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Costs Have Declined Substantially, but Better Cost Data Would Help 
Efforts to Expand Treatment' which was released on April 15, 2013. 

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United States Government Accountability Office: 
GAO: 

Report to Congressional Requesters: 

March 2013: 

President's Emergency Plan For Aids Relief: 

Per-Patient Costs Have Declined Substantially, but Better Cost Data 
Would Help Efforts to Expand Treatment: 

GAO-13-345: 

GAO Highlights: 

Highlights of GAO-13-345, a report to congressional requesters. 

Why GAO Did This Study: 

Through PEPFAR-—first authorized in 2003-—the United States has 
supported major advances in HIV/AIDS treatment, care, and prevention 
in more than 30 countries, including directly supporting treatment for 
almost 5.1 million people. However, millions more people still need 
treatment. Congress reauthorized PEPFAR in 2008—-authorizing up to $48 
billion over 5 years-—making it a major policy goal to help partner 
countries develop independent, sustainable HIV programs. Congress also 
set spending and treatment targets. OGAC leads PEPFAR by allocating 
funding and providing guidance to implementing agencies. As requested 
GAO reviewed PEPFAR-supported treatment programs. GAO examined (1) how 
per-patient treatment costs have changed and affected program 
implementation, (2) how PEPFAR cost information supports efforts to 
expand treatment, and (3) how PEPFAR has met a legislated treatment 
spending requirement. GAO reviewed cost analyses and reports and 
analyzed ARV drug data relating to fiscal years 2005 through 2011; 
conducted fieldwork in three countries selected on the basis of 
program size and other factors; and interviewed PEPFAR officials and 
implementing partners. 

What GAO Found: 

The Department of State’s (State) Office of the U.S. Global AIDS 
Coordinator (OGAC) has reported that per-patient treatment costs 
declined from about $1,053 to $339 from 2005 to 2011. Purchasing 
generic antiretroviral (ARV) drugs, together with declining drug 
prices, has led to substantial savings. OGAC estimates that the 
President’s Emergency Plan for AIDS Relief (PEPFAR) has saved $934 
million since fiscal year 2005 by buying generic instead of branded 
products. PEPFAR’s analyses of data from eight country treatment-cost 
studies indicate that per-patient costs also declined as programs 
realized economies of scale while taking on new patients. Furthermore, 
the analyses suggest that costs decreased as countries’ treatment 
programs matured, particularly in the first year after programs 
expanded, and reduced one-time investments. Per-patient cost savings 
have facilitated substantial increases in the number of people on ARV 
treatment. In September 2012, an estimated 8 million were on treatment 
in low- and middle-income countries, of which PEPFAR directly 
supported 5.1 million—an increase of 125 percent since 2008, the year 
the program was reauthorized. 

Despite substantial declines in per-patient treatment costs, it is 
important that countries continue to improve the efficiency of their 
programs to expand to meet the needs of the estimated 23 million 
people eligible for ARV treatment under recent international 
guidelines. PEPFAR’s cost estimation and expenditure analysis 
approaches provide complementary information that can help partner 
countries expand treatment and identify potential cost savings. 
However, as currently applied, these approaches do not capture the 
full costs of treatment. Cost estimation provides in-depth 
information, but data are limited because detailed cost studies have 
been done in only eight partner countries, at a small number of sites. 
Moreover, although treatment programs are changing rapidly, key data 
for most of the studies are no longer timely, since they were 
collected in 2006 and 2007. PEPFAR does not have a plan for 
systematically conducting or repeating cost studies in partner 
countries. Data from expenditure analyses, while more timely, are 
limited because they do not include non-PEPFAR costs. Without more 
timely and comprehensive information on treatment costs, PEFPAR may be 
missing opportunities to identify potential savings, which are 
critical for expanding HIV treatment programs to those in need. 

Using an OGAC-developed budgetary formula, PEPFAR has met the 
legislative requirement that more than half of its funds be spent each 
year to provide specific treatment and care services for people living 
with HIV. From fiscal year 2008 to fiscal year 2012, PEPFAR funds 
allocated to capacity building—-to strengthen health systems, 
laboratory capacity, and strategic information systems-—increased from 
15 percent to 21 percent of PEPFAR’s total funds to support country 
programs. However, the current formula does not include the capacity 
building funds. These funds—-which support PEPFAR country teams’ 
efforts to meet another legislative goal of promoting sustainable 
country-owned programs—-and other PEPFAR activities also contribute to 
HIV treatment and care services. PEPFAR does not currently have a 
methodology to account for those contributions. Without such a 
methodology, it is not possible to determine the full amount of PEPFAR 
funds that are allocated to support the HIV treatment and care 
services identified in the spending requirement. However, the 
treatment spending requirement expires at the end of September 2013. 

What GAO Recommends: 

GAO recommends that State develop a plan for (1) expanding the use of 
in-depth cost studies to additional countries and sites, where 
appropriate, and (2) broadening expenditure analysis to include non-
PEPFAR costs, as feasible. State generally agreed with the report’s 
recommendations. 

View [hyperlink, http://www.gao.gov/products/GAO-13-345]. For more 
information, contact David Gootnick at (202) 512-3149 or 
gootnickd@gao.gov, or contact Marcia Crosse at (202) 512-7114 or 
crossem@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Lower-Priced ARV Drugs, Economies of Scale, and Program Maturity Have 
Helped Reduce Per-Patient Costs and Contributed to Expanding Treatment 
Programs: 

PEPFAR Cost Information Supports Efforts to Expand Country Treatment 
Programs but Has Limitations: 

Using OGAC's Budgetary Formula, PEPFAR Has Met the Treatment Spending 
Requirement, but the Formula Does Not Fully Account for All Funds: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: PEPFAR Program Areas, Budget Codes, and Budgetary Formula 
for Treatment Spending Requirement: 

Appendix III: Comments from the Department of State: 

Appendix IV: GAO Contacts and Staff Acknowledgments: 

Related GAO Products: 

Tables: 

Table 1: ARV Drug Purchases by PEPFAR and Estimated Savings from 
Purchasing Generic Products, Fiscal Years 2005 through 2011: 

Table 2: Features of PEPFAR's Cost Estimation and Expenditure Analysis 
Approaches for Obtaining Treatment Cost Information: 

Table 3: PEPFAR Program Areas and Associated Budget Codes: 

Figures: 

Figure 1: PEPFAR HIV Treatment Budget per Patient on ARV Treatment 
Directly Supported by PEPFAR, 2005 through 2011: 

Figure 2: Average Prices for Three Comparable First-Line ARV Treatment 
Regimens, from Third Quarter of Fiscal Year 2005 through Third Quarter 
of Fiscal Year 2011: 

Figure 3: Reported Number of People on ARV Treatment, 2004 through 
2012: 

Figure 4: Components of Approved PEPFAR Country Budgets Accounted for 
and Not Accounted for in OGAC Budgetary Formula, Fiscal Years (FY) 
2008 to 2012: 

Abbreviations: 

2008 Leadership Act: The Tom Lantos and Henry J. Hyde United States 
Global Leadership Against HIV/AIDS, Tuberculosis, and Malaria 
Reauthorization Act of 2008: 

AIDS: acquired immunodeficiency syndrome: 

ARV: antiretroviral: 

CD4: cluster of differentiation antigen 4: 

CDC: Centers for Disease Control and Prevention: 

FDA: Food and Drug Administration: 

Global Fund: The Global Fund to Fight AIDS, Tuberculosis and Malaria: 

HHS: Department of Health and Human Services: 

HIV: human immunodeficiency virus: 

NGO: nongovernmental organization: 

OGAC: Office of the U.S. Global AIDS Coordinator: 

PEPFAR: President's Emergency Plan for AIDS Relief: 

State: Department of State: 

TB: tuberculosis: 

UNAIDS: Joint United Nations Programme on HIV/AIDS: 

USAID: U.S. Agency for International Development: 

WHO: World Health Organization: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

March 15, 2013: 

Congressional Requesters: 

At the end of 2011, an estimated 34 million people worldwide were 
living with HIV, according to the Joint United Nations Programme on 
HIV/AIDS (UNAIDS). Through the President's Emergency Plan for AIDS 
Relief (PEPFAR), the United States has supported significant advances 
in HIV treatment, care, and prevention in more than 30 countries. 
PEPFAR investments have led to the rapid expansion of programs that 
provide access to life-saving antiretroviral (ARV) drugs and other 
treatment and care services for people living with HIV/AIDS.[Footnote 
1] As of September 2012, PEPFAR directly supported ARV treatment for 
almost 5.1 million men, women, and children.[Footnote 2] Although this 
represents more than half of the approximately 8 million people in 
low- and middle-income countries receiving ARV treatment, UNAIDS 
estimates that 15 million people in those countries are eligible for 
treatment under current international guidelines established by the 
World Health Organization (WHO).[Footnote 3] 

The U.S. Congress established PEPFAR in 2003 to assist foreign 
countries in combating HIV/AIDS, tuberculosis (TB), and 
malaria.[Footnote 4] At that time, the Congress authorized $15 billion 
from fiscal years 2004 through 2008 for PEPFAR.[Footnote 5] PEPFAR's 
implementing agencies--particularly the Department of Health and Human 
Services' (HHS) Centers for Disease Control and Prevention (CDC) and 
the U.S. Agency for International Development (USAID)--work with 
country governments and other partners such as the Global Fund to 
Fight AIDS, Tuberculosis and Malaria (Global Fund) to help provide an 
array of services, including HIV treatment, care, and prevention. 
Congress reauthorized PEPFAR in 2008--through the Tom Lantos and Henry 
J. Hyde United States Global Leadership Against HIV/AIDS, 
Tuberculosis, and Malaria Reauthorization Act of 2008 (2008 Leadership 
Act)[Footnote 6]--authorizing up to $48 billion to be used over 5 
years to continue and to expand U.S.-supported HIV/AIDS and other 
programs. The current authorization of appropriations for PEPFAR 
expires September 30, 2013.[Footnote 7] 

With the support of PEPFAR and other donors, countries are expanding 
their treatment programs to meet the needs of people receiving ARV 
treatment as well as HIV-positive people who are eligible for 
treatment under WHO's guidelines but are not yet being treated. In 
addition, in part to prevent disease transmission, some countries are 
broadening treatment eligibility requirements to include more groups 
of HIV-positive people, for example, by providing lifelong ARV 
treatment to pregnant and breastfeeding mothers. Despite the 
continuing expansion of treatment programs in low-and middle-income 
countries, international funding for the HIV response has stagnated 
since the onset of the global economic downturn, according to UNAIDS. 
This places increasing pressure on the treatment programs that PEPFAR 
supports to manage the per-patient cost of providing HIV treatment. 

The 2008 Leadership Act contained, among many other amendments, four 
provisions directly relevant to the expansion of treatment programs 
and their associated costs: 

* the requirement to increase PEPFAR's treatment goals in proportion 
to reductions in the U.S. per-patient cost of providing treatment in 
countries receiving PEPFAR assistance;[Footnote 8] 

* the requirement that PEPFAR annual reporting include a detailed 
description of program monitoring, defined as the collection, 
analysis, and use of routine program data to assess program 
implementation and costs;[Footnote 9] 

* the requirement that more than half of funds appropriated for PEPFAR 
be expended for certain treatment, care, and support activities for 
people living with HIV[Footnote 10] (hereafter referred to as the 
"treatment spending requirement"); and: 

* the major policy goal of helping partner countries develop 
independent sustainable HIV programs (hereafter referred to as 
"promoting country ownership"). 

You asked us to review HIV/AIDS treatment programs supported through 
PEPFAR. This is the first of three reports responding to your request. 
In this report, we examine: 

1. changes in per-patient treatment costs and their effect on program 
implementation; 

2. how PEPFAR's cost information supports countries' efforts to expand 
treatment; and: 

3. how PEPFAR has met the treatment spending requirement. 

We plan to issue related reports on PEPFAR treatment program results 
and PEPFAR supply chains later this year. 

