraceptive purchases that Latin American countries report to SEPREMI, which is a web based platform in which 12 LAC countries register their acquisitions on a regular basis. Assessment only considered domestic acquisitions, so available data allowed to sample nine countries during four years (2016, 2017, 2018 and 2019). Assessment is based on two assumptions: 1) what results would have been obtained by replacing domestic purchases by TPP through UNFPA? 2) What results would have been obtained if the savings generated by the purchase by TPP had been reinvested in expanding the availability of contraceptives? Investments in FP LAC countries would save from 14% to 61% of their public investments in contraceptives by replacing domestic procurement with Third Party Procurement through UNFPA Procurement. The total amount of investments in PF for the countries reporting to SEPREMI between 2016 and 2019 is $47,480,194 and the investments by country range from $886,268 (Guatemala) to $16,852,460 (Argentina). Comparing with budgetary needs if the procurement were made via UNFPA, the general estimated savings would be 38% and the estimated savings by country range from 14% to 61% (table 1). 1 Report prepared by Federico Tobar (RHCS Regional Advisor UNFPA-LACRO) and Ivan Rodriguez Bernate (Regional Advisor in Health Economics) and Mónica Lay Alzamora (Procurement Services Branch UNFPA). July, 2020. http://www.unfpa.org/ 2 Table 1. Savings that countries would get by replacing domestic procurement by TPP through UNFPA Procurement Service (USD) Country MOH local procurement of some items (2016-2019 data) Estimated budget needs, Procurement via UNFPA (CIP Incoterms) Estimated Savings Estimated savings % ARGENTINA $ 16,852,460 $ 5,253,305 $ 9,302,616 55% BRASIL $ 9,419,300 $ 7,014,917 $ 1,352,146 14% CHILE $ 5,902,217 $ 2,845,622 $ 2,629,752 45% EL SALVADOR $ 3,499,284 $ 1,843,635 $ 1,379,104 39% GUATEMALA $ 886,268 $ 566,312 $ 235,010 27% MEXICO $ 4,748,159 $ 2,331,356 $ 2,067,099 44% NICARAGUA $ 1,655,724 $ 1,190,065 $ 287,149 17% PARAGUAY $ 1,449,364 $ 489,665 $ 886,249 61% PERU $ 3,067,420 $ 2,268,363 $ 458,802 15% TOTAL $ 47,480,194 $ 23,803,239 $ 18,139,124 38% Source: Own calculations based on SEPREMI Database. This information is only shared with SEPREMI's partners and can't be publicly disclosed. These investments in FP contribute to the coverage of women and couples with modern methods and additionally bring health outcomes for women and children, as well as medium and long-term economic and social benefits. FP is a cost-effective investment with high social and economic returns, as shown below. Health outcomes Coverage For the whole period 2016 -2019, these investments have contributed 7,369,960 Couple Years of Protection (CYP) with modern methods of FP, ranging from 206,862 CYP by country to 1,714,003 CYP by country. Table 2. CYP provided by public provision per country and year Country 2016 2017 2018 2019 Total Argentina 507,880 969,752 236,370 1,714,003 Brasil 41,604 1,503,628 1,545,232 Chile 603,303 603,303 Ecuador 211,680 211,680 El Salvador 55,049 151,813 206,862 Guatemala 607,600 521,280 40,128 1,169,008 Mexico 278,890 470,139 749,029 Nicaragua 289,250 289,250 Peru 881,594 881,594 Total 607,600 1,349,654 3,853,678 1,559,27 7,369,960 Source: Own calculations based on SEPREMI Database. This information is only shared with SEPREMI's partners and can't be publicly disclosed. 3 Effectiveness The direct effect of the increase in FP coverage with modern methods is the reduction of unintended pregnancies and, as a consequence, unsafe and induced abortions and maternal and child deaths are reduced in a certain proportion. All investment in FP made in 4 years by the 9 countries contributed averting 2,105,703 unintended pregnancies, 280,760 abortions, 14,038 child deaths and 1063 maternal deaths, as shown below. Figure 1. Health outcomes that result from public investments in FP Source: Table 1. Annex 489,715 441,495 334,002 251,884 214,008 172,372 82,643 60,480 59,103 65,295 58,866 44,534 33,585 28,534 22,983 11,019 8,064 7,880 - 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 Unintended pregnancies averted (UPA) Abortions Averted (AbAv) 3,265 2,943 2,227 1,679 