The arrival of nearly $10 million worth of donated antimalarial drugs in the small West African country of Togo starting in 2005 should have been fantastic news for the hundreds of thousands of impoverished people who fall sick with malaria there each year. The several million doses of treatments were meant to be handed out free in government clinics, helping those who couldn't afford the drugs. But that's not what happened. Instead, a third of the drugs were stolen, "diverted" away from free government clinics to be sold in street markets and for-profit pharmacies. Suddenly, they were priced way out of reach of most Togolese. And the international donors that provided the funds to buy the drugs didn't even know they'd gone missing until months after the fact. Worse, they didn't do a thing once they found out.
Sadly, Togo is not alone. Every year, perhaps as many as 30 million donated malaria treatments are stolen, similarly diverted from their intended, needy recipients into the hands of profit-driven distributors. What's most incredible about this, however, is that most of those treatments come from one of the world's most respected public-health donors, the Global Fund to Fight AIDS, Tuberculosis and Malaria. Next week, the body will finally hold a meeting devoted to drawing up a plan to stop the theft. "Theft of medicines is a problem that affects all institutions investing in health services, and we must clamp down on it," said Michel Kazatchkine, the Global Fund's executive director. In the same December 2010 news release, he asked for help: "[N]o single institution can act on its own. We can only solve this challenge if we all work together." But that plea amounts to too little, too late. The Global Fund has always had the power to oversee the distribution of its funds, but it has chronically failed to act on that responsibility.
When the international health community, backed by the G-8 leaders and the United Nations established the Global Fund in 2002, it was widely heralded as a new leader in solving some of the world's most pressing public-health problems. The model was simple: Rather than individual wealthy countries buying commodities like drugs or bed nets on an ad hoc basis, the Global Fund would serve as a clearinghouse, ensuring that funds were distributed according to need and preventing overlap and inefficiencies. It was an approach that gained the endorsement and support of the U.S. government. To date, the Global Fund has dispersed an incredible $21.7 billion in grants since its creation, $7 billion of it donated by Washington.
Yet however commendable the Global Fund's aim, its accountability standards don't nearly measure up to its hefty budget and vast influence. Recipient governments are responsible for managing the funds they receive, and often their local institutions are simply not up to the task. The Global Fund gets a third of its donations from the United States, but more than U.S. dollars, it needs American oversight. Currently, the administrative work done by the international health specialists working for the Global Fund Secretariat is overseen a 20-member board, in which the United States has only one seat. The Global Fund board's consensus-based decision-making is politically expedient, but it lacks the executive, investigative power to ensure real accountability. The Global Fund simply doesn't have the resources to both administer and audit medicinal grants.
Togo is only the most recent case in which the Global Fund's shortcomings have been on display. But it's a case in point. The small West African country is an ideal candidate for the Global Fund's attention and a microcosm of its failures. With a population of about 6.5 million, Togo suffered nearly 900,000 incidents of malaria in 2008, with 2,663 reported deaths. It's a country that neatly symbolizes the scourge of malaria and the difficulties of fighting it in straitened economic circumstances--half of the population survives on $1.25 a day, and the government only provides about $70 per person per year in health spending. (Most mid-income countries spend 10 times as much, while Western countries' spending is usually a hundred times more than that.) So it was appropriate that in 2005 the Global Fund approved a grant to Togo of more than $10 million to purchase and distribute top-of-the-line malaria treatments and to train health workers.
The Global Fund does not distribute funds directly; in Togo's case, the United Nations Development Program (UNDP) acted as the principal recipient in country. The UNDP then handed over the funds to UNICEF, which helped a Togolese agency, the Essential and Generic Medicine Procurement Agency (known by its French acronym CAMEG), to procure the relevant drugs. From that point forward, as per the Global Fund's standard practices, CAMEG was solely responsible for storing and distributing them for free through government clinics. At the outset, everything seemed to be going well. The Global Fund reported in 2010 that more than 3 million people in Togo had been treated with antimalarial drugs.
