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Issue 258: 16 January 2015

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CONTENTS OF THIS ISSUE:

1. NEWS: New inspector general appointed

A new inspector general was appointed to fill the vacancy left by Martin O'Malley. Mouhamadou Diagne will lead the team as it continues to tackle both the backlog of legacy cases and new audits and investigations into allegations of fraud and financial mismanagement.

2. NEWS: Ecuador and Rwanda audits show mixed results

Two new reports on audits conducted by the Office of the Inspector General found that controls were adequate in some areas but inadequate in others. The Rwanda audit focused as much on the implementation of the results-based financing pilot as on the grants themselves.

3. NEWS: CSOs call for transition planning in countries facing declines in Global Fund support

Civil society organizations have argued that the decision to shift more resources to low-income countries will harm key populations in upper-middle-income countries, especially marginalized groups such as sex workers, men who have sex with men and persons who inject drugs. They are urging the GlobalFund to lead a coordinated effort to develop transition plans for affected countries.

4. NEWS: Mauritania's relationship with the Global Fund buffeted by the winds of change

Mauritania and the Global Fund are looking to turn the page on a 2009 corruption scandal that resulted in the suspension of an HIV grant and provoked considerable rifts with Fund donors. A 32 million-dollar HIV grant being allocated under the new funding model could be just the thing.

5. NEWS: Aidspan releases new analysis of TB drug pricing trends

A new Aidspan analysis of pricing trends between 2010-2013 in medicines to treat drug resistant and non-resistant tuberculosis is released.

 

ARTICLES:

1. NEWS: New inspector general appointed

Lauren Gelfand 13 January 2015

Mouhamadou Diagne has more than 20 years of international public accounting experience

Senegalese national Mouhamadou Diagne will take up his new role as the Global Fund's inspector general from March 2015, replacing the outgoing IG, Martin O'Malley, it was announced in late December.

Diagne has more than 20 years of experience in auditing and financial analysis, most recently as the director of Strategy and Operations as part of the World Bank Groups' Internal Audit unit. He also spent seven years with the US government-sponsored Federal National Mortgage Association (Fannie Mae) which provides fixed-rate mortgage loans.

O'Malley announced his intention to resign his position for personal reasons in July 2014. He will remain in post through the end of January; in the interim, Katie Hodson, director of investigations, will be the acting IG.

It is anticipated that Diagne will continue along the same path as O'Malley as he works to clear a backlog of so-called legacy cases that piled up during the last transition in the Office of the Inspector General. (see article here). Six internal and 10 country audits were forecast in the OIG work plan shared at the 32nd Board meeting held in late November 2014. Among the countries being audited are Nigeria, Pakistan, Uzbekistan and Honduras. The investigations unit is also scheduled to produce quarterly risk assessment missions in 2015.

The office he is preparing to lead is staffed by some 40 auditors, investigators and other professional staff, with a budget of some $16.4 million in 2015.  

The selection of Diagne was the culmination of  a wide search that the Global Fund says drew more than 100 qualified candidates.

[This article was first posted on GFO Live on 13 January 2015.]

To comment on this article, click here.

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2. NEWS: Ecuador and Rwanda audits show mixed results

David Garmaise 15 January 2015

Problems in governance, oversight and management in Rwanda; deficiencies in program performance and controls of health services and products in Ecuador

Reports on audits of grants in Rwanda and Ecuador were released by the Office of the Inspector General (OIG) at the end of December.

Rwanda

The audit of Rwanda's three grants concluded that risk management is generally effective across three areas: financial and fiduciary; health services and products; and program performance. Some improvements are required in governance, oversight and management. All three grants are managed by the Ministry of Health.

The audit covered an HIV, a TB and a malaria grant. The HIV grant is part of a results-based financing pilot, now referred to as a “national financing strategy model.” The TB and malaria grants are also being considered for this approach. The audit, covering the period 1 January 2013 to June 2014, focused as much on the planning and execution of the pilot as on controls in place for the three grants.

