Technical Guidance Note Addressing value for money in round 10 proposals for the Global Fund to fight HIV/AIDS, Malaria and TB

UNAIDS/E / JC1924E (English original, July 2010) © Joint United Nations Programme on HIV/AIDS (UNAIDS) 2009. All rights reserved. Publications produced by UNAIDS can be obtained from the UNAIDS Information Production Unit. Requests for permission to reproduce or translate UNAIDS publications—whether for sale or for noncommercial distribution—should also be addressed to the Information Production Unit at the address below, or by fax, at +41 22 791 4835, or e-mail: publicationpermissions@ unaids.org. The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of UNAIDS concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. The mention of specific companies or of certain manufacturers’ products does not imply that they are endorsed or recommended by UNAIDS in preference to others of a similar nature that are not mentioned. Errors and omissions excepted, the names of proprietary products are distinguished by initial capital letters. All reasonable precautions have been taken by UNAIDS to verify the information contained in this publication. However, the published material is being distributed without warranty of any kind, either expressed or implied. The responsibility for the interpretation and use of the material lies with the reader. In no event shall UNAIDS be liable for damages arising from its use.

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Technical Guidance Note Addressing value for money in round 10 proposals for the Global Fund to fight HIV/AIDS, Malaria and TB

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Technical Guidance Note Addressing value for money in round 10 proposals for the Global Fund to Fight HIV/AIDS, Malaria and TB

Table des matières 1. Describing VFM

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i. Describing Choice of SDA and Expected Outcomes and Benefits

6

ii. Additionality

7

iii. Sustainability

7

iv. Integration

8

2. Cost Analysis: A brief Introduction

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3. Calculating Service Delivery Area Unit Costs for Historical Analysis and Budgeting Purposes

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3.2.1 What is value for money?

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3.2.2 How should recent average service delivery unit costs be estimated?

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3.2.3 What if an applicant does not have estimates of average service unit costs available?

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3.2.4 How should the expected service delivery unit costs for key services in the proposal be calculated?

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3.2.5 Should the estimate of recent service unit delivery costs be the same or similar to the expected unit cost for the service in the proposal?

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3.2.6 Are there tools to guide countries in planning the measurement of service delivery unit costs throughout the lifecycle of the grant?

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3.2.7 Which interventions require an estimate of recent and expected service delivery unit costs?

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3.2.8 Why are applicants requested to provide recent and expected service delivery unit costs?

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3.2.9 Where can applicants find information on unit costs available on the market for health products?

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Appendix C: GFATM Information Note “Value for Money”

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Appendix D: SDA Description Tool

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Appendix H: NASA Expenditure Estimation: Costing HIV Services and Programs

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Appendix I: Clinton Foundation HIV/AIDS Initiative Unit Cost Analysis: Challenges and Potential Alternatives

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Before getting started: Look at the following sources of information, which you might refer to in support of your proposal and which the TRP will likely look at during review of your application:

General: Performance1 on prior GFATM grants http://portfolio.theglobalfund.org/?lang=en GFATM Round 10 Unit Costs for Selected Key Health Products http://www.theglobalfund.org/en/applicationfaq/ PSM Toolbox http://www.psmtoolbox.org/en/index.php



HIV/AIDS:



UNGASS Country Update Report http://www.unaids.org/en/KnowledgeCentre/ HIVData/CountryProgress/2010CountryProgressAllCountries.asp



UNAIDS Epidemiological Fact Sheet on HIV/AIDS http://www.unaids.org/en/ KnowledgeCentre/HIVData/Epidemiology/epifactsheets.asp#B



UNAIDS National AIDS Spending Assessment (where available) http://www.unaids. org/en/KnowledgeCentre/HIVData/Tracking/Nasa.asp



WHO Global Price Reporting Mechanism (latest edition) http://www.who.int/hiv/ amds/GPRMsummaryReportNov2009.pdf



WHO Stop TB: Global Tuberculosis Control: A short update http://whqlibdoc.who. int/publications/2009/9789241598866_eng.pdf



TB:

Malaria: Roll Back Malaria Financing Report http://www.rollbackmalaria.org/ ProgressImpactSeries/docs/RBMMalariaFinancingReport-en.pdf

1 Where applicable, review “Under-Spending” on existing grants and proactively address causes within Round 10 Proposal.

Technical Guidance Note Addressing value for money in round 10 proposals for the Global Fund to Fight HIV/AIDS, Malaria and TB

Introduction The Global Fund (GFATM) defines Value for Money (VFM) as “Using the most cost-effective interventions as appropriate to achieve the desired results.2”

VFM does not mean lowest cost. The objective is to achieve the BIGGEST IMPACT for money spent by balancing Costs and Effectiveness.VFM consists of Quantitative components, such as the cost of ARVs and commodities, and Qualitative factors, such as the level and sustainability of care.



An intervention or program represents VFM when its cost is justified by an improved outcome; it is the optimal balance between cost and outcome. An example could be as follows: A Program Manager justifies higher expenditures for activities such as Home-BasedCare (HBC) for ART by presenting program-specific data that demonstrates a significant impact on a patient’s adherence and survival at a reasonable marginal cost.



