    Global HIV/AIDS: A More Country-Based Approach Could Improve
    Allocation of PEPFAR Funding (02-APR-08, GAO-08-480).

    The President's Emergency Plan for AIDS Relief (PEPFAR) provides
    assistance for combating HIV/AIDS in 15 focus countries and
    elsewhere, with global targets for prevention, treatment, and
    care. The U.S. Leadership Against HIV/AIDS, TB and Malaria Act of
    2003, which authorizes the $15 billion program, contains
    directives to guide the Office of the U.S. Global AIDS
    Coordinator's (OGAC) allocation of this funding. The act expires
    in September 2008. The President announced his intention to ask
    Congress to authorize $30 billion for these efforts for the next
    5 years. In 2007, the Institute of Medicine (IOM) recommended
    eliminating the directives. GAO was asked to describe (1) the
    views of HIV/AIDS experts on these directives, (2) an alternative
    approach to allocating funds, and (3) potential challenges
    related to this approach. GAO interviewed 22 experts, surveyed
    PEPFAR officials in the 15 focus countries, and reviewed
    pertinent documentation.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-08-480
        ACCNO:   A81551
      TITLE:     Global HIV/AIDS: A More Country-Based Approach Could
    Improve Allocation of PEPFAR Funding
         DATE:   04/02/2008
      SUBJECT:   Acquired immunodeficiency syndrome
    	     Allocation (Government accounting)
    	     Appropriated funds
    	     Budget outlays
    	     Cost analysis
    	     Disease control
    	     Disease detection or diagnosis
    	     Disease surveillance
    	     Federal aid to foreign countries
    	     Foreign aid programs
    	     Health care programs
    	     Infectious diseases
    	     International cooperation
    	     International relations
    	     Program evaluation
    	     Strategic planning
    	     Cost estimates
    	     CDC Global AIDS Program
    	     Global HIV/AIDS Initiative
    	     President's Emergency Plan for AIDS
    	     Relief

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    GAO-08-480

    This is a work of the U.S. government and is not subject to copyright
    protection in the United States. It may be reproduced and distributed
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    material separately.

    Report to Congressional Requesters:

    United States Government Accountability Office:

    GAO:

    April 2008:

    Global HIV/AIDS:

    A More Country-Based Approach Could Improve Allocation of PEPFAR
    Funding:

    Global HIV/AIDS:

    GAO-08-480:

    GAO Highlights:

    Highlights of GAO-08-480, a report to the Chairman, Committee on
    Foreign Relations, U.S. Senate; and the Chairman, Committee on Foreign
    Affairs, House of Representatives.

    Why GAO Did This Study:

    The President�s Emergency Plan for AIDS Relief (PEPFAR) provides
    assistance for combating HIV/AIDS in 15 focus countries and elsewhere,
    with global targets for prevention, treatment, and care. The U.S.
    Leadership Against HIV/AIDS, TB and Malaria Act of 2003, which
    authorizes the $15 billion program, contains directives to guide the
    Office of the U.S. Global AIDS Coordinator�s (OGAC) allocation of this
    funding. The act expires in September 2008. The President announced his
    intention to ask Congress to authorize $30 billion for these efforts
    for the next 5 years. In 2007, the Institute of Medicine (IOM)
    recommended eliminating the directives. GAO was asked to describe (1)
    the views of HIV/AIDS experts on these directives, (2) an alternative
    approach to allocating funds, and (3) potential challenges related to
    this approach. GAO interviewed 22 experts, surveyed PEPFAR officials in
    the 15 focus countries, and reviewed pertinent documentation.

    What GAO Found:

    HIV/AIDS experts recognized that the Leadership Act�s spending
    directives have ensured funding for prevention and treatment. However,
    many expressed concern about a directive to spend 33 percent of
    prevention funding on activities promoting abstinence and fidelity.
    Overall, the experts advocated replacing PEPFAR�s current allocation
    process�based on the spending directives�with an approach based more on
    country-level data and needs. Experts also advocated that OGAC continue
    providing guidance and technical assistance to PEPFAR country teams.

    An alternative approach to allocating PEPFAR funds would include three
    elements of the current allocation process�setting targets, selecting
    interventions, and considering costs�but give country teams more
    responsibility for planning PEPFAR programs. OGAC would retain its
    leadership role, including reviewing and approving country plans. Teams
    would use country-level data to propose targets, and OGAC would work
    with teams to ensure these targets align with PEPFAR�s global targets.
    Teams would select interventions to meet the proposed targets, without
    the constraints of spending directives but subject to OGAC review.
    Teams would consider country-specific data on interventions� costs
    using a consistent, OGAC-defined methodology; teams currently identify
    and analyze costs in varying ways. OGAC has not provided formal
    guidance or a methodology for identifying and analyzing costs, in
    contrast to federal standards that call for use of consistent
    methodologies to develop cost information.

    Most country team officials surveyed reported that the alternative
    approach to allocating funds would be feasible. However, some officials
    noted that reaching consensus on targets with external partners and
    within country teams could be a challenge. Officials also noted some
    ongoing challenges�including lack of host country capacity and limited
    cost data�that they would likely continue to face in implementing the
    alternative approach.

    Figure: Alternative Approach to PEPFAR Funding Allocation Process.

    This figure is a flowchart of the alternative approach to PEPFAR
    funding allocation process.

    [See PDF for image]

    Source: GAO analysis of OGAC data; Map Resources (clip art and map).

    [End of figure]

    What GAO Recommends:

    If Congress decides to remove spending directives, it should encourage
    OGAC to adopt a more country-based approach to allocating funds, with
    OGAC guidance. GAO recommends that the Secretary of State direct OGAC
    to provide guidance to PEPFAR country teams on using cost information
    in their planning and budgeting. State agreed with this recommendation
    and noted that elements of a country-based approach to funding are in
    place.

    To view the full product, including the scope and methodology, click on
    [http://www.gao.gov/cgi-bin/getrpt?GAO-08-480]. To view the e-
    supplement online, click on GAO-08-534SP. For more information, contact
    David Gootnick at (202) 512-3149 or mailto:GootnickD@gao.gov.

    [End of section]

    Contents:

    Letter:

    Results in Brief:

    Background:

    Experts Generally Called for a More Country-Based Approach to
    Allocating PEPFAR Funds:

    Alternative Approach to Allocating Funding Could Strengthen Country-
    Based Programming:

    Most Country Team Officials Found Alternative Approach Feasible but
    Identified Potential Challenges:

    Conclusions:

    Matter for Congressional Consideration:

    Recommendation for Executive Action:

    Agency Comments and Our Evaluation:

    Appendix I: Scope and Methodology:

    Appendix II: List of Experts:

    Appendix III: Data-Gathering Tools Used:

    Appendix IV: Comments from the Office of the U.S. Global AIDS
    Coordinator:

    Appendix V: GAO Contact and Staff Acknowledgments:

    Related GAO Products:

    Figures:

    Figure 1: Stage of the HIV/AIDS Epidemic in PEPFAR Focus Countries,
    December 2007:

    Figure 2: Spending Directives and Guidance from the Leadership Act for
    Fiscal Years 2006-2008:

    Figure 3: PEPFAR's Planned Allocations for Prevention, Treatment, and
    Care, Fiscal Year 2007:

    Figure 4: Total Planned PEPFAR Funding Allocations for 15 Focus
    Countries, Fiscal Years 2004-2008:

    Figure 5: Timeline of PEPFAR's Planning and Allocation Process:

    Figure 6: Relationship between PEPFAR Global Targets, 5-Year Country-
    Level Targets, and Annual Country-Level Targets:

    Figure 7: Current Allocation Process Compared with Alternative Approach
    to Allocating PEPFAR Funds:

    Abbreviations:

    AB: abstinence/faithfulness:

    ABC: Abstain, Be faithful, or use Condoms:

    ARV: antiretroviral drugs:

    CDC: Centers for Disease Control and Prevention:

    COP: country operational plan:

    COPRS: Country Operational Plan and Reporting System:

    IOM: Institute of Medicine:

    NIH: National Institutes of Health:

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

    OVC: orphans and vulnerable children:

    PEPFAR: President's Emergency Plan for AIDS Relief:

    PMTCT: Prevention of mother-to-child transmission:

    TB: tuberculosis:

    UNAIDS: Joint United Nations Programme for HIV/AIDS:

    USAID: U.S. Agency for International Development:

    WHO: World Health Organization:

    United States Government Accountability Office:

    Washington, DC 20548:

    April 2, 2008:

    The Honorable Joseph R. Biden, Jr.:
    Chairman:
    Committee on Foreign Relations:
    United States Senate:

    The Honorable Howard L. Berman:
    Chairman:
    Committee on Foreign Affairs:
    House of Representatives:

    The President's Emergency Plan for AIDS Relief (PEPFAR) is a $15
    billion, 5-year initiative to combat the global HIV/AIDS epidemic.
    Since its inception in 2003, PEPFAR has been credited with enabling the
    significant expansion of access to HIV/AIDS prevention, treatment, and
    care services in the 15 countries where it operates, while continuing
    to support other bilateral programs around the world.[Footnote 1] The
    U.S. Leadership Against HIV/AIDS, Tuberculosis and Malaria Act of 2003
    (Leadership Act),[Footnote 2] which authorizes PEPFAR, expires on
    September 30, 2008. PEPFAR's global targets call for preventing 7
    million new HIV infections by 2010, treating 2 million HIV-infected
    individuals by 2009, and caring for 10 million people infected and
    affected by HIV/AIDS, including orphans and vulnerable children, by
    2009. In May 2007, the President announced his intention to ask
    Congress to authorize the appropriation of $30 billion to continue
    PEPFAR's efforts over the next 5 years.[Footnote 3]

    The Leadership Act calls for an HIV/AIDS Coordinator to have primary
    responsibility for overseeing and coordinating PEPFAR resources and
    activities; in 2004, the Office of the U.S. Global AIDS Coordinator
    (OGAC) was established in the Department of State to carry out these
    functions.[Footnote 4] In addition, the act contains directives to
    guide the allocation of PEPFAR funding for HIV/AIDS prevention,
    treatment, and care. These spending directives include, among others,
    (1) a recommendation that 20 percent of funds appropriated to PEPFAR be
    dedicated to HIV/AIDS prevention[Footnote 5] (prevention directive) and
    a requirement that at least 33 percent of prevention funds be spent on
    programs promoting abstinence until marriage (AB directive[Footnote
    6]); (2) a requirement that at least 55 percent of the appropriated
    funds be dedicated to therapeutic medical care of HIV-infected
    individuals (treatment directive) and a recommendation that at least 75
    percent of treatment funds be used to procure antiretroviral drugs (ARV
    directive); and (3) a recommendation that 15 percent of the
    appropriated funds be spent on palliative care for those living with
    HIV/AIDS. These directives guide OGAC's allocation of funds for
    prevention, treatment, and care.[Footnote 7]

    In April 2006, we reported that the directive to spend 33 percent of
    PEPFAR prevention funding on AB programs had challenged the efforts of
    U.S. officials implementing PEPFAR funding in focus countries (country
    teams) to adopt evidence-based and country-level approaches to fighting
    HIV/AIDS[Footnote 8] as called for in OGAC's 5-year strategy.[Footnote
    9] Challenges cited by country teams included, for example, budgeting
    for abstinence-related activities separately from other prevention
    activities and difficulty delivering appropriate prevention messages to
    populations at high-risk of HIV/AIDS.[Footnote 10] In addition, a
    congressionally mandated study by the Institute of Medicine's (IOM)
    Committee for the Evaluation of PEPFAR Implementation, published in
    March 2007, found that the Leadership Act's spending directives hinder
    program implementation.[Footnote 11] While acknowledging PEPFAR's
    accomplishments, the IOM study recommends that Congress replace the
    spending directives with mechanisms that ensure country teams'
    accountability for results and link spending directly to overall and
    country-level PEPFAR targets. The IOM study does not specify the form
    that such mechanisms should take.

    We were asked to identify potential approaches that respond to the
    IOM's recommendation to replace the spending directives with an
    alternative approach. This report describes (1) views of leading HIV/
    AIDS experts regarding the Leadership Act's spending directives and the
    current process of allocating PEPFAR funds under these directives; (2)
    absent the spending directives, an alternative approach to allocating
    PEPFAR funds, based in part on the experts' views; and (3) potential
    challenges related to implementing this alternative approach, as
    identified by PEPFAR country team officials.

    To address these objectives, we conducted semi-structured interviews
    with 22 HIV/AIDS experts[Footnote 12] and, based on our analysis of
    information from these interviews, outlined an alternative approach to
    allocating PEPFAR funds. In addition, we conducted initial and follow-
    up surveys of PEPFAR country team members. (Survey questions, results,
    and number of respondents per question are presented in an electronic
    supplement to this report, available at our Web site.[Footnote 13]) We
    also interviewed government officials from four PEPFAR focus countries
    as well as officials at OGAC and the U.S. Agency for International
    Development (USAID) in Washington, D.C., and we held meetings with
    officials at the World Health Organization (WHO); the Joint United
    Nations Programme on HIV/AIDS (UNAIDS); and the Global Fund to Fight
    AIDS, Tuberculosis, and Malaria in Geneva, Switzerland. In addition, we
    reviewed PEPFAR documents, such as the President's Emergency Plan for
    AIDS Relief Fiscal Year 2008 Country Operational Plan (COP) Guidance.
    (See app. I for a more detailed description of our scope and
    methodology.) We conducted this performance audit from May 2007 to
    March 2008 in accordance with generally accepted government auditing
    standards.

    Results in Brief:

    HIV/AIDS prevention and treatment experts whom we interviewed
    recognized that the Leadership Act's spending directives had some
    benefits, but many experts expressed concerns about the effect of the
    AB and ARV directives on country-based and evidence-based programming.
    More than half of the experts stated that the prevention directive
    helped protect funding for prevention, and a number of the experts said
    that the treatment directive helped expand access to HIV/AIDS treatment
    in the 15 focus countries. However, 13 of 22 experts expressed concern
    that the AB directive posed obstacles to the development of country-
    based and evidence-based programming. In addition, the same number of
    experts explicitly stated that PEPFAR's AB directive hindered the
    development of integrated prevention programs that appropriately
    balanced AB prevention activities with other prevention activities.
    Further, 12 experts stated that the ARV directive does not reflect the
    varying cost of ARV drugs. Overall, the experts advocated revising
    PEPFAR's current allocation process, which is based on the spending
    directives, with a more country-based approach. Several experts also
    advocated a leadership role for OGAC in providing guidance and
    technical assistance to country teams.

