PRESIDENT’S 

EMERGENCY PLAN 

FOR AIDS RELIEF

Per-Patient Costs 

Have Declined 

Substantially, but 

Better Cost Data 

Would Help Efforts to 

Expand Treatment

Report to Congressional Requesters

March 2013

GAO-13-345

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-13-345, a report to 

congressional requesters 

March 2013 

PRESIDENT’S EMERGENCY PLAN FOR AIDS 

RELIEF 

Per-Patient Costs Have Declined Substantially, but 

Better Cost Data Would Help Efforts to Expand

Treatment

Why GAO Did This Study

Through PEPFAR—first authorized in 

2003—the United States has 

supported major advances in HIV/AIDS 

treatment, care, and prevention in 

more than 30 countries, including 

directly supporting treatment for almost 

5.1 million people. However, millions 

more people still need treatment. 

Congress reauthorized PEPFAR in 

2008—authorizing up to $48 billion 

over 5 years—making it a major policy 

goal to help partner countries develop 

independent, sustainable HIV 

programs. Congress also set spending 

and treatment targets. OGAC leads 

PEPFAR by allocating funding and 

providing guidance to implementing 

agencies. As requested GAO reviewed 

PEPFAR-supported treatment 

programs. GAO examined (1) how perpatient treatment costs have changed 

and affected program implementation, 

(2) how PEPFAR cost information

supports efforts to expand treatment, 

and (3) how PEPFAR has met a 

legislated treatment spending 

requirement. GAO reviewed cost 

analyses and reports and analyzed 

ARV drug data relating to fiscal years 

2005 through 2011; conducted 

fieldwork in three countries selected on 

the basis of program size and other 

factors; and interviewed PEPFAR

officials and implementing partners. 

What GAO Recommends

GAO recommends that State develop 

a plan for (1) expanding the use of indepth cost studies to additional 

countries and sites, where appropriate, 

and (2) broadening expenditure 

analysis to include non-PEPFAR costs, 

as feasible. State generally agreed 

with the report’s recommendations. 

What GAO Found

The Department of State’s (State) Office of the U.S. Global AIDS Coordinator 

(OGAC) has reported that per-patient treatment costs declined from about

$1,053 to $339 from 2005 to 2011. Purchasing generic antiretroviral (ARV) 

drugs, together with declining drug prices, has led to substantial savings. OGAC 

estimates that the President’s Emergency Plan for AIDS Relief (PEPFAR) has 

saved $934 million since fiscal year 2005 by buying generic instead of branded 

products. PEPFAR’s analyses of data from eight country treatment-cost studies

indicate that per-patient costs also declined as programs realized economies of 

scale while taking on new patients. Furthermore, the analyses suggest that costs 

decreased as countries’ treatment programs matured, particularly in the first year 

after programs expanded, and reduced one-time investments. Per-patient cost 

savings have facilitated substantial increases in the number of people on ARV 

treatment. In September 2012, an estimated 8 million were on treatment in lowand middle-income countries, of which PEPFAR directly supported 5.1 million—

an increase of 125 percent since 2008, the year the program was reauthorized. 

Despite substantial declines in per-patient treatment costs, it is important that 

countries continue to improve the efficiency of their programs to expand to meet 

the needs of the estimated 23 million people eligible for ARV treatment under 

recent international guidelines. PEPFAR’s cost estimation and expenditure 

analysis approaches provide complementary information that can help partner 

countries expand treatment and identify potential cost savings. However, as 

currently applied, these approaches do not capture the full costs of treatment. 

Cost estimation provides in-depth information, but data are limited because 

detailed cost studies have been done in only eight partner countries, at a small 

number of sites. Moreover, although treatment programs are changing rapidly, 

key data for most of the studies are no longer timely, since they were collected in 

2006 and 2007. PEPFAR does not have a plan for systematically conducting or 

repeating cost studies in partner countries. Data from expenditure analyses, 

while more timely, are limited because they do not include non-PEPFAR costs. 

Without more timely and comprehensive information on treatment costs, 

PEFPAR may be missing opportunities to identify potential savings, which are 

critical for expanding HIV treatment programs to those in need. 

Using an OGAC-developed budgetary formula, PEPFAR has met the legislative

requirement that more than half of its funds be spent each year to provide

specific treatment and care services for people living with HIV. From fiscal year 

2008 to fiscal year 2012, PEPFAR funds allocated to capacity building—to 

strengthen health systems, laboratory capacity, and strategic information 

systems—increased from 15 percent to 21 percent of PEPFAR’s total funds to 

support country programs. However, the current formula does not include the 

capacity building funds. These funds—which support PEPFAR country teams’ 

efforts to meet another legislative goal of promoting sustainable country-owned 

programs—and other PEPFAR activities also contribute to HIV treatment and 

care services. PEPFAR does not currently have a methodology to account for 

those contributions. Without such a methodology, it is not possible to determine 

the full amount of PEPFAR funds that are allocated to support the HIV treatment 

and care services identified in the spending requirement. However, the treatment 

spending requirement expires at the end of September 2013. 