1,427 1,149 551 403 394 247 223 169 127 108 87 42 31 30 Child Deaths Averted (CDA) Maternal Deaths Averted (MDA) 4 Cost-Effectiveness Those public investments in contraceptives are among the most highly cost-effective health interventions. In addition to the reduction of reproductive health outcomes, public investments in contraceptives have contributed to reduce the disease burden. Singh et al. (2014) summarize the issue of mortality and morbidity by using Disability-Adjusted Life Years (DALYs), a measure of the number of years of healthy life lost as a result of premature maternal and child deaths and disabilities. The authors estimate the cost of preventing a DALY by providing contraceptives. The Cost per DALY averted is USD 61. That “cost per DALY averted compares favorably with other interventions to improve women’s and children’s health, and it is among the most highly cost- effective health interventions overall” Singh et al. (2014, P15). By keeping the same allocation levels but replacing domestic procurement by TPP through UNFPA procurement, LAC countries could increase 39% the quantity of DALYs avoided. Using the 2016 through 2019 estimated investment of approximately $23 million dollars (via UNFPA procurement) and the $61 per DALY averted produces a value of over 390,217 DALYs avoided (table 2 annex). Nevertheless, If the estimated savings that would be obtained by procuring through TPP on UNFPA Procurement will be reinvested in reinforcing the availability of contraceptives an amount of 152,382 additional DALYs averted will be obtained (table 3 annex) what means an additional 39% reduction on the disease burden related to contraceptives. Social and economic benefits The return of an investment in contraception depends on the temporal framework considered, starting in 47% at the first year until 4020% ten years later. There are several pieces of evidence documenting that contraceptive provision provides substantial benefits and returns on investment. According to (Singh S. et al., 2014), spending one dollar for contraceptive services reduces the cost of pregnancy-related care by $1.47 in the same year, which yields a Cost-Benefit Ratio (CBR) of FP of 1.47 for the first year of investment. Nevertheless, in social and economic terms, the benefit from lives saved and disability avoided is not the biggest benefit of FP, the biggest benefit is lives made more productive. More widely spaced pregnancies and births and lower total fertility rates bring the benefits of the demographic dividend. So, the bigger socioeconomic benefits start approximately one generation after. Moreland, S., & Talbird, S. (2006) estimated a CBR of 4.02 (midpoint) for 10 years of sustained investments in FP and The Study Group for the Global Investment Framework for Women’s and Children’s (Stenberg, K. et al, 2014) estimated CBRs of 6.1 and 31.1 for 22 and 37 years for upper-middle income countries (figure 2). So, interpolating the CBRs for the different timeframes, the conclusion is that benefits outweigh costs by 47% immediately (the same year of investment), but the greatest benefits are seen after 10 years of sustained investment (table 3) 5 Figure 2. Benefits (by type) and investment costs as share of GDP (%). Stenberg et al (2014) 6 Figure 3. Estimated CBR for several timeframes. Table 3. Cost-Benefit Ratios (CBR) for different timeframes Year 0 1 2 3 4 5 6 7 8 9 10 11 12 CBR 1,5 1,7 2,0 2,2 2,5 2,8 3,0 3,3 3,5 3,8 4,0 4,2 4,4 Year 13 14 15 16 17 18 19 20 21 22 23 24 25 CBR 4,5 4,7 4,9 5,1 5,2 5,4 5,6 5,8 5,9 6,1 7,8 9,4 11,1 Year 26 27 28 29 30 31 32 33 34 35 36 37 CBR 12,8 14,4 16,1 17,8 19,4 21,1 22,8 24,4 26,1 27,8 29,4 31,1 Source: Own calculations (interpolations) based on Singh et al. (2014), Moreland, S., & Talbird, S. (2006), (Stenberg, K. et al, 2014). The minimum related return for the nine countries considered until now would be $34,9 Million. This number results of considering the more conservative scenario of a CBR equals to 1.47, the benefits (value for money) obtained by the investments of $23.8 Million are $34.9 million saved in health care related to pregnancies (table 4). Nevertheless, If the estimated savings by procuring through TPP will be reinvested in FP, additional benefits are obtained (table 5). 