To assess changes in per-patient costs and their effect on program 
implementation, we focused our work on PEPFAR's reported trends in per-
patient treatment costs relating to fiscal years 2005 through 2011. We 
also reviewed agency documents on PEPFAR's cost estimation approach 
and detailed results from the eight country treatment-cost studies 
that PEPFAR had completed as of February 2013.[Footnote 11] Further, 
we analyzed data on nearly all drug purchases from fiscal years 2005 
through 2011, and we interviewed PEPFAR officials and representatives 
of the contractor that manages the bulk of PEPFAR's ARV drug 
procurement. On the basis of our reviews of documentation, data 
checks, and interviews with officials responsible for the data, we 
determined that the ARV drug data were sufficiently reliable for our 
purposes. In addition, we conducted work in three PEPFAR partner 
countries--Kenya, South Africa, and Uganda--in June 2012. We selected 
these countries on the basis of program size, estimates of disease 
burden, and other factors. While in each country, we interviewed key 
implementing partners, technical experts in costing methodology, and 
in-country officials and reviewed documentation from the selected 
countries. We also analyzed data on the number of patients treated in 
PEPFAR-supported country treatment programs. On the basis of our 
reviews of documentation for these data and our interviews with PEPFAR 
officials, we determined that the data were sufficiently reliable for 
our purposes. To determine how PEPFAR cost information supports 
countries' efforts to expand treatment, we assessed the timeliness and 
completeness of information generated through PEPFAR's cost estimation 
and expenditure analysis approaches; examined PEPFAR country 
operational plans, other documents on cost trends, and goals for 
expanding treatment programs; reviewed international treatment 
guidelines; and interviewed PEPFAR officials. To assess how PEPFAR has 
met the treatment spending requirement, we reviewed applicable 
authorizing language as well as PEPFAR strategy and guidance; reviewed 
PEPFAR country operational plans and other planning documents; and 
reviewed PEPFAR budget data for fiscal years 2008 (the year PEPFAR was 
reauthorized) through 2012. We also interviewed PEPFAR officials 
regarding their implementation of the treatment spending requirement. 
For additional details on our scope and methodology, see appendix I. 

We conducted this performance audit from October 2011 to March 2013 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Background: 

PEPFAR's original authorization in 2003 established the Office of the 
U.S. Global AIDS Coordinator (OGAC) at the Department of State (State) 
and gave OGAC primary responsibility for the oversight and 
coordination of all resources and international activities of the U.S. 
government to combat the HIV/AIDS pandemic. OGAC also allocates 
appropriated funds to PEPFAR implementing agencies, particularly CDC 
and USAID. CDC and USAID obligate the majority of PEPFAR funds for HIV 
treatment, care, and prevention activities through grants, cooperative 
agreements, and contracts with selected implementing partners, such as 
U.S.-based nongovernmental organizations (NGO) and partner-country 
governmental entities and NGOs.[Footnote 12] 

PEPFAR supports the national HIV response in more than 30 countries. 
[Footnote 13] The levels and types of PEPFAR support for these 
countries' treatment programs vary on the basis of each country's 
capacity and the state of its HIV epidemic. For example, for a given 
country's program, PEPFAR may directly deliver the majority of HIV 
treatment services; it may be one of many entities delivering those 
services; or it may primarily provide support to other partners such 
as the country government and other bilateral and multilateral 
organizations--the Global Fund, for example--that also provide support 
to HIV programs. Moreover, UNAIDS data indicate that support for HIV 
programs in many countries is increasingly a mix of resources from the 
country government, Global Fund, PEPFAR, and other donors.[Footnote 
14] PEPFAR strategy stresses the importance of having the partner-
country government play the coordinating role. 

PEPFAR funding supports country programs that provide comprehensive 
HIV treatment--a broad continuum of treatment, care, and supportive 
services. This continuum begins with HIV testing and associated 
counseling, during which patients learn their HIV status and receive 
interventions to help them understand test results and link them to 
subsequent HIV treatment services. For individuals who are HIV 
positive, eligibility for ARV treatment is assessed by means of 
standard clinical or laboratory criteria--using CD4 count tests to 
measure the strength of a patient's immune system.[Footnote 15] 
Patients eligible for treatment receive ARV drugs as well as regular 
clinical assessment and laboratory monitoring of the treatment's 
effectiveness. Patients on ARV treatment also receive various care and 
support services such as treatment of opportunistic infections 
including TB co-infection, nutritional support, and programs to 
promote retention and adherence to treatment. Patients are expected to 
take ARV drugs on a continuing, lifelong basis once they have 
initiated treatment. 

Not all HIV-positive patients are eligible for ARV treatment at the 
time they are identified as HIV positive. However, these patients 
generally have access to a similar range of care and support services 
as well as to regular clinical and laboratory monitoring. HIV-infected 
patients become eligible to transition into ARV treatment on the basis 
of patient need and treatment guidelines, although other factors, such 
as the capacity of the site to support additional patients, may also 
be considered. WHO establishes international guidelines on when to 
initiate ARV treatment for various groups of HIV-positive people, such 
as adult patients who have never been on ARV treatment, pediatric 
patients, and pregnant and breastfeeding women. In 2010, WHO updated 
its guidelines to recommend ARV treatment for all people with CD4 
counts of less than 350 cells/mm3 and all people co-infected with HIV 
and TB, thereby expanding the number of people eligible for treatment. 
Each country establishes its own guidelines, based on WHO guidelines, 
for when to initiate treatment for these groups. UNAIDS estimated at 
the end of 2011 that, on the basis of the country-specific guidelines, 
15 million people in low-and middle-income countries needed ARV 
treatment. 

For PEPFAR budgeting purposes, PEPFAR categorizes the funds it 
provides for HIV programs into four broad program areas--Treatment, 
Care, Prevention, and Other--each of which includes multiple types of 
services.[Footnote 16] Treatment and Care include many of the 
clinical, laboratory, and support services that make up the 
comprehensive HIV treatment continuum as well as support services for 
orphaned and vulnerable children. Prevention includes interventions to 
prevent HIV infection, such as preventing mother-to-child transmission 
of HIV, sexual prevention, and medical male circumcision. The program 
area known as Other includes PEPFAR funds for efforts to strengthen 
health care systems, establish or enhance laboratory infrastructure, 
and provide strategic health information. For additional detail on the 
services budgeted in each PEPFAR program area and associated PEPFAR 
budget codes, see appendix II. 

Lower-Priced ARV Drugs, Economies of Scale, and Program Maturity Have 
Helped Reduce Per-Patient Costs and Contributed to Expanding Treatment 
Programs: 

Declining prices for ARV drugs have been a key source of per-patient 
cost savings, with most of these savings coming from the purchase of 
generic ARV drugs. Costs have also declined because programs have 
benefited from economies of scale and program maturity as they have 
expanded. These savings have contributed to substantial growth in 
treatment programs--both in the number of patients that PEPFAR 
directly supports on treatment, as well as the number of patients 
treated within the country programs that PEPFAR supports more broadly. 

PEPFAR's Reported Per-Patient Treatment Costs Have Declined 
Substantially: 

OGAC has reported a substantial decline in PEPFAR per-patient 
treatment costs, from $1,053 in 2005 to $339 in 2011. Using available 
program information, PEPFAR calculated these costs by dividing 
specific elements of its budgets for HIV treatment in a given year by 
the number of reported patients for the subsequent year (see figure 
1).[Footnote 17] For this calculation, PEPFAR defined its HIV 
treatment budget as the total amount budgeted for ARV drugs (hereafter 
referred to as ARVs), adult treatment, pediatric treatment, and 
laboratory infrastructure. The number of patients currently on ARV 
treatment directly supported by PEPFAR is routinely reported by 
country teams at the end of each fiscal year. PEPFAR officials told us 
that they use HIV treatment budgets to approximate trends in PEPFAR's 
per-patient treatment costs because they lack detailed information on 
the costs of comprehensive HIV treatment over time. They acknowledged 
that the calculation is a rough approximation that does not capture 
the full scope of PEPFAR funds spent to support the broad continuum of 
services under comprehensive HIV treatment. The calculation also does 
not capture funds from other funding sources. 

Figure 1: PEPFAR HIV Treatment Budget per Patient on ARV Treatment 
Directly Supported by PEPFAR, 2005 through 2011: 

[Refer to PDF for image: 3 line graphs, consolidated into one table] 

Year: 2005; 
PEPFAR HIV treatment budget[A, C]: $262 million; 
Patients on ARV treatment directly supported by PEPFAR[B]: 249,000; 
PEPFAR HIV treatment budget per ARV patient[C]: $1,053. 

Year: 2006; 
PEPFAR HIV treatment budget[A, C]: $453 million; 
Patients on ARV treatment directly supported by PEPFAR[B]: 541,000; 
PEPFAR HIV treatment budget per ARV patient[C]: $836. 

Year: 2007; 
PEPFAR HIV treatment budget[A, C]: $718 million; 
Patients on ARV treatment directly supported by PEPFAR[B]: 1.092 
million; 
PEPFAR HIV treatment budget per ARV patient[C]: $658. 

Year: 2008; 
PEPFAR HIV treatment budget[A, C]: $1.174 billion; 
Patients on ARV treatment directly supported by PEPFAR[B]: 1,744 
million; 
PEPFAR HIV treatment budget per ARV patient[C]: $673. 

Year: 2009; 
PEPFAR HIV treatment budget[A, C]: $1.609 billion; 
Patients on ARV treatment directly supported by PEPFAR[B]: 2.485 
million; 
PEPFAR HIV treatment budget per ARV patient[C]: $647. 

Year: 2010; 
PEPFAR HIV treatment budget[A, C]: $1.454 billion; 
Patients on ARV treatment directly supported by PEPFAR[B]: 3.21 
million; 
PEPFAR HIV treatment budget per ARV patient[C]: $453. 

Year: 2011; 
PEPFAR HIV treatment budget[A, C]: $1.326 billion; 
Patients on ARV treatment directly supported by PEPFAR[B]: 3.915 
million; 
PEPFAR HIV treatment budget per ARV patient[C]: $339. 

Source: GAO analysis of PEPFAR data. 

[A] PEPFAR defined the HIV treatment budget for this calculation as 
the total budget amounts allocated to the following four budget codes 
within the Treatment and Other program areas: ARV drugs, adult 
treatment, pediatric treatment, and laboratory infrastructure. 

[B] The number of adults and children receiving ARV treatment directly 
supported by PEPFAR is routinely reported by country teams at the end 
of each fiscal year. 

[C] PEPFAR calculated its annual HIV treatment budget per patient by 
dividing the budget amount allocated to treatment in the previous 
fiscal year by the number of reported patients for the current fiscal 
year. This calculation assumes a 1-year lag between budgeted funds and 
provision of services as an approximation of the typical delay between 
when resources are allocated and when they are expended. For example, 
PEPFAR calculated its 2005 per-patient treatment budget by dividing 
the fiscal year 2004 HIV treatment budget (as defined above) by the 
number of directly supported patients on ARV treatment reported for 
fiscal year 2005. 

[End of figure] 

Detailed PEPFAR studies of the estimated costs of providing 
comprehensive HIV treatment services in eight countries also show 
declining per-patient treatment costs. The average of PEPFAR's 
estimates includes costs not only to PEPFAR but also to other funding 
sources for PEPFAR-supported treatment programs. Using the data from 
the country treatment-cost studies, PEPFAR estimated that in fiscal 
year 2011 the per-patient cost of providing comprehensive HIV 
treatment services averaged $768, with PEPFAR's share amounting to an 
estimated $335. In comparison, the estimated per-patient treatment 
cost in fiscal year 2010 was $812, with PEPFAR's share amounting to an 
estimated $436 of the total. These estimates represent average costs 
because per-patient treatment costs vary by country, by treatment 
facility within a country, and by different types of patients, such as 
adult patients on ARV treatment versus pediatric patients on ARV 
treatment. 

Generic Products and Lower Prices Paid for ARV Drugs Have Been Key 
Factors Contributing to Declining Per-Patient Treatment Costs: 

Two key factors have contributed significantly to declining per-
patient ARV drug costs in PEPFAR-supported treatment programs: (1) the 
increasing use of generic products and (2) decreasing prices for 
specific ARV drugs. 

Increasing Use of Generic Products: 

From fiscal year 2005 to 2011, PEPFAR-supported treatment programs 
substantially increased their use of generic products, as shown by 
PEPFAR's data on ARV purchases.[Footnote 18] In fiscal year 2005, the 
first year when PEPFAR purchased ARVs, generics represented about 15 
percent of ARV purchases (by volume). By fiscal year 2008, generic ARV 
products had risen to 89 percent of purchases. By fiscal year 2011, 98 
percent of all ARVs PEPFAR purchased were for generic products. 
Although PEPFAR's overall increases in generic ARV purchases have been 
steady and substantial over the 7 years of data that we reviewed, the 
percentage of PEPFAR purchases for generic ARVs each year has varied 
across countries based on the availability of quality-assured generic 
products in each country.[Footnote 19] This is because PEPFAR 
purchases only quality-assured ARV products that comply with the laws--
including patent and drug-registration laws--that apply in each 
partner country. For example, because of country-specific requirements 
in South Africa, in fiscal year 2008 only 25 percent of the ARVs that 
PEPFAR purchased in South Africa were generic products. In 2010 and 
2011, PEPFAR worked with the South African government to update its 
ARV procurement processes, and in fiscal year 2011 almost 97 percent 
of PEPFAR-purchased ARVs in South Africa were generic. 