GFATM recognizes that assessing and measuring VFM is challenging and should be evaluated within a local context, and --if possible-- at the level of the overall National Program. Ultimately, it is believed that the concept of VFM will provide countries the tools to improve program efficiency.



Key Elements you should consider for VFM in Round 10 proposals:

1. Pricing for medicines/commodities. Use prices in line or below those in the WHO and/or GFATM reference guides. If you don’t, explain why and how you will in the future. 2. Additionality of GFATM -- demonstrated by the contribution of funds (“co-investment”) by Governments and other donors. 3. Unit Cost Breakdowns for Key Service Delivery Areas (SDAs), including, ART, PMTCT, OVC, DOTS, MDR-TB, ACT, LLIN, Harm Reduction and others, as applicable. Note: There is a lot of flexibility on this topic for now. If you demonstrate a clear logic in your assumptions and explain how you will monitor performance against your assumptions, you should be able to address GFATM’s requirements for VFM in Round 10 proposals3.

A few key principles to keep in mind:

1. Describe how the key interventions in the proposal represent the best balance of costs and effectiveness (in light of context of epidemic in country) 2. Consider both short and long term impacts. 3. Describe the projected effectiveness of interventions and the anticipated impact/ outcome. 4. Demonstrate how the program will drive efficiency and effectiveness of proposed interventions. 5. Outline information gaps and how to address them. 2 Please also see section on VFM in GFATM Round 10 FAQs (Appendix B) and VFM Information Note (Appendix C) 3 WHO/UNAIDS/GFATM are currently working on developing a standardized methodology for SDA costing which will provide additional clarity for future GFATM proposal rounds. 5

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6. Provide continuity from previous proposals – where possible use historical information to determine SDA costs and use this information for budgeting. 7. If possible, show historical trends in, and list examples of efficiency improvements, demonstrating how efficiencies have been achieved over time. 8. If using different treatment approaches from past proposals, explain reason for changing and how new approach will result in greater efficiency. This document includes strategies on how to address VFM in GFATM proposals for Round 10. It is structured as follows: 1. Describing VFM: Addressing Qualitative Aspects of VFM 2. Short introduction to Cost Analysis 3. Calculating Service Delivery Area (SDA) Unit Costs for Historical Analysis and Budgeting Purposes 4. Section-by-section suggestions on how to address VFM in relevant areas of the Round 10 proposal.

1. Describing VFM Perhaps the most important VFM concept for Round 10 is that higher cost interventions are justifiable if you can demonstrate effectively that they lead to greater benefits over time.

In addition to quantitative analysis, qualitative descriptions of VFM are an important element of Round 10 Proposals. Qualitative descriptions might include but are not limited to any of the following 4 components: a) SDA selection and benefits, b) Additionality, c) Sustainability, and d) Integration.

i. Describing Choice of SDA and Expected Outcomes and Benefits UNAIDS and the WHO have put together a very useful tool to assist Program Managers with SDA descriptions. Please see Appendix D for further details.

Describing SDAs: Each SDA should be accompanied by a detailed description of activity, expected outcomes and a clear explanation of how the intervention fits into the overall Program Strategy and complements other interventions. Key elements:

Deliver a clear rationale for choosing a specific intervention Provide the context within which the decision was made Describe the specific expected benefits of the intervention and how you will measure them Provide historical program [if available] and/or other reference data to strengthen your position Make sure all individual SDAs have clear link into the overall program strategy and each other.

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Technical Guidance Note Addressing value for money in round 10 proposals for the Global Fund to Fight HIV/AIDS, Malaria and TB



Efficiency: Describe how efficiency improvements of SDAs will drive down costs based on your quantitative analysis (see following sections). For example, the primary reason you can spread fixed costs (see next section) across a greater number of outputs over years comes from increase in experience (e.g. healthcare personnel providing ART) as well as improvements in efficiency of service that allows the same number of staff to treat more individuals with better overall results.



Quality: Describe qualitative targets of SDAs in proposals, as they can demonstrate a real cost benefit and value-add to the overall program. For example, a program that strives to put in place special measures for improving ART adherence [thus improving quality of care] could justify the incremental cost by demonstrating how improved adherence will lead to patients remaining on 1st line ARV regimens for longer periods rather than moving to much higher-cost 2nd line ARV regimens.

Remember:

Higher cost interventions are acceptable if you can demonstrate the rationale for selection and expected benefit. Such interventions could range across various topics, such as choice of 1st and 2nd line ARV regimens, home-based care for ART, or targeted prevention campaigns for MSMs.