View GAO-13-345. For more information, 

contact David Gootnick at (202) 512-3149 or 

gootnickd@gao.gov, or contact Marcia Crosse 

at (202) 512-7114 or crossem@gao.gov. 
Page i GAO-13-345 PEPFAR Treatment Costs

Letter 1 

Background 5

Lower-Priced ARV Drugs, Economies of Scale, and Program 

Maturity Have Helped Reduce Per-Patient Costs and Contributed 

to Expanding Treatment Programs 8

PEPFAR Cost Information Supports Efforts to Expand Country 

Treatment Programs but Has Limitations 18

Using OGAC’s Budgetary Formula, PEPFAR Has Met the 

Treatment Spending Requirement, but the Formula Does Not 

Fully Account for All Funds 26

Conclusions 30

Recommendations for Executive Action 31

Agency Comments and Our Evaluation 31

Appendix I Objectives, Scope, and Methodology 35

Appendix II PEPFAR Program Areas, Budget Codes, and Budgetary 

Formula for Treatment Spending Requirement 38

Appendix III Comments from the Department of State 40

Appendix IV GAO Contacts and Staff Acknowledgments 43

Related GAO Products 44

Tables

Table 1: ARV Drug Purchases by PEPFAR and Estimated Savings 

from Purchasing Generic Products, Fiscal Years 2005 

through 2011 12

Table 2: Features of PEPFAR’s Cost Estimation and Expenditure 

Analysis Approaches for Obtaining Treatment Cost 

Information 24

Table 3: PEPFAR Program Areas and Associated Budget Codes 38

Contents 
Page ii GAO-13-345 PEPFAR Treatment Costs

Figures

Figure 1: PEPFAR HIV Treatment Budget per Patient on ARV 

Treatment Directly Supported by PEPFAR, 2005 through 

2011 9

Figure 2: Average Prices for Three Comparable First-Line ARV 

Treatment Regimens, from Third Quarter of Fiscal Year 

2005 through Third Quarter of Fiscal Year 2011 13

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

through 2012 16

Figure 4: Components of Approved PEPFAR Country Budgets 

Accounted for and Not Accounted for in OGAC Budgetary 

Formula, Fiscal Years (FY) 2008 to 2012 28

Abbreviations 

2008 Leadership Act The Tom Lantos and Henry J. Hyde United

 States Global Leadership Against HIV/AIDS,

 Tuberculosis, and Malaria Reauthorization Act of

 2008

AIDS acquired immunodeficiency syndrome

ARV antiretroviral

CD4 cluster of differentiation antigen 4

CDC Centers for Disease Control and Prevention

FDA Food and Drug Administration

Global Fund The Global Fund to Fight AIDS, Tuberculosis and

 Malaria

HHS Department of Health and Human Services

HIV human immunodeficiency virus

NGO nongovernmental organization

OGAC Office of the U.S. Global AIDS Coordinator

PEPFAR President’s Emergency Plan for AIDS Relief

State Department of State

TB tuberculosis

UNAIDS Joint United Nations Programme on HIV/AIDS

USAID U.S. Agency for International Development

WHO World Health Organization

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

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necessary if you wish to reproduce this material separately.
Page 1 GAO-13-345 PEPFAR Treatment Costs

United States Government Accountability Office 

Washington, DC 20548

March 15, 2013

Congressional Requesters

At the end of 2011, an estimated 34 million people worldwide were living 

with HIV, according to the Joint United Nations Programme on HIV/AIDS 

(UNAIDS). Through the President’s Emergency Plan for AIDS Relief 

(PEPFAR), the United States has supported significant advances in HIV 

treatment, care, and prevention in more than 30 countries. PEPFAR 

investments have led to the rapid expansion of programs that provide 

access to life-saving antiretroviral (ARV) drugs and other treatment and 

care services for people living with HIV/AIDS.1 As of September 2012, 

PEPFAR directly supported ARV treatment for almost 5.1 million men, 

women, and children.2 Although this represents more than half of the 

approximately 8 million people in low- and middle-income countries 

receiving ARV treatment, UNAIDS estimates that 15 million people in 

those countries are eligible for treatment under current international 

guidelines established by the World Health Organization (WHO).3

The U.S. Congress established PEPFAR in 2003 to assist foreign 

countries in combating HIV/AIDS, tuberculosis (TB), and malaria.4 At that 

time, the Congress authorized $15 billion from fiscal years 2004 through 

2008 for PEPFAR.5

 

1

In this report, we use “ARV treatment” to mean the services delivered to HIV-positive 

individuals who are receiving treatment with ARV drugs. We use “HIV treatment” to mean 

services delivered to all HIV-positive individuals in the country program, regardless of 

whether or not the individual is receiving ARV drugs.

 PEPFAR’s implementing agencies—particularly the 

2

PEPFAR defines and counts direct treatment results as the number of uniquely identified 

people receiving ARV treatment services that can be attributed to an ARV treatment 

intervention or activity taking place at a facility that receives PEPFAR support. PEPFAR 

also makes broader contributions to country programs through overall system 

strengthening and capacity building that may occur apart from the treatment facilities.

3

WHO establishes international guidelines on when to initiate ARV treatment for various 

groups of HIV-positive people (e.g., adults, children, pregnant or breastfeeding women, 

and people co-infected with tuberculosis) and which ARV drugs should be used to treat 

most people in resource-limited settings.

4

United States Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act of 2003, Pub. 

L. No. 108-25, 117 Stat. 711.

5

These funds were authorized to be appropriated to the President for PEPFAR. See Pub. 

L. No. 108-25, § 401.

 
 

Page 2 GAO-13-345 PEPFAR Treatment Costs

Department of Health and Human Services’ (HHS) Centers for Disease 

Control and Prevention (CDC) and the U.S. Agency for International 

Development (USAID)—work with country governments and other 

partners such as the Global Fund to Fight AIDS, Tuberculosis and 

Malaria (Global Fund) to help provide an array of services, including HIV 

treatment, care, and prevention. Congress reauthorized PEPFAR in 

2008—through the Tom Lantos and Henry J. Hyde United States Global 

Leadership Against HIV/AIDS, Tuberculosis, and Malaria Reauthorization 

Act of 2008 (2008 Leadership Act)6

—authorizing up to $48 billion to be 

used over 5 years to continue and to expand U.S.-supported HIV/AIDS 

and other programs. The current authorization of appropriations for 

PEPFAR expires September 30, 2013.7

With the support of PEPFAR and other donors, countries are expanding 

their treatment programs to meet the needs of people receiving ARV 

treatment as well as HIV-positive people who are eligible for treatment 

under WHO’s guidelines but are not yet being treated. In addition, in part 

to prevent disease transmission, some countries are broadening 

treatment eligibility requirements to include more groups of HIV-positive 

people, for example, by providing lifelong ARV treatment to pregnant and 

breastfeeding mothers. Despite the continuing expansion of treatment 

programs in low- and middle-income countries, international funding for 

the HIV response has stagnated since the onset of the global economic 

downturn, according to UNAIDS. This places increasing pressure on the 

treatment programs that PEPFAR supports to manage the per-patient 

cost of providing HIV treatment.

The 2008 Leadership Act contained, among many other amendments, 

four provisions directly relevant to the expansion of treatment programs 

and their associated costs:

 

6

Pub. L. No. 110-293, 122 Stat. 2918. 

7

Pub. L. No. 110-293, § 401.
 

