BBC News - Thursday, 13 November, 2003
Evan Davis, BBC Economics Editor

Yet one of the biggest social and human consequences of the disease is precisely through its effect the economies of the countries affected by it.

In the rich nations of the west, it is clear that economic issues are a concern, but a manageable one.

But in the poorest countries of the world, there is no dichotomy between worries about economic development and concerns about human suffering.

It only became apparent in the 1990s that HIV/Aids is a significant economic issue.

In the developed world, as new treatments emerged, health systems had to face the costs of purchasing them.

Drugs costs

As HIV drugs have had the effect of turning an acute disease into a chronic one, treatment costs are long term.

In addition, the virus has the ability to mutate, which means that new treatments need to be developed all the time to cope with the virus's resistance to previous drugs.

This ensures that research costs are high and that the "latest drug" is always likely to be under patent, and hence expensive.

For example, the most recent addition to the HIV armoury, Roche's Fuzeon - a drug that sits in a whole new class of HIV therapy - is priced at about $20,000 per patient per year.

Fortunately, most treatments are cheaper than this, and in most of the developed world, levels of HIV prevalence are sufficiently low that at the moment the costs are broadly containable.

HIV has a prevalence among adults of about 0.1% in the UK, 0.3% across the developed world generally, and about 0.6% in the United States.

With the treatment cost per patient on a scale of about half the annual average income of each person, the cost of HIV runs to a few tenths of one percent of the annual output of a developed country.

This is not negligible, but it is easily tolerable.

Middle-income countries

When we move beyond the developed world, however, problems grow.

In the middle-income countries, the economic cost of treatment may not be so easily absorbed.

The average income is smaller, HIV prevalence tends to be a little higher than in the richer nations, and the virus is spreading worryingly fast.

Access to cheaper treatments is growing in some of these countries.

Brazil and India are the two countries that are best able to produce generic versions of patented drugs.

It is not impossible that treatment prices may reach about a dollar a day, instead of the usual western price of about $30.

It appears that generic imitation will not face a credible challenge under international trade rules.

Hardest-hit countries

The really significant economic problems arise, however, in the very poorest countries, especially in Sub-Saharan Africa.

Adult HIV prevalence is about 9%, and with the acute stage of the disease largely untreated there is a critical effect on prime-age adults, the most economically crucial portion of the population.

To put the prevalence into context, the UN estimates that by 2015, the population of Botswana will be 31% smaller than it would have been in the absence of Aids.

In addition, because the disease is a predominantly heterosexual phenomenon in Africa, there is a more significant problem of disease in couples with children than in the west, leaving millions of orphans to be looked after by relatives, village communities or state authorities.

"The first thing poor families affected by Aids ask for is not cash or drugs, it is food", said James Morris, Executive Director of the World Food Programme.

It is a comment that puts the differences between HIV in the developed and the developing world into perspective.

Health systems

Furthermore, health spending in Africa is tiny by western standards.

Botswana, a relatively well developed country, spends $358 per person on health each year, and could reasonably expect to distribute widespread treatment.

Others in Africa spend far less: from Angola ($52) to Nigeria ($15) to Zambia ($49).

These budgets may accommodate treatment for special groups (like HIV positive pregnant women, whose transmission to their unborn child can usually be prevented) or treatment for some of the opportunistic infections associated with Aids.

But universal prescribing of antiretrovirals is far more difficult.

Even if the drugs were provided by Western companies or generic competitors free, administering them would represent a significant burden to the health systems in many African countries.

Funding gap

It is not altogether surprising that in Sub-Saharan Africa, at the end of 2002, an estimated 50,000 people were on antiretrovirals, out of an estimated 4 million or so who need them.

Of course, there is a growing acknowledgement of the problem of HIV, both in thwarting economic development and in the cost burden of modern treatment.

There are global initiatives to help. UNAids estimates that private, national and international sources will disburse $4.7 billion in middle and low income countries this year.

But while that represents huge growth, but is still half the amount that UNAids thinks will be needed by 2005.
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