    A more country-based approach to the current process of allocating
    PEPFAR funds could strengthen country teams' ability to develop
    programs that respond to local needs. Building on the IOM
    recommendation to eliminate the spending directives, the proposed
    alternative approach in this report includes changes to three elements
    of the current allocation process--setting targets, selecting
    interventions, and considering costs--but gives country teams more
    responsibility for planning PEPFAR programs, subject to OGAC's
    continued review[Footnote 14]. Under the proposed approach, teams would
    draw on country-level data to propose targets, including annual and
    multiyear targets, that respond to each country's conditions; OGAC
    would work with teams to ensure that the proposed targets are aimed at
    meeting the global PEPFAR targets. In contrast, teams currently set
    annual targets to meet 5-year country-level targets established by
    OGAC. Country teams would also select interventions to meet their
    proposed targets, unconstrained by the spending directives, subject to
    OGAC's review. Currently, teams select interventions within the
    constraints of the spending directives. In addition, teams would
    consider country-level cost information according to a consistent, OGAC-
    defined methodology; teams currently identify and analyze costs in
    varying ways. Although OGAC bases its country-level allocations in part
    on the proposed budgets in the teams' plans, OGAC has not provided the
    teams formal guidance or a methodology for identifying and analyzing
    cost information. In contrast, federal standards state that agencies
    should use consistent costing methodologies in their planning to
    provide reliable and timely information to federal managers and
    Congress[Footnote 15]. To ensure country teams' accountability for
    results under the proposed approach, OGAC would retain its leadership
    role, including approving country plans and leading efforts to monitor
    allocation of funds and progress toward targets.

    Most PEPFAR country team officials whom we surveyed reported that the
    proposed alternative approach to allocating PEPFAR funds would be
    feasible. However, some of the officials cited several key challenges
    that they might face in implementing the approach. With regard to
    proposing all country-level targets, most PEPFAR country team officials
    stated that it would not be difficult for country teams to do so.
    However, some country team officials identified reaching consensus on
    targets, both internally and with external participants--such as host
    country officials and implementing partners--as potential challenges.
    With regard to selecting interventions, officials noted a range of
    ongoing challenges--including measurement and evaluation difficulties,
    limited data, and lack of host country capacity--that would likely
    continue under the alternative approach. With regard to using cost-
    related data in their planning and budgeting, many officials said it
    would not be difficult for country teams to do so, but they cited a
    lack of complete and appropriate data and wide variations in costs as
    current obstacles that are also likely under the alternative approach.

    If Congress decides to remove the spending requirements as IOM
    recommended, we suggest that Congress encourage OGAC to adopt a more
    country-based approach to allocating funding, with OGAC providing
    overall leadership and guidance for setting country-specific targets,
    selecting interventions, and considering costs, as discussed in this
    report. In addition, to help ensure that PEPFAR country teams are
    better able to provide consistent and accurate cost estimates to OGAC,
    we recommend that the Secretary of State direct OGAC to provide
    appropriate guidance to PEPFAR country teams on identifying and using
    cost-related information in their planning and budgeting of PEPFAR
    programs.

    OGAC provided written comments regarding a draft of this report, which
    we have reprinted in appendix IV, as well as technical comments that we
    incorporated as appropriate. OGAC agreed with our recommendation to
    improve its guidance to country teams on how to identify and use cost
    information for planning and budgeting. In its written comments, OGAC
    emphasized that PEPFAR policies and procedures are intended to ensure
    country ownership consistent with applicable law. Our report's central
    finding--based on input we received from noted HIV/AIDS experts--that a
    more country-based approach could improve allocation of funds does not
    suggest that country-teams play no role in PEPFAR programming. However,
    a number of experts we interviewed observed that congressional spending
    directives and targets set by OGAC have constrained country-level
    programming. OGAC's written comments also suggested that our report
    demonstrated some misunderstanding of PEPFAR operations. In response,
    we added to our report more information about OGAC's annual allocation
    process. OGAC further challenged our presentation of expert concerns
    regarding the impact of the 33 percent AB spending directive. In
    response, we added a footnote detailing some of the experts' comments
    regarding the AB spending directive. In addition, OGAC stated its
    concern that the report does not address the potential consequences of
    eliminating the current 10 percent spending directive for programs
    serving orphans and vulnerable children (OVC). Although our work
    focused on the prevention and treatment spending directives, a number
    of individuals whom we interviewed noted that this directive helped
    protect programs for OVC. We also recognize that Congress may view the
    OVC directive as necessary to protect this vulnerable group.

    Background:

    More than 20 million people have died from AIDS since 1981. In 2007, an
    estimated 2.1 million died from AIDS and about 2.5 million people were
    newly infected with HIV. Data for 2007 from UNAIDS indicate that about
    33.2 million people worldwide are living with HIV/AIDS. More than two-
    thirds of these people live in sub-Saharan Africa, where adult HIV
    prevalence in 2007 was estimated by UNAIDS at 5 percent.

    HIV/AIDS Epidemic in PEPFAR countries:

    The nature of the AIDS epidemic varies among the 15 PEPFAR focus
    countries, 12 of which are in sub-Saharan Africa (see fig. 1). Although
    the epidemic in some focus countries is concentrated in certain
    populations, in other focus countries it has spread among the general
    population. In addition, the groups most vulnerable to HIV infection
    vary among the focus countries. For example, while girls and young
    women are most vulnerable in some countries, populations typically
    considered high-risk groups, such as intravenous drug-users or
    commercial sex workers, are most vulnerable in others.

    Figure 1: Stage of the HIV/AIDS Epidemic in PEPFAR Focus Countries,
    December 2007:

    This figure is a map showing the stage of the HIV/AIDS epidemic in
    PEPFAR countries, December 2007.

    [See PDF for image]

    Source: UNAIDS data.

    Note: According to UNAIDS and WHO, a concentrated epidemic is one in
    which HIV has infected at least 5 percent of individuals in defined
    subpopulation but is not well-established in the general population. In
    a generalized epidemic, HIV has spread among the general population,
    infecting at least 1 percent.

    [End of figure]

    Leadership Act's Spending Directives and Guidance:

    The Leadership Act specifies the percentages of PEPFAR funds to be
    allocated for HIV/AIDS prevention, treatment, and care activities for
    fiscal years 2006-2008. The act endorses the "ABC model" (Abstain, Be
    faithful, correct and consistent use of Condoms) for sexual prevention
    of HIV/AIDS.[Footnote 16] The act also requires that at least 10
    percent of PEPFAR funds be devoted to care for orphans and vulnerable
    children.[Footnote 17] (See fig. 2.)

    Figure 2: Spending Directives and Guidance from the Leadership Act for
    Fiscal Years 2006-2008:

    This figure is a combination of three pie graphs showing spending
    directives and guidance from the leadership act for fiscal years 2006-
    2008.

    Large Pie Graph:

    Treatment: 55%;
    Prevention: 20%;
     care: 15%;
    Orphans and vulnerable children: 10%.

    Treatment:

    Antiretroviral drugs: 75%;
    Related care: 25%.

    Prevention:

    Other Prevention activities: 66%;
    Abstinence/: 33%.

    [See PDF for image]

    Source: GAO analysis of 2003 Leadership Act.

    Note: The percentage shown for other prevention activities represents
    PEPFAR prevention funds remaining after the required allocation for
    abstinence/faithfulness activities.

    [End of figure]

    PEPFAR Funding:

    In fiscal year 2007, Congress appropriated about $4.52 billion for
    global HIV/AIDS efforts. Of this amount, approximately $4.48 billion
    was appropriated to four accounts: (1) the Global HIV/AIDS Initiative
    (GHAI), (2) the Child Survival and Health account, (3) the National
    Institutes of Health (NIH) budget account, and (4) the Centers for
    Disease Control and Prevention (CDC) Global AIDS Program.[Footnote 18]
    In this report, "PEPFAR funding" refers to funds appropriated to these
    four accounts.[Footnote 19]

    In fiscal year 2007, planned PEPFAR allocations for prevention,
    treatment, and care activities in the 15 focus countries totaled about
    $2.35 billion.[Footnote 20] Of that sum, about $488 million (21
    percent) was allocated for prevention; approximately $703 million (30
    percent) was allocated for care, which includes assistance for orphans
    and vulnerable children; and about $1.16 billion (49 percent) was
    allocated for treatment (see fig. 3).

    Figure 3: PEPFAR's Planned Allocations for Prevention, Treatment, and
    Care, Fiscal Year 2007:

    This figure is a pie graph showing PEPFAR's planned allocations for
    prevention, treatment, and care, fiscal year 2007.

    Treatment: $1.16 billion: 49%;
    Care: $703 million: 30%;
    Prevention: $488 million: 21%.

    [See PDF for image]

    Source: GAO analysis of budget data provided by OGAC.

    [End of figure]

    PEPFAR's annual planned allocations have increased significantly since
    the program received its first appropriation in January 2004. In fiscal
    year 2004, planned allocations to the 15 focus countries for
    prevention, treatment, and care activities totaled approximately $629
    million. Planned allocations to the focus countries for these
    activities were approximately $1.05 billion in fiscal year 2005, $1.4
    billion in fiscal year 2006, and $2.35 billion in fiscal year 2007. For
    fiscal year 2008, planned allocations to the focus countries for
    prevention, treatment, and care total about $3.16 billion.[Footnote 21]
    Figure 4 shows total planned PEPFAR funding allocations for fiscal
    years 2004-2008.

    Figure 4: Total Planned PEPFAR Funding Allocations for 15 Focus
    Countries, Fiscal Years 2004-2008:

    This figure is a vertical bar graph showing total planned PEPFAR
    funding allocations for 15 focus countries, fiscal years 2004-2008. The
    X axis is the fiscal year, and the Y axis is dollars in millions.

    Fiscal year: "2004";
    Dollars in millions: 628.6.

    Fiscal year: "2005";
    Dollars in millions: 1049.8.

    Fiscal year: "2006";
    Dollars in millions: 1403.4.

    Fiscal year: "2007";
    Dollars in millions: 2349.

    Fiscal year: "2008[A]";
    Dollars in millions: 3162.

    [See PDF for image]

    Source: GAO analysis of budget data provided by OGAC.

    Note: As of March 31, 2008, OGAC had not yet approved fiscal year 2008
    planned allocations.

    [End of figure]

    PEPFAR Program Areas:

    PEPFAR guidance establishes several program areas that comprise
    activities undertaken for prevention, treatment, and care. For
    prevention, the guidance defines five program areas--abstinence/
    faithfulness (AB); "other prevention," which includes condom activities
    ("C"), management of sexually transmitted infections, and reduction of
    injection drug use; prevention of mother-to-child transmission (PMTCT);
    blood safety; and safe medical injections. These areas are divided into
    two groups: (1) activities aimed at preventing sexual transmission--AB
    and "other prevention," and (2) activities aimed at preventing
    nonsexual transmission--prevention of mother to child transmission,
    blood safety, and safe medical injections.[Footnote 22]

    In addition, PEPFAR guidance specifies three program areas for
    treatment: ARV drugs, which encompasses the cost of ARV drugs as well
    as logistical and supply chain support; ARV services, which includes
    training clinicians and other health care providers on ARV-related
    issues; and laboratory infrastructure. The guidance defines four
    program areas for care: basic health care and support; tuberculosis
    (TB) prevention and treatment; care of orphans and other vulnerable
    children affected by HIV/AIDS, including basic education and health
    care; and counseling and testing.

    Within each program area, OGAC has developed a number of indicators
    that it uses to measure progress. For example, two indicators under the
    PMTCT program area are the number of facilities providing the minimum
    package of PMTCT services and the number of pregnant women who received
    HIV counseling and testing for PMTCT and who received their test
    results.

    Office of the Global AIDS Coordinator:

    Established in January 2004, OGAC is responsible for developing a
    global HIV/AIDS strategy and administering PEPFAR. The Leadership Act
    authorizes the Global AIDS Coordinator to carry out international
    prevention, treatment, and care and other HIV/AIDS-related activities
    through nongovernmental organizations (NGO) and U.S. executive branch
    agencies.[Footnote 23] The act also charges the coordinator with
    primary responsibility for overseeing and coordinating PEPFAR
    activities. These duties include, among others, auditing, monitoring,
    and evaluating all PEPFAR programs; directly approving all PEPFAR
    activities, including funding; and establishing criteria needed to
    assess the measurable outcomes of PEPFAR activities.[Footnote 24]

    In the countries where PEPFAR operates, PEPFAR programs are managed by
    country teams, each consisting of staff from PEPFAR's implementing
    agencies and led, respectively, by the U.S. Ambassador for that
    country. Some focus country teams include a PEPFAR coordinator, who is
    responsible for coordinating with implementing agencies and the host
    country government, and for facilitating the development of that
    country's PEPFAR program.

    OGAC also monitors and evaluates PEPFAR funding and program results.
    For instance, OGAC requires country teams to submit semiannual and
    annual progress reports for each fiscal year; these reports describe
    program results and identifying obligations for the past fiscal year.
    OGAC uses this information to monitor country teams' progress toward
    the PEPFAR global targets.

    Current Process for Allocating PEPFAR Funding:

    The current process for allocating PEPFAR funding within the framework
    of the spending directives is a multistage annual process. These stages
    include, among others, OGAC's provision of an initial budget to each
    country team; each team's submission of an annual strategy, known as a
    country operational plan (COP); and OGAC's assessment of each team's
    opportunities, challenges, and progress in the previous year. Based on
    OGAC's assessment, PEPFAR's interagency headquarters leadership
    provides a new annual allocation for each country team.

    * OGAC provides each country team an initial planning budget, subject
    to annual appropriations, as well as COP technical guidance. In setting
    the initial planning budget for each country, OGAC takes several
    factors into account, including the country team's progress toward
    achieving the previous year's annual country-level targets; national
    coverage rates for individuals eligible for PEPFAR prevention,
    treatment, and care services; and financial obligation rates. For
    fiscal year 2007, OGAC provided each focus country team with an initial
    planning budget in June 2006.

    * On the basis of these budgets and guidance, the country teams develop
    their COPs--including annual country-level targets, selected
    interventions and the organizations that will implement them
    (implementing partners),[Footnote 25] and estimated costs of
    interventions--and submit them in late September. For fiscal year 2007,
    country teams submitted COPs by September 30, 2006.

    * The interagency headquarters team--comprising staff from OGAC and the
    agencies that implement PEPFAR--then conducts technical and
    programmatic reviews of the proposed programs, consulting with country
    teams to clarify and discuss issues related to the COPs. After these
    reviews are complete, the PEPFAR principals, which include the Global
    AIDS Coordinator and senior management from the PEPFAR implementing
    agencies, review the COPs and make recommendations to the Global AIDS
    Coordinator regarding their approval.

    * OGAC provides a series of notifications to Congress of the activities
    and budget functions it plans to implement under PEPFAR in the current
    fiscal year. For fiscal year 2007, OGAC submitted four congressional
    notifications, beginning in December 2006.