Page 3 GAO-13-345 PEPFAR Treatment Costs

• the requirement to increase PEPFAR’s treatment goals in proportion 

to reductions in the U.S. per-patient cost of providing treatment in 

countries receiving PEPFAR assistance;8

• the requirement that PEPFAR annual reporting include a detailed 

description of program monitoring, defined as the collection, analysis, 

and use of routine program data to assess program implementation 

and costs;9

• the requirement that more than half of funds appropriated for PEPFAR 

be expended for certain treatment, care, and support activities for 

people living with HIV10

• the major policy goal of helping partner countries develop 

independent sustainable HIV programs (hereafter referred to as 

“promoting country ownership”). 

(hereafter referred to as the “treatment 

spending requirement”); and

You asked us to review HIV/AIDS treatment programs supported through 

PEPFAR. This is the first of three reports responding to your request. In 

this report, we examine

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

implementation;

2. how PEPFAR’s cost information supports countries’ efforts to expand 

treatment; and

3. how PEPFAR has met the treatment spending requirement.

We plan to issue related reports on PEPFAR treatment program results 

and PEPFAR supply chains later this year.

 

8

PEPFAR’s original authorization in 2003 set multiple targets for the number of people to 

be reached by the program, including providing treatment to 2 million people by 2006. The 

reauthorization amended these goals by requiring increases to treatment targets 

proportional to reductions in per-patient treatment costs—as compared to costs in fiscal 

year 2008—as well as increases to treatment targets proportional to increases in 

appropriated funding. See Pub. L. No. 110-293, § 403(3). In December 2011, the 

President set a new treatment target for PEPFAR, committing to provide direct support for 

ARV treatment for more than 6 million people by the end of fiscal year 2013. 

9

Pub. L, No. 110-293, § 301(e)(2)(B).

10Specifically, the 2008 Leadership Act requires that, each year, more than half of the 

funds appropriated for bilateral assistance under the act should be expended for ARV 

treatment, clinical monitoring of HIV-positive people not yet in need of ARV treatment, 

care for associated opportunistic infections, nutrition and food support, and other essential 

HIV/AIDS-related medical care for people living with HIV/AIDS. See Pub. L. No. 110-293, 

§ 403(3).
 

Page 4 GAO-13-345 PEPFAR Treatment Costs

To assess changes in per-patient costs and their effect on program 

implementation, we focused our work on PEPFAR’s reported trends in 

per-patient treatment costs relating to fiscal years 2005 through 2011. We 

also reviewed agency documents on PEPFAR’s cost estimation approach 

and detailed results from the eight country treatment-cost studies that 

PEPFAR had completed as of February 2013.11

 

11As of February 2013, country treatment-cost studies had been completed in Botswana, 

Ethiopia, Kenya, Mozambique, Nigeria, Tanzania, Uganda, and Vietnam. 

Further, we analyzed 

data on nearly all drug purchases from fiscal years 2005 through 2011, 

and we interviewed PEPFAR officials and representatives of the 

contractor that manages the bulk of PEPFAR’s ARV drug procurement. 

On the basis of our reviews of documentation, data checks, and 

interviews with officials responsible for the data, we determined that the 

ARV drug data were sufficiently reliable for our purposes. In addition, we 

conducted work in three PEPFAR partner countries—Kenya, South 

Africa, and Uganda—in June 2012. We selected these countries on the 

basis of program size, estimates of disease burden, and other factors. 

While in each country, we interviewed key implementing partners, 

technical experts in costing methodology, and in-country officials and 

reviewed documentation from the selected countries. We also analyzed 

data on the number of patients treated in PEPFAR-supported country 

treatment programs. On the basis of our reviews of documentation for 

these data and our interviews with PEPFAR officials, we determined that 

the data were sufficiently reliable for our purposes. To determine how 

PEPFAR cost information supports countries’ efforts to expand treatment, 

we assessed the timeliness and completeness of information generated 

through PEPFAR’s cost estimation and expenditure analysis approaches; 

examined PEPFAR country operational plans, other documents on cost 

trends, and goals for expanding treatment programs; reviewed 

international treatment guidelines; and interviewed PEPFAR officials. To 

assess how PEPFAR has met the treatment spending requirement, we 

reviewed applicable authorizing language as well as PEPFAR strategy 

and guidance; reviewed PEPFAR country operational plans and other 

planning documents; and reviewed PEPFAR budget data for fiscal years 

2008 (the year PEPFAR was reauthorized) through 2012. We also 

interviewed PEPFAR officials regarding their implementation of the 

treatment spending requirement. For additional details on our scope and 

methodology, see appendix I.
 

Page 5 GAO-13-345 PEPFAR Treatment Costs

We conducted this performance audit from October 2011 to March 2013 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

PEPFAR’s original authorization in 2003 established the Office of the U.S. 

Global AIDS Coordinator (OGAC) at the Department of State (State) and 

gave OGAC primary responsibility for the oversight and coordination of all 

resources and international activities of the U.S. government to combat 

the HIV/AIDS pandemic. OGAC also allocates appropriated funds to 

PEPFAR implementing agencies, particularly CDC and USAID. CDC and 

USAID obligate the majority of PEPFAR funds for HIV treatment, care, 

and prevention activities through grants, cooperative agreements, and 

contracts with selected implementing partners, such as U.S.-based 

nongovernmental organizations (NGO) and partner-country governmental 

entities and NGOs.12

PEPFAR supports the national HIV response in more than 30 countries.13

 

12Other implementing agencies include the Peace Corps and the Departments of State, 

Defense, Labor, and Commerce. In addition, other HHS offices and agencies receiving 

PEPFAR resources include the Office of Global Health Affairs, the Food and Drug 

Administration (FDA), the Health Resources and Services Administration, the National 

Institutes of Health, and the Substance Abuse and Mental Health Services Administration.