But in July, Mamessile Assih, CAMEG's chief executive, reported to the Togolese government that some of the drugs had been stolen. An internal government audit later revealed that 544,161 malaria treatments, well over a quarter of those donated, had been stolen from government stores. When my West African research colleagues went to Togo and dug a bit further, however, they found that the donated drugs--still in their distinctive packaging--were widely available in street markets across the country. The donated products were being sold rather than being given away at the state clinics. Togo's poor, who were supposed to be the beneficiaries, were now entirely excluded. Worse, these drugs were not stored in ideal conditions and hence were degraded, reducing their efficacy--and potentially even helping to incubate drug-resistant strains of malaria.
On Oct. 29, Togo's health minister, Komlan Mally, reported that the government audit had revealed that roughly a third of the antimalarial medicines provided by the Global Fund, worth well over $1 million, had been stolen. What is worse, CAMEG's own chief financial officer is alleged to be involved. He, along with four other CAMEG officials, including another senior manager, an operations manager, a warehouse manager, and a storekeeper, are under investigation for theft and trading in stolen products. Several remain in Togolese custody, considered potential flight risks. The investigation is ongoing. But the losses are considerable. The Togolese government managed to recover some of the stolen drugs from the markets, but much has simply disappeared, possibly to other African markets.
Corruption can occur anywhere, and it is to the credit of the Togolese government, and to Assih of CAMEG in particular, that it has been relatively transparent about these problems. But the Global Fund never should have allowed malfeasance to reach this level. The organization took too long before sending investigators to Togo--they arrived in autumn, months after the first credible reports of widespread corruption--which meant the trail had gone cold well before they arrived. A more cynical interpretation, though, is that by acting slowly, much of the evidence of a problem had disappeared by their arrival.
Unfortunately, Togo is not an isolated instance of abuse. The Global Fund has a long history of problems with stolen funds and failing projects. In 2005, it suspended grants to Uganda for mismanagement, and in 2010 it stopped giving funds to Zambia's Health Ministry, preferring instead to work with the more transparent UNDP.
My research into criminal drug distribution has revealed a steady increase in stolen drugs over the past three years. As many as 30 million donated malaria treatments are "diverted" every year, leaving malaria sufferers to pay in private markets for poorly stored products they should have received for free. Unsurprisingly, criminal gangs are now gaining greater control over medicinal distribution systems in many emerging markets across the globe. Rich international donors, by exponentially increasing the formerly limited drug supply, have also unwittingly expanded the opportunities available to criminal drug traders, from Pavel Garg's team in India to the Bryntsalov family in Moscow. In short, this is a huge and growing problem. Yet the Global Fund grant system continues unchanged and unaffected by the evident corruption in the states that receive funding. Currently, the organization only temporarily cuts the flow of funds from Geneva before again turning the funding tap back on.
Theoretically, that could change in the near future. At next week's meeting, the Global Fund will convene law enforcement and health officials to draw up a plan to combat the problem. Their efforts, however, are likely to amount to mere talk. This is a problem that requires not bureaucratic hand-wringing, but the attention of an international criminal-justice organization like Interpol.
One model for the Global Fund may be the U.S. medicinal aid system, which controls its own drug purchases for the developing world far more tightly. First, unlike the Global Fund, the U.S. government doesn't simply provide funds to recipient countries. Rather, it comes to an individual agreement with each country regarding which drugs the country wants; then it buys the drugs and has U.S. contractors deliver the products to the government distributors. When it encounters a problem with public-sector drug distributors, as it has in Angola, it completely bypasses the troublesome actor--in this case the Angolan government--and looks for other private distribution networks, including direct handoffs from U.S. contractors to in-country clinics. The global health community doesn't approve of this approach, however, suggesting that it wastes funds that could in principle be used to treat more people. Perhaps, but it's indisputable that the drugs at least get to where they're supposed to go.
The new U.S. Congress is lead by a Republican Party that has promised to take a hard look at wasteful spending decisions. The Global Fund, and its broken distribution systems, would be a good place for them to test their mettle.Roger Bate is the Legatum Fellow in Global Prosperity at AEI.