    * Funds are eventually released to the PEPFAR implementing agencies and
    country teams, which then allocate their funding to implementing
    partners according to their COP strategies. The process for
    transferring and obligating funds and the time required to complete
    this process vary by agency, but all implementing agencies are
    instructed to obligate their funds within the current fiscal year, with
    a few exceptions.[Footnote 26]

    * During each annual budget cycle, OGAC reassesses each country team's
    opportunities and challenges and review its progress in the previous
    year. Based on this assessment, PEPFAR's interagency headquarters
    leadership provides a new annual allocation for each country team.

    Country teams received fiscal year 2007 funding from January to May
    2007. Figure 5 shows the timeline for PEPFAR's planning and allocation
    process for fiscal year 2007.

    Figure 5: Timeline of PEPFAR's Planning and Allocation Process:

    This figure is a timeline of PEPFAR's planning and allocation process.

    [See PDF for image]

    Source: GAO analysis of OGAC data.

    [A] OGAC submitted four congressional notifications for fiscal year
    2007.

    [B] The process for transferring and obligating funds and the time
    required to complete this process vary by agency. The timeline depicts
    the general time frame during which country teams received USAID and
    CDC funds for fiscal year 2007.

    [End of figure]

    The development of country teams' COPs includes three elements: setting
    targets, selecting interventions, and considering costs.

    * Setting targets. OGAC set initial 5-year country-level targets for
    prevention, treatment, and care for each focus country that, when
    summed across countries, total PEPFAR's global targets.[Footnote 27] To
    achieve these 5-year country-level targets, each country team sets
    annual targets for prevention, treatment, and care.[Footnote 28] (See
    fig. 6.) For instance, each team sets annual targets for the number of
    individuals to receive HIV-related palliative care and the number of
    orphans and vulnerable children to be assisted that over 5 years should
    strive to achieve or exceed OGAC's 5-year country-level target for
    care. OGAC guidance urges country teams to do everything possible to
    meet the 5-year country-level targets.[Footnote 29] Although OGAC does
    not require that country teams' annual targets sum to the 5-year
    targets, it considers PEPFAR's global targets to be "hard" targets that
    it is committed to achieving.

    Figure 6: Relationship between PEPFAR Global Targets, 5-Year Country-
    Level Targets, and Annual Country-Level Targets:

    This figure is a chart showing the relationship between PEPFAR global
    targets, 5 year country level targets, and annual country-level
    targets.

    PEPFAR program:

    Global Targets:

    * 2 million people to be put on treatment by 2009;
    * 7 million infections to be prevented by 2010;
    * 10 million people to receive care by 2009.

    5-year country-level targets:

    * Set by OGAC;
    * Cover prevention, treatment, and care for 15 focus countries;
    * Developed based on estimates of country need.

    Annual country-level targets:
    after 5 years, should add up to 5-year country-level targets above:

    * Set by PEPFAR country teams in 15 focus countries;
    * Cover treatment, care, and specific aspects of prevention.

    ----> Global targets and 5-year-country-level targets influence country
    team's selection of annual country-level targets.

    [See PDF for image]

    Source: GAO analysis of PEPFAR data; Map Resources (map); and Nova
    Development (clip art).

    [End of figure]

    * Selecting interventions. Each country team selects interventions to
    meet its annual targets, within the constraints of the spending
    directives and the context of the country's epidemic. OGAC provides
    guidance to country teams on selecting interventions. For example, OGAC
    guidance addresses developing and implementing prevention programs that
    use the ABC approach.

    8 Considering costs. Each country team estimates costs when setting
    targets, selecting interventions, and developing budgets. Country teams
    obtain as-needed technical assistance for conducting cost analyses from
    PEPFAR implementing agencies. OGAC bases its country-level allocations
    in part on the proposed budgets in country teams' annual COPs and each
    country's efficiency in achieving its targets.

    IOM's 2007 Recommendations:

    In its report,[Footnote 30] the IOM Committee for the Evaluation of
    PEPFAR Implementation concluded that, although the spending directives
    may have been initially helpful in ensuring that PEPFAR had a balance
    of activities for prevention, treatment, care, and orphans and
    vulnerable children, they have limited PEPFAR's ability to tailor its
    programs to the specific epidemic in each country. The committee
    recommended that Congress remove the spending directives and replace
    them with more appropriate mechanisms to ensure that PEPFAR country
    teams are held accountable to OGAC and Congress for achieving results
    and that spending is linked directly to overall and country-level
    PEPFAR targets.

    The report made several other recommendations. For instance, it called
    for PEPFAR to emphasize long-term strategic planning and capacity
    building to help build a sustainable response to the HIV/AIDS epidemic.
    The report also recommended that PEPFAR work to accumulate better data
    to determine the most appropriate prevention interventions for each
    country, empower women and girls by focusing on the factors that put
    them at greater risk for HIV/AIDS, and build workforce capacity by
    increasing support for educating new health care workers.

    Experts Generally Called for a More Country-Based Approach to
    Allocating PEPFAR Funds:

    Although more than half of the 22 experts we interviewed acknowledged
    benefits of PEPFAR's overall prevention spending directive, the same
    number of experts expressed concern about the AB directive's effect on
    country-based and evidence-based programming. Many of the experts
    stated that the prevention and treatment directives have, respectively,
    protected funding for prevention and helped expand access to HIV/AIDS
    treatment. However, 13 of 22 experts expressed concern that the AB
    directive has posed obstacles to country-based programming, and 13
    experts said it has hindered development of integrated prevention
    programs. In general, the experts advocated replacing the current
    allocation process with a more country-based approach for allocating
    PEPFAR funds.[Footnote 31] In addition, several experts advocated a
    leadership role for OGAC in providing guidance and technical
    assistance.

    Experts Acknowledged Some Positive Impact of Spending Directives for
    Prevention and Treatment:

    Consistent with the IOM 2007 study, experts we consulted generally
    agreed that PEPFAR has expanded HIV/AIDS prevention and treatment
    programs, supporting significant progress in combating the HIV/AIDS
    epidemic in the focus countries.[Footnote 32] Many of the experts
    acknowledged that the prevention and treatment spending directives had
    a positive impact during PEPFAR's first 5 years.

    * Thirteen experts noted benefits from the Leadership Act's directive
    to spend 20 percent of PEPFAR funding on prevention. In general, these
    experts said that the prevention directive ensured that PEPFAR
    continued to fund prevention in the face of an increasing focus on
    expanding access to treatment. For example, one commented that the
    prevention spending directive secured protection of prevention funding
    despite the call for a massive expansion of ARV treatment. Another
    expert observed that securing funding for prevention is extremely
    important because the AIDS epidemic will never be ended through
    treatment alone.

    * Nine experts agreed that PEPFAR's directive to spend 55 percent of
    funding on HIV/AIDS treatment helped expand access to ARV treatment in
    the focus countries. This result is consistent with IOM's conclusion
    that a primary accomplishment of PEPFAR has been to demonstrate that
    treatment can be rapidly scaled up in resource-constrained
    environments. For example, one expert stated that the treatment
    directive's strength was in securing a large amount of money to expand
    ARV therapy although it was considered very expensive at the time.
    However, another expert, qualifying his support for the directive, said
    that during the first phase, PEPFAR was disproportionately skewed
    toward treatment and that, although the treatment directive may have
    been useful to initiate the massive scale up of ARV treatment, it
    should be reconsidered for the next 5-year period.

    Experts Expressed Concerns about AB and ARV Directives and Called for a
    More Country-Based Approach to Allocations:

    A number of experts questioned the effect of the AB and ARV spending
    directives on country teams' ability to develop integrated, country-
    based programs. For example:

    * Thirteen of 22 experts expressed concern that the AB directive posed
    obstacles to the development of country-based and evidence-based
    programming.[Footnote 33] In addition, 13 experts explicitly stated
    that the AB directive hindered the development of integrated prevention
    programs that appropriately balanced abstinence-until-marriage
    prevention activities with other prevention activities.[Footnote 34]
    Experts also noted that the AB directive inhibits the integration of
    prevention, treatment, and care programs.[Footnote 35] In contrast, two
    experts highlighted the benefits of the directive, emphasizing the
    importance of programs promoting fidelity for sexually active adults in
    countries with generalized epidemics.

    * Twelve experts stated that the ARV directive does not reflect the
    changing price of ARV drugs. For example, seven experts noted that the
    cost of ARV drugs has decreased over the past 5 years.[Footnote 36]

    Several experts observed that it is important to set targets and select
    interventions that reflect country-level data and to base funding
    allocations on the needs and costs in each country. For example, 9
    experts suggested that it is important that PEPFAR targets be based on
    country-specific data, and 10 experts observed that such data are
    important for the selection of interventions. Other experts recommended
    determining funding levels based on the characteristics of each
    country's epidemic. In addition, several experts noted that to set
    appropriate targets, OGAC and country teams need to know the costs of
    interventions in each country.

    Experts Advocated That OGAC Provide Guidance and Technical Assistance:

    A number of the experts we interviewed said that OGAC should provide
    guidance and technical assistance to country teams during the next
    phase of PEPFAR.[Footnote 37]

    * Six experts stated that OGAC should provide guidance to country
    teams. Of these six, one expert pointed out that OGAC should provide
    guidance that lays out how PEPFAR country teams need to communicate
    with host country authorities. Another of these experts noted that
    currently OGAC provides limited guidance on how country teams should
    conduct outcome evaluations to determine whether programs are having an
    impact or how they can be more effective. This expert also suggested
    that it would be useful if OGAC provided more information to country
    teams about what is and is not working. According to one expert who did
    not support delegating key decisions to the country teams, in the
    absence of spending directives, OGAC should provide guidance for
    allocating funding for both generalized and concentrated epidemics.

    * Four experts suggested that OGAC should provide technical assistance
    to the country teams. For example, according to one of these experts, a
    key role for OGAC would be to provide advice on the effectiveness of
    given interventions.

    Alternative Approach to Allocating Funding Could Strengthen Country-
    Based Programming:

    A more country-based approach to the current process of allocating
    PEPFAR funds could strengthen country teams' ability to develop
    programs that respond to local needs. Building on the IOM
    recommendation to eliminate the spending directives, the proposed
    alternative approach includes changes to three basic elements of the
    current allocation process--setting targets, selecting interventions,
    and considering cost--but gives country teams greater responsibility
    for planning their country's PEPFAR programs, subject to OGAC's
    continued review (see fig. 7). Under the proposed approach, country
    teams would propose targets, including annual and multiyear targets,
    that respond primarily to the country's conditions; OGAC would work
    with the country teams collaboratively and iteratively to ensure that
    the proposed targets are aimed at meeting the global PEPFAR targets.
    The country teams would also select interventions to meet their
    proposed targets, unconstrained by the spending directives, subject to
    OGAC's review and with OGAC's guidance and technical assistance. In
    addition, the teams would consider country-level cost information
    according to a consistent, OGAC-defined methodology; currently,
    countries use costs in varying ways, with OGAC providing as-needed
    technical assistance but no formal guidance. OGAC would retain its
    leadership role under the alternative approach, including reviewing and
    approving COPS and monitoring country teams' progress toward global
    targets.

    Figure 7: Current Allocation Process Compared with Alternative Approach
    to Allocating PEPFAR Funds:

    This figure is a combination of two flowcharts showing the current
    allocation process compared with alternative approach to allocating
    PEPFAR funds.

    [See PDF for image]

    Source: GAO analysis of OGAC data; GAO analysis.

    [End of figure]

    Country Teams Would Propose Country-Level Targets to Reflect Country
    Conditions and Data, Subject to OGAC Review:

    Under the proposed approach, country teams would draw on local
    epidemiological information and cost data to propose targets, which
    could include annual and multiyear targets, that respond primarily to
    the country's conditions. OGAC would review the countries' proposed
    targets and, in a collaborative, iterative process, work with the
    countries to modify the proposed targets to reflect both PEPFAR's
    global targets and changing local conditions, such as trends in HIV/
    AIDS infection rates among vulnerable populations. According to an OGAC
    official, in the absence of OGAC's 5-year country-level targets, OGAC
    would determine whether country teams' proposed country-level targets
    are on track to meet the global targets.

    * Twenty-eight of 38 country team officials responding to our first
    survey reported that allowing country teams to propose all targets
    would have a very positive or positive effect on prevention programs.
    Similarly, 23 of the 38 responding country team officials reported that
    allowing country teams to propose all targets would have a very
    positive or positive effect on treatment programs.

    * When asked to provide information on the effect of allowing teams to
    propose all country-level targets, nine country team officials said
    that this would make their programs responsive to local needs and
    conditions. In addition, six officials reported that proposing country
    level targets would enhance country teams' ability to consider country-
    specific information and team knowledge.

    Under the current approach, country teams' target setting reflects the
    combined influence of OGAC's 5-year country-level targets and country-
    level information, according to country team officials we surveyed.

    * Most country team officials reported that OGAC's 5-year country-level
    targets greatly affect their process for setting annual country-level
    targets. Thirty-two of 38 survey respondents indicated that the 5-year
    country-level targets were extremely or very important in their process
    of setting annual country-level targets, and several country team
    officials reported challenges related to the 5-year country-level
    targets. For example, one noted that the targets set by OGAC did not
    correspond with the host country government's own goals. Another
    respondent stated that OGAC's 5-year country-level targets for care did
    not appropriately address orphans and vulnerable children or home-based
    care.

    * Most country team officials reported that other sources of
    information were also influential in their process of setting annual
    country-level targets. For example, 27 of 38 survey respondents
    indicated that information from the host country's national strategy
    and targets was extremely or very important, while 32 of 38 respondents
    reported that the PEPFAR country team's own analysis of country data
    was extremely or very important to setting annual targets.

    Alternative Approach Would Allow Country Teams to Select Interventions
    without Constraints of Spending Directives:

    Under the alternative approach, the country teams would select
    interventions based on country-level epidemiological and other
    evidence, without the constraint of the spending directives. OGAC would
    continue to review the selected interventions as part of the COP
    process and would provide guidance and technical assistance on proposed
    interventions.

    Under the current approach, country team officials we surveyed reported
    that three factors--the Leadership Act's spending directives, country-
    specific information, and input from other partners--influence their
    selection of interventions. About half said that the spending
    directives constrained the selection process. A number of country team
    officials also noted that guidance provided by OGAC influenced their
    selection of interventions.

    * Country team officials generally said that they considered data on
    effectiveness of interventions and past program performance as well as
    country-level information as major factors in their selection of
    interventions. For example, 37 of 38 respondents indicated that the
    effectiveness of interventions is an extremely or very important factor
    in their determination of which interventions to use. Also, 35 of 38
    country team officials reported that information about the past
    performance of ongoing programs is extremely or very important in
    determining which interventions to implement. In addition, almost all
    country team officials reported that they considered the following to
    be extremely or very important when selecting interventions: country
    capacity, country-level epidemiological data, cultural acceptability,
    and professional and technical expertise of in-country PEPFAR staff.