The levels and types of PEPFAR support for these countries’ treatment 

programs vary on the basis of each country’s capacity and the state of its 

HIV epidemic. For example, for a given country’s program, PEPFAR may 

directly deliver the majority of HIV treatment services; it may be one of 

many entities delivering those services; or it may primarily provide 

support to other partners such as the country government and other 

bilateral and multilateral organizations—the Global Fund, for example—

13This includes the 33 countries and three regions that developed PEPFAR annual 

operational plans for fiscal year 2012. The 33 countries were Angola, Botswana, Burundi, 

Cambodia, Cameroon, China, Côte d’Ivoire, Democratic Republic of the Congo, 

Dominican Republic, Ethiopia, Ghana, Guyana, Haiti, India, Indonesia, Kenya, Lesotho, 

Malawi, Mozambique, Namibia, Nigeria, Russia, Rwanda, South Africa, South Sudan, 

Swaziland, Tanzania, Thailand, Uganda, Ukraine, Vietnam, Zambia, and Zimbabwe. The 

three regions were the Caribbean, Central America, and Central Asia.

Background
 

Page 6 GAO-13-345 PEPFAR Treatment Costs

that also provide support to HIV programs. Moreover, UNAIDS data 

indicate that support for HIV programs in many countries is increasingly a 

mix of resources from the country government, Global Fund, PEPFAR, 

and other donors.14

PEPFAR funding supports country programs that provide comprehensive 

HIV treatment—a broad continuum of treatment, care, and supportive 

services. This continuum begins with HIV testing and associated 

counseling, during which patients learn their HIV status and receive 

interventions to help them understand test results and link them to 

subsequent HIV treatment services. For individuals who are HIV positive, 

eligibility for ARV treatment is assessed by means of standard clinical or 

laboratory criteria—using CD4 count tests to measure the strength of a 

patient’s immune system.

PEPFAR strategy stresses the importance of having 

the partner-country government play the coordinating role.

15

Not all HIV-positive patients are eligible for ARV treatment at the time 

they are identified as HIV positive. However, these patients generally 

have access to a similar range of care and support services as well as to 

regular clinical and laboratory monitoring. HIV-infected patients become 

eligible to transition into ARV treatment on the basis of patient need and 

treatment guidelines, although other factors, such as the capacity of the 

site to support additional patients, may also be considered. WHO 

establishes international guidelines on when to initiate ARV treatment for 

various groups of HIV-positive people, such as adult patients who have 

Patients eligible for treatment receive ARV 

drugs as well as regular clinical assessment and laboratory monitoring of 

the treatment’s effectiveness. Patients on ARV treatment also receive 

various care and support services such as treatment of opportunistic 

infections including TB co-infection, nutritional support, and programs to 

promote retention and adherence to treatment. Patients are expected to 

take ARV drugs on a continuing, lifelong basis once they have initiated 

treatment.

 

14UNAIDS reports that from 2010 to 2011, low- and middle-income countries increased 

their domestic spending on HIV programs by 15 percent and that by the end of 2011, 

domestic spending accounted for the majority of all HIV spending for the first time.

15CD4 (cluster of differentiation antigen 4) cells are a type of white blood cell that fights 

infection. The CD4 count test measures the number of CD4 cells in a sample of blood. 

Along with other tests, the CD4 count test helps determine the strength of the person’s 

immune system, indicates the stage of the HIV disease, guides treatment, and predicts 

how the disease may progress. Normal CD4 counts range from 500 to 1,000 cells/mm3

. 
 

Page 7 GAO-13-345 PEPFAR Treatment Costs

never been on ARV treatment, pediatric patients, and pregnant and 

breastfeeding women. In 2010, WHO updated its guidelines to 

recommend ARV treatment for all people with CD4 counts of less than 

350 cells/mm3 and all people co-infected with HIV and TB, thereby 

expanding the number of people eligible for treatment. Each country 

establishes its own guidelines, based on WHO guidelines, for when to 

initiate treatment for these groups. UNAIDS estimated at the end of 2011 

that, on the basis of the country-specific guidelines, 15 million people in 

low- and middle-income countries needed ARV treatment.

For PEPFAR budgeting purposes, PEPFAR categorizes the funds it 

provides for HIV programs into four broad program areas—Treatment, 

Care, Prevention, and Other—each of which includes multiple types of 

services.16 Treatment and Care include many of the clinical, laboratory, 

and support services that make up the comprehensive HIV treatment 

continuum as well as support services for orphaned and vulnerable 

children. Prevention includes interventions to prevent HIV infection, such 

as preventing mother-to-child transmission of HIV, sexual prevention, and 

medical male circumcision. The program area known as Other includes 

PEPFAR funds for efforts to strengthen health care systems, establish or 

enhance laboratory infrastructure, and provide strategic health 

information. For additional detail on the services budgeted in each 

PEPFAR program area and associated PEPFAR budget codes, see 

appendix II.

 

16In this report, we use the term “budget” to refer to PEPFAR’s internal resource allocation 

processes. 
 

Page 8 GAO-13-345 PEPFAR Treatment Costs

Declining prices for ARV drugs have been a key source of per-patient 

cost savings, with most of these savings coming from the purchase of 

generic ARV drugs. Costs have also declined because programs have 

benefited from economies of scale and program maturity as they have 

expanded. These savings have contributed to substantial growth in 

treatment programs—both in the number of patients that PEPFAR directly 

supports on treatment, as well as the number of patients treated within 

the country programs that PEPFAR supports more broadly.

OGAC has reported a substantial decline in PEPFAR per-patient 

treatment costs, from $1,053 in 2005 to $339 in 2011. Using available 

program information, PEPFAR calculated these costs by dividing specific 

elements of its budgets for HIV treatment in a given year by the number 

of reported patients for the subsequent year (see fig. 1).17

 

17This calculation assumes a 1-year lag between budgeted funds and provision of 

services as an approximation of the typical delay between when resources are allocated 

and when they are expended. For example, PEPFAR calculated its 2005 per-patient 

treatment budget by dividing the fiscal year 2004 HIV treatment budget by the number of 

directly supported patients on ARV treatment reported for fiscal year 2005.

For this 

calculation, PEPFAR defined its HIV treatment budget as the total amount 

budgeted for ARV drugs (hereafter referred to as ARVs), adult treatment, 

pediatric treatment, and laboratory infrastructure. The number of patients 

currently on ARV treatment directly supported by PEPFAR is routinely 

reported by country teams at the end of each fiscal year. PEPFAR 

officials told us that they use HIV treatment budgets to approximate 

trends in PEPFAR’s per-patient treatment costs because they lack 

detailed information on the costs of comprehensive HIV treatment over 

time. They acknowledged that the calculation is a rough approximation 

that does not capture the full scope of PEPFAR funds spent to support 

the broad continuum of services under comprehensive HIV treatment. 