A clear description of the program’s SDA and the expected benefits from efficiency and quality are important. Equally critical is a description of the methodology used by the program to continuously monitor and report (internally and externally) the proposed outcomes and should be described with much detail.

ii. Additionality The principle of Additionality of GFATM is to show achievement of outcomes that are in addition to what could have been achieved with existing government and other funding sources. Demonstrating how GFATM will leverage other sources of funds and contribute to greater program impact will be critical and a good opportunity to showcase VFM in proposals. A practical example of Additionality could be described as follows: GFATM funds are spent on the development of pediatric ART training curriculum and subsequent implementation of training courses. Meanwhile government resources are used to built new pediatric wards at provincial and district level hospitals and other donor resources (e.g. UNITAID) are used to procure pediatric ARVs.

iii. Sustainability Program Sustainability is critical to GFATM – an entire section (4.5) is dedicated to this topic. Describing cost and operational efficiencies are important components of program sustainability. A few additional points should be highlighted in proposals: Highlight National Program’s leadership role in implementation and coordination Emphasize results of program to date and any cost efficiencies and/or improvements in quality that have been recorded Describe the metrics and the frequency in which the program monitors performance A few practical examples of sustainable [cost-reducing] measures:

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Reducing Capital Expenditures for lab equipment by establishing a cost-effective laboratory system and Leasing CD4 machines instead of purchasing them. For example, the National Program of a high-prevalence country in SE Asia leased multiple CD 4 machines in 2005 free of charge from the supplier and negotiated reduced prices for test reagents by agreeing to annual minimum test reagent purchases. The machines were placed at regional laboratories and a system was designed for all ART providers (government and NGO) in the region to access testing for patients free of charge. Innovative solutions improving system efficiencies and achieving real cost savings are great opportunities to demonstrate VFM.



Minimizing expenses due to waste -- such as expired medicines, reagents, etc; if you can quantify historical values lost annually to waste and describe methods to minimize this expense in the future (i.e. investment in improved forecasting system and/or better storage facility) you can drive down SDA costs significantly and project improved VFM.

iv. Integration Integrating of Vertical Programs into National Health Systems is one of the key challenges for Ministries of Health and Program managers across the globe. Using donor funding for vertical programs, such as HIV/AIDS to strengthen other aspects of the general health system represents a great opportunity to show VFM. Some practical examples for integration:

Reducing TB/HIV morbidity by implementing regular TB screening for HIV+ patients attending follow-up visits with health care staff.



Investments in HIV/AIDS laboratory monitoring as a key driver for developing laboratory capacity (infrastructure and human) at provincial and district level health centers that benefits patients of many other diseases.

2. Cost Analysis: A brief Introduction The following section introduces some simple mathematical concepts that allow you to show increased efficiency over time and hence improvements in VFM by analyzing different types of costs or expenses: 1. a. b. c. 2. a. b.

Expenses that occur once –typically at the onset of a program -- and whose output will be used for many years. These expenses are called Capital Expenditures, e.g.: Construction or restoration of a building4 Purchase of vehicles Purchase of laboratory equipment Expenses that occur on an ongoing basis year-by-year. These are called Operating Expenses. Operating expenses can be broken down into: Variable costs: will generally increase with each additional input/output. For example, 1st line ARVs, commodities, lab reagents for 1 patient-year. Fixed costs: will generally remain constant, regardless of an additional output. For example, salaries for Healthcare staff (please see “Allocations” below), salaries for Program management & administration staff, annual training programs. Also: other overhead expenses, e.g. electricity to operate a hospital, gasoline for transportation of medicines, communications etc.

4 Certain restrictions apply for using GFATM funds for building construction

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Technical Guidance Note Addressing value for money in round 10 proposals for the Global Fund to Fight HIV/AIDS, Malaria and TB

Here’s a few guiding concepts for addressing cost analysis: 1st: Start with your Capital Expenditures.You have two options for this category5: a. Allocate all Capital Expenditures to the year in which they occur, e.g.Year 1 of program b. Divide the Capital Expenditures by a defined number of years (e.g. lifetime of product, duration of proposal) and allocate the same proportional amounts to each year If you chose option a) you will expect to see a significant drop in your per unit SDA cost from year 1 to year 2. If you chose option b) you will expect to see a constant per unit SDA cost for this category which gradually declines as the allocated capital expenditures are divided by a larger number of outputs in each subsequent year. 2nd: Look at your Variable Operating costs. They include the cost of medicines, lab reagents, consumables. Per unit variable costs would be expected to remain constant in your SDA budget as they increase symmetrically to each increase in output. 3rd: Look at your Fixed Operating costs: your total fixed costs (salaries, overheads) will remain predominantly constant or increase only slightly regardless of the number of outputs each year, e.g. number of patients treated. However, as you divide your fixed costs by an increasing number of outputs each subsequent year, per unit fixed costs will decrease.

3. Calculating Service Delivery Area Unit Costs for Historical Analysis and Budgeting Purposes This section provides a sample SDA unit cost breakdown (see Appendix I for additional examples) that you can use as a reference for historical SDA unit cost framework analysis and budgeting purposes. Whether you select a similar sample or create an entirely new cost breakdown by SDA is at your discretion for Round 10 proposals as long as all assumptions are clearly explained within the proposal. Note: The methodology your program will use to continuously monitor and report (internally and externally) the proposed cost metrics will be a critical element of VFM and should be described with much detail. Steps related to SDA unit cost analysis and budget 1.

Analyze historical SDA unit costs and develop SDA unit cost framework: a. Identify cost drivers in your SDA b. Separate them by type of cost (see previous section): i.

Capital Expenditure

ii.