PEPFAR estimates that in fiscal years 2005 to 2011, it saved almost 
$934 million by buying generic versions of ARVs instead of equivalent 
branded products. PEPFAR estimated these savings by determining the 
amount it spent each year on quality-assured generic products that 
have an equivalent branded product.[Footnote 20] PEPFAR then compared 
the prices it paid for those generics with internationally negotiated 
prices for the equivalent branded products. (See table 1.) Purchasing 
generic ARVs has also allowed PEPFAR to broaden the selection of ARVs 
it purchases to include WHO-recommended products, particularly fixed-
dose combination products that do not have an equivalent branded 
formulation.[Footnote 21] However, PEPFAR has not estimated savings 
associated with purchasing these fixed-dose combination products 
because there are no branded equivalents. 

Table 1: ARV Drug Purchases by PEPFAR and Estimated Savings from 
Purchasing Generic Products, Fiscal Years 2005 through 2011: 

Total ARVs purchased: 
2005: $116.8 million; 
2006: $119.8 million; 
2007: $131.6 million; 
2008: $202.2 million; 
2009: $192.1 million; 
2010: $204.7 million; 
2011: $271.9 million; 
Total: $1.239 billion. 

Total generic ARVs purchased: 
2005: $10.7 million; 
2006: $36.2 million; 
2007: $75.4 million; 
2008: $154.6 million; 
2009: $129.9 million; 
2010: $177.1 million; 
2011: $254.8 million; 
Total: $838.7 million. 

Estimated PEPFAR savings: 
2005: $8.1 million; 
2006: $24.9 million; 
2007: $75.7 million; 
2008: $214.6 million; 
2009: $96.6 million; 
2010: $173.2 million; 
2011: $340.6 million; 
Total: $933.8 million. 

Source: GAO review of PEPFAR data. 

Notes: We reviewed data on ARV purchases and estimated savings (as of 
January 2013) that PEPFAR provided to us as well as PEPFAR data 
published in the Journal of the American Medical Association (see C.B. 
Holmes et.al., "Use of Generic Antiretroviral Agents and Cost Savings 
in PEPFAR Treatment Programs," Journal of the American Medical 
Association, vol. 304, no. 3 (2010)). To estimate savings from buying 
generic versions of ARVs, PEPFAR compares average annual prices that 
its implementing partners paid for generic versions of ARVs in a given 
year with internationally negotiated prices for equivalent branded 
products, if such branded equivalents existed at the time. 

[End of table] 

Decreasing Prices for Specific ARV Drugs: 

PEPFAR has also benefited from declining prices for specific ARV 
products, which have led to declining prices for the ARV treatment 
regimens recommended for use in resource-limited settings. WHO 
recommends that most patients starting ARV treatment for the first 
time receive one of several first-line regimens that combine three ARV 
drugs.[Footnote 22] Based on updated 2010 WHO treatment guidelines, 
these first-line regimens are built from combinations of the following 
six ARVs: tenofovir disoproxil furmarate (tenofovir), zidovudine, 
[Footnote 23] lamivudine, emtricitabine, nevirapine, and efavirenz. 
WHO's 2010 guidelines recommended that countries move away from 
including stavudine, a previously recommended ARV, in first-line 
regimens, because of toxicities associated with the drug. Instead, WHO 
recommended that countries use tenofovir or zidovudine. At the time, 
stavudine had been a preferred component of many countries' first-line 
regimens and was relatively inexpensive. In contrast, tenofovir and 
zidovudine were relatively more expensive. While prices for tenofovir-
based regimens remain higher than prices for the stavudine regimens 
they replace, tenofovir prices have declined to the point where they 
are, on average, lower than prices for zidovudine, the current first-
line alternative. Figure 2 shows how average prices have declined for 
three comparable first-line treatment regimens.[Footnote 24] 

Figure 2: Average Prices for Three Comparable First-Line ARV Treatment 
Regimens, from Third Quarter of Fiscal Year 2005 through Third Quarter 
of Fiscal Year 2011: 

[Refer to PDF for image: multiple line graph] 

Cost per patient: 

Fiscal year 2005, Q3; 
Tenofovir-based regimen: $808.06; 
Stavudine-based regimen: $555.48. 

Fiscal year 2005, Q4; 
Tenofovir-based regimen: $628.69; 
Zidovudine-based regimen: $662.33; 
Stavudine-based regimen: $469.26. 

Fiscal year 2006, Q1; 
Tenofovir-based regimen: $440.67; 
Zidovudine-based regimen: $442.59; 
Stavudine-based regimen: $273.88. 

Fiscal year 2006, Q2; 
Tenofovir-based regimen: $621.63; 
Zidovudine-based regimen: $640.17; 
Stavudine-based regimen: $420.83. 

Fiscal year 2006, Q3; 
Tenofovir-based regimen: $432.20; 
Zidovudine-based regimen: $422.78; 
Stavudine-based regimen: $290.58. 

Fiscal year 2006, Q4; 
Tenofovir-based regimen: $353.88; 
Zidovudine-based regimen: $279.92; 
Stavudine-based regimen: $180.31. 

Fiscal year 2007, Q1; 
Tenofovir-based regimen: $341.73; 
Zidovudine-based regimen: $350.42; 
Stavudine-based regimen: $168.10. 

Fiscal year 2007, Q2; 
Tenofovir-based regimen: $356.04; 
Zidovudine-based regimen: $337.20; 
Stavudine-based regimen: $198.47. 

Fiscal year 2007, Q3; 
Tenofovir-based regimen: $329.06; 
Zidovudine-based regimen: $319.47; 
Stavudine-based regimen: $161.68. 

Fiscal year 2007, Q4; 
Tenofovir-based regimen: $315.95; 
Zidovudine-based regimen: $237.77; 
Stavudine-based regimen: $126.03. 

Fiscal year 2008, Q1; 
Tenofovir-based regimen: $326.64; 
Zidovudine-based regimen: $232.05; 
Stavudine-based regimen: $140.94. 

Fiscal year 2008, Q2; 
Tenofovir-based regimen: $317.04; 
Zidovudine-based regimen: $241.76; 
Stavudine-based regimen: $127.24. 

Fiscal year 2008, Q3; 
Tenofovir-based regimen: $257.51; 
Zidovudine-based regimen: $288.81; 
Stavudine-based regimen: $111.86. 

Fiscal year 2008, Q4; 
Tenofovir-based regimen: $235.12; 
Zidovudine-based regimen: $207.56; 
Stavudine-based regimen: $109.27. 

Fiscal year 2009, Q1; 
Tenofovir-based regimen: $252.82; 
Zidovudine-based regimen: $203.83; 
Stavudine-based regimen: $105.76. 

Fiscal year 2009, Q2; 
Tenofovir-based regimen: $271.38; 
Zidovudine-based regimen: $215.76; 
Stavudine-based regimen: $126.86. 

Fiscal year 2009, Q3; 
Tenofovir-based regimen: $289.39; 
Zidovudine-based regimen: $160.01; 
Stavudine-based regimen: $90.12. 

Fiscal year 2009, Q4; 
Tenofovir-based regimen: $195.48; 
Zidovudine-based regimen: $189.88; 
Stavudine-based regimen: $118.69. 

Fiscal year 2010, Q1; 
Tenofovir-based regimen: $178.10; 
Zidovudine-based regimen: $167.54; 
Stavudine-based regimen: $91.86. 

Fiscal year 2010, Q2; 
Tenofovir-based regimen: $168.62; 
Zidovudine-based regimen: $162.26; 
Stavudine-based regimen: $104.78. 

Fiscal year 2010, Q3; 
Tenofovir-based regimen: $162.17; 
Zidovudine-based regimen: $154.78; 
Stavudine-based regimen: $85.45. 

Fiscal year 2010, Q4; 
Tenofovir-based regimen: $158.24; 
Zidovudine-based regimen: $157.28; 
Stavudine-based regimen: $110.64. 

Fiscal year 2011, Q1; 
Tenofovir-based regimen: $140.88; 
Zidovudine-based regimen: $146.61; 
Stavudine-based regimen: $79.23. 

Fiscal year 2011, Q2; 
Tenofovir-based regimen: $137.53; 
Zidovudine-based regimen: $146.85; 
Stavudine-based regimen: $77.63. 

Fiscal year 2011, Q3; 
Tenofovir-based regimen: $139.87; 
Zidovudine-based regimen: $145.21; 
Stavudine-based regimen: $92.29. 

Source: GAO analysis of PEPFAR data. 

Notes: Each first-line regimen shown is a combination of three 
individual ARV products. In 2010, WHO recommended that countries 
replace stavudine with tenofovir or zidovudine in their national 
treatment guidelines. The stavudine-based regimen includes stavudine, 
lamivudine, and nevirapine. The zidovudine-and tenofovir-based 
regimens also include lamivudine and nevirapine but replace stavudine 
with one of the currently recommended alternatives. Some of these 
regimens can be built with fixed-dose combination products that 
combine two or three ARVs into one pill. Prices for regimens using 
fixed-dose combination products are not shown. 

[End of figure] 

PEPFAR Analyses Indicate That Effects of Treatment Program Scale and 
Maturity Have Also Reduced Per-Patient Treatment Costs: 

PEPFAR has analyzed program characteristics that affect per-patient 
costs as treatment has expanded in PEPFAR-supported programs. PEPFAR 
evaluated treatment costs using a cost estimation approach that 
includes detailed country treatment-cost studies[Footnote 25] as its 
primary information source. These studies collect data through patient 
records and interviews from a selected number of delivery sites. 
PEPFAR has conducted country treatment-cost studies in eight 
countries. Five studies were completed in 2009 (Botswana, Ethiopia, 
Nigeria, Uganda, and Vietnam); two studies were completed in 2011 
(Mozambique and Tanzania); and one study was completed in 2012 
(Kenya). In the country treatment-cost studies, ARV and non-ARV drug 
costs (e.g., equipment, personnel, and supplies) were identified and 
evaluated over a period of at least 1 year as the treatment program 
expanded. Each country treatment-cost study stated that per-patient 
treatment costs declined over its evaluation period, from a 6 percent 
decline in Kenya's 2012 study to a 74 percent decline in Vietnam's 
2009 study. 

In addition, a November 2012 peer-reviewed journal article summarized 
findings from PEPFAR-supported studies of the costs of providing 
comprehensive HIV treatment services. This analysis used available 
data (collected from 54 delivery sites across six country treatment-
cost studies) to analyze the factors that contribute to declining per-
patient treatment costs.[Footnote 26] The summary analysis concluded 
that program scale and maturity had the most significant relationship 
with per-patient costs. 

Program Scale: 

The 2012 summary analysis identified a relationship between the 
increasing scale of the treatment program--the number of patients 
supported by the site in a defined period--and reduced per-patient 
treatment costs. This analysis estimated a 43 percent decline in per-
patient costs if an additional 500 to 5,000 patients are put on ARV 
treatment, and a 28 percent decline in per-patient costs if an 
additional 5,000 to 10,000 patients are put on ARV treatment. Program 
scale was also identified in the eight country treatment-cost studies 
as a factor affecting per-patient treatment costs, as each country 
experienced large increases in the number of people put on ARV 
treatment after rapid expansion in clinic capacity and infrastructure 
in PEPFAR-supported treatment programs. Officials told us that these 
reductions with program scale are due to the efficiencies gained with 
larger patient cohorts. 

Program Maturity: 

The 2012 summary analysis also identified a relationship between the 
program maturity--the time elapsed since sites began expanding their 
treatment programs--and reduced per-patient treatment costs. The 
summary analysis determined that per-patient costs declined an 
estimated 41 percent from 0 to 12 months, and declined an estimated 25 
percent from 12 to 24 months. The majority of country treatment-cost 
studies found that the first year following expansion saw the greatest 
reduction in costs, followed by minor cost reductions in later 
evaluation periods. In each country studied, the expansion of 
treatment programs included one-time investments, such as training and 
equipment costs, as well as ongoing costs, such as personnel and 
laboratory supplies, that were analyzed over time. After the large 
increase in funding at the beginning of the study period, one-time 
costs fell by the end of the study period in all eight countries, 
ranging from a 9 to 93 percent decline. Ongoing costs also fell from 
the beginning to the end of the evaluation period, ranging from a 16 
to 59 percent decline. PEPFAR attributes the relationship between 
declining per-patient treatment costs and program maturity as due 
primarily to the reduction in one-time investments and in part to 
fewer resources needed for ongoing investments as the programs 
expanded treatment. Officials also told us that as treatment programs 
mature, experience providing comprehensive HIV treatment can lead to 
program efficiencies--such as maximizing work flow in outpatient 
clinics--that reduce per-patient costs. 

