With Budget Cuts Looming Again, Can PEPFAR Keep the Gas on its Acceleration Strategy?

PEPFAR has long enjoyed bipartisan support on the Hill. It has a strong reputation as an initiative that pursues and achieves results, pushing the envelope among US government actors in using epidemiological program monitoring and costing data to inform its funding and programming decisions. Yet, it has not been spared from significant cuts in President Trump’s latest budget request for foreign aid. It is noteworthy that this administration’s three successive budget requests have proposed increasingly large cuts to PEPFAR’s funding. The FY2018 request proposed an 11 percent reduction from the previous year’s enacted spending level, while the FY2019 request included a cut of 16 percent. Both were soundly rejected by Congress.

The newly released FY2020 request goes even further, aiming to cut State’s global health funding (by-and-large PEPFAR) by 25 percent (or $1.4 billion), compared to FY2019 enacted levels. If past is prelude, a cut of this magnitude is unlikely to materialize in any final spending bill. But we wondered what the request suggests about PEPFAR’s ambitions to accelerate investment to get to HIV/AIDS epidemic control—the point where the number of people living with HIV starts to decline rather than increase, because total new HIV infections falls below total deaths among HIV-positive individuals—by FY2020. In addition, what will the implications be for the Global Fund, which is seeking to raise $14 billion for its next three-year cycle (2021–2023) at its upcoming replenishment in October? More broadly, what does it portend for the health financing landscape—and health outcomes—in countries where significant PEPFAR support could be scaled back?

Money remains targeted towards epidemic control in priority countries

In 2017, PEPFAR released a Strategy for Accelerating HIV/AIDS Epidemic Control, in which it committed to accelerate progress toward controlling the epidemic in 13 high-burden countries. While the strategy made no mention of how funding might shift to support “acceleration” in these 13 countries, last year our colleague Rachel Silverman found that country-level funding allocations included in the FY2019 budget request largely favored the 13 priority countries. The FY2020 budget request also homes in on PEPFAR’s epidemic control ambitions, claiming that the resources requested, when combined with prior year funds that are still available, would “advance the US government’s impact strategy to achieve HIV/AIDS epidemic control by 2020 in a select group of 13 countries with high HIV/AIDS burden and also maintain all current patients on treatment.” A first glance at the tables in the Congressional Budget Justification, which don’t include FY2017 enacted funds, might call that commitment into question. Under the latest budget request, six of the 13 priority countries would see funding levels below their FY2018 enacted levels.

Taking a longer view, however (and replicating Rachel’s earlier analysis), it becomes clear that, at a country level, PEPFAR’s acceleration strategy seems still to be in play. (Basing a trend analysis on a combination of enacted and requested funding isn’t ideal, of course, but it’s the best country-level data that’s currently available.) The table below provides a snapshot of enacted and requested levels of funding by country between FY2017 and FY2020. Priority countries are bolded; shading indicates the magnitude of change between FY2017 enacted and FY2020 requested levels. One caveat: FY2019 is excluded since comparable, actual country-level allocations are not currently available (the budget justification document only shows requested levels and the estimates included in PEPFAR planning documents are subject to change and not entirely analogous with the budget numbers).

Since FY2017, when PEPFAR’s strategy was announced, the budget for almost all the acceleration countries has grown—most by quite a bit (Namibia has been level and Côte d’Ivoire and Haiti have seen small increases). The biggest increases came between FY2017 and FY2018, corresponding with the launch of the acceleration strategy. In the budget requests since FY2018, year-on-year increases have been smaller on average, with some modest declines. The big exceptions to the pattern of increased funding for acceleration countries are the bilateral programs for Tanzania and Kenya. These are two of PEPFAR’s largest bilateral programs and the countries face proposed cuts of 30 and 37 percent, respectively, in the FY2020 request compared to FY2018 enacted levels. Together they account for 20 percent of the total proposed reduction to PEPFAR funds. The two countries’ FY2019 Country Operational Plan planning letters offer some insight into the rationale for the reductions.