    * About half of the country team officials reported that the current
    spending directives constrained their selection of interventions. In
    response to our follow-up survey, 15 of 32 officials reported that the
    spending directives presented challenges to selecting interventions,
    with most respondents focusing on challenges posed by the prevention
    directives. For example, one respondent stated that the national
    universal access treatment target had not been met because the country
    team had to follow the spending directives.[Footnote 38]

    * Most country team officials reported collaborating with implementing
    partners, host country representatives, and major donor representatives
    in selecting interventions. Respondents most frequently characterized
    implementing partners as being heavily involved in determining which
    interventions to carry out: 35 of 38 respondents reported that
    implementing partners were extremely or very involved in selecting
    interventions. In addition, 34 of 38 respondents noted that host
    country technical working groups--groups organized by the host country
    government that are usually comprised of representatives from major
    donors as well as host government officials--were extremely or very
    important. In addition, 26 of 36 officials who responded to a question
    about country officials' participation in the selection of
    interventions reported that host country authorities were extremely or
    very involved in this process.

    * A majority of country team officials (23 of 38) reported that formal
    guidance provided by OGAC influenced their selection of interventions.

    Country Teams Would Consider Costs Using OGAC-defined Methodology:

    Under the alternative approach, each country team would analyze, in a
    manner consistent across all teams, country-level cost data to
    determine the funding needed for the interventions they select. In
    doing so, the country teams would use a consistent methodology defined
    by OGAC. In contrast, under the current approach, although most country
    teams reported using cost data in planning and budgeting, the teams
    reported using varying methodologies to identify and analyze this data.
    Although OGAC provides the country teams as-needed assistance and
    guidance in using cost data for budgeting and planning, it has not
    provided formal guidance or established a consistent methodology for
    conducting cost analyses, in accordance with federal accounting
    standards.

    Almost all country team officials who responded to our survey reported
    using cost information in their planning and budgeting. Specifically,
    35 of 38 respondents said that they use cost information when planning
    and budgeting PEPFAR programs, with about half of this group using the
    information to a great or very great extent and the other half using it
    to a moderate extent or to some extent.[Footnote 39] However, country
    team officials reported using varying methods to identify and analyze
    cost information to plan and budget PEPFAR programs. Some respondents
    reported calculating cost per unit for interventions or services, while
    others stated that they compare costs across implementing partners. For
    instance, 11 of 32 respondents said that they use information about the
    actual unit cost of specific interventions to a great or very great
    extent when planning and budgeting. Other reported methods for
    identifying and analyzing cost information include using cost data to
    discuss cost-effectiveness and to identify and complement other funding
    sources.

    * An official from one country team explained its attempts to estimate
    cost per intervention. The official provided an example related to a
    care intervention, noting that the country team first determines the
    level of funding available for care interventions and then identifies
    the most effective interventions for care--in this case, co-
    trimoxazole, an antibiotic that can be used to treat most of the
    opportunistic infections associated with HIV/AIDS--and the number of
    beneficiaries it hopes to serve. The country team then determines the
    cost of an average dose of the drug by using information from
    implementing partners, interagency technical working groups, and supply
    chain partners. Finally, the team calculates the cost of providing the
    drug to the identified beneficiaries.

    * Officials from another country team reported that the country team
    calculates rough costs for each implementing partner. For example, to
    estimate the cost per patient treated, the officials reported that they
    divide each partner's proposed budget by the number of patients the
    partner planned to treat with ARVs. The country team then compares the
    cost per patient across implementing partners to identify partners
    whose costs are much higher or lower than average. The country team
    then holds discussions with those implementing partners to determine
    the reasons for the variation.

    * Five country team officials also reported using cost information in
    other ways. For instance, in response to an open-ended question, 3 of
    35 respondents reported that they use cost data in discussions about
    cost-effectiveness of implementing partners or new interventions. Two
    of 35 respondents said they use cost information to help them identify
    and complement other funding sources, such as the host country
    government or other donors.[Footnote 40] For example, one of these
    respondents noted that cost information is used to help the country
    team determine how to complement other funding sources, such as the
    Global Fund and the Clinton Foundation, for interventions such as ARVs.

    Although OGAC bases its country-level allocations in part on the
    proposed budgets in country teams' annual COPs, OGAC has not provided
    the teams formal guidance on identifying and analyzing cost
    information, nor has OGAC developed a methodology that the teams could
    apply to identify and use cost information. Federal financial
    accounting standards state that agencies should use consistent costing
    methodologies in their planning to determine the full cost of resources
    that contribute to the production of outputs in order to provide
    reliable and timely information to federal managers and
    Congress.[Footnote 41] In 2006, OGAC conducted a high-level exercise to
    determine the cost of averting an infection, using several cost models
    that examine prevention program cost effectiveness.[Footnote 42]
    According to an OGAC official, although several country teams have used
    these models to plan their own prevention programs, other teams found
    that the model was too high level and not country specific enough to be
    useful. Instead of providing formal guidance, OGAC offers country teams
    assistance and guidance on an as-needed basis. For example, OGAC
    officials noted that staff from OGAC's Strategic Information unit
    provide informal technical assistance to country teams on performing
    cost analyses.[Footnote 43] In addition, from time to time OGAC
    distributes studies on the costs of interventions to the country teams
    to assist them in planning and budgeting their programs. Several PEPFAR
    country team officials indicated the need for guidance from OGAC on how
    or to what extent they should conduct cost analysis in planning or
    budgeting programs. These country team officials noted that it would be
    useful to receive more detailed guidance on (1) how much to spend on
    specific aspects of programs, such as human resources; (2) what
    methodology to use to determine and analyze costs; (3) the best methods
    to obtain cost-related data; and (4) how to conduct costing studies.

    OGAC Would Retain Leadership Role in Allocation Process:

    Under the alternative approach to allocating PEPFAR funds, OGAC would
    maintain its current leadership role. For example, in addition to
    collaborating with the country teams in setting targets, selecting
    interventions, and considering costs, OGAC would:

    * provide initial budgets to the country teams to facilitate the
    planning and development of COPs,

    * review and approve the COPs,

    * monitor and report on funds allocated to assure that programs are
    balanced and integrated, and:

    * monitor progress toward targets.

    To assure country teams' accountability for results, OGAC would
    continue to review country teams' annual progress reports and gather
    and analyze strategic information to monitor and evaluate PEPFAR
    programs.

    Most Country Team Officials Found Alternative Approach Feasible but
    Identified Potential Challenges:

    Most PEPFAR country team officials whom we surveyed reported that the
    proposed alternative approach to allocating PEPFAR funds would be
    feasible.[Footnote 44] However, some officials identified several key
    challenges that they might face in implementing the approach. With
    regard to proposing all country-level targets, most officials said that
    country teams could easily do so, although some county team officials
    identified reaching consensus on targets, both internally and with
    external participants, as potential challenges. With regard to
    selecting interventions, officials noted a range of challenges--such as
    measurement and evaluation difficulties, limited data, and lack of host
    country capacity--that they currently face and which, according to our
    analysis, they would likely encounter under the alternative
    approach.[Footnote 45] With regard to using cost-related data, many
    officials cited a lack of complete and appropriate data and wide
    variations in costs as current obstacles that are also likely to
    continue under the alternative approach.

    Proposing Targets Would Be Feasible, but Reaching Consensus Could Be a
    Challenge for Some Country Teams:

    Most of the PEPFAR country team officials we surveyed stated that
    proposing all country-level targets would not be difficult, although
    some officials cited potential challenges. Twenty-nine of the 32
    country team officials who responded to our follow-up survey said it
    would be easy or very easy for country teams to propose all country-
    level targets, which could include multiyear targets; 3 said it would
    be difficult to do so.[Footnote 46] When asked to explain their
    response, 10 of 23 who predicted an easy or very easy process mentioned
    country team experience as a key reason.[Footnote 47] Twelve of these
    23 officials also noted the existence of good data, including
    epidemiological data, data on partner contributions, and direct
    feedback from providers and consumers, as a key reason that proposing
    targets would be easy or very easy. In addition, 11 of these 23
    officials reported that they currently work closely with their
    implementing partners and host country government to develop annual
    country-level targets. These country team officials cited, among other
    things, strong collaboration mechanisms such as joint working groups
    and good access to government decision-makers.

    When asked to identify potential challenges related to proposing all
    targets, some country team officials said that reaching external and
    internal consensus about the targets could be difficult.[Footnote 48]

    * Reaching external consensus. About a third of 36 officials who
    responded to a question in our original survey about developing targets
    identified reaching external consensus on country-level targets with
    the host country government, implementing partners, or both, as a
    potential challenge. For example, one official stated that the process
    of reaching consensus with the national authorities regarding program
    priorities might be more challenging without the requirements imposed
    by OGAC. Another official in this group suggested that the host country
    government might in some cases push for its own health priorities such
    as investment in infrastructure. In contrast, all six host country
    officials we interviewed praised the strong collaboration between their
    governments and PEPFAR country teams and stated that it would not be
    difficult to reach agreement with country teams on country-level
    targets.

    * Reaching internal consensus. Some country team officials also
    reported that it could be difficult for the country team to reach
    internal consensus regarding the level of the targets. Specifically, 10
    of 36 officials who responded to a question in our original survey
    about developing targets noted that reaching consensus within the
    country team might be a challenge if the country teams were to propose
    all country-level targets. For example, one official cited different
    levels of technical expertise and understanding within the country team
    might make it difficult to reach consensus. Another official expressed
    concern that agencies would want to focus on targets in their
    particular area of expertise. However, two officials also noted that
    the process of shared analysis and planning involved in developing
    consensus with both external partners and within the country team could
    strengthen both interagency relations and the program itself. Another
    official acknowledged that such negotiations are a difficult but
    necessary part of the planning process.

    Some Current Challenges Could Continue to Affect Selection of
    Interventions:

    Challenges that country team officials associated with their current
    process for selecting interventions included measurement and evaluation
    difficulties, limited data, and lack of country capacity.[Footnote 49]
    According to our analysis, these challenges would likely continue under
    the alternative approach.

    * Measurement and evaluation difficulties. A number of country team
    officials cited concerns related to considering interventions'
    effectiveness. Thirty-seven of the 38 officials who responded to a
    question in our original survey about selecting interventions indicated
    that interventions' effectiveness is an extremely or very important
    consideration. However, 9 of 31 officials who responded to a question
    in our follow-up survey on selecting interventions noted that they had
    encountered challenges related to measurement and evaluation when
    selecting interventions to meet country-level targets for prevention,
    and one official reported such challenges when attempting to select
    interventions to meet country-level care targets. For example, several
    officials observed that it was difficult to measure the actual outcomes
    of prevention interventions, such as mass media activities. Another
    official cited the difficulties associated with measuring the success
    of a program designed to increase the likelihood of a nonevent such as
    preventing an infection. These difficulties in measuring the impact of
    interventions can make it harder for country teams to select
    interventions, because the links between the interventions and their
    ultimate effects may not be clear.

    * Limited data. Six of 31 officials who responded to a question in our
    follow-up survey about selecting interventions indicated that limited
    data on areas such as epidemiology and demography have challenged their
    ability to select interventions to meet PEPFAR's targets for
    prevention, treatment, and care. For example, one official noted that
    because data on the demography of high-risk groups are inadequate for
    designing prevention interventions to reach these groups, the country
    team instead selects interventions that reach the general population.
    As a result, according to the official, the interventions are weak and
    unfocused.

    * Lack of country capacity. Six of 31 country team officials who
    responded to a question in our follow-up survey about selecting
    interventions stated that a lack of human resources and infrastructure
    and weak absorptive capacity in their host country challenged their
    selection of interventions to meet PEPFAR targets. These shortfalls in
    country capacity make it more difficult for these country teams to
    select interventions that are likely to be effective. For example, one
    official mentioned that the lack of available human resources at the
    institutional and community levels made it difficult to track adherence
    to treatment. Another official noted that although home care needs
    continued to increase, fulfilling these needs is difficult owing to the
    "massive exodus" of trained physicians and nurses.

    Considering Costs Would Be Feasible, but Data Problems Could Pose
    Challenges:

    Twenty-three of 32 country team officials who responded to a question
    in our follow-up survey about considering costs said it would not be
    difficult for country teams to use information on the cost of specific
    interventions as part of their planning and budgeting.[Footnote 50]
    However, country team officials noted several challenges--including
    data gaps and wide variations in cost--that have made obtaining
    accurate data difficult.[Footnote 51] According to our analysis, these
    challenges would continue if the alternative approach were implemented.

    * Data gaps. Country team officials noted a lack of country- specific
    data as an obstacle to using cost data in planning and
    budgeting.[Footnote 52] For example, in a follow-up interview, an
    official from one country team stated that she did not know what the
    costs for treatment and care services should be in her host country,
    owing in part to the lack of any HIV/AIDS-related cost study by the
    host country government. An official from another country team cited
    the lack of country-specific cost data and reported that her country
    team had to look outside the host country for data on the costs of
    using a certain drug to treat opportunistic infections. In addition, 11
    of 16 officials who reported using cost information to a great or very
    great extent in their planning and budgeting cited the challenge of
    data not covering all populations within the host country as
    significant or very significant.[Footnote 53]

    * Cost variations. Country officials also cited varying costs as an
    obstacle to using cost information in their planning and budgeting. In
    response to an open-ended question,[Footnote 54] 10 of 38 country team
    officials who responded to a question in our original survey about
    considering costs noted that varying costs for programs, interventions,
    and persons served limited their ability to use cost data for planning
    PEPFAR programs. For example, one official observed that costs could
    vary depending on geographical differences. Another noted that costs of
    interventions can vary depending on whether an intervention is being
    implemented in a rural or an urban area or in a clinic or community
    setting.

    Conclusions:

    PEPFAR's contribution to expanding access to antiretroviral treatment
    and expanding prevention and care programs during its first 5-year
    phase has been widely recognized. Over the next 5 years, the U.S.
    bilateral contribution will likely remain the largest single source of
    funding to combat the global HIV/AIDS pandemic. Absent the current
    directives for allocating U.S. funds, a country-based approach, such as
    the alternative approach we describe, would increase the use of local
    evidence and country priorities and conditions in planning and
    implementing programs. This could enhance country teams' ability to
    address local needs and enable OGAC and country teams to meet the IOM
    criteria of assuring accountability for results and linking funding to
    achieving targets.

    Shifting some planning responsibilities from OGAC to country teams
    would support the more country-based approach suggested by the HIV/AIDS
    experts we consulted, while preserving OGAC's key leadership role.
    Country team officials generally found such an approach to be feasible,
    but some also identified continuing challenges, including reaching
    consensus and obtaining data on the cost of interventions in each
    country. Under both the current and the proposed approach, cost
    analysis is of key importance to planning and to ensuring
    accountability at the country level. Lacking formal guidance, country
    teams have relied on ad hoc approaches to obtain and analyze cost
    information and reported varying uses of cost analysis in budgeting and
    planning. Until OGAC develops clear guidance on how to identify and use
    cost information in planning and budgeting, country teams will likely
    remain unable to provide consistent or accurate cost estimates to OGAC.
    The lack of reliable data cited by country team officials also limits
    their ability to develop accurate cost estimates. As a result, OGAC may
    be limited in its ability to ensure accountable use of resources, and
    OGAC managers and Congress may lack full and accurate cost information
    when making decisions about resource allocation.