Operating (Fixed)

iii. Operating (Variable) c. Allocate Fixed Operating expenses that are not directly or exclusively related to the program, for example, salaries of general health care staff at the provincial hospital level to a SDA: 5 Note: GFATM proposal is based on a cash budget – items are to be budgeted in the period in which the cash payment is expected to be made. For proposal purposes, chose option a) 9

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One approach is to allocate proportions of salaries and overhead based on time actually spent treating patients of a particular category. Look to get a consensus at the MOH level of your country on what would be appropriate as a rule of thumb for this exercise and then remain consistent throughout your reporting (e.g. 25% of time of health staff spent on treating HIV patients, hence 25% of their salaries would be allocated to ART SDA). 2.

Use this SDA unit cost framework to develop Program and/or Proposal SDA unit budget. a. Where historical SDA unit costs are not available, explain why. b. Create SDA unit cost framework and provide detailed explanation of assumptions.

The WHO is currently working on a standardized tool for budgets and workplans for program managers (likely not available until Round 11) as well as a tool for drug quantities and ARV costs for use in developing proposals. This tool can be found at http://www.who. int/hiv/pub/toolkits/GF-Resource kit/en/index2.html. A firm understanding and control of the main cost drivers by SDA will ensure that programs meet their operational targets within the resource framework they are operating in. Frequent monitoring of the main cost drivers (monthly/quarterly) will allow Program Managers to identify problems (i.e. a sudden increase in SDA variable costs) and address them promptly before they can threaten the sustainability of the program.

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$10,605,600

$12,517,150

$45,000

$808,650

$300,000

$5,391,000

$37,500

$50,000

$250,000

$250,000

$35,000

$75,000

$25,000

$250,000

$5,000,000

-

-

-

Year 1 (target: 20,000 patients treated)

$530.3

$1.5

$27

$10

$179.7

$1.9

$2.5

$12.5

$12.5

$1.8

$3.8

$1.3

$12.5

$250

$6

$7.5

-

Year 2 (target: 30,000 patients treated)

-

-

-

$417.2

$1.5

$27

$10

$179.7

$1.3

$1.7

$8.3

$8.3

$1.2

$2.5

$0.8

$8.3

$166.7

ART (SDA): Per patient/year

Note: per unit costs for capex and fixed expenses decrease, while variable costs remain constant

15% of funds spent on lab reagents

15% of funds spent on ARVs

$5 per test, 2 tests ppy

Prices from WHO guidelines, assume 90% on first line(d4t+3tc+nvp), 10% on second line (abc+ddi+lpv/rit)

$75,000, Misc expenses, 50% of program budget to ART

$100,000, 50% of program budget -- telephone, software licenses, email, other allocated to ART

$250,000 Central Warehouse rental

$250,000 per year for ART training/annual refresher

$70,000, 50% of program budget allocated to ART

$150,000, 50% of program budget allocated to ART

$50,000 for overall M&E, 50% of time allocated to ART

$500,000 overall budget for Program, $50% of time allocated to ART

$20 million overall national personnel budget for healthcare staff – 25% of time allocated to HIV Care and Treatment

40k per vehicle, 3 vehicles, cost applied to year 1

30k per machine, 5 machines; cost applied to year 1

Notes/Assumptions

Note: Please see appendix A for possible sources of data. How you set up your cost matrix and allocate your costs is at your discretion. However, in order to allow for meaningful analysis going forward, you need to maintain cost categories consistent, and put in place a monitoring system that allows you to collect the above data inputs on a regular basis. Program Managers might look at tracking information on a quarterly basis to monitor performance for internal as well as external purposes.

TOTAL

$30,000

$539,100

OI Meds

Lab Consumables

$200,000

Lab Reagents

ARVs

$3,594,000

$37,500

Other

Operating Costs (Variable)

$50,000

$250,000

Logistics

IT& Communications

$250,000

$35,000

Office Supplies

Training

$75,000

$25,000

$250,000

Program Mgmt & Administration

Monitoring & Evaluation

$5,000,000

$120,000

Vehicles (4)

Healthcare Staff

$150,000

-

Lab Equipment

Building

Year 2

Gasoline

Personnel

Operating Expenses (Fixed)

Capital Expenditures

Year 1

Category

ART (Total – Overall National Program)

Exhibit 1: ART SDA cost break-down (Illustrious: Low Income Country)

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Some Additional Guidelines from GFATM for SDA Budgets

The GFATM suggests using the “Summary Budget by SDA” table and corresponding outputs in the Performance Framework, using the following calculation:

Expected SDA per unit cost (total

-

Relevant Proposal Budget Item Corresponding Output

+

Adjustments added to include relevant cost components covered by other funding sources



More detailed budget information may be necessary in cases where one SDA supports multiple outputs or if the full cost of an activity is split over multiple SDAs.



Provide additional analysis and explanation where output targets are not directly tied to the grant but represent a larger number than is to be financed directly by the grant.



If portions of the service delivery costs will be funded through other sources, adjustments need to be added to arrive at the full service delivery unit cost.



In cases where resources (such as staffing or facilities) will be shared with other activities, allocate only the relevant portion of that resource’s cost to the service delivery and explain the allocation calculation or assumption.