In Tanzania’s case, the letter is clear that funds are being cut because the program has been seriously underperforming—due in part to the government of Tanzania’s policy choices and to persistent underperformance of certain partners. It seems stakeholders should welcome PEPFAR’s evidence-orientation and rigorous program monitoring that can enable careful decisions not to throw good money after bad until a new strategy is developed to address current shortcomings. (And more broadly, this also begs the question: how, if at all, might the Global Fund adjust its allocation going forward?)

The possible rationale for cutting Kenya’s program seems to be quite the opposite. The letter states that Kenya has largely achieved many of its PEPFAR goals and there are signs that HIV incidence may be starting to decline (pending the findings of a forthcoming epidemiological survey). As a result, the program is shifting from “scaling up” to “sustaining gains.” This sounds promising and suggests a good-news story. But hopefully the conversation is taking place with considered attention to dynamic budgetary effects. Kenya’s HIV program—and its health program overall—is heavily reliant on external funding; donor funding, notably from the US government, has historically accounted for nearly three-quarters of HIV spending. And in 2016, PEPFAR spent on HIV nearly 40 percent of what the government of Kenya spent on its entire health sector. Accordingly, it is critical that any drawdown of US support is accompanied by careful planning and coordination between the government, PEPFAR, and other donors to sustain results in a context of competing fiscal pressures as the country embarks on its path toward universal health coverage.

As for the “non-acceleration” countries, the budget request would look to modestly increase (by less than 10 percent) the budget for four of them relative to FY2017 actual levels, but most would receive cuts. In fact, more than half of the “non-acceleration” bilateral programs (mostly the smallest ones) were zeroed out in the FY2020 request. While a few would likely retain some level of funding through a proposed expansion to regional channels, as the table below shows, the new regional funds do not cover the entire gap, particularly in Africa and the Western Hemisphere.

The requests for several “non-acceleration” countries are noteworthy. The proposed cut to South Africa’s program, one of PEPFAR’s largest, is a massive 71 percent over FY2018 actuals—this alone makes up nearly a third of the total proposed cut to PEPFAR funds. And it’s a hard one to figure. While there are serious concerns about the program’s performance that suggest a new plan of action is warranted, the magnitude of the proposed cut seems incongruous with the announcement just last December that PEPFAR would “surge” treatment spending to the tune of $1.2 billion over two years to help South Africa reach epidemic control, a big increase over an average annual spend of around $390 million a year since FY2004.

Three “non-acceleration” countries that would receive cuts (per the proposed budget) are among those our colleague Rachel (again) highlighted as being at high fiscal risk due to the likelihood of transitions from other global health financing mechanisms happening within a similar timeframe. Cameroon (with a proposed 14 percent cut from FY2017 actual levels), the Democratic Republic of the Congo (with a proposed 21 percent cut), and Ethiopia (with a proposed 58 percent cut) are also facing a simultaneous ramp down of funding from the Global Polio Eradication Initiative (GPEI). While PEPFAR and GPEI focus on different diseases, the overlapping drawdown creates fiscal pressures on the government’s health budget—especially where external support is relatively large compared to government health spending—as it takes over increased financial responsibility for sustaining and building upon results.

The Global Fund’s target replenishment may be at risk

The proposed cut to International Partnerships—read: the Global Fund—represents the biggest portion of the overall PEPFAR cut. In 2016, the United States matched $1 for every $2 contributed by other donors as part of three-year pledge of $4.3 billion. Pointing to the need for greater burden sharing, the Trump administration has proposed a US match of $1 for every $3 contributed by other donors for a total contribution over three years of up to $3.3 billion toward the Global Fund’s $14 billion replenishment target.

As experts have pointed out, slashing US bilateral and multilateral HIV assistance could work at cross-purposes with the administration’s commitment to “defeat AIDS in America and beyond.” In an increasingly interconnected world, controlling the epidemic will take sustained efforts—backed by resources—both here in the United States and around the world.

Thanks to Erin Collinson, Amanda Glassman, and Rachel Silverman for their thoughtful comments and feedback. All errors are our own.