As Per-Patient Costs Have Declined, PEPFAR Has Supported Treatment for 
More People: 

As per-patient treatment costs have declined in PEPFAR-supported 
programs, savings have contributed to substantial increases in the 
number of people on ARV treatment, including both people directly 
supported by PEPFAR and those who receive treatment through country 
programs (see fig. 3). Since the end of fiscal year 2008, PEPFAR has 
directly supported ARV treatment for over 3.3 million additional 
people. Moreover, in fiscal year 2012 PEPFAR added more people to ARV 
treatment than in any previous year. 

Figure 3: Reported Number of People on ARV Treatment, 2004 through 
2012: 

[Refer to PDF for image: stacked line graph] 

Year: 2004; 
Number of people on ARV treatment in low- and middle income countries[A]: 629,260; 
Number of people on ARV treatment directly supported by PEPFAR: 
66,700; 
Total number of people on ARV treatment: 695,960. 

Year: 2005; 
Number of people on ARV treatment in low- and middle income countries[A]: 1,062,730; 
Number of people on ARV treatment directly supported by PEPFAR: 
249,200; 
Total number of people on ARV treatment: 1,311,930. 

Year: 2006; 
Number of people on ARV treatment in low- and middle income countries[A]: 1,492,700; 
Number of people on ARV treatment directly supported by PEPFAR: 
541,300; 
Total number of people on ARV treatment: 2,034,000. 

Year: 2007; 
Number of people on ARV treatment in low- and middle income countries[A]: 1,877,440; 
Number of people on ARV treatment directly supported by PEPFAR: 
1,091,600; 
Total number of people on ARV treatment: 2,969,040. 

Year: 2008; 
Number of people on ARV treatment in low- and middle income countries[A]: 2,309,630; 
Number of people on ARV treatment directly supported by PEPFAR: 
1,743,600; 
Total number of people on ARV treatment: 4,053,230. 

Year: 2009; 
Number of people on ARV treatment in low- and middle income countries[A]: 2,753,980; 
Number of people on ARV treatment directly supported by PEPFAR: 
2,485,300; 
Total number of people on ARV treatment: 5,239,280. 

Year: 2010; 
Number of people on ARV treatment in low- and middle income countries[A]: 3,382,030; 
Number of people on ARV treatment directly supported by PEPFAR: 
3,195,000; 
Total number of people on ARV treatment: 6,577,030. 

Year: 2011; 
Number of people on ARV treatment in low- and middle income countries[A]: 3,905,500; 
Number of people on ARV treatment directly supported by PEPFAR: 
4,101,040; 
Total number of people on ARV treatment: 8,006,540. 

Year: 2012; 
Number of people on ARV treatment in low- and middle income countries[A]: 4,400,000; 
Number of people on ARV treatment directly supported by PEPFAR: 
5,057,500; 
Total number of people on ARV treatment: 9,457,500. 

Source: PEPFAR and UNAIDS data. 

Notes: The data shown represent our compilation of data reported by 
PEPFAR country teams and data collected by UNAIDS annually. PEPFAR 
defines direct results as counts of uniquely identified individuals 
receiving ARV treatment services that can be attributed to an ARV 
treatment intervention or activity taking place at a treatment 
facility that receives PEPFAR support. PEPFAR also makes broader 
contributions to country programs through overall system strengthening 
and capacity building that may occur apart from, or at higher levels 
than, the actual treatment facilities. PEPFAR reports these results 
based on fiscal year. UNAIDS reports the number of people on ARV 
treatment in low-and middle-income countries on a calendar-year basis. 
UNAIDS reported the number for 2011 in November 2012. 

[A] The number of people on ARV treatment in low-and middle-income 
countries shown for 2012 is a GAO projection based on recent trends. 

[End of figure] 

As a result of the recent increases in the number of people on ARV 
treatment, PEPFAR reports that it has met the requirement in the 2008 
Leadership Act to increase the number of patients on ARV treatment 
proportional to changes in appropriated funds and per-patient 
treatment costs.[Footnote 27] PEPFAR calculations indicate that, while 
funding for PEPFAR increased by about 10 percent and average per-
patient treatment costs declined by almost 67 percent from fiscal year 
2008 to 2011, the number of people under treatment due to direct 
PEPFAR support increased by 125 percent compared with the 2008 
baseline. On the basis of these results, PEPFAR anticipates that it 
will continue to exceed the mandated treatment targets and is also 
making progress towards meeting another target--set by the President 
in December 2011--that calls for PEPFAR to provide direct support for 
ARV treatment for more than 6 million people by the end of fiscal year 
2013. 

In addition to increasing the number of people it directly supports on 
ARV treatment, PEPFAR has supported partner countries in expanding 
their programs to provide ARV treatment to more people.[Footnote 28] 
Declining per-patient treatment costs have contributed to the 
countries' abilities to expand their programs. Additionally, PEPFAR 
has increased its efforts to strengthen the capacity of partner-
country programs to deliver treatment services. Some country 
governments are also contributing additional resources to treatment 
programs. As a result, national programs have also expanded rapidly. 
For example, in South Africa an estimated 1.7 million people were on 
ARV treatment at the end of 2011, almost 1 million more than were on 
ARV treatment at the end of 2008, according to UNAIDS data. Similarly, 
in Kenya almost 540,000 people were on ARV treatment at the end of 
2011, an increase of almost 290,000 since 2008. 

PEPFAR Cost Information Supports Efforts to Expand Country Treatment 
Programs but Has Limitations: 

PEPFAR expects that total costs for country programs will increase 
over the near term if country treatment programs expand to reach unmet 
needs and adhere to updated international guidelines. PEPFAR's current 
cost information could help partner countries expand treatment because 
the information is useful for planning and identifies cost-cutting 
opportunities. However, PEPFAR's cost estimation and expenditure 
analysis approaches have certain limitations--primarily relating to 
the timeliness and comprehensiveness of data--that do not allow PEPFAR 
to capture the full costs of treatment programs. 

Total Treatment Costs Are Expected to Increase over the Near Term as 
More People Receive Treatment: 

Despite decreasing per-patient treatment costs, PEPFAR expects that 
country treatment programs will continue to expand to address large 
unmet needs, resulting in increases in total treatment costs. For 
example, in Uganda's treatment cost study, although the estimated per-
patient treatment cost in Uganda fell by 53 percent over the course of 
the evaluation, the total site-level costs grew as the program 
expanded to treat more people. As of 2011, Uganda had provided ARV 
treatment to about 290,000 people--half the number of those eligible 
for ARV treatment. In its 2012 country operational plan, Uganda set a 
goal of providing ARV treatment to 347,000 people with direct PEPFAR 
support. Given the magnitude of the unmet need for treatment in Uganda 
and other PEPFAR partner countries, higher treatment goals will 
continue to drive the expansion of treatment programs, and PEPFAR 
expects this will add to the amount of resources required. 

PEPFAR partner countries are also considering treatment program 
expansion on the basis of emerging scientific evidence. The new 
evidence demonstrates that ARV treatment can be highly effective not 
only for treating people with HIV but also for preventing HIV-positive 
people from transmitting the virus to others. In early 2012, WHO 
updated its guidance for certain elements of ARV treatment that 
advises countries to expand treatment programs to new groups, which 
will increase total treatment costs. The 2012 updates did not change 
WHO's recommendations about when to initiate ARV treatment; however, 
the revised guidance described the long-term benefits of expanding 
eligibility for ARV treatment in several categories of HIV-positive 
people, including all pregnant and breastfeeding women and certain 
high-risk populations, in order to prevent HIV transmission.[Footnote 
29] Some countries are beginning to expand eligibility for ARV 
treatment to some of these groups, particularly by initiating lifelong 
ARV treatment for all HIV-positive pregnant and breastfeeding women as 
part of concerted efforts to eliminate mother-to-child transmission of 
HIV. UNAIDS estimates that expanding programs to these groups would 
increase the number of people in low-and middle-income countries who 
are eligible for ARV treatment by over 50 percent, from 15 million to 
23 million.[Footnote 30] 

PEPFAR and its partner countries use cost information to plan for 
expanding treatment programs. For example, some of PEPFAR's country 
treatment-cost studies have projected total costs under different 
scenarios of expanded treatment. Four of the eight country treatment-
cost studies we reviewed included scenarios that project total costs 
with different patterns and rates of treatment expansion over a 3-or 5-
year period. For example, Nigeria's 2009 country treatment-cost study 
projected costs under three scenarios: (1) keeping its treatment 
targets at 2008 levels, (2) adding 100,000 patients, and (3) adding 
more than 200,000 patients, which represented half of those estimated 
to need ARV treatment in 2008. 

PEPFAR Has Detailed Cost Information but Needs More Timely and 
Comprehensive Data: 

The 2008 Leadership Act established the requirement that PEPFAR annual 
reporting include a detailed description of its program monitoring 
activities--defined as the collection, analysis, and use of routine 
program data to assess program implementation and costs.[Footnote 31] 
According to PEPFAR and UNAIDS officials, cost information is 
essential for helping low-and middle-income countries meet the 
challenge of expanding treatment. For example, in 2012, a report by 
UNAIDS officials stressed the importance of developing systematic 
processes--including both routine cost monitoring and in-depth 
facility-based cost studies--that countries can use to produce robust 
information on costs at local and national levels.[Footnote 32] Such 
information can be used to analyze program costs and help identify 
opportunities for greater efficiency. 

PEPFAR uses two complementary approaches to analyze costs in the 
programs it supports.[Footnote 33] One approach provides comprehensive 
in-depth analysis of treatment costs, while the other approach will 
provide routine monitoring of spending data specific to PEPFAR. 
However, neither approach captures the full costs to country treatment 
programs of meeting increasing demand and resource needs in 
environments that are continually changing. 

Cost Estimation Approach: 

PEPFAR's cost estimation approach identifies the costs of providing 
comprehensive HIV treatment services in a partner country, examines 
the range of the costs across delivery sites and types of patients, 
and analyzes the costs over a period of at least 1 year. This 
approach--and the country treatment-cost studies conducted as its 
primary information source--provides valuable information on the costs 
of delivering comprehensive HIV treatment services.[Footnote 34] The 
country treatment-cost studies consist of in-depth analysis from 
patient record data and interviews from a selected number of delivery 
sites--outpatient clinics that provide comprehensive HIV treatment 
services. Each delivery site's data is grouped by cost unit[Footnote 
35] and segmented into 6-month periods in order to examine ARV drug 
and non-ARV drug costs over time. Cost estimation allows PEPFAR to 
assess costs to itself and to other funding sources--country 
governments, including Global Fund contributions, and other local and 
international organizations. However, there are three key limitations. 

First, the cost estimation approach has provided valuable information 
on the costs of delivering comprehensive HIV treatment services, but a 
lack of timely data is a significant limitation, particularly given 
the rapid pace of change in treatment programs. Data for five of the 
eight country treatment-cost studies were collected between April 2006 
and March 2007--before the significant expansion of country treatment 
programs. PEPFAR officials noted that changes in treatment program 
costs can happen too fast to be captured, and because the data 
collection and analysis for country treatment-cost studies are time 
and resource intensive, the reported results from the studies lag 
behind conditions on the ground. PEPFAR collects retrospective data 
for a determined period of time--typically a few months--and analyzes 
that data for treatment costs and results, which requires a period of 
typically 2 years. For example, Nigeria's treatment-cost study 
involved data collection at nine delivery sites and supporting 
organizations from April to October 2006, but the final report on the 
results was completed in December 2009. Moreover, most country cost 
estimates included data collected in 6-month periods beginning at or 
around the start of PEPFAR support, thus providing cost information on 
the impact of treatment expansion with PEPFAR funds. Only one country 
treatment-cost study--Kenya's 2012 study--covered a time period of 
data collection that could indicate how costs changed after PEPFAR's 
increased support of expanded treatment programs. 

Second, PEPFAR's cost estimation approach has been limited in the 
scope of information it has provided because of the small number and 
type of delivery sites selected. For seven of the eight country 
treatment-cost studies, patient record data consist mostly of data 
that typically were collected from nine outpatient clinics per country 
that received direct or indirect PEPFAR support. In addition, PEPFAR 
reports that the selected sites vary in how representative they are of 
the respective country program.[Footnote 36] The costs of 
comprehensive HIV treatment services vary among sites because the 
services provided may differ widely. Additionally, services and costs 
at sites in one country may not represent the type of services 
provided under comprehensive HIV treatment available across other 
PEPFAR partner countries, which makes it difficult to identify best 
practices that can be applied to other programs to increase program 
efficiency. However, PEPFAR's most recent country treatment-cost study 
(completed in Kenya in October 2012) included 29 delivery sites and 
was the first study to use random sampling to select sites. PEPFAR 
officials characterized the study as a representative sample of the 
country's delivery sites. Separately, limited information is available 
for sites not supported by PEPFAR. Although entities outside PEPFAR 
have conducted studies to estimate treatment costs at different sites, 
PEPFAR reports that these studies have not assessed as many services 
(e.g., services for people living with HIV who are not yet on ARV 
treatment), and, as a result, there were not sufficient, comparable 
data available for a meaningful comparison of costs. 