    Matter for Congressional Consideration:

    If Congress decides to remove the spending directives as IOM
    recommended, we suggest that Congress encourage OGAC to adopt a more
    country-based and evidence-based approach to allocating funding, with
    OGAC providing overall leadership and guidance for setting country-
    specific targets, selecting interventions, and considering costs, as
    discussed in this report.

    Recommendation for Executive Action:

    To help ensure that PEPFAR country teams are better able to provide
    consistent and accurate cost estimates to OGAC, we recommend that the
    Secretary of State direct OGAC to provide appropriate guidance to
    PEPFAR country teams for identifying and using cost-related information
    in planning and budgeting PEPFAR programs.

    Agency Comments and Our Evaluation:

    OGAC provided written comments about a draft of this report, which we
    have reprinted in appendix IV. OGAC also provided technical comments
    separately, which we have incorporated as appropriate. OGAC agreed with
    our recommendation to help provide consistent and accurate cost
    estimates to the field by strengthening guidance for identifying and
    using cost information for planning and budgeting.

    In its written comments, OGAC emphasized that PEPFAR policies and
    procedures are intended to ensure country ownership consistent with
    applicable law. Our report's central finding--based on the observations
    of noted HIV/AIDS experts--that a more country-based approach could
    improve allocation of funds does not suggest that country-teams play no
    role in PEPFAR programming. For example, our report describes country
    team involvement in developing country operational plans and the role
    of these teams in selecting interventions within the constraints of the
    spending directives. However, consistent with the Institute of
    Medicine's 2007 report and our 2006 report, a number of experts we
    interviewed observed that the congressional spending directives and
    targets set by OGAC have constrained country-level programming,
    particularly as a result of country teams' efforts to comply with the
    AB spending directive.

    OGAC's written comments suggested that our report demonstrated some
    misunderstanding about PEPFAR operations and that several aspects of
    the proposed alternative approach have been part of PEPFAR from its
    start. As our report states, the proposed approach includes changes to
    three basic elements of the current allocation process--setting
    targets, selecting interventions, and considering cost--but gives
    country teams greater responsibility for planning their country's
    PEPFAR's programs, subject to OGAC's continued review. In response to
    OGAC's comment, we added text to our report to clarify that OGAC's
    annual budget process includes a reassessment of each country team's
    opportunities and challenges and a review of its progress in the
    previous year, which guide new funding allocations for the recipient
    countries. (See page 16.) OGAC's technical comments did not challenge
    our overall description of its processes, and we addressed these
    technical comments with changes to the background section of our
    report.

    OGAC also challenged our presentation of experts' concerns regarding
    the impact of the AB spending directive. In response, we added a
    footnote further detailing the experts' comments regarding the AB
    spending directive (see page 22). In the footnote, we note that 13
    experts observed that the AB directive posed obstacles to developing
    evidence based programs and that 6 of these 13 stated that the
    directive negatively affected country-based programming. Additionally,
    1 of the 13 experts stated that AB programs are being implemented with
    no measure of effectiveness, and another noted that AB programs are too
    restrictive. Three of the 22 experts generally supported the spending
    directives. The remaining 6 experts did not comment on the directive's
    impact on evidence-based or country-based programming.

    OGAC further commented that our report does not address the potential
    consequences of eliminating the current statutory 10 percent allocation
    for programs serving orphans and vulnerable children (OVC). Because our
    work focused on the prevention and treatment spending directives, we
    did not specifically discuss the OVC spending directive with experts,
    host country officials, or PEPFAR officials. However, a number of those
    whom we interviewed noted that this directive helped protect programs
    for OVC. We recognize that Congress may view the OVC directive as
    necessary to protect this vulnerable group, although it may constrain a
    more country-based approach to allocating funds.

    Finally, OGAC described some steps it takes to allow a country-based
    approach within applicable law, including new guidance for fiscal year
    2008 that requires only countries with generalized epidemics (those
    with national prevalence rates exceeding one percent in the general
    population) to meet the AB spending directive; no AB justification is
    required for countries with only concentrated epidemics. OGAC also
    elaborated on three specific challenges and ongoing efforts to allocate
    PEPFAR funding using country-based and evidence-based approaches.

    Unless you release its contents earlier, we plan no further
    distribution of this report until 30 days after this date. At that
    time, we will send copies of this report to the Department of State,
    appropriate congressional committees, and other interested parties. We
    will also make copies available to others on request. In addition, the
    report will be available at no charge on GAO's Web site at [hyperlink,
    http://www.gao.gov]. If you or your staff have any questions regarding
    this report, please contact me at (202) 512-3149 or gootnickd@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 significant contributions to this report are listed in appendix V.

    Signed by:

    David Gootnick, Director:

    International Affairs and Trade:

    [End of section]

    Appendix I: Scope and Methodology:

    In March 2007, the Institute of Medicine (IOM) recommended that
    Congress remove the current spending directives for the President's
    Emergency Plan for AIDS Relief (PEPFAR) and replace them with
    alternative mechanisms that ensure accountability and link spending to
    performance targets. However, the IOM did not specify the form that
    such mechanisms should take. At the request of Congress, we identified
    a potential approach that responded to the IOM's recommendation.

    To obtain background information on PEPFAR's current approach to
    allocating funds under the Leadership Act's spending directives, we
    reviewed the 2003 Leadership Act; documentation from the Office of the
    U.S. Global AIDS Coordinator (OGAC), including the President's
    Emergency Plan for AIDS Relief FY08 Country Operational Plan (COP)
    Guidance and PEPFAR's Five-Year Global HIV/AIDS Strategy; and
    information from prior GAO reports. [Footnote 55] We also reviewed
    information from OGAC's Country Operational Plan and Reporting System
    (COPRS), a central U.S. government data system developed to support the
    collection and analysis of data related to PEPFAR planning and
    reporting requirements. We conducted interviews with officials from
    OGAC and the U.S. Agency for International Development (USAID) in
    Washington, D.C., to obtain information about the current approach to
    funding allocation. In addition, we met with officials at the World
    Health Organization (WHO); Joint United Nations Programme on HIV/AIDS
    (UNAIDS); and the Global Fund to Fight AIDS, Tuberculosis, and Malaria
    in Geneva, Switzerland. To understand processes used by PEPFAR field
    staff, we examined data from two surveys that we conducted from October
    to November 2007 (see below for more information).

    To determine HIV/AIDS experts' views of the Leadership Act's spending
    directives and identify their suggestions for an alternative approach
    to funding allocation, we conducted semi-structured interviews with 22
    leading experts in the field of HIV/AIDS from June 2007 to January
    2008.

    Our structured interview tool included questions related to the current
    PEPFAR targets and spending requirements, and alternative approaches to
    allocating funding.[Footnote 56] To develop questions to use in our
    semi-structured interviews, we reviewed IOM's report, PEPFAR
    Implementation: Progress and Promise. We also reviewed prior GAO work
    on PEPFAR.[Footnote 57]

    We identified and selected experts to interview by using a
    nonprobability selection methodology.[Footnote 58] First, to determine
    a population of experts, we started with a small group of core experts
    selected from those that participated in the IOM's evaluation of
    PEPFAR, and we asked these experts for suggestions of other experts to
    interview. Most of the experts we selected to interview were suggested
    by more than one other expert; in some cases, we included experts not
    suggested by more than one expert to obtain coverage across all of our
    selection criteria. We selected experts to interview based on numerous
    criteria, such as (1) educational background in medicine, public
    health, or both; (2) professional experience in working with HIV/AIDS
    organizations; and (3) leadership experience in addressing HIV/AIDS
    issues. With a few exceptions, all of the experts we selected fulfilled
    these three criteria. In addition, our selection criteria helped ensure
    that we obtained a wide range of viewpoints, including those supported
    by the faith-based community.[Footnote 59] We also selected experts who
    possessed expertise in prevention, treatment, and both prevention and
    treatment.[Footnote 60] We interviewed 22 HIV/AIDS experts in 17
    interviews. (For a list of experts interviewed, see appendix II.) In
    addition to interviewing the experts who participated in our semi-
    structured interviews, we also held general discussions about PEPFAR
    with four other experts from UNAIDS, WHO, OGAC, and Harvard Medical
    School and School of Public Health. These experts are also listed in
    appendix II.

    To summarize experts' responses to our semi-structured interviews and
    develop categories for our analysis, we conducted a comprehensive
    content analysis of all responses. We first grouped open-ended
    qualitative interview responses into a set of overarching issue areas,
    separating comments related to the Leadership Act's current spending
    directives and those related to an alternative approach to PEPFAR
    funding allocation. To categorize and summarize these responses, we
    performed a systematic content analysis of each set of the open-ended
    responses. Three GAO analysts and two methodologists reviewed the
    responses and independently proposed categories; to ensure the validity
    and reliability of our analysis, they met and reconciled any
    differences. A similar process was used to create subcategories. An
    analyst placed each of the experts' responses into one or more
    resulting categories, a second analyst reviewed the placement, and a
    methodologist reviewed the entire analysis and resolved any
    disagreements about the placement of text into categories. After coding
    the experts' suggestions on an alternative approach to allocating
    PEPFAR funding, we determined that the experts' suggestions generally
    fell into three areas. Based on our analysis of these three areas, we
    outlined an alternative approach that provides PEPFAR country teams
    greater authority to set country-based targets, choose interventions to
    achieve these targets and conduct rigorous costing analyses to support
    their planning and budgeting.[Footnote 61]

    To identify challenges to implementing the alternative approach to
    allocating PEPFAR funds, we conducted an e-mail survey of PEPFAR field
    staff from October to November 2007. We surveyed the Centers for
    Disease Control and Prevention (CDC) Chief of Party, the USAID health
    team leader, and the PEPFAR coordinator in each of the 15 focus
    countries. Four of these officials held both the PEPFAR coordinator
    position and the USAID health team leader positions; as a result, 41
    officials received our survey. Our survey included questions on setting
    country-based targets, selecting appropriate interventions, and using
    cost information to plan and budget PEPFAR programs. We pretested our
    survey with CDC and USAID staff that work on HIV/AIDS issues and had
    recently returned from the field. We achieved a response rate of 93
    percent (38 of 41). In collecting and analyzing the survey data, we
    took steps to minimize errors that might occur during these stages.
    Survey questions, results, and number of respondents per question are
    presented in an electronic-supplement, which may be accessed at GAO-08-
    534SP.

    To obtain additional information on country teams' experiences with
    setting targets, selecting interventions, and using cost information,
    we conducted a follow-up e-mail survey with respondents to our first
    survey. We obtained a response rate of 84 percent (32 of 38). In
    collecting and analyzing the survey data, we took steps to minimize
    errors that might occur during these stages.

    To analyze responses to open-ended questions in both of our surveys, we
    followed the same content analysis methodology described above for
    analyzing experts' comments.

    To obtain the perspectives of host country government officials from
    English-speaking PEPFAR focus countries with varying socioeconomic
    conditions, we conducted structured interviews in January 2008 with
    five government officials and one former official government official
    in the health ministries or national governmental HIV/AIDS
    organizations in four countries--Namibia, Nigeria, Uganda, and Zambia.
    We selected these officials based primarily on availability. With the
    assistance of two methodologists, we developed a structured interview
    tool. We pretested this tool with three individuals who had previous
    experience working in the governments of countries that receive PEPFAR
    funding. Information from the six interviews are used anecdotally in
    the report and are not representative of the views of all officials in
    these countries or the views of officials from countries not
    interviewed. Because of the limited use of these data in the report, we
    determined that the data from these interviews were sufficiently valid
    and reliable for our auditing purposes.

    We conducted this performance audit from May 2007 to March 2008 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.

    [End of section]

    Appendix II: List of Experts:

    To address our first two objectives, we conducted 17 structured
    interviews with 22 HIV/AIDS experts from June 2007 to January 2008. At
    some of these interviews, we spoke with more than one expert; we have
    identified group interviews below. In addition, we conducted interviews
    with four other experts to obtain their general views on PEPFAR.

    List of Experts Participants in Semi-structured Interviews:

    Dr. Stefano Bertozzi, Director of Health Economics and Policy, School
    of Public Health of Mexico, National Institute of Public Health:

    Dr. James Curran, Professor of Epidemiology and Dean, Rollins School of
    Public Health, Emory University:

    Dr. Kevin de Cock, Director, Department of HIV/AIDS, World Health
    Organization:

    Dr. Helene Gayle, President and Chief Executive Officer, CARE:

    Dr. Eric Goosby, Chief Executive Officer and Chief Medical Officer,
    Pangea Global AIDS Foundation:

    Dr. Edward C. Green, Director, AIDS Prevention Research Project,
    Harvard Center for Population and Development Studies:

    Dr. Norman Hearst, Professor, Family Medicine and Epidemiology,
    University of California, San Francisco:

    Dr. Michel Kazatchkine, Executive Director, Global Fund to Fight AIDS,
    Tuberculosis, and Malaria:

    Dr. Peter Lamptey, President, Public Health Programs, Family Health
    International:

    Dr. Richard Marlink, Executive Director, Harvard AIDS Initiative,
    Harvard School of Public Health, Harvard University; Scientific
    Director, Care and Treatment, Elizabeth Glaser Pediatric AIDS
    Foundation:

    Dr. Anne Peterson, Director, Center for Global Health, World Vision
    International:

    Dr. Peter Piot, Executive Director, Joint United Nations Programme on
    HIV/AIDS; Under Secretary-General, United Nations:

    Dr. James Sherry, Professor and Chair, Department of Global Health,
    School of Public Health and Health Services, George Washington
    University:

    Mr. John Stover, President, The Futures Institute:

    Centers for Disease Control and Prevention:

    Dr. Deborah Birx, Division Director, Global AIDS Program, Centers for
    Disease Control and Prevention:

    Dr. Elizabeth Marum, Team Leader, Counseling and HIV Testing, HIV
    Prevention Branch, Global AIDS Program, Centers for Disease Control and
    Prevention:

    Dr. Lawrence Marum, Team Leader, Medical Transmission, HIV Prevention
    Branch, Global AIDS Program, Centers for Disease Control and
    Prevention:

    Dr. Dorothy Mbori-Ngacha, Chief, Prevention of Mother-to-Child
    Transmission Section, Global AIDS Program--Nairobi, Kenya, Centers for
    Disease Control and Prevention:

    Partners in Health:

    Dr. Paul Farmer, Founding Director, Partners in Health; Professor of
    Medical Anthropology, Department of Social Medicine, Harvard Medical
    School, Harvard University; Associate Chief, Division of Social
    Medicine and Health Inequalities, Brigham and Women's Hospital:

    Dr. Joia Mukherjee, Medical Director, Partners in Health:

    United Nations Children's Fund:

    Dr. Chewe Luo, Senior Program Advisor, HIV/AIDS, United Nations
    Children's Fund:

    Dr. Doreen Mulenga, Acting Chief, HIV/AIDS, United Nations Children's
    Fund:

    Other Experts Interviewed:

    Dr. Paul Delay, Director, Evidence, Monitoring, and Evaluation, Joint
    United Nations Programme on HIV/AIDS:

    Ambassador Mark Dybul, U.S. Global AIDS Coordinator, Office of the U.S.
    Global AIDS Coordinator:

    Dr. Charles Gilks, Director Coordinator of Antiretroviral Therapy and
    HIV Care Team, HIV Department, World Health Organization:

    Dr. Jim Kim, Professor of Health and Human Rights, Harvard School of
    Public Health; Professor of Medicine and Social Medicine, Harvard
    Medical School; Chief, Division of Social Medicine and Health
    Inequalities, Brigham and Women's Hospital; Director, Fran�ois Xavier
    Bagnoud Center for Health and Human Rights; Chair, Department of Social
    Medicine, Harvard Medical School.