The calculation also does not capture funds from other funding sources.

Lower-Priced ARV 

Drugs, Economies of 

Scale, and Program 

Maturity Have Helped 

Reduce Per-Patient 

Costs and 

Contributed to 

Expanding Treatment 

Programs 

PEPFAR’s Reported PerPatient Treatment Costs 

Have Declined 

Substantially
 

Page 9 GAO-13-345 PEPFAR Treatment Costs

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

a

PEPFAR defined the HIV treatment budget for this calculation as the total budget amounts allocated 

to the following four budget codes within the Treatment and Other program areas: ARV drugs, adult 

treatment, pediatric treatment, and laboratory infrastructure. 

b

The number of adults and children receiving ARV treatment directly supported by PEPFAR is 

routinely reported by country teams at the end of each fiscal year. 

c

PEPFAR calculated its annual HIV treatment budget per patient by dividing the budget amount 

allocated to treatment in the previous fiscal year by the number of reported patients for the current 

fiscal year. This calculation assumes a 1-year lag between budgeted funds and provision of services 

as an approximation of the typical delay between when resources are allocated and when they are 

expended. For example, PEPFAR calculated its 2005 per-patient treatment budget by dividing the 

fiscal year 2004 HIV treatment budget (as defined above) by the number of directly supported 

patients on ARV treatment reported for fiscal year 2005. 

Detailed PEPFAR studies of the estimated costs of providing 

comprehensive HIV treatment services in eight countries also show 

declining per-patient treatment costs. The average of PEPFAR’s 

estimates includes costs not only to PEPFAR but also to other funding 

sources for PEPFAR-supported treatment programs. Using the data from 
 

Page 10 GAO-13-345 PEPFAR Treatment Costs

the country treatment-cost studies, PEPFAR estimated that in fiscal year 

2011 the per-patient cost of providing comprehensive HIV treatment 

services averaged $768, with PEPFAR’s share amounting to an 

estimated $335. In comparison, the estimated per-patient treatment cost 

in fiscal year 2010 was $812, with PEPFAR’s share amounting to an 

estimated $436 of the total. These estimates represent average costs 

because per-patient treatment costs vary by country, by treatment facility 

within a country, and by different types of patients, such as adult patients 

on ARV treatment versus pediatric patients on ARV treatment.

Two key factors have contributed significantly to declining per-patient 

ARV drug costs in PEPFAR-supported treatment programs: (1) the 

increasing use of generic products and (2) decreasing prices for specific 

ARV drugs.

From fiscal year 2005 to 2011, PEPFAR-supported treatment programs 

substantially increased their use of generic products, as shown by 

PEPFAR’s data on ARV purchases.18

 

18PEPFAR compiles data annually on almost all ARV purchases made by PEPFAR 

implementing partners. In 2011, the data captured ARV purchases in 23 countries, 

including an estimated 98 percent of PEPFAR ARV purchases.

In fiscal year 2005, the first year 

when PEPFAR purchased ARVs, generics represented about 15 percent 

of ARV purchases (by volume). By fiscal year 2008, generic ARV 

products had risen to 89 percent of purchases. By fiscal year 2011, 98 

percent of all ARVs PEPFAR purchased were for generic products. 

Although PEPFAR’s overall increases in generic ARV purchases have 

been steady and substantial over the 7 years of data that we reviewed, 

the percentage of PEPFAR purchases for generic ARVs each year has 

varied across countries based on the availability of quality-assured 

Generic Products and 

Lower Prices Paid for ARV 

Drugs Have Been Key 

Factors Contributing to 

Declining Per-Patient 

Treatment Costs

Increasing Use of Generic 

Products
 

Page 11 GAO-13-345 PEPFAR Treatment Costs

generic products in each country.19

PEPFAR estimates that in fiscal years 2005 to 2011, it saved almost $934 

million by buying generic versions of ARVs instead of equivalent branded 

products. PEPFAR estimated these savings by determining the amount it 

spent each year on quality-assured generic products that have an 

equivalent branded product.

This is because PEPFAR purchases 

only quality-assured ARV products that comply with the laws—including 

patent and drug-registration laws—that apply in each partner country. For 

example, because of country-specific requirements in South Africa, in 

fiscal year 2008 only 25 percent of the ARVs that PEPFAR purchased in 

South Africa were generic products. In 2010 and 2011, PEPFAR worked 

with the South African government to update its ARV procurement 

processes, and in fiscal year 2011 almost 97 percent of PEPFARpurchased ARVs in South Africa were generic.

20 PEPFAR then compared the prices it paid 

for those generics with internationally negotiated prices for the equivalent 

branded products. (See table 1.) Purchasing generic ARVs has also 

allowed PEPFAR to broaden the selection of ARVs it purchases to 

include WHO-recommended products, particularly fixed-dose combination 

products that do not have an equivalent branded formulation.21

 

19All drug products PEPFAR purchases must comply with PEPFAR quality assurance 

requirements. To assure quality, PEPFAR requires that ARV products have either FDA 

approval or the approval of another acceptable regulatory authority. A generic 

manufacturer may seek FDA approval for a generic version of a U.S. patented drug if 

marketing of the generic product in the United States would occur after expiration of that 

patent and any periods of market exclusivity. See 21 U.S.C. § 355(j)(5)(B), 35 U.S.C. § 

271(e). FDA may issue tentative approval for such a product that may not yet be marketed 

in the United States due to the unexpired patent or exclusivities. As of January 13, 2013, 

FDA had approved or tentatively approved 156 ARV products for use under PEPFAR.

However, 

PEPFAR has not estimated savings associated with purchasing these 

fixed-dose combination products because there are no branded 

equivalents.

20An equivalent branded product is one that contains the same active ingredients and is 

available in the same form—tablet, capsule, liquid—and dose (for example, 100 mg and 

300 mg). 

21Some fixed-dose combination products are only available in generic formulations 

because different companies own the U.S. patent rights to the specific ARV drugs that 

make up the fixed-dose combination and those companies have not developed an 

equivalent branded formulation combining the same ARV drugs. 
 