Provide available contextual information for expected unit costs e.g. explain why an expected unit cost appears high or low, or why a trend over time is expected.



Include comparisons to reference points (benchmarks – e.g. historical, global) that the program used when determining its budget and interpreting any significant differences.



Remember: Be sure to provide a clear explanation of your assumptions for declining or increasing per unit costs within the proposal. Increases in program costs and/or addition of new SDAs in proposals are not necessarily a bad thing, as long as you provide a clear explanation for additional costs. For example, in order to reach out to hardest/most hidden populations, programs might have to increase the cost of outreach to serve Most at Risk Population (MARP) who are most vulnerable. So even though this approach is higher cost you can still demonstrate VFM.

Appendix A: Integrating value for money into GFATM round 10 proposals GFATM has identified six sections (4.4, 4.5, 4.5.3, 4.8.6, 5.1.1, 5.4.4) that request input on VFM in Round 10 proposals. GFATM has also provided several critical questions in its Information Note on VFM (Appendix D) that should be addressed in the application. Instead of following a chronological order, a more straightforward approach is to start with the quantitative drug/commodity price section (4.8.6), and then use the price data from this section as a key input for building service unit cost estimates in section 5.4.4. Thereafter, referencing the quantitative analysis from previous sections will add significant weight to the qualitative description of the SDAs and the overall program description and strategy sections of 4.4, 4.5 and 4.5.3. The following table reflects a proposed strategy for addressing VFM in each section using this approach and referencing the instructions and key questions from GFATM’s Info note on VFM that are relevant to each section. 12

4.8.6

5.4.4

1

2

Measuring service unit cost and cost effectiveness

Pharmaceutical and Health Products for initial two years

Title

• If cost information is not routinely available for program, can include measurement (e.g. T.A.) in the workplan and budget proposal.

• If possible, estimate average cost of these key services expected to be achieved with the additional funding from grant.

• Provide best estimate service delivery costs for these key interventions + explanation of how estimates were arrived at and include key cost components.

• Consider which key interventions in program (ART, PMTCT, OVC, DOTS, MDR-TB, ACT, LLIN) will be able to provide service delivery costs over time.

• If local legislation is preventing access to low cost prices through local manufacturer or similar mandates, clarification should be provided as well as a plan for addressing such barriers over the life of grant.

• Applicants are asked to justify if provided price is out of range. The TRP will check whether prices are in range of justification is reasonable given the country context.

• Provide justification for unit prices used for budgeting key health commodities to be funded through the proposal using guidance provided in the Information Note on Unit Costs for Selected Key Health Products or from other published international reference source.

Description and Instructions (from GFATM VFM Info Note)

Is there a clear workplan and budget for measuring cost information and VFM measurement in proposal?

How can existing national or program level monitoring and evaluation systems and/or expenditure tracking systems be strengthened to produce standardized delivery unit costs that are reliable and comparable over time?

How can existing program expenditure and outcomes to technical partners be leveraged in measuring VFM?

What information on costs and outcomes is available at sub-national or sub-program level that could assist in identifying weaknesses and areas of strength in the program?

Key Questions to Consider Addressing (from GFATM VFM Info Note)

• Highlight which sections within SDA cost framework are specifically addressed by GFATM funding.

NGO service providers

PEPFAR (where applicable)

NASA (where applicable)

UNGASS

WHO (HIV/StopTB/RBM)

National program M&E

• Research available in-country data from following sources:7

• Build a historical and budgeted SDA cost framework, identify and label key cost drivers (see section 3: SDA costing frameworks).

• Identify key SDAs included in National program and proposal.

• Download WHO costing tool at http://www.who.int/hiv/ pub/toolkits/GF-Resource kit/en/index2.html.

• Outline how program will strive to bring per unit prices in line with international reference pricing, if possible, within the lifetime of the grant (e.g. address legal barriers to local manufacturing requirements).

• If you plan to use per unit prices for budgeting that are higher than in reference materials, provide CLEAR explanation!

• Compare actual costs to GFATM Information Note on Unit Costs for Selected Key Health Products and/ or WHO Global Price Reporting Mechanism (latest edition).6

• Use most recent actual [country] per unit costs for budgeting purposes.

Suggestions

6 If your most recent actual prices are higher than in reference materials, provide explanation. 7 Where this information is available, use it in your proposal as the TRP will be reviewing these reference documents. If any of the above data sources are available for your country, but you choose to use other inputs for your SDA cost calculations, explain clearly why you are not using the available information.

Section

Proposed Order of Comp.

Technical Guidance Note Addressing value for money in round 10 proposals for the Global Fund to Fight HIV/AIDS, Malaria and TB

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5.1.1

4.4

3

4

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Strategy and Priority Interventions

Explanation of financial needs and Additionality of Global Fund financing

• Cost-effectiveness and technical appropriateness of the interventions.

• GFATM requested funds must be additional and leverage other investments from Govt. and other partners.

• Describe how funding requested is additional to existing available resources and contribute to program outcomes that would not be possible without funding requested.

Is there a clear understanding of costs and benefits of program elements, interventions and services? If these are not understood then what investments will be made in supporting establishing systems for this?