The pilot emphasizes the achievement of targets for outcome and impact indicators. Detailed testing of financial and programmatic data includes substantive verification of programmatic data by the local fund agent (LFA), which performs extensive testing in 58 sites: a much wider sample than the six sites normally required under the performance-based methodology.

The OIG said the Secretariat had failed to test controls over programmatic and financial data before the HIV grant was signed, and had not developed an in-depth understanding of the strengths and weaknesses of these controls. A plan was put in place before the audit to address these gaps.

While the Secretariat failed to fully articulate the rationale for piloting this model in Rwanda, the audit determined it was justifiable. However, "as the Secretariat tailors national strategy financing to other countries, it will need to draw up clearer criteria for deciding on particular models, understand better the system of controls that exist around grant funds at the country level and how they can be relied upon, and better articulate the justification for selecting specific countries," the audit concluded.

Oversight over data collection and reporting remains limited, despite checks and balances in place to ensure that data from primary sources, such as patient files and case registries, are reported accurately. The audit found that "staff are more concerned with correcting the data errors than understanding and mitigating the root causes of the errors".

Ecuador

The audit of two HIV grants in Ecuador found that fiduciary and financial controls were generally effective but that performance and controls were unsatisfactory in two areas: health services and products,  and programs. The audit also found problems with governance, oversight and management, but said they were being addressed.  

Field work for the audit was carried out in June 2014, of principal recipients the Ministry of Health (MoH) and the Corporación Kimirina, an NGO.

Problems with the implementation of the MoH grant were identified well in advance of the audit. Consequently when the two grants entered Phase 2 in 2012, MoH responsibilities including the procurement of condoms were re-assigned to Kimirina. This strained the NGO's resources.

The Secretariat was aware of Kimirina's limited capacity and experience in procurement, and took steps to mitigate procurement risk, but failed to conduct an external assessment of its procurement and supply chain management capacity or implement a capacity-building plan.

Kimirina's inability to obtain a tax exemption for their purchase of condoms and lubricants was one of the main obstacles to its successful implementation of several grant-supported activities. This delay meant that only only one quarter of prevention kits distributed between July 2013 and March 2014 contained condoms.

Interventions on the NGO's behalf with the MoH and partners by the Secretariat to encourage action by the national authorities yielded results at the end of 2014. A first shipment of tax-exempt products for the NGO is expected in February 2015.

Analysis of programmatic risk was acceptable but has yet to result in noticeable improvement in program performance, the report concluded. High staff turnover in government and rapid public policy change are among the reasons for this, alongside the Secretariat's failure to propose actions to mitigate risk that were specific and measurable.

Key program activities by the MoH also showed limited progress at the time of the audit. None of the 11 performance indicators in this grant could be measured accurately, the OIG said, either because they were not reported in the ministry’s management information system or they were not subject to quality control. No disbursements under the HIV grant have been made to the MoH since January 2011.

While Kimirina was implementing the bulk of activities under its grant, the OIG said, its performance was affected by delays in the development of a strategy for sub-recipients to reach key populations.

The findings reveal a gap in oversight by the Secretariat, the OIG said. There is no formal mechanism to escalate to senior management the risk that a grant may not achieve its expected impact or procure health products successfully.

The audit also raises questions about the sustainability of HIV prevention activities as Ecuador continues to transition out of eligibility for Global Fund support. The country is no longer eligible for HIV or TB funding and will see its disbursements for HIV decline considerably during the 2014-2017 allocation period.

A new plan is now in place to guide improved implementation by the MoH, and the Secretariat has committed to ensuring the development by the country coordinating mechanism of a sustainability plan. 

[This article was first posted on GFO Live on 15 January 2015.]

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3. NEWS: CSOs call for transition planning in countries facing declines in Global Fund support

David Garmaise 14 January 2015

Thirty-two components in UMI countries became ineligible for funding in the years leading up to the NFM

The impact on upper-middle-income (UMI) countries of the decision to shift more resources to low-income countries remains the subject of heated and passionate discussions within the Global Fund ecology.