    [End of section]

    Appendix III: Data-Gathering Tools Used:

    To address our objectives, we used several data-gathering tools. To
    obtain experts' views of the Leadership Act's spending directives and
    identify their suggestions for an alternative approach to funding
    allocation, we used a structured interview tool. To gather information
    on challenges to implementing the alternative approach to allocating
    PEPFAR funds, we conducted an e-mail survey and a follow-up e-mail
    survey.

    Expert Interviews: Structured Interview Tool:

    We asked the following questions in the semi-structured interviews we
    conducted with 22 experts.

    Background:

    1. What do you consider your primary area of expertise related to HIV/
    AIDS? (e.g., epidemiology, HIV/AIDS research; treatment; evaluation;
    program management, etc.)

    * Would you say that your experience is primarily in prevention,
    treatment, or a combination of the two? Can you describe your
    experience in this area?

    2. Have you had any first-hand experience with programs that received
    PEPFAR funding?

    3. Did you participate in the 2007 IOM study? If yes, what were your
    roles and responsibilities in the IOM study?

    Prevention:

    4. Regarding the first-phase target of preventing 7 million HIV
    infections, do you think this target should be modified for PEPFAR's
    second phase or remain the same?

    5. As you know, the Leadership Act requires that 20 percent of total
    PEPFAR funding be directed to prevention activities and 33 percent of
    this amount be used for abstinence-until-marriage programs.

    * What are the strengths and limitations of the overall 20 percent
    prevention requirement?

    * What are the strengths and limitations of the 33 percent requirement
    for abstinence-until-marriage programs?

    6. The IOM report recommends doing away with these spending
    requirements and adopting alternative mechanisms that (1) are based on
    adaptive, evidence-based programming; (2) ensure accountability; and
    (3) are linked to and commensurate with efforts to achieve overall and
    country targets.

    a. Should the spending requirements be replaced with different spending
    requirements, or with a different approach? b. What ideas or
    suggestions do you have for alternatives to these spending mechanisms
    for prevention?

    Criteria:

    a. How is this mechanism based on adaptive, evidence-based programming?
    b. How does this mechanism promote accountability? c. How is the
    mechanism linked to overall and country prevention targets? d. How
    would the mechanism help the program to meet its targets?

    Feasibility:

    e. What suggestions do you have for determining the feasibility of this
    mechanism?

    * With regard to our field survey of PEPFAR implementers-- what topics
    or questions do you suggest we address with PEPFAR implementers?

    - Do you know of anyone we should talk to with experience applying
    similar mechanisms to the one you have suggested?

    h. How does the mechanism you've outlined as an alternative to the
    current PEPFAR approach contrast with other alternatives or approaches
    that other experts are considering at this point in time?

    i. Are these mechanisms specific to prevention-related activities, or
    could they be applied to treatment activities as well?

    Treatment:

    7. Regarding the first-phase target of providing ARVs to 2 million
    people, do you think this target should be modified for PEPFAR's second
    phase or remain the same?

    8. As you know, the Leadership Act requires that 55 percent of total
    PEPFAR funding be directed to treatment activities. Also, 75 percent of
    this amount is to be used for the purchase and distribution of ARVs.

    * What are the strengths and limitations of the overall 55 percent
    treatment requirement?

    * What are the strengths and limitations of the 75 percent ARV purchase
    and distribution requirements?

    9. The IOM report recommends doing away with these spending
    requirements and adopting alternative mechanisms that (1) are based on
    adaptive, evidence-based programming; (2) ensure accountability; and
    (3) are linked to and commensurate with efforts to achieve overall and
    country targets.

    a. Should the spending requirements be replaced with different spending
    requirements, or with a different approach?

    b. What ideas or suggestions do you have for alternatives to these
    spending mechanisms for prevention?

    Criteria:

    c. How is this mechanism based on adaptive, evidence-based programming?

    d. How does this mechanism promote accountability?

    e. How is the mechanism linked to overall and country prevention
    targets?

    f. How would the mechanism help the program to meet its targets?

    Feasibility:

    g. What suggestions do you have for determining the feasibility of this
    mechanism?

    * With regard to our field survey of PEPFAR implementers-- what topics
    or questions do you suggest we address with PEPFAR implementers?

    - Do you know of anyone we should talk to with experience applying
    similar mechanisms to the one you have suggested?

    h. How does the mechanism you've outlined as an alternative to the
    current PEPFAR approach contrast with other alternatives or approaches
    that other experts are considering at this point in time?

    i. Are these mechanisms specific to treatment-related activities, or
    could they be applied to prevention activities as well?

    Other:

    10. Are there any other issues regarding PEPFAR reauthorization that
    you would like to discuss?

    a. Areas of the report that warrant further GAO focus?

    b. Issues IOM left out of the report that warrant further study?

    Survey of PEPFAR Country Team Officials:

    The questions, results, and number of respondents per question from our
    first survey of PEPFAR country team officials are provided in the
    electronic supplement to this report [GAO, Global HIV/AIDS: Survey of
    PEPFAR Country Team Officials, GAO-08-534SP (Washington, D.C.: April
    2008)], available at [hyperlink, http://www.gao.gov].

    Follow-up Survey of PEPFAR Country Team Officials:

    The following questions were sent as a follow-up to the 38 PEPFAR
    country team officials who responded to our initial country team
    survey.

    1 a. How easy or difficult would it be for country teams to set all
    country-level targets?

    Select one:

    ___very easy:

    ___easy:

    ___neither easy nor difficult:

    ___difficult:

    ___very difficult:

    1 b. Why would it be easy or difficult?

    2 a. What challenges, if any, have you encountered while selecting
    interventions to meet country-level targets for prevention?

    2 b. What challenges, if any, have you encountered while selecting
    interventions to meet country-level targets for treatment?

    2 c. What challenges, if any, have you encountered while selecting
    interventions to meet country-level targets for care?

    3. To what extent do you use information about the actual unit cost of
    specific interventions in your country when planning and budgeting?
    (For example, the cost per person of PMTCT services in a given region):

    Select one:

    __very great extent:

    __great extent:

    __moderate extent:

    ___some extent:

    ___little or no extent:

    Please explain your answer:

    4 a. How easy or difficult would it be for country teams to use
    information on the costs of specific interventions as part of their
    planning and budgeting?

    Select one:

    ___very easy:

    ___easy:

    ___neither easy nor difficult:

    ___difficult:

    ___very difficult:

    4 b. Why would it be easy or difficult?

    [End of section]

    Appendix IV: Comments from the Office of the U.S. Global AIDS
    Coordinator:

    Note: GAO comments supplementing those in the report text appear at the
    end of this appendix.

    United States Department of State:
    Assistant Secretary for Resource Management and Chief Financial
    Officer:
    Washington, D.C. 20520:

    March 25, 2008:

    Ms. Jacquelyn Williams-Bridgers:
    Managing Director:
    International Affairs and Trade:
    Government Accountability Office:
    441 G Street, N.W.:
    Washington, D.C. 20548-0001:

    Dear Ms. Williams-Bridgers:

    We appreciate the opportunity to review your draft report, "Global
    HIV/AIDS: A More Country-Based Approach Could Improve Allocation of
    PEPFAR Funding," GAO Job Code 320504.

    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
    Clint Fenning, Foreign Affairs Officer, Office of the US Global AIDS
    Coordinator, at (202) 663-2420.

    Sincerely,

    Signed by:

    Bradford R. Higgins:

    cc: GAO � Audrey Solis:
    S/GAC � Mark Dybul:
    State/OIG � Mark Duda:

    Department of State Comments on GAO Draft Report

    GLOBAL HIV/AIDS: A More Country-Based Approach Could Improve Allocation
    of PEPFAR Funding (GAO-08-480, GAO Code 320504)

    On behalf of the U.S. Department of State (DOS), the Office of the U.S.
    Global AIDS Coordinator (OGAC) appreciates the opportunity to comment
    on the draft report from the Government Accountability Office (GAO)
    entitled, "Global HIV/AIDS: A More Country-Based Approach Could Improve
    Allocation of PEPFAR Funding" (GAO-08-480). We appreciate the report's
    emphasis on country ownership because that is one of the fundamental
    principles of the President's vision for development.

    The President's Emergency Plan for AIDS Relief (PEPFAR) has been on the
    cutting edge of implementing the President's vision for development.
    This vision is based in the power of partnerships, representing a new
    era in development based in the intrinsic dignity, equality and worth
    of every human life. Because PEPFAR is a partnership between equals,
    PEPFAR strives to implement the principles of the Monterrey Consensus,
    beginning with the key aspects of country ownership and results-driven
    development. PEPFAR was one of the original co-sponsors of the UNAIDS'
    Three Ones approach that is also based in country ownership. Since its
    inception, PEPFAR has put policies and practices in place to ensure
    country ownership. A key aspect of this approach is the administration
    of resources in-country � a fundamental characteristic of PEPFAR.

    As the Institute of Medicine said, PEPFAR is a "learning organization,"
    and it pursues new opportunities to improve all aspects of the program
    � including its country-ownership and results-based focus. As such,
    OGAC appreciates the review and insights provided by GAO. However,
    there seemed to be some fundamental misunderstandings about how PEPFAR
    operates. In fact, several of the aspects of the new approach that were
    recommended have been part of PEPFAR from the earliest days of the
    initiative.

    (See comment 1.):

    As part of the results-based approach, each country was provided with
    five-year prevention, treatment, and care goals in 2004. The initial
    country allocations for Fiscal Year (FY) 2004 were based on these goals
    and other parameters, including country capacity. With each annual
    budget cycle, there is a re-assessment of country opportunities and
    challenges, and a review of progress in the previous year/s. Based on
    this assessment, PEPFAR's interagency headquarters leadership provides
    a new annual allocation for each country. As can be seen below, several
    countries have already exceeded their initial goals for treatment and
    care. However, if there are opportunities for expanded services in the
    coming year, additional resources will be provided.

    (See comment 2):

    Table:

    [See PDF for image]

    [End of table]

    Table:

    [See PDF for image]

    [End of table]

    Under PEPFAR guidance, each country team is provided an overall funding
    level in the late spring/early summer of the year preceding the fiscal
    year to use in planning an appropriate country response. For example,
    an FY 2008 planning level was provided in May-June 2007, along with
    planning guidance. These planning levels are subject to the annual
    appropriation of resources.

    Upon receiving the country planning level, each PEPFAR country team
    works to design a program tailored to the country epidemic; this
    program is reflected in the team's submission of the Country
    Operational Plan (COP) in September along with targets for each program
    set by the country team through an iterative process with stakeholders.
    See attached guidance on target-setting as provided to teams in the FY
    2008 COP guidance.

    Country teams do operate within the context of congressionally mandated
    budgetary directives. However, the COP guidance states that "If meeting
    any of the mandatory requirements is not reasonable from a programmatic
    perspective, please submit a justification with the COP." See attached
    FY 2008 COP guidance.

    The guidance further states, "For other bilateral country programs,
    however, only those with generalized epidemics (i.e. national
    prevalence rates exceeding 1% in the general population) are expected
    to meet AB budgetary requirements. New for FY 2008 is that no AB
    justification is required for countries that have concentrated
    epidemics, with national prevalence below 1%."

    As these documents make clear, PEPFAR agrees that a country-based
    approach to planning investments is critical�that is why PEPFAR has
    specifically been designed to allow a country-driven approach
    consistent with applicable law. PEPFAR has been implemented accordingly
    throughout the past five years.

    Regarding the directive for abstinence and faithfulness programs, the
    report notes that 12 of 22 of the experts consulted � one more than
    half -- expressed concern about its impact. The report then presents
    data on the treatment directive and concludes that "Overall, the
    experts recommended revising PEPFAR's current allocation process."
    (page 4) � a key basis for the report's recommendation. The two
    directives are very different in their purposes and impact to date, so
    the reference to an "overall" expert view may create confusion. We are
    concerned that some may misread the report as a whole to imply a
    broader consensus against the abstinence and faithfulness directive
    than the data suggest, and to accord much more weight to the views of
    one group of 12 experts than another group of 10 experts. More effort
    throughout the report to convey the diversity of views on the
    abstinence and faithfulness directive could help to prevent such
    misunderstanding.

    (See comment 3.):

    Also of concern is the report's lack of discussion of the consequences
    of elimination of the current statutory allocation of 10 percent for
    programs serving orphans and vulnerable children (OVCs). During 2007,
    in light of the urgent need for additional programs in this area,
    PEPFAR asked country teams to submit proposals for additional funding
    for OVC programs � but proposals fell far short of available resources.
    This experience suggests that the directive plays an important role in
    ensuring at least minimal funding for OVC programs, and provides an
    important counterpoint to other views on funding allocations � a
    counterpoint from which the report would have benefited.

    (See comment 4.):

    PEPFAR will continue and strengthen the country-based, country-led
    approach with a Partnership Compact model under a second five-year
    authorization. OGAC also agrees with the report's recommendation to
    strengthen guidance on the costing of HIV/AIDS interventions.

    In the paragraphs below, we elaborate on three specific challenges and
    ongoing efforts to allocate PEPFAR funding utilizing country-based and
    evidence based approaches.

    1. Country setting of prevention targets. OGAC recognizes the
    difficulty of setting outcome level targets for prevention
    interventions, such as mass media activities, as well as the near
    impossibility of routine direct measurement of the impact of programs
    designed to prevent HIV infections (page 35). For this reason, in the
    area of behavioral prevention, country teams are only asked to set
    output targets (i.e., number of people reached with behavior messages).
    The current and ongoing Next Generation of Indicators project, through
    PEPFAR agency and community consultation, is intended to provide an
    improved set of program monitoring output indicators. Routine
    monitoring of outcomes such as behavior change, however, will not be
    possible due to the difficulty of measurement. Therefore, for this
    information we will continue to require special studies (i.e., Public
    Health Evaluations, behavioral surveys) or population-based evaluations
    (i.e., Demographic and Health Surveys, or AIDS Indicator Surveys).