•

•

• Provide a clear explanation and qualitative description of your strategy and key SDAs • (Appendix D) • Refer to calculations for SDA costing framework made under 5.4.4 to show clear understanding of main cost drivers and their projected behavior over the life of the program. • Benchmark your country program and proposal against Historical country SDA costs Request, if available, historical SDA costs calculated by GFATM for your country as a reference • Build on past performance [and proposals] – explain whether application is for continuation of past policies and SDAs, or includes modifications and/or additional SDAs. Explain how program scale-up will lead to continued cost-efficiencies [using calculations from 5.4.4] • If application includes a strategic change from current practices, explain • Rationale for selecting new approach Management implications to national program Cost Implications (refer to SDA cost drivers) • Remember: VFM ≠ lowest cost; opportunity to justify higher cost interventions Show a clear understanding of cost drivers (5.4.4) and their projected trend Showcase how proposed interventions improve output, outcome and impact of program An example here could be the use of HBC for ART to improve patient adherence or Special interventions for high-risk groups (IDUs, OVCs) and projected outcome of activity • Your strategy section should conclude with a description of the monitoring system that will be implemented by the program to track: Key Cost Drivers per SDA SDA Output

• Outline TOTAL NATIONAL PROGRAM BUDGET REQUIREMENTS. • Highlight the proposed use of GFATM funding and its critical role in achieving the desired outcome that could not be achieved without GFATM funding. • Describe how those financial needs were estimated (i.e. at what level) and demonstrate tie-in with SDA costing proposed in 5.4.4. If needs calculation does not tie-into SDA costing, be explicit in about this fact and provide rationale).

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4.5

4.5.3

5

6

Improving Value for Money

Program Sustainability

Sustainability of program support systems

Patient mix to be served by grant funds

Stage of Epidemic

Program Maturity

Why does the approach chosen by program provide best value:

• Consider context-specific factors aside from cost:

• How does proposal contribute to program VFM (short/long-term)

• Explain how overall program provides VFM

• Support sustainability of impact of interventions

• Links to broader development frameworks

• Strengthening of existing capacity

• What information and tools would support program managers in identifying opportunities to improve VFM?

• Does the program have an approach for routinely measuring, evaluating and improving its VFM?

• For aspects of VFM that will be difficult to capture on a routine basis, what role should be allocated to periodic in-depth studies?

• Given that some aspects of VFM will take time to measure fully, what phased approach can be used to ensure that program has relevant information available at time of review for continued funding?

• What information is needed to link program level investment costs with output and impact?

• Highlight cross-disease/cross systems efficiencies – e.g. reduction in TB/HIV mortality or reduction in burden of general health staff through improvements in National Malaria, HIV, TB treatment programs

4.5: Describe tools for measuring results vs projected outcomes and tie-in to existing national programs and development frameworks

4.4: Narrative on selected SDAs and rationale for choosing them, historical performance, projected outcomes of proposed activities

5.1.1: Highlight Additionality of requested GFATM funds

5.4.4: Strategy to identify main cost drivers, monitor them closely and achieve efficiencies over time

4.8.6: Strategy to lower per unit costs (i.e. benchmarking, removing local barriers)

• Summarize inputs from prior sections to achieve VFM:

• Describe system to collect output and outcome data. Discuss how regular quantitative/qualitative data collection will be complemented by in-depth studies [include in proposal budget] to monitor quality of service and program outcomes: e.g. cohort studies for PLWA on ART post 12,24,36,48 months

• Highlight historical output and, if available, outcome achievements over lifetime of the program to date. Explain how proposed activities will build on past achievements.

• Examine historical trend-line on past SDA costs. Highlight cost efficiencies achieved over lifetime of the program to date and forecast any expected reductions in per unit SDA costs through proposed activities.

• Highlight National Program’s role in leading and coordinating implementation of proposed activities and SDAs

Technical Guidance Note Addressing value for money in round 10 proposals for the Global Fund to Fight HIV/AIDS, Malaria and TB

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Appendix B: GFATM Round 10 FAQs (May 2010) value for money excerpt 3.2.1 What is value for money? Value for money (VFM) can be defined as using the most cost-effective interventions, as appropriate, to achieve the desired results. The Global Fund urges applicants to bear in mind that VFM does not necessarily equate to lower cost. What is important to consider is the balance between cost and effectiveness. For more details, please refer to the Information Note on Value for Money which explains how applicants can integrate Value for Money concepts throughout their Round 10 proposal.