In several letters and briefs, civil society organizations (CSOs) have argued that the decision will harm key populations, especially marginalized groups such as sex workers, men who have sex with men, and people who inject drugs, because many governments are not inclined to provide them with services.

In an open letter concerning the situation in Eastern Europe and Central Asia, presented to the Board when it met in November 2014, CSOs called for the development of gradual transition plans for countries where the Global Fund is eliminating or significantly reducing funding.

By tightening its eligibility rules, the Global Fund has progressively limited access to funding for UMI countries since about 2010. There are 32 components from UMI countries that received disbursements during 2010-2013 that were no longer eligible for funding when the new funding model (NFM) was rolled out. See Table 1 for a complete list, and refer to the Aidspan report on the NFM allocations for further details.

Table 1: Components that have become ineligible for further support from the Global Fund

Countries and components

Countries and components

Components ineligible from Round 10 on:

Brazil: Malaria

Cuba: TB

Equatorial Guinea: HIV, malaria

Montenegro: HIV, TB

Serbia: TB

 

Components ineligible from Round 11 on:

Argentina: HIV

Bosnia & Herzegovina: HIV, TB

Columbia: Malaria

Dominican Republic: Malaria

Jordan: HIV, TB

Kazakhstan: HIV

Macedonia: HIV, TB

Mexico: HIV

Russian Federation: TB

Components ineligible from the TFM on:

Azerbaijan: Malaria

Brazil: TB

China: HIV, TB, malaria

Ecuador: TB, malaria

Iran, TB, malaria

Serbia: HIV

Tunisia: TB

 

Components ineligible from the NFM transition phase on:

Colombia: TB

 

Components ineligible as of the full NFM
roll-out:

Uruguay: HIV

(Russia has since been categorized as a high-income country.)

The total disbursement during 2010-2013 for these 32 components was $632 million. One country, China, accounted for well over half of this amount.

Most of the components that became ineligible for further funding were still running grants. The exceptions were Brazil, whose TB component became ineligible at the time of the TFM (transitional funding mechanism) in 2012 and whose existing TB grant was scheduled to close that same year; and Uruguay, whose HIV component became ineligible as of the NFM roll-out in 2014 and whose existing HIV grants were scheduled to close in December 2013. Most of the other components had at least two years’ notice that their funding would run out.

"The Global Fund Board, with participation of all partners, adopted a strategy in 2011 to shift a greater percentge of funding to low-income countries," Seth Faison, director of communications for the Fund, told Aidspan in a written statement. "Yet the challenges of concentrated epidemics in middle-income countries are very real and need to be addressed."

Among components that remained eligible for funding for 2014-2017 under the NFM, those in UMI countries experienced an overall increase of 12% in allocations compared to recent funding. However, there was considerable variation among and within regions.

UMI countries in Sub-Saharan Africa collectively experienced the largest increase (62%). South Asia was the only other region where UMI countries collectively showed an increase (7%). MENA was essentially flat. UMI countries in the other three regions – East Asia and the Pacific, the EECA and LAC – collectively experienced decreases ranging from 14% to 36%. See Table 2 for details.

Table 2: UMICs – Total allocation 2014–2016 vs. disbursed 2010-2013 (all regions) ($US)
 

Allocation

 

 

 
   

 

Increase or reduction (-)

 

Existing

funding

Additional

funding

 

Disbursed 

2010-2013

 

 

Region

Total

Amount

%

East Asia & P.

116,504,739

4,674,915

121,179,655

189,447,847

-68,268,192

-36.0%

EECA

94,802,695

66,583,322

161,386,017

187,889,995

-26,503,979

-14.1%

LAC

75,068,820

104,147,396

179,216,215

223,754,371

-44,538,156

-19.9%

MENA

7,988,934

21,514,160

29,503,095

29,838,487

-335,392

-1.1%

South Asia

11,212,771

9,025,524

20,238,295

18,993,516

1,244,779

6.6%

Sub-S. Africa

491,601,188

215,914,955

707,516,142

437,908,947

269,607,196

61.9%

TOTALS

797,179,147

421,860,272

1,219,039,419

1,087,833,163

131,206,254

12.1%

Regional tables showing all UMI countries are available here.