    As a result of the above-mentioned difficulties and the fact that
    incidence testing technologies currently under development are not yet
    ready for extensive use, measuring the impact of HIV prevention
    programs on incidence and infections averted requires statistical
    modeling. PEPFAR currently uses a population-based model to estimate
    the number of infections averted as a result of all activity in
    country. While the statistical models are formed at headquarters, they
    are reviewed and approved by the USG country teams before they are
    finalized.

    Unfortunately, this population-based model will not provide specific
    program intervention information. The gaps in the body of scientific
    knowledge around effectiveness or cost-effectiveness of prevention
    interventions make it difficult to model impact at a program level with
    any degree of certainty. However, we continue to work with program
    impact models. As the body of knowledge around prevention interventions
    grows, these types of models will become increasingly useful.

    2. Producing cost guidance. PEPFAR does have a number of models ranging
    from John Blandford's study, "Cost of Comprehensive HIV Treatment in
    Emergency Plan Focus Countries"�an intensive multi-country study
    conducted in Nigeria, Uganda, Ethiopia, Botswana and Vietnam�to country-
    driven estimation of treatment costs. The data gathered from the multi-
    country study, which allow disaggregation by cost component,
    programmatic activity and source of support, are being utilized in the
    development of a cost-projection model for use by PEPFAR country teams
    to estimate resource needs for treatment. A user-friendly model has
    also been piloted to allow PEPFAR country teams and country partners to
    project resource needs to support the purchase of antiretroviral
    medications and associated buffer stock. Similar to PEPFAR's work in
    partner portfolio monitoring, OGAC can start to distribute guidance
    that sets minimum standards for cost analyses, e.g., outlier analysis,
    determination of unit costs, and also provide options for more
    intensive studies by fiscal year 2010.

    3. Evaluating country-set targets. To be consistent with the Three
    Ones, it is important that PEPFAR and its other multilateral partners
    (Global Fund, UNAIDS, World Health Organization, and the World Bank)
    have common indicator, target setting, and reporting guidance to
    improve the quality of targets and results reporting and to avoid
    duplicative efforts. OGAC's Strategic Information unit, in coordination
    with its interagency partners, has worked for two years through the
    UNAIDS Monitoring and Evaluation Reference Group (MERG) to harmonize
    indicator guidance. This guidance document is being released during the
    first quarter of this year. PEPFAR will use this harmonized work as the
    basis for the Next Generation of indicators.

    As the report notes, country-set targets are not always realistic
    and/or rooted in current data. PEPFAR expects that the annual review
    and reconciliation of data at the country level will improve with the
    availability of data and the collaborative target setting process.
    Since 2005, PEPFAR has met with the multilateral agency headquarters
    (WHO, UNAIDS, UNICEF, and Global Fund) to review and harmonize data
    reported from multiple sources on the number of patients receiving
    antiretroviral treatment (ART). The goals of this activity have been 1)
    to identify and reconcile discrepancies in reported data; and 2) for
    all multilateral organization publications to report one reconciled
    national number of individuals on treatment. In February 2008, this
    exercise was extended to five of the PEPFAR country-level indicators
    (ART, ARV prophylaxis, counseling and testing, OVC, and tuberculosis
    treatment) during the 2007 UNGASS data reconciliation meeting in
    Geneva, Switzerland.

    While the practice of data reconciliation among the multilateral
    agencies and PEPFAR has helped to improve the quality and consistency
    of data reported in publications at the international level, it is
    widely recognized that in order to best support the "Third One," one
    national reporting system, this process would be most effective taking
    place at the national level. This new practice would allow national
    programs to begin to ascertain the underlying reasons for systematic
    discrepancies and begin taking steps to rectify those discrepancies.

    PEPFAR country teams are strongly encouraged to organize or attend data
    reconciliation meetings with appropriate stakeholders in country prior
    to the submission of semi-annual progress reports to review country-
    level indicators. At a minimum, participants at this in-country data
    reconciliation meeting should include the Global Fund, the UNAIDS
    monitoring and evaluation officer, and the appropriate host country
    government representative. This data reconciliation meeting should be
    scheduled in advance of the Semi-Annual Program Results submission in
    order to give sufficient time for maximum stakeholder participation in
    the process. Implementing each of these steps noted also will enhance
    the abilities of national and USG teams to improve the setting of
    realistic targets.

    In conclusion, the current PEPFAR funding allocation process is country-
    based and consistent with the authorizing legislation. PEPFAR has
    specifically been designed to allow a country-driven approach, which
    has given the host countries the flexibility to implement effective
    HIV/AIDS programming. PEPFAR is a learning organization that will
    continue to adjust and adapt its guidance to strengthen its ability to
    meet the challenges in fighting HIV/AIDS around the world.

    We appreciate GAO's examination of these important issues and their
    recommendations. We look forward to working with Congress to further
    develop our processes that ensure country-owned and results-based
    programs.

    Attachment 1: Guidance on Mandatory Budget Requirements

    For FY 2008, as in prior years, there are three mandatory budgetary
    requirements for all focus countries: (Abstinence and Be Faithful (AB),
    Orphans and Vulnerable Children (OVC) and Treatment). For Other
    Bilateral countries, only the AB requirement applies. There have been
    some minor modifications in both the OVC and AB guidance for the FY
    2008 COP.

    * Track 1.0 central budgets (from headquarters) will be attributed to
    these mandatory requirements (see further explanation below).

    * If meeting any of the mandatory requirements is not reasonable from a
    programmatic perspective, please submit a justification with the COP
    (see the COP Planning section on the Extranet for the format of the
    justifications). You should engage your Core Team Leader in discussions
    of any necessary justifications.

    * Integrated programs should be distributed, as appropriate, across
    program areas. For more information, please see the guide to allocating
    activities across program areas on page 59.

    Prevention: Abstinence And Be Faithful:

    Note: Special instructions for Other Bilateral Countries at the end of
    this section.

    ABC � Abstinence, Being faithful, and the correct and consistent use of
    Condoms for people engaged in high-risk behaviors � is the most
    effective, evidence-based approach to the prevention of sexual
    transmission of HIV (as described in PEPFAR's ABC Guidance). In each of
    the focus countries except Vietnam, the primary mode of HIV
    transmission is sexual contact; therefore, a significant proportion of
    prevention funding should be dedicated to ABC activities to prevent
    sexual transmission of HIV.

    In FY 2008, each country should strive to dedicate 50% of total
    prevention funds to sexual transmission, and within sexual transmission
    funds, to dedicate 66% to AB. If a country does not meet these
    expectations, a written justification is required.

    However, failure to meet the 50% requirement for sexual transmission
    within all prevention programs would not justify failure to reach the
    66% requirement within sexual transmission prevention funds for AB
    activities. In some countries, based on epidemiology, it may not make
    programmatic sense to devote 66% of sexual prevention funds to AB, and
    in such cases, a written justification would be appropriate.

    An example of when a justification would be appropriate is if the
    country is experiencing a concentrated epidemic, in which case a higher
    proportion of sexual transmission funds would likely be directed to
    correct and consistent condom use among people engaged in high-risk
    behaviors, within the context of the ABC approach.

    AB Funding + Condoms and Other Prevention Funding / Prevention Funding
    =%Sexual Prevention:

    Note: Prevention Funding = PMTCT Funding + AB Funding + Injection
    Safety + Blood Safety + Condoms and Other Prevention Funding:

    AB Funding/Sexual Prevention Funding=%AB:

    Please note: in a generalized epidemic, a very strong justification
    will be required if a country does not meet the 66% AB or 50% sexual
    prevention requirement. Again, please inform your Core Team Leader as
    soon as possible if you think these budgetary requirements will present
    a problem, and consider requesting technical assistance from the
    Prevention TWG.

    Generally speaking, the percentage of sexual prevention funds dedicated
    to AB programming in the country should not decrease between FY 2007
    and FY 2008. However, if new evidence or priorities warrant decreasing
    the percentage of sexual transmission funds dedicated to AB
    programming, then please provide an explanation for the proposed
    decrease in the justification narrative.

    Special Instructions For Other Bilateral Countries:

    For other bilateral country programs, however, only those with
    generalized epidemics (i.e. national prevalence rates exceeding 1% in
    the general population) are expected to meet AB budgetary requirements.
    New for FY 2008 is that no AB justification is required for countries
    that have concentrated epidemics, with national prevalence below 1%.

    Orphans And Vulnerable Children (OVC):

    All focus countries must allocate 10% of total prevention, care, and
    treatment resources towards OVC programs. Given the maturity of the
    PEPFAR program and the magnitude of the problem, there is an
    expectation that countries are bringing OVC programs to scale. New for
    FY 2008, pediatric treatment will not be counted towards the 10%. This
    is in no way intended to lessen the focus on Pediatric treatment, which
    is also highly important; however, pediatric treatment funds should be
    attributed only to the treatment budgetary requirement, not to OVC.

    Please submit a justification if your FY 2008 COP does not meet the 10%
    OVC requirement.

    Treatment:

    To reach the goal of 2 million, and to meet the Congressional
    directives that the Emergency Plan allocate 55% of its program
    resources to antiretroviral treatment (ART), in FY 2008 the 55%
    budgetary requirement for treatment will continue to apply to all focus
    countries. Please submit a justification if your FY 2008 COP does not
    meet the 55% treatment requirement.

    ARV Drugs Funding + ARV Services Funding + Lab Funding / Prevention
    Funding + Treatment Funding +Care Funding = %Treatment:

    Attachment 2: Guidance on Target Setting:

    The information below is to provide countries some information on how
    to set targets. This is not meant to be a formula or template to follow
    in setting your targets, but simply to give you a better idea of what
    roles different individuals play in target-setting, what documents
    would be useful in setting your targets and key concepts that relate to
    target setting.

    What is target-setting in the context of PEPFAR? Target-setting is an
    iterative, group process integral to program planning and program
    management. Targets are set at the partner-level, program- level,
    country-level and international level using standardized indicators to
    outline measurable future achievements for PEPFAR.

    Who does target-setting?

    Target setting is a collaborative group process that is best conducted
    with the active participation of program managers/project officers
    (e.g. cognizant technical officers or CTOs), budgetary staff,
    implementing partners, strategic information staff (HQ SI advisors, in-
    country SI liaisons and other SI technical area personnel), core team
    staff (HQ and in-country) and technical work group members, who each
    have roles and responsibilities in the group process. All USG agencies
    in country should agree to and follow the same target-setting processes
    to arrive at consistent partner-, program- and country-level targets.

    The following are our comments regarding the March 25, 2008, letter
    from the Office of the U.S. Global AIDS Coordinator.

    GAO Comments:

    1. Our report's central finding--based on the observations of noted
    HIV/ AIDS experts--that a more country-based approach could improve
    allocation of funds does not suggest that country-teams play no role in
    PEPFAR programming. For example, our report describes country team
    involvement in developing country operational plans and the role of
    these teams in selecting interventions within the constraints of the
    spending directives.

    2. We added text to our report, in response to OGAC's written comments,
    to clarify that OGAC's annual budget process includes a reassessment of
    each country team's opportunities and challenges and a review of its
    progress in the previous year, which guide new funding allocations for
    the recipient countries (see p. 16). OGAC's technical comments did not
    challenge our overall description of its processes, and we addressed
    these technical comments with minor changes to the background section
    of our report.

    3. We added a footnote in our report stating that 13 of 22 experts
    observed that the AB directive posed obstacles to developing evidence-
    based programs and 6 of these 13 experts said that the directive
    negatively affected country-based programming (see p. 22). One of the
    13 experts stated that AB programs are being implemented with no
    measure of effectiveness; another noted that AB programs are too
    restrictive. Three of the 22 experts generally supported the spending
    directives. The remaining six experts did not comment on the
    directive's impact on evidence-based or country-based programming.

    4. Because our work focused on the prevention and treatment spending
    directives, we did not specifically discuss the 10 percent spending
    directive for OVC with experts, host country officials, or PEPFAR
    officials. However, a number of those whom we interviewed noted that
    this spending directive helped protect programs for OVC. We recognize
    that Congress may view the OVC directive as necessary to protect this
    vulnerable group, although it may constrain a more country-based
    approach to allocating funds.

    [End of section]

    Appendix V: GAO Contact and Staff Acknowledgments:

    GAO Contact:

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

    Acknowledgments:

    In addition to the contact named above, Audrey Solis (Assistant
    Director), David Dornisch, Amanda Miller, Susan Tieh, Eve Weisberg, and
    Tom Zingale made key contributions to this report. Technical assistance
    was provided by Sylvia Bascope, Muriel Brown, Aniruddha Dasgupta, Leah
    DeWolf, Carlos Diz, Etana Finkler, Reid Lowe, Joy Labez, Grace Lui,
    Jeff Miller, Mary Moutsos, Jackie Nowicki, Diahanna Post, and Eddie
    Uyekawa.

    [End of section]

    Related GAO Products:

    Global Health: Global Fund to Fight AIDS, TB and Malaria Has Improved
    Its Documentation of Funding Decisions but Needs Standardized Oversight
    Expectations and Assessments. GAO-07-627. Washington, D.C.: May 2007.

    Global Health: Spending Requirement Presents Challenges for Allocating
    Prevention Funding under the President's Emergency Plan for AIDS
    Relief. GAO-06-395. Washington, D.C.: April 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. GAO-05-639. Washington, D.C.: June 2005.

    Global Health: U.S. AIDS Coordinator Addressing Some Key Challenges to
    Expanding Treatment, but Others Remain. GAO-04-784. Washington, D.C.:
    June 2004.

    Global Health: Global Fund to Fight AIDS, TB and Malaria Has Advanced
    in Key Areas, but Difficult Challenges Remain. GAO-03-601. Washington,
    D.C.: May 2003.

    [End of section]

    Footnotes:

    [1] Approximately two-thirds of funds appropriated for PEPFAR are
    directed to HIV/AIDS initiatives in 15 focus countries: Botswana, Cote
    d'Ivoire, Ethiopia, Guyana, Haiti, Kenya, Mozambique, Namibia, Nigeria,
    Rwanda, South Africa, Tanzania, Uganda, Vietnam, and Zambia.

    [2] Pub. L. No. 108-25, 117 Stat. 711.

    [3] The President's announcement proposes to revise PEPFAR's global
    targets to prevent 12 million infections, treat 2.5 million infected
    individuals, and provide care for 12 million people affected by HIV/
    AIDS by 2013.

    [4] The act outlines the duties of the HIV/AIDS Coordinator as
    including, among others, auditing, monitoring, and evaluating all
    PEPFAR programs; directly approving all PEPFAR activities, including
    funding; and establishing criteria needed to assess the measurable
    outcomes of PEPFAR activities. (Pub. L. No. 108-25, � 102(a)(2).)