1 2 2 2 2 3 3 3 4 4 4 4 4 5 5 5 5 5 5 6 6 6 6 8 9 11 13 14 16 18 19 21 23 24 26 28 29 31 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 Year of investment 7 Table 4. Estimated benefits of investment in FP (value for money) Country Estimated budget needs, Procurement via UNFPA (CIP Incoterms) Estimated Benefits (Value for Money) GUATEMALA $ 566,312 $ 832,479 PARAGUAY $ 489,665 $ 719,808 NICARAGUA $ 1,190,065 $ 1,749,395 PERU $ 2,268,363 $ 3,334,494 EL SALVADOR $ 1,843,635 $ 2,710,143 MEXICO $ 2,331,356 $ 3,427,093 CHILE $ 2,845,622 $ 4,183,064 BRASIL $ 7,014,917 $ 10,311,928 ARGENTINA $ 5,253,305 $ 7,722,358 TOTAL $ 23,803,239 $ 34,990,761 Source: Own calculations based on SEPREMI Database Table 5. Additional benefits that would be obtained by reinvesting the saving obtained by procuring contraceptives through TPP Country Estimated Savings Benefits (Value for Money) GUATEMALA $ 235,010 $ 345,464 PARAGUAY $ 886,249 $ 1,302,786 NICARAGUA $ 287,149 $ 422,109 PERU $ 458,802 $ 674,439 EL SALVADOR $ 1,379,104 $ 2,027,282 MEXICO $ 2,067,099 $ 3,038,636 CHILE $ 2,629,752 $ 3,865,735 BRASIL $ 1,352,146 $ 1,987,654 ARGENTINA $ 9.302,616 $ 13,674,845 TOTAL $ 9,295,310 $ 13,664,106 Source: Own calculations based on SEPREMI Database Conclusion The Cost Benefit Ratio of investing in a Bridge Facility Fund for LAC countries that could allow them to make TPP through UNFPA Procurement will be 2.04 at the first year. Considering that the social return at the first year would be $48,654,867 that results from adding $34.990.761 (table 4) to 13,664,106 (table 5) with an initial investment of$ 23,803,239. However, as said, this returns increases considering a longer temporal framework, as shown in figure 3. 8 References FOROLAC (2018). Miplan. Herramienta para evaluar inversiones en salud sexual y reproductiva. Lima.2018. Moreland, S., & Talbird, S. (2006). Achieving the Millennium Development Goals: The contribution of fulfilling the unmet need for family planning. May, 70. Singh S, D. J. and A. L. (2014). Adding It Up: The cost and benefits of investing in sexual and reproductive health, 2014. https://doi.org/10.17226/9822 Stenberg, K., Axelson, H., Sheehan, P., Anderson, I., Gülmezoglu, A. M., Temmerman, M., Mason, E., & Friedman, H. S. (2013). Advancing social and economic development by investing in women ’ s and children ’ s health : a new Global Investment Framework. 6736(13), 1–22. https://doi.org/10.1016/S0140- 6736(13)62231-X https://doi.org/10.17226/9822 https://doi.org/10.1016/S0140-6736(13)62231-X https://doi.org/10.1016/S0140-6736(13)62231-X 9 ANNEX Table 1. Health outcomes that result from public investments in FP Country Unintended pregnancies averted (UPA) Abortions Averted (AbAv) Child Deaths Averted (CDA) Maternal Deaths Averted (MDA) Argentina 489.715 65.295 3.265 247 Brasil 441.495 58.866 2.943 223 Guatemala 334.002 44.534 2.227 169 Peru 251.884 33.585 1.679 127 Mexico 214.008 28.534 1.427 108 Chile 172.372 22.983 1.149 87 Nicaragua 82.643 11.019 551 42 Ecuador 60.480 8.064 403 31 El Salvador 59.103 7.880 394 30 Total 2.105.703 280.760 14.038 1.063 Source: Own calculations based on SEPREMI Database and Miplan (Forolac, 2018) Table 2. DALYs that would be averted by procuring trough TPP Country Estimated budget needs, Procurement via UNFPA (CIP Incoterms) DALYs Averted GUATEMALA $ 566.312 9.284 PARAGUAY $ 489.665 8.027 NICARAGUA $ 1.190.065 19.509 PERU $ 2.268.363 37.186 EL SALVADOR $ 1.843.635 30.224 MEXICO $ 2.331.356 38.219 CHILE $ 2.845.622 46.650 BRASIL $ 7.014.917 114.999 ARGENTINA $ 5.253.305 86.120 TOTAL $ 23.803.239 390.217 Source: Own calculations based on SEPREMI 10 Table 3. Additional DALYs averted that would be obtained by LAC countries by reinvesting amount saved by replacing domestic procurement through TPP Country Estimated Savings DALYs Averted GUATEMALA $ 235.010 3.853 PARAGUAY $ 886.249 14.529 NICARAGUA $ 287.149 4.707 PERU $ 458.802 7.521 EL SALVADOR $ 1.379.104 22.608 MEXICO $ 2.067.099 33.887 CHILE $ 2.629.752 43.111 BRASIL $ 1.352.146 22.166 ARGENTINA $ 9.302.616 152.502 TOTAL $ 9.295.310 152.382 Source: Own calculations based on SEPREMI

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