Third, although PEPFAR's cost estimation process enables it to analyze 
costs at the treatment facility level for PEPFAR and other funding 
sources, it does not include program management costs incurred above 
the facility level. In addition, PEPFAR has identified but not 
analyzed possible cost benefits associated with improved patient 
outcomes from standardization and extended monitoring intervals for 
stable patients, and continued decreases in ARV drug pricing because 
of better tolerated regimens and declines in second-line regimen 
formulations. Challenges in linking cost data to patient outcomes data 
was identified as a limitation by all of the country treatment-cost 
studies. Information on program management costs and outcomes will 
become increasingly important as countries take on additional 
responsibility for supporting treatment delivery and allocating 
resources across all program sites. 

Expenditure Analysis Approach: 

To obtain more timely cost information, PEPFAR began piloting the use 
of expenditure analysis in 2009 to review country-specific PEPFAR 
spending across program activities, including treatment. PEPFAR's 
expenditure analysis approach involves collecting data from PEPFAR 
implementing partners on amounts that each partner spent to provide 
direct or indirect treatment services, and links that spending to the 
numbers of patients receiving support for treatment through the 
partner. The expenditure analysis approach updates costs rapidly and 
includes information on PEPFAR costs above the facility level. Between 
2009 and 2012, PEPFAR completed nine expenditure analysis pilots in 
eight countries.[Footnote 37] PEPFAR officials told us that, during 
fiscal year 2012, it began to use its formal expenditure analysis 
approach in a different set of nine countries,[Footnote 38] and these 
analyses were completed and disseminated to countries in February 
2013. PEPFAR uses expenditure analysis to identify spending outliers 
among its implementing partners. PEPFAR officials said they use that 
information to discuss with implementing partners the causes of their 
relatively high or low expenditures per patient and to identify 
potential efficiencies that other partners can implement. For example, 
in Mozambique--the first country to complete a second expenditure 
analysis--PEPFAR officials found that the variation of per-patient 
expenditures for non-ARV drug costs narrowed among five implementing 
partners between 2009 and 2011. PEPFAR attributed the smaller range of 
expenditures in part to their ability to use expenditure analysis data 
to stress efficient delivery of services. 

Expenditure analysis does not provide a comprehensive picture of 
treatment costs, because it only includes spending by PEPFAR 
implementing partners. Although expenditure analysis enables PEPFAR to 
allocate resources more efficiently by comparing its implementing 
partners, it does not include spending from partner-country resources 
and other funding sources. Because PEPFAR cannot require reporting for 
non-PEPFAR resources, PEPFAR officials stated that using diplomatic 
efforts with country governments has been a priority to enable sharing 
of expenditure data. PEPFAR has reported that the vast majority of 
patients on PEPFAR-supported ARV treatment receive services in the 
public sector (36 of the 43 delivery sites among the five country 
treatment-cost studies completed by 2009 were government-run 
facilities). As a result, cost information across all treatment 
partners at the facility and country level is important for 
facilitating fully informed discussions among those partners about 
current and future resource allocation. (The features of PEPFAR's cost 
estimation and expenditure analysis approaches for obtaining cost 
information are described in table 2.) 

Table 2: Features of PEPFAR's Cost Estimation and Expenditure Analysis 
Approaches for Obtaining Treatment Cost Information: 

Approach feature: Scope; 
Cost estimation: Country treatment-cost 
studies capture facility-level costs to PEPFAR, country government, and 
other funding sources; 
Expenditure analysis: Analysis captures PEPFAR implementing partner 
spending and includes costs above the facility level. 

Approach feature: Time frame; 
Cost estimation: Delivery site data are captured for a period of at 
least 1 year in a retrospective analysis; 
Expenditure analysis: Data are captured as part of a rapid assessment 
covering a period of 1 year. 

Approach feature: Methodology; 
Cost estimation: In-depth analysis in country treatment-cost studies 
of cost units collected from patient records compared across 6-month 
segments; 
Expenditure analysis: Collects data on PEPFAR implementing partners' 
spending to provide direct or indirect treatment services and links 
that spending to numbers of patients receiving support for treatment 
through that partner. 

Approach feature: Output; 
Cost estimation: Cost estimates of country's comprehensive HIV 
treatment services to examine ARV drug and non-ARV drug costs over 
time; 
Expenditure analysis: Rapid analysis of expenditures across 
implementing partners to target and address outliers. 

Approach feature: Key limitations; 
Cost estimation: Lack of timely data due to resource-intensive data 
collection and analysis; a limited number and type of delivery sites 
included; does not include certain costs, such as above facility-level 
costs; 
Expenditure analysis: Only includes spending by PEPFAR implementing 
partners. 

Source: GAO analysis of PEPFAR documentation. 

[End of table] 

Each of PEPFAR's complementary approaches provides cost information 
that can help countries to plan for the efficient expansion of 
treatment programs, and PEPFAR has made some plans to strengthen each 
approach. As of February 2013, PEPFAR was preparing three additional 
country treatment-cost studies, including a follow-up study in 
Tanzania--PEPFAR's first repetition of a study in a partner country. 
In addition, PEPFAR has shortened the time frame for examining costs, 
compared with the time frames for earlier studies. In the Kenya, 
Mozambique, and Tanzania treatment-cost studies that were completed in 
2011 and 2012, the data collection period for all facilities was a 
maximum of 1 year (or two 6-month periods). PEPFAR officials told us 
that cost estimation is important for identifying cost drivers, 
especially because it includes non-PEPFAR costs and can be used to 
develop cost projections for various treatment scenarios. However, 
because the studies are in-depth analyses, requiring extensive field 
work, they will continue to be time and resource intensive. PEPFAR 
officials told us that conducting country treatment-cost studies more 
regularly has not been their highest priority; they noted that their 
efforts have been focused on implementing processes for routine 
expenditure analysis in PEPFAR partner countries. Although PEPFAR has 
taken steps to strengthen cost estimation, country treatment-cost 
studies have been conducted in only a small number of countries (eight 
partner countries) and delivery sites (usually about nine clinics per 
country). In addition, although PEPFAR-supported treatment programs 
are changing rapidly, for five of the eight studies that have been 
completed, data were collected between 2006 and 2007. PEPFAR currently 
does not have a plan for systematically conducting or repeating 
country treatment-cost studies, as appropriate, in partner countries. 
Without such a plan, PEPFAR may be missing opportunities to identify 
potential savings, which are critical for expanding HIV treatment 
programs to those in need. 

Using the expenditure analysis approach to obtain more rapid cost 
information to inform planning efforts by country teams addresses the 
timeliness limitations of the country treatment-cost studies, but does 
not capture non-PEPFAR costs. However, PEPFAR officials told us that 
non-PEPFAR spending data are difficult to obtain because the budget 
processes of each partner are often not aligned and country systems 
may not be structured to aggregate HIV-specific data. For example, in 
an expenditure analysis pilot in Guyana, officials said that aligning 
expenditure categories across all treatment partners (PEPFAR, Global 
Fund, and Guyana Ministry of Health) was a time-consuming process 
requiring negotiation with the country government on the level of 
alignment needed. PEPFAR reports that it has engaged with country 
governments and multilateral partners to address the ability to 
capture full country-expenditure data. Further, it has begun 
collaborating with up to three countries to obtain expenditure data 
for the full country program during 2013. Although we recognize the 
difficulties involved in capturing non-PEPFAR expenditures, these 
spending data are important for decision makers as countries take on 
additional responsibility for allocating resources. PEPFAR officials 
told us that, by the end of fiscal year 2014, they plan to roll out 
formal expenditure analysis to all PEPFAR countries as part of annual 
reporting requirements; however, they said there are no current plans 
to routinely capture non-PEPFAR costs in those analyses. Without 
comprehensive data on expenditures, PEPFAR-supported programs will not 
be fully informed when making decisions about how to allocate 
resources. 

Using OGAC's Budgetary Formula, PEPFAR Has Met the Treatment Spending 
Requirement, but the Formula Does Not Fully Account for All Funds: 

The 2008 Leadership Act requires that more than half of PEPFAR funds 
be used to support specific aspects of treatment and care for people 
living with HIV.[Footnote 39] Using an OGAC-developed budgetary 
formula, PEPFAR has met this treatment spending requirement. Since 
PEPFAR was reauthorized in 2008, PEPFAR country teams' budgets 
allocated to capacity building have increased. However, funding for 
capacity building is excluded from OGAC's formula. OGAC currently does 
not have a methodology to account for the extent to which these funds 
contribute to HIV treatment and care. As a result, it is not possible 
to determine the full amount of PEPFAR funds that are allocated to 
support the HIV treatment and care services identified in the spending 
requirement. 

Using OGAC's Budgetary Formula, PEPFAR Has Met the Treatment Spending 
Requirement: 

Using a budgetary formula that OGAC developed, PEPFAR has met the 
treatment spending requirement each year since reauthorization. The 
2008 Leadership Act required that, for each of fiscal years 2009 
through 2013, more than half of the funds appropriated to PEPFAR be 
expended for specific elements of HIV treatment and care.[Footnote 40] 
In implementing this requirement, OGAC refers to the budget for these 
spending categories as the budget for "treatment and care of people 
living with HIV." OGAC divides the budget for "treatment and care of 
people living with HIV" by total country team funds budgeted under the 
Treatment, Care, and Prevention program areas. OGAC guidance defines 
the formula used to implement the spending requirement as follows: 
[Footnote 41] 

Budgets for "treatment and care for people living with HIV": 
divided by: 
(Budgets for Treatment + Care + Prevention program areas): 
Greater than = 50%. 

To determine the amount of the PEPFAR budget that constitutes 
"treatment and care for people living with HIV," OGAC sums the amounts 
allocated by all country teams each year to six of the seven budget 
codes within the Treatment and Care program areas (see appendix II for 
more details regarding this calculation). 

PEPFAR budget data indicate that, using OGAC's budgetary formula, the 
program met the spending requirement each year since reauthorization. 
Between fiscal years 2008 and 2012, the calculated budget for 
"treatment and care for people living with HIV" ranged from 
approximately 54 to 52 percent of total budgets for the Treatment, 
Care, and Prevention program areas. 

Current Budgetary Formula Does Not Account for Increased Proportion of 
Funding Allocated to Country Capacity Building: 

OGAC's budgetary formula implementing the treatment spending 
requirement does not account for the increasing proportion of funds 
that PEPFAR country teams have allocated to country capacity building. 
The 2008 Leadership Act identifies health capacity building in order 
to promote the transition toward greater sustainability through 
country ownership as one of the purposes of the law. Consistent with 
this principle, PEPFAR country teams have increased investments to 
strengthen country health systems. These funds, which are typically 
allocated in the "Other" program area budget codes--health systems 
strengthening, strategic information, and laboratory infrastructure--
are excluded from OGAC's budgetary formula. However, from fiscal year 
2008 to fiscal year 2012, country team budgets for the Other program 
area increased from $574 million to $710 million. Over the same time 
frame, OGAC-defined budgets for "treatment and care for people living 
with HIV" declined from about $1.8 billion to $1.4 billion. Total 
budgets for the Treatment, Care, and Prevention program areas were 
relatively constant from fiscal year 2008 to 2011 but declined to $2.6 
billion in fiscal year 2012. (See fig. 4.) By fiscal year 2012, 
budgets in the Other program area represented more than 21 percent of 
all program area budgets, up from about 15 percent in fiscal year 2008. 

Figure 4: Components of Approved PEPFAR Country Budgets Accounted for 
and Not Accounted for in OGAC Budgetary Formula, Fiscal Years (FY) 
2008 to 2012: 

[Refer to PDF for image: illustration containing graphs and data] 

Fiscal year 2008: 
Budget for "treatment and care for people living with HIV"[A]: $1.840 
billion; 
Budget for treatment, care and prevention program areas[B]: $1.391 
billion; 
Other subtotal[C]: $574 million. 

Fiscal year 2009: 
Budget for "treatment and care for people living with HIV"[A]: $1.741 
billion; 
Budget for treatment, care and prevention program areas[B]: $1.474 
billion; 
Other subtotal[C]: $738 million. 

Fiscal year 2010: 
Budget for "treatment and care for people living with HIV"[A]: $1.640 
billion; 
Budget for treatment, care and prevention program areas[B]: $1.486 
billion; 
Other subtotal[C]: $691 million. 

