Partners in Crime: National Theft of Global Fund Medicines

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Summary

Millions of dollars of donated antimalarial drugs have been stolen, most often by staff of recipient government medical stores; this strengthens criminal gangs and undermines donor intent. The main culprit donor is the Global Fund to Fight AIDS, TB and Malaria, which worryingly is pushing ahead with further schemes that have the same inherent weaknesses, which may worsen the theft problem. Sweden and Germany have already suspended funding to the Global Fund due to financial irregularities, but it is time for a thorough investigation of drug theft-to ensure that drugs are being used by those intended, rather than encouraging illegal parallel distribution systems, in both recipient nations and nations where products are diverted. It is likely that the entire incentive system needs to change, so that donors only receive future taxpayer funds when they can show that the drugs they buy actually reach intended patients in developing nations, not just reach their governments' medical stores.

Background and Introduction

Over the past four years, Africa Fighting Malaria (AFM), a non-profit malaria research group, has sampled malaria drugs from eleven African countries, analyzing them for basic quality. Over time we noticed increasing amounts of the best antimalarial drugs, artemisinin-based combination therapies (ACTs), on sale in the private sector, which had originally been donated to the public sector. They had been stolen and diverted into private markets. We published our analysis in the peer-reviewed literature in September 2010, estimating that over a quarter of the ACTs we bought had been diverted. This research was updated at the end of 2010.

Since then, largely through internal procedures of the Global Fund to Fight AIDS, TB and Malaria (Global Fund), we have learned of major financial irregularities. Although the amount so far unearthed is not obviously large ($34 million) compared with the overall budget expenditure ($13 billion), that is partly because the vast majority of countries have not yet been investigated for fraudulent activity. The Swedish and German governments are worried enough to halt financing of the Global Fund, totaling over $250 million in 2011. Other nations are looking closely at their own support of the Global Fund. In the US, the Obama administration has criticized corruption but has predominantly championed the Global Fund, and last week approved $1.05 billion in funding in the next fiscal year for the Global Fund. Senator Richard Lugar (R-IN) recently published a report for the minority Republican members on the Foreign Relations Committee demanding further investigations at the Global Fund to stem corruption and theft of funds. The Foreign Relations Committee, other US entities and other governments will probably turn their attention to drug theft shortly, because the sheer scale, discussed below, means it is only a matter of time before their focus is shifted.

Roger Bate is the Legatum Fellow in Global Prosperity at AEI.

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