    [5] This provision was included as a sense of Congress in the
    Leadership Act. OGAC has followed this provision in its allocation of
    PEFAR appropriations.

    [6] The Leadership Act endorses the "ABC model" (Abstain, Be faithful,
    correct and consistent use of Condoms) to prevent the sexual
    transmission of HIV (Pub. L. No. 108-25, � 301(a)(2)). Since January
    2004, OGAC has defined abstinence-until-marriage programs as comprising
    both activities promoting abstinence (A) and activities promoting
    fidelity (B).

    [7] In this report, "allocating PEPFAR funds" refers to the
    distribution, across and within the country teams, of funds that have
    been appropriated for PEPFAR.

    [8] Our 2006 report recommended that the Global AIDS Coordinator
    collect and report information regarding the effect of the abstinence-
    until- marriage spending requirement on country teams' sexual
    prevention programming. See GAO, Global Health: Spending Requirement
    Presents Challenges for Allocating Prevention Funding under the
    President's Emergency Plan for AIDS Relief, GAO-06-395 (Washington,
    D.C.: April 2006).

    [9] OGAC's 5-year strategy calls for evidence-based policy decisions
    and programs that respond to local needs and social and cultural
    patterns.

    [10] OGAC permits country teams to apply for exemptions from the 33
    percent abstinence-until-marriage requirement. For example, OGAC
    guidance states that it would be appropriate for a country team in a
    country with a concentrated epidemic--in which HIV has infected at
    least 5 percent of individuals in defined subpopulation but is not well-
    established in the general population--to seek an exemption from this
    requirement.

    [11] Institute of Medicine, PEPFAR Implementation: Progress and Promise
    (Washington, D.C.: National Academies, 2007).

    [12] These experts included individuals affiliated with the U.S.
    government, the faith-based community, academia, and multilateral
    organizations such as the United Nations Children's Fund (UNICEF), the
    Joint United Nations Programme on HIV/AIDS (UNAIDS), and the World
    Health Organization (WHO). We selected these experts on the basis of
    several criteria, including educational background in public health and
    medicine, experience working with major HIV/AIDS organizations, and
    leadership experience in addressing HIV/AIDS. (See app. II for more
    information on these experts.)

    [13] GAO, Global HIV/AIDS: Survey of PEPFAR Country Teams, GAO-08-534SP
    (Washington, D.C.: April 2008), available at [hyperlink,
    http://www.gao.gov]. The survey, which included a primary survey and a
    short follow-up, requested information on issues such as setting
    targets, selecting interventions, and using cost information. The
    country team members surveyed included Centers for Disease Control and
    Prevention (CDC) Chiefs of Party, U.S. Agency for International
    Development (USAID) health team leaders, and PEPFAR coordinators in the
    15 PEPFAR focus countries. Survey percentages reported do not include
    nonresponses to each question in our survey.

    [14] The proposed alternative approach is based on our analysis of the
    views and comments of the 22 experts, the PEPFAR country teams, and
    OGAC officials. For more information about our methodology, see
    appendix I.

    [15] See Statement of Federal Financial Accounting Standards No. 4,
    Managerial Cost Accounting Standards and Concepts (Washington, D.C.:
    2007).

    [16] Pub. L. No. 108-25, � 301(a)(2). The ABC model is based, in part,
    on the experience of Uganda, which implemented an integrated and
    comprehensive ABC campaign in the 1980s and observed a decline in HIV/
    AIDS prevalence by 2001. Many researchers who have studied the Ugandan
    experience emphasize the importance of all three components of ABC and
    have concluded that all three aspects of the model contributed to
    Uganda's decline in HIV prevalence. Although substantial debate exists
    about the extent to which each component of the model is responsible
    for reducing HIV prevalence in Uganda and other countries, there is
    consensus in the public health community that using an integrated,
    comprehensive ABC model can have a positive impact in fighting HIV/AIDS
    (W. Cates, M. M. Cassell, H. D. Gayle, E. C. Green, D. T. Halperin, N.
    Hearst, D. Kirby, and M. J. Steiner, "The Time Has Come for Common
    Ground on Preventing Sexual Transmission of HIV," Lancet, vol. 364
    (2004).

    [17] Pub. L. No. 108-25, � 403.

    [18] The remaining $37 million in global HIV/AIDS funding was
    appropriated to other accounts to support global HIV/AIDS efforts.
    These accounts include the Economic Support Fund, which is intended to
    advance U.S. strategic goals through economic assistance, and Foreign
    Military Financing, which provides support to foreign militaries.

    [19] For fiscal year 2004, Congress appropriated funds to NIH for
    global HIV/AIDS, but those funds supported international HIV/AIDS
    research rather than efforts in the PEPFAR focus countries. Therefore,
    funds for NIH for fiscal year 2004 are not included in our calculations
    of PEPFAR funding for that year. In addition, in fiscal year 2004,
    Congress appropriated funds to the Prevention of Mother to Child
    Transmission (PMTCT) account; this account expired at the end of fiscal
    year 2004, but some country teams carried over PMTCT funds to fiscal
    year 2005. Therefore, for fiscal year 2004 and 2005, this report
    includes funding to the PMTCT account. Although the PMTCT account
    expired, OGAC continues to fund PMTCT activities through the remaining
    accounts.

    [20] We report planned allocations rather than obligations or
    expenditures because our report focuses on the PEPFAR allocation
    process (see app. I for more information on the scope and methodology
    of our report). The total allocation of $2.35 billion for prevention,
    treatment, and care differs from the $4.48 billion appropriated because
    the remaining $2.13 billion was not allocated to prevention, treatment,
    and care activities in the focus countries: about $754 million was
    allocated to international partners, such as the Global Fund;
    approximately $368 million was allocated to HIV/AIDS programs in
    nonfocus countries in which PEPFAR operates; about $362 million was
    allocated for National Institutes of Health HIV/AIDS research; about
    $81 million was allocated to tuberculosis efforts; approximately $40
    million was allocated to microbicides; about $29 million was allocated
    to the International AIDS Vaccine Initiative; and about $497 million
    was allocated for other costs, which include strategic information and
    management and staffing. The total planned allocation for fiscal year
    2007 differs from data that OGAC reported to Congress for that year,
    because OGAC's reported funding included these other costs, which were
    not reported as program area funds until fiscal year 2006. To be
    consistent with our prior work, we do not include these costs in our
    calculations of PEPFAR funding.

    [21] As of March 31, 2008, planned allocations for fiscal year 2008 had
    not yet been approved by OGAC. The total allocation amount was obtained
    from OGAC's Country Operational Plan and Reporting System (COPRS) on
    February 6, 2008, and may be subject to revision.

    [22] To meet the AB spending directive, OGAC mandated in its ABC
    guidance that PEPFAR country teams spend at least half of prevention
    funds on sexual transmission prevention and two-thirds of those funds
    on AB activities.

    [23] Pub. L. No. 108-25, � 102(a)(2). The agencies primarily
    responsible for implementing PEPFAR are USAID, the Department of Health
    and Human Services' Centers for Disease Control and Prevention (CDC),
    and the Department of State. Other agencies involved in PEPFAR are the
    Peace Corps and the Departments of Defense, Labor, and Commerce.

    [24] Pub. L. No. 108-25, � 102(a)(2).

    [25] Implementing partners carry out interventions, such as
    administering ARV drugs or providing HIV testing.

    [26] All unobligated funds undergo a carryover approval process during
    the first quarter of the following fiscal year.

    [27] According to OGAC, the global targets were developed from the 5-
    year country-level targets. OGAC identified 50 percent of the need for
    prevention, treatment, and care in each country and used those figures
    to set the 5-year country-level targets. These targets were then added
    together across countries to produce the global targets. OGAC set the 5-
    year country-level targets in 2004, and the targets are fixed. The 5-
    year country-level targets include the accomplishments of PEPFAR's own
    programs, as well as the results of host governments' and other donors'
    programs that receive U.S. government support. Country teams are to
    achieve the 5-year country-level care and treatment targets by
    September 30, 2009; they are to meet the prevention target by September
    30, 2010.

    [28] Owing to the difficulty in estimating the number of infections
    prevented, country teams are not required to provide annual country-
    level targets for infections averted. Country teams set annual country-
    level prevention targets only for PMTCT activities, such as providing
    HIV counseling and testing to pregnant women. Thus, for prevention,
    country teams' annual country-level targets are not intended to sum to
    the 5-year country-level targets.

    [29] OGAC guidance states that if the 5-year country-level targets are
    unrealistic, annual targets should not be set to show that the 5-year
    targets will be met.

    [30] The IOM report is available at [hyperlink,
    http://www.iom.edu/CMS/3783/24770/41804.aspx].

    [31] All results from our expert interviews come from our standardized
    structured instrument (see app. III).

    [32] In this report, we narrowed our scope to include prevention and
    treatment and did not specifically ask the experts questions about care
    and orphans and children spending directives.

    [33] Thirteen of the 22 experts stated that the AB directive posed
    obstacles to developing evidence-based programs, and 6 of the 13 stated
    that the directive negatively affected country-based programming. One
    of the 13 experts stated that AB programs are being implemented with no
    measure of effectiveness, and another noted that AB programs are too
    restrictive. Three of the 22 experts generally supported the spending
    directives. The remaining six experts did not comment on the
    directive's impact on evidence-based or country-based programming.

    [34] Consistent with this argument, in April 2006, we reported that 8
    of 15 PEPFAR country teams indicated that segregating AB from "other
    prevention" funding compromised the integration of their prevention
    efforts. See GAO-06-395, p. 35.

    [35] Five of six host country officials whom we interviewed also noted
    that the AB directive does not reflect their country-level needs and
    conditions.

    [36] First-line drugs are initial ARV regimens. In some cases, patients
    are switched to more expensive regimens because of occurrence of side
    effects and/or drug resistance.

    [37] Although our structured interview did not include a question
    regarding OGAC's role, some experts chose to comment on this topic.

    [38] The results in this subsection were based on responses to three
    open-ended questions related to selecting interventions for prevention,
    treatment, and care: "What challenges, if any, have you encountered
    while selecting interventions to meet country-level targets for
    prevention/treatment/care?"

    [39] To obtain cost-related information, officials reported drawing on
    a wide variety of sources, including implementing partners, their own
    PEPFAR country team, and their own U.S. government agency. Overall,
    most officials found these sources to be useful--for example, 29 out of
    37 officials found information from implementing partners to be very
    useful.

    [40] The open-ended question was: "How do you use information on the
    costs to PEPFAR of specific interventions in your planning and
    budgeting process?"

    [41] Federal standards further state that reliable information on the
    costs of federal programs and activities is crucial for effective
    management of government operations. This information should be used by
    program managers to improve operating economy and efficiency. In
    addition, this information can be used by Congress and federal
    executives in making decisions about allocating federal resources,
    authorizing and modifying programs, and evaluating program performance.
    See Statement of Federal Financial Accounting Standards No. 4,
    Managerial Cost Accounting Standards and Concepts (Washington, D.C.:
    2007).

    [42] One such model used by OGAC in this exercise was the Futures
    Group's GOALS model, which enhances planning by linking program goals
    and resource allocation levels.

    [43] The Strategic Information staff at OGAC, among other things,
    measure progress toward the global targets; support international
    agencies and host country government for program management and
    reporting systems; and use surveillance, survey, and program data to
    help improve programs' design and focus.

    [44] Survey questions, results, and number of respondents per question
    are presented in an electronic supplement to this report, which may be
    accessed at our e-supplement (GAO-08-534SP). Survey percentages
    reported do not include nonresponses to each question in our survey.

    [45] While we did not specifically ask about the feasibility of
    selecting interventions under the new approach, the main challenges
    cited by respondents to selecting interventions were related to the
    constraints posed by the directives.

    [46] Three CDC officials predicted that it would be difficult for
    country teams to set all country-level targets because it would require
    host country involvement and prioritization by country teams, the
    targets set by host country governments are problematic, and some
    targets are hard to quantify. Each of these responses was selected by
    one official, with some officials selecting more than one response. No
    respondent said that it would be very difficult for country teams to
    propose all country-level targets.

    [47] Country team officials were asked to provide an open-ended
    response to the close-ended question "Why would it be easy or difficult
    (to set all targets at the country level)?" We do not know, therefore,
    how many of the remaining respondents would have had similar or
    different views on the issue of data availability.

    [48] The open-ended question asked was: "What would be the potential
    challenges in your country if all PEPFAR country-level targets were set
    by the country team rather than by OGAC?"

    [49] We asked three open-ended questions related to selecting
    interventions for prevention, treatment, and care: "What challenges, if
    any, have you encountered while selecting interventions to meet country-
    level targets for prevention/treatment/care?"

    [50] Country team officials were asked, "How easy or difficult would it
    be for country teams to use information on the costs of specific
    interventions as part of their planning and budgeting?"

    [51] Other challenges that officials frequently cited as extremely or
    very significant included concerns about data reliability (28 of 37
    respondents) and data not being available (26 of 36 respondents).
    Respondents were asked to select from a list of potential challenges;
    figures indicate the total number of respondents who responded to each
    individual challenge.

    [52] This challenge was cited as extremely or very significant by 21
    out of 37 survey respondents who responded to a closed-ended question
    on the extent to which a lack of country-specific data posed a
    challenge to obtaining using cost information.

    [53] In contrast, among the 18 officials who used costing information
    to a moderate or some extent, only 5 individuals found the lack of data
    covering all populations within the host country to be a significant or
    very significant challenge.

    [54] These additional challenges resulted from an open-ended follow-up
    to our close-ended question on challenges asking for any other
    challenges officials have experienced.

    [55] GAO, Global Health: Spending Requirement Presents Challenges for
    Allocating Prevention Funding under the President's Emergency Plan for
    AIDS Relief, GAO-06-395 (Washington, D.C.: Apr. 4, 2006); Global
    Health: Spending Requirement Presents Challenges for Allocating
    Prevention Funding under the President's Emergency Plan for AIDS
    Relief, GAO-06-1089T (Washington, D.C.: Sept. 6, 2006).

    [56] See appendix III for our structured interview questions.

    [57] See GAO-06-395 and GAO-06-1089T.

    [58] Because we used a nonprobabilty selection methodology, our overall
    list of potential interviewees is not a complete list of all HIV/AIDS
    experts or all experts on PEPFAR. Our findings cannot be generalized to
    all HIV/AIDS experts or all individuals with expertise on PEPFAR.

    [59] We modified our selection criteria to include experts supported by
    the faith-based community in response to congressional interest. We
    determined that including these criteria was appropriate for our design
    and objectives.

    [60] Given our limited scope and time frames, we chose to select
    experts with experience in prevention and/or treatment.

    [61] We consulted OGAC officials regarding this approach, and they
    agreed that the current funding allocation process includes the three
    parts noted above.

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