3.2.2 How should recent average service delivery unit costs be estimated? Potential approaches vary depending on the service and available information sources. While there is not a preferred approach, the methodology used for the estimates must be described in the proposal. In principle, use existing data and estimates when available; applicants should not conduct a detailed expenditure data collection for the program solely for the purpose of the proposal. Approaches that applicants could consider include, but are not limited to, the following:

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a)

Use national assessments of expenditures per intervention and divide by the number of corresponding services/ outputs delivered at national level. For example, a National AIDS Spending Assessment (NASA) may provide national expenditures on antiretroviral therapy (ART) which can be combined with the number of patients on ART in the same year according to UNGASS reporting, to arrive at an estimated ART cost per patient year. If available, describe which cost components were included in the expenditure reporting.

b)

Use information that is routinely reported to technical partners on costs and outputs. For example, annual reporting to WHO-Stop TB by national TB control programs may provide the expenditures of the DOTS program as well as the cases treated, which can then be used to derive an estimate of the cost per DOTS patient treated.

c)

Use information from sub-national or in-depth costing studies. Where program-level data is not available, it may be possible to use information from parts of the program that have better data available to make an estimate for the full program. For example, there may be specific geographic regions or selected facilities with better data that could be used. However, a description should be included of the extent that the data source is representative of the larger program. Also consider providing available contextual information to help interpret the estimate of recent unit costs. For example, it may be helpful to explain why an expected unit cost appears high or low, or if there is a trend over time.

Technical Guidance Note Addressing value for money in round 10 proposals for the Global Fund to Fight HIV/AIDS, Malaria and TB

3.2.3 What if an applicant does not have estimates of average service unit costs available? The Global Fund recognizes that estimates may not be available in all local contexts. However, where estimates are not available, applicants should briefly explain why it is not possible to provide an estimate and ensure that this information gap is addressed in the description of how service delivery unit costs will be measured during the lifetime of the proposal period.

3.2.4 How should the expected service delivery unit costs for key services in the proposal be calculated? In addition to estimates of recent actual service unit costs, applicants should provide the expected (future) service unit costs implied by the proposal budget. In general, the expected service delivery unit cost should be the relevant proposal budget items divided by the number of corresponding outputs, with adjustments added to include relevant cost components covered by other funding sources. While there is not a single correct or preferred calculation, the methodology used should be clearly explained. In some cases, a potential starting point is the “Summary Budget by SDA” table and the corresponding outputs in the Performance Framework. However, more detailed budget information may be necessary in cases where one SDA supports multiple outputs or if the full cost of an activity is split over multiple SDAs. Additional analysis and explanation may also be required in cases where output targets are not directly tied to the grant but represent a larger number than is to be financed directly by the grant. In cases where portions of the service delivery costs will be funded through other sources, adjustments need to be added to arrive at the full service delivery unit cost. Applicants should include the budgeted figures for these cost components from other funding sources with reference to relevant documents or the methodology used to estimate these other components. In cases where resources (such as staffing or facilities) will be shared with other activities, the applicant needs to allocate only the relevant portion of that resource’s cost to the service delivery and explain the allocation calculation or assumption. Consider providing available contextual information for these expected unit costs. For example, it may be helpful to explain why an expected unit cost appears high or low, or why a trend over time is expected. Also consider including comparisons to reference points that the program used when determining its budget and interpreting any significant differences.

3.2.5 Should the estimate of recent service unit delivery costs be the same or similar to the expected unit cost for the service in the proposal? No, the estimate of recent service unit costs and the expected unit cost used in the proposal budget can differ. However, applicants may wish to provide a brief interpretation if significant differences exist between the two figures. For example, contextual information on initiatives that are expected to decrease or increase unit costs could be mentioned. If the recent and expected figures are not comparable, consider explaining why this is the case.

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3.2.6 Are there tools to guide countries in planning the measurement of service delivery unit costs throughout the lifecycle of the grant? In addition to discussing with technical partners, the following links may assist in understanding existing reporting to partners on national costs and service deliveries: UNGASS National Expenditure reporting: http://www.unaids.org/en/KnowledgeCentre/HIVData/CountryProgress/2010_UNGASS_ Reporting.asp http://data.unaids.org/pub/Manual/2009/JC1676_Core_Indicators_2009_en.pdf National AIDS Spending Assessment (NASA): http://www.unaids.org/en/KnowledgeCentre/HIVData/Tracking/Nasa.asp WHO TB data collection form: http://www.who.int/tb/publications/global_report/2009/update/dcf_2009.pdf Applicants should consider multiple options to determine what is the most efficient way to collect reliable service delivery unit cost information that is relevant to program managers.

3.2.7 Which interventions require an estimate of recent and expected service delivery unit costs? Service delivery unit costs do not need to be provided for all interventions. Include unit costs for services that are considered as key contributors to program impact and/or cost (e.g. ART, PMTCT, ACT, LLIN distribution, DOTS, OVC, MDR-TB treatment, etc).

3.2.8 Why are applicants requested to provide recent and expected service delivery unit costs? Service delivery unit costs are an important part of the value for money equation between costs and effectiveness. This section should be viewed as an opportunity for applicants to provide information on the progress that has been made in measuring these costs, as well as describing plans that can address information gaps, within the overall context of building the capacity to assess, improve, and demonstrate the value for money of a program. For more details, please refer to the Round 10 Guidelines for Proposals section 5 and the Unit costs for selected Key Health Products Information Note.