Page 12 GAO-13-345 PEPFAR Treatment Costs

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

through 2011

U.S. dollars, in millions

2005 2006 2007 2008 2009 2010 2011 Total

Total ARVs purchased $116.8 $119.8 $131.6 $202.2 $192.1 $204.7 $271.9 $1,239.1

Total generic ARVs purchased 10.7 36.2 75.4 154.6 129.9 177.1 254.8 838.7

Estimated PEPFAR savings 8.1 24.9 75.7 214.6 96.6 173.2 340.6 933.8

Source: GAO review of PEPFAR data.

Notes: We reviewed data on ARV purchases and estimated savings (as of January 2013) that 

PEPFAR provided to us as well as PEPFAR data published in the Journal of the American Medical 

Association (see C.B. Holmes et.al., “Use of Generic Antiretroviral Agents and Cost Savings in 

PEPFAR Treatment Programs,” Journal of the American Medical Association, vol. 304, no. 3 (2010)). 

To estimate savings from buying generic versions of ARVs, PEPFAR compares average annual 

prices that its implementing partners paid for generic versions of ARVs in a given year with 

internationally negotiated prices for equivalent branded products, if such branded equivalents existed 

at the time. 

PEPFAR has also benefited from declining prices for specific ARV 

products, which have led to declining prices for the ARV treatment 

regimens recommended for use in resource-limited settings. WHO 

recommends that most patients starting ARV treatment for the first time 

receive one of several first-line regimens that combine three ARV drugs.22

Based on updated 2010 WHO treatment guidelines, these first-line 

regimens are built from combinations of the following six ARVs: tenofovir 

disoproxil furmarate (tenofovir), zidovudine,23

 

22In addition to first-line treatment regimens, second-line or other regimens may be 

necessary because people receiving ARV treatment can experience serious side effects 

from some ARVs or develop strains of HIV that are resistant to some or all of their ARVs. 

When a patient’s current regimen becomes ineffective, the patient must switch to a 

different regimen. 

lamivudine, emtricitabine, 

nevirapine, and efavirenz. WHO’s 2010 guidelines recommended that 

countries move away from including stavudine, a previously 

recommended ARV, in first-line regimens, because of toxicities 

associated with the drug. Instead, WHO recommended that countries use 

tenofovir or zidovudine. At the time, stavudine had been a preferred 

component of many countries’ first-line regimens and was relatively 

inexpensive. In contrast, tenofovir and zidovudine were relatively more 

expensive. While prices for tenofovir-based regimens remain higher than 

prices for the stavudine regimens they replace, tenofovir prices have 

declined to the point where they are, on average, lower than prices for 

23Zidovudine is also known as azidothymidine, or AZT.

Decreasing Prices for Specific 

ARV Drugs
 

Page 13 GAO-13-345 PEPFAR Treatment Costs

zidovudine, the current first-line alternative. Figure 2 shows how average 

prices have declined for three comparable first-line treatment regimens.24

Figure 2: Average Prices for Three Comparable First-Line ARV Treatment 

Regimens, from Third Quarter of Fiscal Year 2005 through Third Quarter of Fiscal 

Year 2011

Notes: Each first-line regimen shown is a combination of three individual ARV products. In 2010, 

WHO recommended that countries replace stavudine with tenofovir or zidovudine in their national 

treatment guidelines. The stavudine-based regimen includes stavudine, lamivudine, and nevirapine. 

The zidovudine- and tenofovir-based regimens also include lamivudine and nevirapine but replace 

stavudine with one of the currently recommended alternatives. Some of these regimens can be built 

 

24Prices paid for a specific product can vary by country, year, and the implementing

partner. Because these price variations are driven by various factors, PEPFAR is 

examining differences in prices paid by implementing partners. According to PEPFAR 

officials they are focusing their analyses on variations within the same country in the same 

year, to determine if the program can minimize these variations in price and thereby 

achieve additional savings. 
 

Page 14 GAO-13-345 PEPFAR Treatment Costs

with fixed-dose combination products that combine two or three ARVs into one pill. Prices for 

regimens using fixed-dose combination products are not shown. 

PEPFAR has analyzed program characteristics that affect per-patient 

costs as treatment has expanded in PEPFAR-supported programs. 

PEPFAR evaluated treatment costs using a cost estimation approach that 

includes detailed country treatment-cost studies25

In addition, a November 2012 peer-reviewed journal article summarized 

findings from PEPFAR-supported studies of the costs of providing 

comprehensive HIV treatment services. This analysis used available data

(collected from 54 delivery sites across six country treatment-cost 

studies) to analyze the factors that contribute to declining per-patient 

treatment costs.

as its primary 

information source. These studies collect data through patient records 

and interviews from a selected number of delivery sites. PEPFAR has 

conducted country treatment-cost studies in eight countries. Five studies 

were completed in 2009 (Botswana, Ethiopia, Nigeria, Uganda, and 

Vietnam); two studies were completed in 2011 (Mozambique and 

Tanzania); and one study was completed in 2012 (Kenya). In the country 

treatment-cost studies, ARV and non-ARV drug costs (e.g., equipment, 

personnel, and supplies) were identified and evaluated over a period of at 

least 1 year as the treatment program expanded. Each country treatmentcost study stated that per-patient treatment costs declined over its 

evaluation period, from a 6 percent decline in Kenya’s 2012 study to a 74 

percent decline in Vietnam’s 2009 study.

26

The 2012 summary analysis identified a relationship between the 

increasing scale of the treatment program—the number of patients 

The summary analysis concluded that program scale 

and maturity had the most significant relationship with per-patient costs.

 

25In this report, we use “country treatment-cost studies” to refer to the studies conducted 

under PEPFAR’s ARV Treatment Costing Project. These studies are PEPFAR supported, 

and, according to PEPFAR, are intended to be objective, applied, empirical research of its 

programs. PEPFAR reports that it has funded assessments of treatment costs through 

external technical partners in at least four additional countries.

26The 2012 summary analysis of the 54 delivery sites from six country treatment-cost 

studies was conducted by selecting possible factors (excluding ARV drugs) that might 

describe site characteristics and influence costs. The analysis used statistical modeling to 

identify the relationship between selected factors and costs. See N. A. Menzies, A. A. 