If one were to factor in the $632 million that was disbursed in 2010-2013 to UMI countries for components ineligible under the NFM, UMI countries would have gone from experiencing an 12% increase to facing a 30% decrease.

In the open letter, the CSOs said that "the overall tendency is a rapid scale-down as countries go through the country dialogues and face persistent political resistance and an unwillingness to pay for programs that target KAP, including harm reduction services for people who use drugs… The majority of EECA countries are already able to predict the lack of investments into harm reduction service delivery and advocacy at the country level in 2015- 2017."

The CSOs acknowledged that they could use the declines in Global Fund support as a tool to persuade national governments to increase their investments. However: "The approach to funding allocation based only on the combination of disease burden and ability to pay fails to recognize the specific challenges of concentrated epidemics in MICs," they noted.

As a result, they say that MICs that account for 18% of the global disease burden are only receiving 8% of the funding available under the NFM.

The CSOs called on the Global Fund "to make the formulas and calculations of country allocations public – including the disease burden scores and the ability to pay numbers for individual countries, as well as all the relevant quality criteria applied by the Global Fund Secretariat".

The CSOs said that the Global Fund should take the lead in planning and executing a gradual transition to national funding of HIV and TB in EECA, particularly for harm reduction programs. The CSOs added that technical partners, donor governments, national governments, and civil society should be partners in this process.

In November 2014, Open Society Foundations (OSF) issued a working draft of a brief in which  it reinforced some of the arguments made in the open letter. In addition, OSF said that "the abandonment of key populations in middle-income countries" is contrary to the human rights principles and goals contained in the Global Fund Strategy 2012-2016. According to OSF, 70% of the world’s poorest people live in countries classified as middle-income by the World Bank. It said that this proportion could grow to 87% by 2020.

The  Equitable Access Initiative (EAI) established by the Global Fund and several partner agencies in 2014 is examining, among other things, factors in addition to gross national income that could be used to classify countries. One such factor might be percent of people living in poverty. The EAI is not expected to produce final recommendations until the first quarter of 2016.

"As the Board looks forward and prepares its next strategy, to be finalized in 2016, this issue is already being considered," Faison said. "It will require a collective effort."

The information in this article on the components that became ineligible for funding and on how UMI countries fared in the 2014-2017 allocations was taken from "The New Funding Model Allocations: An Aidspan Analysis" available here. Further information on the EAI is included in the Report of the Executive Director prepared for the November 2014 Board meeting, available here (see Paragraphs 56 and 57.).

[This article was first posted on GFO Live on 14 January 2015.]

To comment on this article, click here.

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4. NEWS: Mauritania's relationship with the Global Fund buffeted by the winds of change

Robert Bourgoing 16 January 2015

It's hard to imagine that it's been five years since the scandal that compromised Mauritania's HIV program and its relationship with the Global Fund, watching mobile teams canvass neighborhoods to promote HIV diagnostics testing and develop an accurate accounting of the number of cases of AIDS. Door to door, house to house, these teams are working to turn the page on what Dr Mohamed Idoumou Ould Mohammed Vall, the executive secretary of the national AIDS commission SENLS, called a "humiliation for all Mauritanians".

The national AIDS commission was implicated in the 2009 investigation by the Office of the Inspector General for the loss of $6.7 million -- including $4.2 million taken in kickbacks by senior members of the commission's leadership team. Another $2.5 million was lost to fraud carried out by sub-recipients of the UN Development Program (UNDP).