3.2.9 Where can applicants find information on unit costs available on the market for health products? Applicants may refer to guidance provided in the Information Note on Unit Costs for selected key Health Products. Reference is provided here to the lowest unit costs available on the market for a selected list of some of the most commonly used health products. For further information on pricing and available international reference sources, please consult the PSM Toolbox. This Toolbox has been developed as a central repository for a wide range of health related procurement & supply management tools, including pricing information and is available at the following link: http://www.psmtoolbox.org/en/

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Technical Guidance Note Addressing value for money in round 10 proposals for the Global Fund to Fight HIV/AIDS, Malaria and TB

Appendix C: GFATM Information Note “Value for Money” Appendix D: SDA Description Tool

Appendix E: Estimates of unit costs for key interventions in GFATM programs (2008)8 Disclaimer: these figures produced by a recent gfatm report represent very preliminary calculations. Gfatm does not intend countries to use these figures for benchmarking. As this data is publically available, it has been included in this appendix for clarification purposes. Service and Cost Unit

National Income Level and Unit Cost Estimate (Range)

Data Sources

Long-lasting insecticticidal net distributed to a person or family at risk of malaria

All incomes

US$ 7.3 (6.7 – 8.0)

Global Fund Price & Quality Reporting systems and in-depth costing studies

DOTS per TB patient

LI

US$ 150 (138-191)

LMI

US$ 173 (151-177)

UMI

US$ 1,023 (956-3,148)

Annual expenditure reporting by national TB programs to WHO Stop TB department

ART ppy (first line)

ART ppy (second line)

LI

US$ 553 (538-572)

LMI

US$ 675 (654-708)

UMI

US$ 776 (729-803)

LI

US$ 1,351 (1,324-1,488)

LMI

US$ 1,803 (1,533-2,331)

UMI

US$ 3,305 (2,408-5,223)

ARV prices reported to WHO Global Price Reporting system, indepth ARV therapy costing studies, UNGASS expenditure reporting



The Global Fund is redesigning the way in which it is providing funding to countries. In the new grant architecture, each Principal Recipient will receive a single stream of funding and comprehensive reviews of the program will be done every three years. Under this new model, program level service unit cost measurement is integrated systematically in the performance-based funding model.



With support from technical partners such as WHO, countries will be guided to measure and report service unit costs for key interventions in the programs at regular intervals(along with quality and impact data) to facilitate value for money assessments. This assessment will inform key decision-making stages of the funding cycle, such as evaluations of proposals by the TRP and decisions on continued funding.



Currently unit costs remain only one of the criteria used in decision-making. The purpose is to make countries aware of unit costs and achieve efficiency savings by setting feasible targets for improving unit costs without reductions in service delivery targets (GFATM, March 2010).



It is important part to bear in mind that higher up-front costs (unit or otherwise) are acceptable if justified due to greater benefits accrued over time (financial or otherwise).

8 Improving Value for Money in Global Fund – Supported Programs, March 2010

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Appendix F: Current and Long-term GFATM Objectives of VFM in supported programs9 (from GFATM Value for Money framework) 1. 2.

Contextual information in proposal and grant reviews , e.g. DOTS $/p Indicators for program planning and budgeting, e.g. country A sets target of reducing ART $/py from $1,000 to $900 by 2012. Inputs to evaluations on cost per life saved or per disability-adjusted life-year gained, e.g. to support investment decisions.

3.

Appendix G: GFATM Measurement of Value for Money10 (from GFATM website): By Level: Level

Type of Measurement

Example

1

Unit Price per health product

Price per ARV tablet

2

Unit Cost per service delivery (output)

Price per insecticide-treated bed net

Please see Appendix B for GFATM benchmark costing 3

Unit Cost per service delivery (outcome)

Cost per person on ART Cost per ITBN distributed Cost per patient treated under DOTS Cost per ITBN hung Cost per patient cured under DOTS

4

Cost-effectiveness (impact)

Cost per life saved/cost per death averted by ART, DOTS, ITBN

Round 10 Focus

By disease, methodology and source11: TB: DOTS Treatment: WHO Stop TB database by country: cost per patient treated under DOTS, cost per cured patient under DOTS. HIV: ART: In depth, bottom-up program level costing studies available from selected sites ARV pricing reported in WHO Global Price Reporting Mechanism UNGASS, NASA and Universal Access Reports Analysis of grant expenditure data on ARV therapy reported by supported programs through GFATM enhanced financial reporting system (see Appendix B) Malaria: Insecticide-treated bed net distribution: WHO Global Malaria Program annual country reports calculating expenditure per distributed net Bed net procurement pricing reported to WHO Global Price Reporting Mechanism

9 http://www.theglobalfund.org/en/performance/effectiveness/value/improving/?lang=en 10 http://www.theglobalfund.org/en/performance/effectiveness/value/framework/?lang=en 11 http://www.theglobalfund.org/en/performance/effectiveness/value/measured/?lang=en 20

Technical Guidance Note Addressing value for money in round 10 proposals for the Global Fund to Fight HIV/AIDS, Malaria and TB

Appendix H: NASA Expenditure Estimation: Costing HIV Services and Programs Appendix I: Clinton Foundation HIV/AIDS Initiative Unit Cost Analysis: Challenges and Potential Alternatives 1 If your most recent actual prices are higher than in reference materials, provide explanation. 2 Where this information is available, use it in your proposal as the TRP will be reviewing these reference documents. If any of the above data sources are available for your country, but you choose to use other inputs for your SDA cost calculations, explain clearly why you are not using the available information.

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