Berruti, and, J. M. Blandford, “The Determinants of HIV Treatment Costs in Resource 

Limited Settings,” PLOS ONE, vol. 7, issue 11 (2012). 

PEPFAR Analyses Indicate 

That Effects of Treatment 

Program Scale and 

Maturity Have Also 

Reduced Per-Patient 

Treatment Costs

Program Scale 
 

Page 15 GAO-13-345 PEPFAR Treatment Costs

supported by the site in a defined period—and reduced per-patient 

treatment costs. This analysis estimated a 43 percent decline in perpatient costs if an additional 500 to 5,000 patients are put on ARV 

treatment, and a 28 percent decline in per-patient costs if an additional 

5,000 to 10,000 patients are put on ARV treatment. Program scale was 

also identified in the eight country treatment-cost studies as a factor 

affecting per-patient treatment costs, as each country experienced large 

increases in the number of people put on ARV treatment after rapid 

expansion in clinic capacity and infrastructure in PEPFAR-supported 

treatment programs. Officials told us that these reductions with program 

scale are due to the efficiencies gained with larger patient cohorts.

The 2012 summary analysis also identified a relationship between the 

program maturity—the time elapsed since sites began expanding their 

treatment programs—and reduced per-patient treatment costs. The 

summary analysis determined that per-patient costs declined an 

estimated 41 percent from 0 to 12 months, and declined an estimated 25 

percent from 12 to 24 months. The majority of country treatment-cost 

studies found that the first year following expansion saw the greatest 

reduction in costs, followed by minor cost reductions in later evaluation 

periods. In each country studied, the expansion of treatment programs 

included one-time investments, such as training and equipment costs, as 

well as ongoing costs, such as personnel and laboratory supplies, that 

were analyzed over time. After the large increase in funding at the 

beginning of the study period, one-time costs fell by the end of the study 

period in all eight countries, ranging from a 9 to 93 percent decline. 

Ongoing costs also fell from the beginning to the end of the evaluation 

period, ranging from a 16 to 59 percent decline. PEPFAR attributes the 

relationship between declining per-patient treatment costs and program 

maturity as due primarily to the reduction in one-time investments and in 

part to fewer resources needed for ongoing investments as the programs 

expanded treatment. Officials also told us that as treatment programs 

mature, experience providing comprehensive HIV treatment can lead to 

program efficiencies—such as maximizing work flow in outpatient 

clinics—that reduce per-patient costs.

As per-patient treatment costs have declined in PEPFAR-supported 

programs, savings have contributed to substantial increases in the 

number of people on ARV treatment, including both people directly 

supported by PEPFAR and those who receive treatment through country 

programs (see fig. 3). Since the end of fiscal year 2008, PEPFAR has 

directly supported ARV treatment for over 3.3 million additional people. 

Program Maturity

As Per-Patient Costs Have 

Declined, PEPFAR Has 

Supported Treatment for 

More People
 

Page 16 GAO-13-345 PEPFAR Treatment Costs

Moreover, in fiscal year 2012 PEPFAR added more people to ARV 

treatment than in any previous year.

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

Notes: The data shown represent our compilation of data reported by PEPFAR country teams and 

data collected by UNAIDS annually. PEPFAR defines direct results as counts of uniquely identified 

individuals receiving ARV treatment services that can be attributed to an ARV treatment intervention 

or activity taking place at a treatment facility that receives PEPFAR support. PEPFAR also makes 

broader contributions to country programs through overall system strengthening and capacity building 

that may occur apart from, or at higher levels than, the actual treatment facilities. PEPFAR reports 

these results based on fiscal year. UNAIDS reports the number of people on ARV treatment in lowand middle-income countries on a calendar-year basis. UNAIDS reported the number for 2011 in 

November 2012. 

a

The number of people on ARV treatment in low-and middle-income countries shown for 2012 is a 

GAO projection based on recent trends. 
 

Page 17 GAO-13-345 PEPFAR Treatment Costs

As a result of the recent increases in the number of people on ARV 

treatment, PEPFAR reports that it has met the requirement in the 2008 

Leadership Act to increase the number of patients on ARV treatment 

proportional to changes in appropriated funds and per-patient treatment 

costs.27

In addition to increasing the number of people it directly supports on ARV 

treatment, PEPFAR has supported partner countries in expanding their 

programs to provide ARV treatment to more people.

PEPFAR calculations indicate that, while funding for PEPFAR 

increased by about 10 percent and average per-patient treatment costs 

declined by almost 67 percent from fiscal year 2008 to 2011, the number 

of people under treatment due to direct PEPFAR support increased by 

125 percent compared with the 2008 baseline. On the basis of these 

results, PEPFAR anticipates that it will continue to exceed the mandated 

treatment targets and is also making progress towards meeting another 

target—set by the President in December 2011—that calls for PEPFAR to 

provide direct support for ARV treatment for more than 6 million people by 

the end of fiscal year 2013.

28 Declining perpatient treatment costs have contributed to the countries’ abilities to 

expand their programs. Additionally, PEPFAR has increased its efforts to 

strengthen the capacity of partner-country programs to deliver treatment 

services. Some country governments are also contributing additional 

resources to treatment programs. As a result, national programs have

also expanded rapidly. For example, in South Africa an estimated 1.7 

million people were on ARV treatment at the end of 2011, almost 1 million 

more than were on ARV treatment at the end of 2008, according to 

UNAIDS data. Similarly, in Kenya almost 540,000 people were on ARV 

treatment at the end of 2011, an increase of almost 290,000 since 2008.

 

27Pub. L. No. 110-293, § 403(3).

28UNAIDS estimates that, in 2011, for the first time, a majority (54 percent) of people in 

low- and middle-income countries who were eligible for ARV treatment received it.
 

Page 18 GAO-13-345 PEPFAR Treatment Costs

PEPFAR expects that total costs for country programs will increase over 

the near term if country treatment programs expand to reach unmet 

needs and adhere to updated international guidelines. PEPFAR’s current 

cost information could help partner countries expand treatment because 

the information is useful for planning and identifies cost-cutting 

opportunities. However, PEPFAR’s cost estimation and expenditure 

analysis approaches have certain limitations—primarily relating to the 

timeliness and comprehensiveness of data—that do not allow PEPFAR to 

capture the full costs of treatment programs.