The timing of the revelations was also damaging for the Fund, which uncovered fraud in Mali, Djibouti and Zambia at around the same time. The successive discoveries were like an electroshock for the Global Fund, exposing the weakness of its risk management system and leading to the temporary suspension of hundreds of millions of dollars in contributions by donor countries and forcing a top-to-bottom reform of the organization.

A lot has changed in Mauritania in the last five years; the country now is seen as an example by the Global Fund and its technical partners for how it is recovering from this crisis. Now Mauritania is putting the finishing touches on its concept note to access the nearly $32million allocated under the NFM, in order to revive its Global Fund-supported HIV, TB and malaria programs.

The background

"We saw NGOs coming and going, and funds that were flying around going everywhere. There was only one thing that was clear: those who were ill were not benefitting from much," recalled Fatimata Ball, one of the two representatives of people living with HIV serving on the newly reconstituted country coordinating mechanism.

After the Fund portfolio manager triggered the alarm, what the investigators of the Office of the Inspector General discovered, between 2009-2011, was a textbook example of corruption and bad management.

"Thousands of fake, fictitious or fabricated documents that were used to support alleged program activities in order to trigger expenditures of grant funds to which they were not entitled to, and for activities that did not occur and goods that were not in fact delivered," helped fuel the bribes, and payoffs that paid for lavish homes, a fleet of vehicles and luxurious overseas holidays, the OIG report concluded.

"One witness alleged that the SENLS senior official had been throwing money instead of confetti at his/her own wedding."

The entire program was rotten at its core. Between 2004 and 2008, the SENLS managed its HIV grant with no procedures, no accounting, no technology. Sub-recipients and sub-sub recipients operated with no supervision from the principal recipient. The management system for drugs and other commodities was pathetically lacking. Those program and financial results that should have triggered warnings and suspicions from the local funding agent (LFA) were not archived, which resulted in a massive undertaking to try and put the pieces of the puzzle back together; by its own estimation, the OIG team had to scan, enter and analyze more than 50,000 pages of program documentation. Investigators interviewed close to 800 people.

Things were not much clearer when it came to TB and malaria grants managed by the UN Development Program. Investigators were refused access to bank accounts on the grounds that, in the case of a UN agency serving as PR, "the Global Fund waives many of the fiduciary tools it has to work with other PRs," according to a citation by the High Level Independent Review Panel in the OIG report.

Thus the investigation was limited exclusively to SR and SSR where the OIG was able to uncover a systematic and deliberate effort to falsify receipts and to collude in bids and tenders in the markets. Compounding the fraud was the absence of a monitoring and evaluation plan for both SRs and the lack of a system -- or even a database -- to collect and manage performance indicator data.

In total, the OIG identified losses of some $2.5 million in fraud perpetuated under the UNDP-administered grant -- a sum contested by UNDP, which said that from its own internal audit that losses due to fraud amounted only to $1.06 million.

Shock treatment to restore confidence

Following the suspension of all Global Fund support for HIV in July 2009, Mauritania undertook a series of measures to address the situation (the TB and malaria grants administered by UNDP were not renewed). First off, most of the members of the SENLS team involved with the Global Fund grants were sacked and replaced. The executive director, the finance manager and the director of administration and finance were jailed. The accountant remains on the lam after evading arrest.

To satisfy one of the conditions to lift the suspension of the HIV grant, the government reimbursed some $4.2 million in misappropriated funds identified by the OIG. With respect to UNDP, there are some $1.5 million to recover but Fund spokesman Andrew Hurst told Aidspan that "corporate-level discussions" were ongoing, with the expectation that "the issue [will] be resolved soon".

To mitigate the conflicts of interest that were rife, the CCM was dissolved and reconstituted, said René-Fréderic Plain, a senior CCM specialist at the CCM hub in the Fund's Grant Management Support Unit.

"As part of the country’s efforts to fulfil one of the Global Fund’s conditions for reinstating the HIV grant, the Mauritania CCM was entirely restructured with the technical support of GMS," he said. "Thanks to the mobilization of national stakeholders and partners, as well as to the CCM’s leadership, it is now functional and recently performed its evaluation and performance assessment (EPA) with the financial support of [the French government's] 5 percent initiative."