Fiscal year 2011: 
Budget for "treatment and care for people living with HIV"[A]: $1.653 
billion; 
Budget for treatment, care and prevention program areas[B]: $1.545 
billion; 
Other subtotal[C]: $765 million. 

Fiscal year 2012: 
Budget for "treatment and care for people living with HIV"[A]: $1.382 
billion; 
Budget for treatment, care and prevention program areas[B]: $1.262 
billion; 
Other subtotal[C]: $710 million. 

Current budgetary formula: 

Budget for "treatment and care for people living with HIV"[A]; 
divided by: 
Budget for treatment, care and prevention program areas[B]; 

Not reflected in current formula: 
Other subtotal[C]. 

Source: GAO analysis of PEPFAR data. 

[A] The OGAC-defined budget for "treatment and care for people living 
with HIV" includes PEPFAR country team budgets for adult treatment, 
pediatric treatment, ARV drugs, adult care and support, pediatric care 
and support, and TB/HIV. 

[B] "Budgets for Treatment, Care, and Prevention program areas" 
includes total PEPFAR country team budgets for those program areas. 

[C] "Other subtotal" includes budget codes for health systems 
strengthening, laboratory infrastructure, and strategic information. 

[End of figure] 

OGAC officials told us that the current budgetary formula was 
developed based on OGAC's interpretation of the intent of the 
treatment spending requirement. Calculating the proportion of funds 
allocated to specific activities as a percentage of total country 
budgets allocated to the Treatment, Care, and Prevention program 
areas--excluding budgets for the Other program area--is consistent 
with the methods OGAC used to track spending under the first PEPFAR 
authorization. OGAC officials said that this approach allows OGAC to 
isolate budgeted funds that support the direct services that PEPFAR 
delivers to patients at the facility level, consistent with PEPFAR's 
early focus on directly delivering treatment services as part of a 
broad emergency response. 

As PEPFAR's role in each country has evolved, the components of PEPFAR 
country team budgets that contribute to the HIV treatment and care 
services specified in the spending requirement have also evolved. 
However, some of those funds are not accounted for in the current 
budgetary formula. In particular, although budgets allocated to 
capacity building have increased, those funds are not accounted for in 
either component of OGAC's budgetary formula: the budget for 
"treatment and care for people living with HIV" or the total budgets 
for the Treatment, Care, and Prevention program areas. Some capacity-
building efforts, such as enhancements to drug supply chain systems 
that are budgeted under health systems strengthening, also contribute 
to HIV treatment and care services. Other health systems strengthening 
activities may have a less direct effect on those services.[Footnote 
42] Moreover, OGAC officials said that some funds budgeted for 
prevention activities--particularly funds for prevention of mother-to-
child transmission of HIV that cover ARV treatment and care services 
for HIV-positive pregnant and breastfeeding women--also contribute to 
HIV treatment and care services. Those contributions are likewise not 
accounted for in the calculated budget for "treatment and care for 
people living with HIV." 

OGAC officials told us that they currently do not have an agreed 
methodology that would allow them to determine the extent to which 
funds for capacity building, or certain prevention activities, 
contribute directly to HIV treatment and care. As a result, it is 
currently not possible to determine accurately the proportion of total 
country budgets that support the services specified in the treatment 
spending requirement, if the contributions of PEPFAR country teams' 
capacity-building and prevention budgets are taken into account. OGAC 
officials acknowledged that as PEPFAR continues to evolve, addressing 
the challenge of accounting for the contributions that funds from 
budgets for capacity building and prevention make to HIV treatment and 
care programs may require revisions to the current budgetary formula. 
However, the treatment spending requirement expires at the end of 
September 2013. 

Conclusions: 

PEPFAR has supported rapid expansion of HIV programs since 2008, 
providing direct support for more than half of the estimated 8 million 
people on ARV treatment in low-and middle-income countries. Data from 
the last 4 years indicate that the growth in treatment programs is 
accelerating. Substantial declines in the costs of providing treatment 
to each individual have contributed to recent accomplishments. Despite 
this progress, there is substantial unmet need. More than 15 million 
people are estimated to be eligible for ARV treatment based on current 
WHO guidelines. Moreover, 23 million would be eligible if programs 
expanded eligibility to include groups such as all pregnant and 
breastfeeding women and certain high-risk populations, consistent with 
recommendations in recent updates to WHO guidelines. 

In order for the country programs that PEPFAR supports to be able to 
expand to meet these needs, it will be important that they maximize 
how efficiently they use available resources. Given the scale of the 
unmet need, countries' plans to expand HIV treatment may continue to 
drive up the total costs of providing treatment even if per-patient 
treatment costs further decline. Each country's ability to expand 
treatment, then, hinges on thorough planning based on data-driven 
analyses of the cost of delivering the full scope of comprehensive HIV 
treatment services. This is a complex task as cost inputs often cut 
across PEPFAR budget codes, and costs are incurred by PEPFAR and other 
donors, partner-country governments, and multilateral partners. 
Although PEPFAR has used its cost estimation and expenditure analysis 
approaches to assist countries' planning efforts and describe 
opportunities for savings, treatment costs have not yet been fully 
studied. In particular, existing data are not always timely, come from 
a limited number of sites in select countries, and do not always 
capture non-PEPFAR costs. Thus, PEPFAR may be missing opportunities to 
identify further savings. Given the rapid pace of change in PEPFAR-
supported programs, effectively identifying potential savings requires 
more timely and comprehensive information on treatment costs than 
PEPFAR's approaches currently provide. 

The 2008 Leadership Act has required PEPFAR to spend half of the funds 
appropriated to PEPFAR on specific HIV treatment and care services and 
has also set a major policy goal of promoting country ownership. Using 
OGAC's budgetary formula, PEPFAR has met the current spending 
requirement. Over the same time frame, PEPFAR funds have been devoted 
increasingly to building country capacity. However, because OGAC 
cannot fully account for the contributions that its country capacity 
building activities have made to the HIV treatment and care services 
identified in the treatment spending requirement, it cannot provide 
complete information on how PEPFAR funds are being allocated to meet 
both the treatment spending requirement and the goal of promoting 
country ownership. The current treatment spending requirement, 
however, is in effect only until September 30, 2013, when it expires. 

Recommendations for Executive Action: 

To improve PEPFAR's ability to help countries expand their HIV 
treatment programs to address unmet need, and do so through the 
efficient allocation of resources and effective program planning, the 
Secretary of State should direct PEPFAR to develop a plan to do the 
following: 

* systematically expand the use of country treatment-cost studies to 
additional sites and partner countries, where it is cost-effective to 
do so, to help estimate costs and examine country-specific 
characteristics of comprehensive HIV treatment that may result in cost 
savings; and: 

* work with partner countries, where feasible, to broaden PEPFAR's 
expenditure analysis to capture treatment costs across all partners 
that support each country program and develop more timely information 
on the full costs of comprehensive HIV treatment. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to State, USAID, and HHS's CDC for 
comment. Responding jointly with CDC and USAID, State provided written 
comments, reproduced in appendix III. In its comments, State agreed 
with our findings and conclusions and concurred that high-quality 
information on costs and expenditures is vital for program management. 
State's comments also emphasized that, because in-depth cost studies 
are time-and resource-intensive to conduct, those studies should be 
complemented with more timely data from expenditure analysis to help 
ensure that PEPFAR-supported programs have a portfolio of information 
that can be used to inform program decision making. In response to our 
first recommendation, State commented that PEPFAR is developing 
guidance on an optimal schedule for evaluating costs--at the country 
level and across the program--to balance in-depth analysis with more 
timely data from expenditure analyses. This approach is consistent 
with our recommendation that PEPFAR develop a plan to expand country 
treatment-cost studies where it is cost effective to do so. In 
response to our second recommendation, State agreed that expenditure 
analysis would be more valuable if it included non-PEPFAR spending, 
but noted that PEPFAR cannot compel its partners to routinely report 
on their spending. However, State said that PEPFAR designed its 
expenditure analysis approach so that it can be adapted to capture 
spending from other partners. Moreover, State commented that in the 
last year PEPFAR has collaborated with multilateral partners in up to 
three countries to plan expenditure analyses that will capture non-
PEPFAR spending. While we recognize that PEPFAR cannot require its 
partners to report on their spending, because HIV treatment costs are 
increasingly supported through a mix of funding from PEPFAR, other 
donors, partner-country governments, and multilateral partners such as 
the Global Fund, it is critical that PEPFAR continue exploring 
opportunities to work with partners, where feasible, to broaden the 
use of expenditure analysis. In addition, State and CDC each provided 
technical comments that were incorporated, as appropriate. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies to the 
Secretary of State and the U.S. Global AIDS Coordinator. The report 
also will be available at no charge on the GAO website at [hyperlink, 
http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-3149 or gootnickd@gao.gov, or contact Marcia 
Crosse at (202) 512-7114 or crossem@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. GAO staff who made major contributions 
to this report are listed in appendix IV. 

Signed by: 

David Gootnick: 
Director, International Affairs and Trade: 

Signed by: 

Marcia Crosse: 
Director, Health Care: 

List of Requesters: 

The Honorable Lamar Alexander: 
Ranking Member: 
Committee on Health, Education, Labor, and Pensions: 
United States Senate: 

The Honorable Tom Coburn, MD: 
Ranking Member: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable Richard Burr: 
Ranking Member: 
Subcommittee on Primary Health and Aging: 
Committee on Health, Education, Labor, and Pensions: 
United States Senate: 

The Honorable Michael B. Enzi: 
Ranking Member: 
Subcommittee on Children and Families: 
Committee on Health, Education, Labor, and Pensions: 
United States Senate: 

The Honorable Johnny Isakson: 
Ranking Member: 
Subcommittee on Employment and Workplace Safety: 
Committee on Health, Education, Labor, and Pensions: 
United States Senate: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

In this report, we examine: 

1. changes in per-patient treatment costs and their effect on program 
implementation; 

2. how PEPFAR's cost information supports countries' efforts to expand 
treatment; and: 

3. how PEPFAR has met the treatment spending requirement. 

To describe how per-patient costs have changed and their effect on 
program implementation in treatment programs supported by the 
President's Emergency Plan for AIDS Relief (PEPFAR), we focused our 
work on PEPFAR's reported trends in cost information relating to 
fiscal years 2005 through 2011. We also reviewed agency documents on 
PEPFAR's detailed cost estimation approach, results from eight country 
treatment-cost studies,[Footnote 43] and summary information that 
PEPFAR has published on available cost estimates and characteristics 
of HIV treatment programs. These included two PEPFAR reports 
summarizing estimated per-patient treatment for fiscal years 2010 and 
2011, including how the estimates varied across partner countries. 
Separately, we analyzed data on PEPFAR's antiretroviral (ARV) drug 
purchases in fiscal years 2005 through 2011 to identify trends in drug 
prices across PEPFAR-supported countries. We also reviewed PEPFAR's 
estimates for savings attributable to purchasing generic ARV products. 
To assess the reliability of the ARV drug data used in our analysis, 
we interviewed PEPFAR officials and officials from a supply chain 
contractor that manages the bulk of PEPFAR's ARV drug purchases and 
collects data annually on almost all ARV purchases by PEPFAR 
implementing partners. We also reviewed documentation on their data 
collection processes. Finally, we performed checks, such as examining 
the data for missing values and discussing the results of our analyses 
with officials responsible for the data. On the basis of these steps, 
we determined that the ARV drug data were sufficiently reliable for 
our purposes. In addition, we conducted field work in three PEPFAR 
partner-countries--Kenya, South Africa, and Uganda--in June 2012 to 
obtain information costing activities and challenges faced in 
implementing treatment programs. We selected these countries on the 
basis of program size, estimates of HIV disease burden, travel 
logistics, and other factors. We interviewed key implementing 
partners, technical experts in costing methodology, and in-country 
officials and reviewed documentation from the selected countries. 
Finally, we examined trends in the number of patients treated in 
PEPFAR-supported country treatment programs, including PEPFAR data 
reported by its country teams as well as global figures from the Joint 
United Nations Programme on HIV/AIDS (UNAIDS). On the basis of our 
reviews of documentation for these data as well as interviews with 
PEPFAR officials, we determined that the data were sufficiently 
reliable for our purposes. 

To describe how PEPFAR's cost information supports countries' efforts 
to expand treatment, we assessed the timeliness and completeness of 
information generated through PEPFAR's cost estimation and expenditure 
analysis approaches. Specifically, we assessed PEPFAR's cost 
estimation approach and eight country treatment-cost studies for their 
ability to provide key information for program planning and resource 
allocation. We assessed PEPFAR's expenditure analysis approach by 
examining PEPFAR documentation on expenditure analysis and results to 
date. We also interviewed PEPFAR officials about the strengths and 
weaknesses of the cost estimation and expenditure analysis approaches, 
and any plans to revise these approaches. In addition, we reviewed 
PEPFAR country operational plans and country treatment-cost studies 
for information on expected cost trends and country goals for 
expanding treatment programs. Last, we reviewed World Health 
Organization (WHO) HIV treatment guidelines and their impact on the 
estimated number of people requiring treatment as country programs 
expand. 

To describe how PEPFAR has met the treatment spending requirement in 
the Tom Lantos and Henry J. Hyde United States Global Leadership 
Against HIV/AIDS, Tuberculosis, and Malaria Reauthorization Act of 
2008 (2008 Leadership Act),[Footnote 44] we reviewed applicable 
authorizing language, PEPFAR strategy and guidance documents,[Footnote 
45] PEPFAR country operational plans, and approved PEPFAR country 
operational plan budget data for fiscal years 2008 through 2012. We 
interviewed PEPFAR budget officials about the budget data to ensure 
the completeness of the data and discuss any changes in budget 
methodology over time. We also interviewed OGAC officials regarding 
the budgetary formula that OGAC uses to implement the treatment 
spending requirement. 

[End of section] 

Appendix II: PEPFAR Program Areas, Budget Codes, and Budgetary Formula 
for Treatment Spending Requirement: 

PEPFAR support for country programs is categorized into four broad 
program areas--Treatment, Care, Prevention, and Other--each comprising 
multiple budget codes. The types of services captured within each 
program area and the associated budget codes are shown in table 3 
below. 

Table 3: PEPFAR Program Areas and Associated Budget Codes: 

Program area: Treatment; 
Summary of services: Clinical and laboratory services for adult and 
pediatric patients who have initiated antiretroviral (ARV) treatment; 
Budget codes[A]: Adult treatment; ARV drugs; Pediatric treatment. 

Program area: Care; 
Summary of services: Clinical, laboratory, and support services for 
adult and pediatric patients before they initiate ARV treatment; care 
and support services needed to treat HIV-positive patients with a 
tuberculosis (TB) co-infection; and support services for orphaned and 
vulnerable children; 
Budget codes[A]: Adult care and support; Orphans and vulnerable 
children; Pediatric care and support; TB/HIV. 

Program area: Prevention; 
Summary of services: Interventions that prevent HIV infection, such as 
prevention of mother-to-child transmission, medical male circumcision, 
and HIV counseling and testing; 
Budget codes[A]: Prevention of mother-to-child transmission; 
Abstinence/be faithful; Other sexual prevention; Blood safety; 
Counseling and testing; Injection safety; Medical male circumcision; 
Prevention among intravenous and non-intravenous drug users. 

Program area: Other; 
Summary of services: Activities that contribute to national, regional, 
or district systems, such as support for strengthening institutional 
capacity, supply chain or procurement systems, and donor coordination; 
strengthening laboratory networks, facilities, quality assurance, and 
staff training; and building country capacity for surveillance, 
monitoring, reporting, and establishing and/or strengthening national 
health information systems; 
Budget codes[A]: Health systems strengthening; Laboratory 
infrastructure; Strategic information. 

Source: GAO analysis of PEPFAR documents. 

[A] We analyzed PEPFAR country operational plan guidance and budget 
data. We categorized the budget codes within various program areas 
based on fiscal year 2012 country operational plan guidance. In 
previous years, certain budget codes have been included in a different 
program area. For example, in fiscal year 2009 laboratory 
infrastructure was part of Treatment, but since fiscal year 2010 it has 
been budgeted under the Other program area. 

[End of table] 

PEPFAR Budgetary Formula for Treatment Spending Requirement: 

Section 403 of the 2008 Leadership Act required that, in each fiscal 
year, more than half of the funds appropriated pursuant to section 401 
of the act shall be expended for the following: (1) ARV treatment; (2) 
clinical monitoring of HIV-positive people not in need of ARV 
treatment; (3) care for associated opportunistic infections; (4) 
nutrition and food support for people living with HIV; and (5) other 
essential HIV-related medical care for people living with HIV. 
[Footnote 46] 

OGAC refers to the budget for the five spending categories delineated 
in section 403 of the act as the budget for "treatment and care of 
people living with HIV." OGAC divides the total amount of spending 
within these categories by total country team funds budgeted under the 
Treatment, Care, and Prevention program areas. OGAC guidance defines 
the formula used to implement the spending requirement as follows: 
[Footnote 47] 

Budgets for "treatment and care for people living with HIV": 
divided by: 
(Budgets for Treatment + Care + Prevention program areas): 
Greater than = 50%. 

To determine the amount of the PEPFAR budget that constitutes 
"treatment and care for people living with HIV," OGAC sums the amounts 
allocated by all country teams each year within six of the seven 
budget codes within the Treatment and Care program areas: 

* adult treatment, 

* adult care and support, 

* ARV drugs, 

* pediatric treatment, 

* pediatric care and support, and: 

* TB/HIV.[Footnote 48] 

[End of section] 

Appendix III: Comments from the Department of State: 

United States Department of State: 
Comptroller: 
1969 Dyess Avenue: 
Charleston, SC 29405: 

February 21, 2013: 

Dr. Loren Yager: 
Managing Director: 
international Affairs and Trade: 
Government Accountability Office: 
441 G Street, N.W. 
Washington, D.C. 20548-0001: 

Dear Dr. Yager: 

We appreciate the opportunity to review your draft report, "Presidents 
Emergency Plan for Aids Relief: Per-Patient Costs Have Declined 
Substantially, but Better Cost Data Would Help Efforts to Expand 
Treatment" GAO Job Code 320875. 

The enclosed Department of State comments are provided for 
incorporation with this letter as an appendix to the final report. 

If you have any questions concerning this response, please contact 
Leigh Ann Monk-Reyes, Program Support Officer, Office of the U.S. 
Global AIDS Coordinator at (202) 663-2753. 

Sincerely, 

Signed by: 

James L. Millette: 

cc: 
GAO — David Gootnick: 
S/GAO — Eric Goosby: 
State/01G — Evelyn Klemstine: 

[End of letter] 

Department of State Comments on GAO Draft Report: 

President's Emergency Plan for Aids Relief: Per-Patient Costs Have 
Declined Substantially, but Better Cost Data Would Help Efforts to 
Expand Treatment: 

(GA0-13-345, GAO Code 320875): 

Thank you for the opportunity to comment on your draft report entitled,
"President's Emergency Plan For AIDS Relief Per-Patient Costs Have 
Declined Substantially, but Better Cost Data Would Help Efforts to 
Expand Treatment, GA0-13-345, Job Code 320875." 

The GAO report included two recommendations for the Department of 
State's Office of the U.S. Global AIDS Coordinator (S/GAC). 

The Department of State's Office of the U.S. Global AIDS Coordinator 
and the PEPFAR implementing agencies appreciate the work conducted by 
the GAO to produce these findings and the report. 

First, GAO recommended that S/GAC expand the use of in-depth costing 
studies to additional countries and sites, where appropriate. PEPFAR 
agrees that high-quality costing information is vital for program 
management and will continue to fund in-depth costing studies on 
treatment for specific purposes. The major limitation of these studies 
is the intensive resources— both in terms of time and money— needed to 
complete them. As a result, while they are very useful as part of a 
strategic portfolio of economic evaluation, they must be complemented 
by other activities (e.g. expenditure analysis) for more real-time 
data for program planning. PEPFAR is currently developing guidance on 
optimal schedules for costing and other economic evaluations at the 
country and global level to ensure resources are used strategically to 
provide a balance of in-depth analysis and more timely data to inform 
program corrections. 

Second, GAO recommended that S/GAC broaden expenditure analysis to 
include non-PEPFAR costs. PEPFAR agrees that expenditure analysis is 
most valuable when it includes results-linked expenditure tracking 
that accounts for spending from all sources of support, including that 
of Global Fund and national partners. PEPFAR undertook expenditure 
analysis firstly to support better partner management, more efficient 
programming, and enhanced program accountability. 

In 2012, PEPFAR initiated routine implementation of expenditure 
analysis in nine countries that represented 76 percent of PEPFAR's 
program spending in that year. In 2013, PEPFAR will extend expenditure 
analysis to an additional 11 countries, for a total of 20. While 
PEPFAR cannot compel routine reporting of spending of non-PEPFAR 
resources, it concurs with GAO's conclusion that expenditure analysis 
would be more valuable if it could include spending of non-PEPFAR 
resources as well. PEPFAR foresaw this need, and designed the 
expenditure analysis such that it can be adapted to capture the 
spending of resources provided by other major partners. In the last 
year, PEPFAR officials have engaged multilateral partners and 
collaborators in planning pilot-harmonized expenditure analysis 
activities that would capture Global Fund and national partner 
spending in two to three countries in 2013. 

In addition to the two recommendations, GAO also described issues 
pertaining to the budget formula PEPFAR developed to ensure that more 
than half of PEPFAR funds are allocated each year to support HIV 
treatment and care services. PEPFAR officials recognize these concerns 
and are eager to continue discussions with Congress on the most 
effective method of measuring PEPFAR's contribution to treatment and 
care services, as well as on its continued commitment to such services. 

[End of section] 

Appendix IV: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

David Gootnick, (202) 512-3149 or gootnickd@gao.gov, or: 

Marcia Crosse, (202) 512-7114 or crossem@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Jim Michels, Assistant 
Director; Chad Davenport; E. Jane Whipple; David Dayton; Fang He; Todd 
M. Anderson; Kay Halpern; Brian Hackney; Erika Navarro; Katy Forsyth; 
Grace Lui; and Etana Finkler made key contributions to this report. 

[End of section] 

Related GAO Products: 

President's Emergency Plan for AIDS Relief: Agencies Can Enhance 
Evaluation Quality, Planning, and Dissemination. [hyperlink, 
http://www.gao.gov/products/GAO-12-673]. Washington, D.C.: May 31, 
2012. 

President's Emergency Plan for AIDS Relief: Program Planning and 
Reporting. [hyperlink, http://www.gao.gov/products/GAO-11-785]. 
Washington, D.C.: July 29, 2011. 

Global Health: Trends in U.S. Spending for Global HIV/AIDS and Other 
Health Assistance in Fiscal Years 2001-2008. [hyperlink, 
http://www.gao.gov/products/GAO-11-64]. Washington, D.C.: October 8, 
2010. 

President's Emergency Plan for AIDS Relief: Efforts to Align Programs 
with Partner Countries' HIV/AIDS Strategies and Promote Partner 
Country Ownership. [hyperlink, 
http://www.gao.gov/products/GAO-10-836]. Washington, D.C.: September 
20, 2010. 

President's Emergency Plan for AIDS Relief: Partner Selection and 
Oversight Follow Accepted Practices but Would Benefit from Enhanced 
Planning and Accountability. [hyperlink, 
http://www.gao.gov/products/GAO-09-666]. Washington, D.C.: July 15, 
2009. 

Global HIV/AIDS: A More Country-Based Approach Could Improve 
Allocation of PEPFAR Funding. [hyperlink, 
http://www.gao.gov/products/GAO-08-480]. Washington, D.C.: April 2, 
2008. 

Global Health: Global Fund to Fight AIDS, TB and Malaria Has Improved 
Its Documentation of Funding Decisions but Needs Standardized 
Oversight Expectations and Assessments. [hyperlink, 
http://www.gao.gov/products/GAO-07-627]. Washington, D.C.: May 7, 2007. 

Global Health: Spending Requirement Presents Challenges for Allocating 
Prevention Funding under the President's Emergency Plan for AIDS 
Relief. [hyperlink, http://www.gao.gov/products/GAO-06-395]. 
Washington, D.C.: April 4, 2006. 

Global Health: The Global Fund to Fight AIDS, TB and Malaria Is 
Responding to Challenges but Needs Better Information and 
Documentation for Performance-Based Funding. [hyperlink, 
http://www.gao.gov/products/GAO-05-639]. Washington, D.C.: June 10, 
2005. 

Global HIV/AIDS Epidemic: Selection of Antiretroviral Medications 
Provided under U.S. Emergency Plan Is Limited. [hyperlink, 
http://www.gao.gov/products/GAO-05-133]. Washington, D.C.: January 11, 
2005. 

Global Health: U.S. AIDS Coordinator Addressing Some Key Challenges to 
Expanding Treatment, but Others Remain. [hyperlink, 
http://www.gao.gov/products/GAO-04-784]. Washington, D.C.: June 12, 
2004. 

Global Health: Global Fund to Fight AIDS, TB and Malaria Has Advanced 
in Key Areas, but Difficult Challenges Remain. [hyperlink, 
http://www.gao.gov/products/GAO-03-601]. Washington, D.C.: May 7, 2003. 