Now, with the lifting of the HIV grant suspension, an agreement for continuity of services was signed to pay for the French Red Cross to provide treatment for 1,900 people living with the disease, said Emina Rye-Florentz, who is the new FPM for Mauritania.

“Since the suspension of the Round 5 HIV grant was lifted, the Global Fund has worked closely with the national PR (SENLS) and the SR (French Red Cross)," she told Aidspan. "They have established an innovative and collaborative partnership, while introducing thorough grant implementation monitoring systems to ensure that essential services supported through the grant are delivered to people living with HIV.”

Since 2012, these surveillance tools use a computerized tracking system to monitor stock levels "down to the pill level," said Dr Heyine Ely Cheickh, a pharmacist who watches commodity and drug levels for the French Red Cross in Mauritania.

From test case to role model

Mauritania has traveled far in its relationship with the Global Fund. So far that in Geneva, it is hailed as a success story.

"The CCM officially launched the Country Dialogue in May 2014 to submit three concept notes, and the Global Fund Secretariat is assured that it is well placed to conduct an inclusive and transparent Concept Note development process," said Plain.

Mauritania was allocated some $30 million under the new funding model, to be split between HIV, TB and malaria programs. Expected submission of the Mauritanian concept notes is end-January 2015.

"These measures have restored confidence between us and our partners," according to Idoumou Ould Mohammed Vall of SENLS. "We have earned their respect."

An affirmation confirmed by Joseph Serutoke, the Fund's Middle East and North Africa regional director.

"The Mauritanian government and partners have been responsive in addressing the issues and recommendations that followed the OIG investigation," Serutoke told Aidspan. "The constructive engagement by Mauritania and partners in resolving the issues is encouraging, and the Global Fund looks forward to continuing to work with all stakeholders as we are reengaging in Mauritania as part of the rollout of the new funding model."

[This article was first posted on GFO Live on 16 January 2015.]

To comment on this article, click here.

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5. NEWS: Aidspan releases new analysis of TB drug pricing trends

Kate Macintyre 15 January 2015

The global strategy for fighting the spread and impact of TB is heavily supported by the Global Fund  through multiple grants to national TB and HIV programs. This can represent up to three quarters of funding for programs in high-burden countries.  A large proportion of those funds are used to buy  medicine and other commodities. 

In a working paper Examining the trends in costs of medicines for drug-susceptible and drug-resistant tuberculosis from 2010 – 2013; an analysis of Global Fund PQR data, published here, Aidspan examines cost trends for selected TB medications purchased with Global Fund support.

The analysis compares both costs for  first- and second-line treatments over time and costs paid by the 22 high-burden countries (HBC) compared to the low burden countries (LBC).  

Study findings show the median cost of all first-line TB medications was significantly lower in HBC compared to LBC with pediatric formulations about half the cost of adult medicines. There was no similar variation in costs of second-line treatments between high- and low- burden countries. Unit  costs of second-line treatments were up to 100 times higher than those of first-line formulations. A rising trend was observed for first-line treatments over the four years; second-line treatment costs, with the exception of capreomycin, reduced over time.

The slow declining trends in the costs of second-line treatments and first-line treatments in LBC  may be attributed to the role of the Global Drug Facility (GDF) in obtaining competitive prices through pooled procurement. Conversely, the costs of first-line treatments in HBC show characteristics of a mature market.  Some of the differences in costs for pediatric and adult first-line drugs appear to coincide with the disbursement of grants by UNITAID to subsidize the cost of pediatric anti-TB drugs.

This analysis illustrates important differences in costs of anti-TB medications and highlights potential areas of intervention for initiatives aimed at accelerating progress towards achieving global TB targets, through increasing access to affordable anti-TB medications.

[This article was first posted on GFO Live on 15 January 2015.]

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