[End of section] 

Footnotes: 

[1] In this report, we use "ARV treatment" to mean the services 
delivered to HIV-positive individuals who are receiving treatment with 
ARV drugs. We use "HIV treatment" to mean services delivered to all 
HIV-positive individuals in the country program, regardless of whether 
or not the individual is receiving ARV drugs. 

[2] PEPFAR defines and counts direct treatment results as the number 
of uniquely identified people receiving ARV treatment services that 
can be attributed to an ARV treatment intervention or activity taking 
place at a facility that receives PEPFAR support. PEPFAR also makes 
broader contributions to country programs through overall system 
strengthening and capacity building that may occur apart from the 
treatment facilities. 

[3] WHO establishes international guidelines on when to initiate ARV 
treatment for various groups of HIV-positive people (e.g., adults, 
children, pregnant or breastfeeding women, and people co-infected with 
tuberculosis) and which ARV drugs should be used to treat most people 
in resource-limited settings. 

[4] United States Leadership Against HIV/AIDS, Tuberculosis, and 
Malaria Act of 2003, Pub. L. No. 108-25, 117 Stat. 711. 

[5] These funds were authorized to be appropriated to the President 
for PEPFAR. See Pub. L. No. 108-25, § 401. 

[6] Pub. L. No. 110-293, 122 Stat. 2918. 

[7] Pub. L. No. 110-293, § 401. 

[8] PEPFAR's original authorization in 2003 set multiple targets for 
the number of people to be reached by the program, including providing 
treatment to 2 million people by 2006. The reauthorization amended 
these goals by requiring increases to treatment targets proportional 
to reductions in per-patient treatment costs--as compared to costs in 
fiscal year 2008--as well as increases to treatment targets 
proportional to increases in appropriated funding. See Pub. L. No. 110-
293, § 403(3). In December 2011, the President set a new treatment 
target for PEPFAR, committing to provide direct support for ARV 
treatment for more than 6 million people by the end of fiscal year 
2013. 

[9] Pub. L, No. 110-293, § 301(e)(2)(B). 

[10] Specifically, the 2008 Leadership Act requires that, each year, 
more than half of the funds appropriated for bilateral assistance 
under the act should be expended for ARV treatment, clinical 
monitoring of HIV-positive people not yet in need of ARV treatment, 
care for associated opportunistic infections, nutrition and food 
support, and other essential HIV/AIDS-related medical care for people 
living with HIV/AIDS. See Pub. L. No. 110-293, § 403(3). 

[11] As of February 2013, country treatment-cost studies had been 
completed in Botswana, Ethiopia, Kenya, Mozambique, Nigeria, Tanzania, 
Uganda, and Vietnam. 

[12] Other implementing agencies include the Peace Corps and the 
Departments of State, Defense, Labor, and Commerce. In addition, other 
HHS offices and agencies receiving PEPFAR resources include the Office 
of Global Health Affairs, the Food and Drug Administration (FDA), the 
Health Resources and Services Administration, the National Institutes 
of Health, and the Substance Abuse and Mental Health Services 
Administration. 

[13] This includes the 33 countries and three regions that developed 
PEPFAR annual operational plans for fiscal year 2012. The 33 countries 
were Angola, Botswana, Burundi, Cambodia, Cameroon, China, Côte 
d'Ivoire, Democratic Republic of the Congo, Dominican Republic, 
Ethiopia, Ghana, Guyana, Haiti, India, Indonesia, Kenya, Lesotho, 
Malawi, Mozambique, Namibia, Nigeria, Russia, Rwanda, South Africa, 
South Sudan, Swaziland, Tanzania, Thailand, Uganda, Ukraine, Vietnam, 
Zambia, and Zimbabwe. The three regions were the Caribbean, Central 
America, and Central Asia. 

[14] UNAIDS reports that from 2010 to 2011, low-and middle-income 
countries increased their domestic spending on HIV programs by 15 
percent and that by the end of 2011, domestic spending accounted for 
the majority of all HIV spending for the first time. 

[15] CD4 (cluster of differentiation antigen 4) cells are a type of 
white blood cell that fights infection. The CD4 count test measures 
the number of CD4 cells in a sample of blood. Along with other tests, 
the CD4 count test helps determine the strength of the person's immune 
system, indicates the stage of the HIV disease, guides treatment, and 
predicts how the disease may progress. Normal CD4 counts range from 
500 to 1,000 cells/mm3. 

[16] In this report, we use the term "budget" to refer to PEPFAR's 
internal resource allocation processes. 

[17] This calculation assumes a 1-year lag between budgeted funds and 
provision of services as an approximation of the typical delay between 
when resources are allocated and when they are expended. For example, 
PEPFAR calculated its 2005 per-patient treatment budget by dividing 
the fiscal year 2004 HIV treatment budget by the number of directly 
supported patients on ARV treatment reported for fiscal year 2005. 

[18] PEPFAR compiles data annually on almost all ARV purchases made by 
PEPFAR implementing partners. In 2011, the data captured ARV purchases 
in 23 countries, including an estimated 98 percent of PEPFAR ARV 
purchases. 

[19] All drug products PEPFAR purchases must comply with PEPFAR 
quality assurance requirements. To assure quality, PEPFAR requires 
that ARV products have either FDA approval or the approval of another 
acceptable regulatory authority. A generic manufacturer may seek FDA 
approval for a generic version of a U.S. patented drug if marketing of 
the generic product in the United States would occur after expiration 
of that patent and any periods of market exclusivity. See 21 U.S.C. § 
355(j)(5)(B), 35 U.S.C. § 271(e). FDA may issue tentative approval for 
such a product that may not yet be marketed in the United States due 
to the unexpired patent or exclusivities. As of January 13, 2013, FDA 
had approved or tentatively approved 156 ARV products for use under 
PEPFAR. 

[20] An equivalent branded product is one that contains the same 
active ingredients and is available in the same form--tablet, capsule, 
liquid-
-and dose (for example, 100 mg and 300 mg). 

[21] Some fixed-dose combination products are only available in 
generic formulations because different companies own the U.S. patent 
rights to the specific ARV drugs that make up the fixed-dose 
combination and those companies have not developed an equivalent 
branded formulation combining the same ARV drugs. 

[22] In addition to first-line treatment regimens, second-line or 
other regimens may be necessary because people receiving ARV treatment 
can experience serious side effects from some ARVs or develop strains 
of HIV that are resistant to some or all of their ARVs. When a 
patient's current regimen becomes ineffective, the patient must switch 
to a different regimen. 

[23] Zidovudine is also known as azidothymidine, or AZT. 

[24] Prices paid for a specific product can vary by country, year, and 
the implementing partner. Because these price variations are driven by 
various factors, PEPFAR is examining differences in prices paid by 
implementing partners. According to PEPFAR officials they are focusing 
their analyses on variations within the same country in the same year, 
to determine if the program can minimize these variations in price and 
thereby achieve additional savings. 

[25] In this report, we use "country treatment-cost studies" to refer 
to the studies conducted under PEPFAR's ARV Treatment Costing Project. 
These studies are PEPFAR supported, and, according to PEPFAR, are 
intended to be objective, applied, empirical research of its programs. 
PEPFAR reports that it has funded assessments of treatment costs 
through external technical partners in at least four additional 
countries. 

[26] The 2012 summary analysis of the 54 delivery sites from six 
country treatment-cost studies was conducted by selecting possible 
factors (excluding ARV drugs) that might describe site characteristics 
and influence costs. The analysis used statistical modeling to 
identify the relationship between selected factors and costs. See N. 
A. Menzies, A. A. Berruti, and, J. M. Blandford, "The Determinants of 
HIV Treatment Costs in Resource Limited Settings," PLOS ONE, vol. 7, 
issue 11 (2012). 

[27] Pub. L. No. 110-293, § 403(3). 

[28] UNAIDS estimates that, in 2011, for the first time, a majority 
(54 percent) of people in low-and middle-income countries who were 
eligible for ARV treatment received it. 

[29] WHO recommendations consider options for expanding early 
initiation of ARV treatment in pregnant and breastfeeding women, 
serodiscordant couples (when one partner is HIV positive and the other 
is not), and key populations such as sex workers, people who inject 
drugs, and men who have sex with men. 

[30] WHO also provides estimates that consider adding other treatment 
guidelines, such as increasing the eligibility for ARV treatment for a 
CD4 count above 350 cells/mm3 or including more widespread approach to 
HIV testing with immediate initiation of ARV treatment for those found 
to be HIV positive. These estimates would increase the number of 
people eligible for ARV treatment to 25 million and 32 million people, 
respectively. 

[31] Pub. L, No. 110-293, § 301. 

[32] See E. J. Beck, C. Avila, S. Gerbase, G. Harling, and P. De Lay, 
"Counting the Cost of Not Costing HIV Health Facilities Accurately," 
Pharmacoeconomics, vol. 30, issue 10 (2012). 

[33] A number of other approaches exist to evaluate HIV treatment 
costs and resources that vary in scope and purpose. We previously 
reported on several of these approaches in GAO, Global Health: Trends 
in U.S. Spending for Global HIV/AIDS and Other Health Assistance in 
Fiscal Years 2001-2008, [hyperlink, 
http://www.gao.gov/products/GAO-11-64] (Washington, D.C.: Oct. 8, 
2010). See GAO Related Products at the end of this report. 

[34] The per-patient cost of providing comprehensive HIV treatment is 
based on site data from country treatment-cost studies. PEPFAR adjusts 
these data to current dollars to assess how changes in certain costs 
affect treatment programs. For example, PEPFAR officials told us that 
they apply current ARV drug prices to data collected on ARV drug usage 
from country treatment-cost studies. 

[35] PEPFAR collects data from delivery sites and categorizes the data 
into cost units. PEPFAR's three broad cost unit categories are for the 
funding source, how it was spent (e.g., personnel, supplies, and 
equipment), and the type of program activity it was used for (e.g., 
clinical care and supply chain management). 

[36] The number of PEPFAR-supported delivery sites greatly increased 
as country treatment programs expanded. For example, in Ethiopia, the 
number of PEPFAR-supported delivery sites increased from no sites in 
September 2004 to over 350 sites by September 2008. 

[37] For the most part, these expenditure analyses have covered all 
HIV program areas in a given country, but have also been used to focus 
on expenditures within a particular program area, such as treatment. 

[38] The formal expenditure analysis approach includes an approved 
methodology that includes all program areas. 

[39] Pub. L. No. 110-293, § 403. 

[40] Section 403 of the 2008 Leadership Act required that, for each of 
fiscal years 2009 through 2013, more than half of the funds 
appropriated pursuant to section 401 of the act shall be expended for 
(1) ARV treatment; (2) clinical monitoring of HIV-positive people not 
in need of ARV treatment; (3) care for associated opportunistic 
infections; (4) nutrition and food support for people living with HIV; 
and (5) other essential HIV-related medical care for people living 
with HIV. Pub. L. No. 110-293, § 403. 

[41] PEPFAR Fiscal Year 2012 Country Operational Plan (COP) Guidance 
(Washington, D.C.: 2011), p.28. 

[42] PEPFAR guidance says that the health systems strengthening budget 
code should generally be used to capture capacity-building efforts at 
national, regional, or district levels. It also says that some 
capacity-building activities that are specific to one program area--
such as treatment-specific laboratory capacity--should be budgeted 
under their respective program area. OGAC allows country teams 
flexibility in determining how to allocate activities within program 
areas and budget codes. 

[43] As of February 2013, country treatment-cost studies had been 
completed in Botswana, Ethiopia, Kenya, Mozambique, Nigeria, Tanzania, 
Uganda, and Vietnam. 

[44] Pub. L. No. 110-293, § 403. 

[45] See: Department of State, Office of the U.S. Global AIDS 
Coordinator, PEPFAR Blueprint: Creating an AIDS-free Generation 
(Washington, D.C.: November 2012); The U.S. President's Emergency Plan 
for AIDS Relief: 5-year Strategy (Washington, D.C.: December 2009); 
PEPFAR Fiscal Year 2012 Country Operational Plan (COP) Guidance 
(Washington, D.C.: August 2011); PEPFAR Fiscal Year 2013 Country 
Operational Plan (COP) Guidance, Version 2.0 (Washington, D.C.: 
October 2012). 

[46] Pub. L. No. 110-293, § 403. 

[47] PEPFAR Fiscal Year 2012 Country Operational Plan (COP) Guidance 
(Washington, D.C.: 2011), p.28. 

[48] The formula does not include the budget code for orphans and 
vulnerable children within the Care program area, in part because 
there is a separate spending requirement specific to budgets for 
services for orphans and vulnerable children. 

[End of section] 

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