Despite decreasing per-patient treatment costs, PEPFAR expects that 

country treatment programs will continue to expand to address large 

unmet needs, resulting in increases in total treatment costs. For example, 

in Uganda’s treatment cost study, although the estimated per-patient 

treatment cost in Uganda fell by 53 percent over the course of the 

evaluation, the total site-level costs grew as the program expanded to 

treat more people. As of 2011, Uganda had provided ARV treatment to 

about 290,000 people—half the number of those eligible for ARV 

treatment. In its 2012 country operational plan, Uganda set a goal of 

providing ARV treatment to 347,000 people with direct PEPFAR support. 

Given the magnitude of the unmet need for treatment in Uganda and 

other PEPFAR partner countries, higher treatment goals will continue to 

drive the expansion of treatment programs, and PEPFAR expects this will 

add to the amount of resources required.

PEPFAR partner countries are also considering treatment program 

expansion on the basis of emerging scientific evidence. The new 

evidence demonstrates that ARV treatment can be highly effective not 

only for treating people with HIV but also for preventing HIV-positive 

people from transmitting the virus to others. In early 2012, WHO updated 

its guidance for certain elements of ARV treatment that advises countries 

to expand treatment programs to new groups, which will increase total 

treatment costs. The 2012 updates did not change WHO’s 

recommendations about when to initiate ARV treatment; however, the 

revised guidance described the long-term benefits of expanding eligibility 

for ARV treatment in several categories of HIV-positive people, including 

all pregnant and breastfeeding women and certain high-risk populations, 

PEPFAR Cost 

Information Supports 

Efforts to Expand 

Country Treatment 

Programs but Has 

Limitations

Total Treatment Costs Are 

Expected to Increase over 

the Near Term as More 

People Receive Treatment
 

Page 19 GAO-13-345 PEPFAR Treatment Costs

in order to prevent HIV transmission.29 Some countries are beginning to 

expand eligibility for ARV treatment to some of these groups, particularly 

by initiating lifelong ARV treatment for all HIV-positive pregnant and 

breastfeeding women as part of concerted efforts to eliminate mother-tochild transmission of HIV. UNAIDS estimates that expanding programs to 

these groups would increase the number of people in low- and middleincome countries who are eligible for ARV treatment by over 50 percent, 

from 15 million to 23 million.30

PEPFAR and its partner countries use cost information to plan for 

expanding treatment programs. For example, some of PEPFAR’s country 

treatment-cost studies have projected total costs under different 

scenarios of expanded treatment. Four of the eight country treatment-cost 

studies we reviewed included scenarios that project total costs with 

different patterns and rates of treatment expansion over a 3- or 5-year 

period. For example, Nigeria’s 2009 country treatment-cost study 

projected costs under three scenarios: (1) keeping its treatment targets at 

2008 levels, (2) adding 100,000 patients, and (3) adding more than 

200,000 patients, which represented half of those estimated to need ARV 

treatment in 2008.

The 2008 Leadership Act established the requirement that PEPFAR 

annual reporting include a detailed description of its program monitoring 

activities—defined as the collection, analysis, and use of routine program 

data to assess program implementation and costs.31

 

29WHO recommendations consider options for expanding early initiation of ARV treatment 

in pregnant and breastfeeding women, serodiscordant couples (when one partner is HIV

positive and the other is not), and key populations such as sex workers, people who inject 

drugs, and men who have sex with men.

According to 

PEPFAR and UNAIDS officials, cost information is essential for helping 

low- and middle-income countries meet the challenge of expanding 

treatment. For example, in 2012, a report by UNAIDS officials stressed 

the importance of developing systematic processes—including both 

30WHO also provides estimates that consider adding other treatment guidelines, such as 

increasing the eligibility for ARV treatment for a CD4 count above 350 cells/mm3 or 

including more widespread approach to HIV testing with immediate initiation of ARV 

treatment for those found to be HIV positive. These estimates would increase the number 

of people eligible for ARV treatment to 25 million and 32 million people, respectively.

31Pub. L, No. 110-293, § 301.

PEPFAR Has Detailed Cost 

Information but Needs 

More Timely and 

Comprehensive Data
 

Page 20 GAO-13-345 PEPFAR Treatment Costs

routine cost monitoring and in-depth facility-based cost studies—that 

countries can use to produce robust information on costs at local and 

national levels.32

PEPFAR uses two complementary approaches to analyze costs in the 

programs it supports.

Such information can be used to analyze program costs 

and help identify opportunities for greater efficiency.

33

PEPFAR’s cost estimation approach identifies the costs of providing 

comprehensive HIV treatment services in a partner country, examines the 

range of the costs across delivery sites and types of patients, and 

analyzes the costs over a period of at least 1 year. This approach—and 

the country treatment-cost studies conducted as its primary information 

source—provides valuable information on the costs of delivering 

comprehensive HIV treatment services.

One approach provides comprehensive in-depth 

analysis of treatment costs, while the other approach will provide routine 

monitoring of spending data specific to PEPFAR. However, neither 

approach captures the full costs to country treatment programs of 

meeting increasing demand and resource needs in environments that are 

continually changing.

34 The country treatment-cost 

studies consist of in-depth analysis from patient record data and 

interviews from a selected number of delivery sites—outpatient clinics 

that provide comprehensive HIV treatment services. Each delivery site’s 

data is grouped by cost unit35

 

32See E. J. Beck, C. Avila, S. Gerbase, G. Harling, and P. De Lay, “Counting the Cost of 

Not Costing HIV Health Facilities Accurately,” Pharmacoeconomics, vol. 30, issue 10 

(2012).

and segmented into 6-month periods in 

33A number of other approaches exist to evaluate HIV treatment costs and resources that 

vary in scope and purpose. We previously reported on several of these approaches in 

GAO, Global Health: Trends in U.S. Spending for Global HIV/AIDS and Other Health 

Assistance in Fiscal Years 2001-2008, GAO-11-64 (Washington, D.C.: Oct. 8, 2010). See 

GAO Related Products at the end of this report.

34The per-patient cost of providing comprehensive HIV treatment is based on site data 

from country treatment-cost studies. PEPFAR adjusts these data to current dollars to 

assess how changes in certain costs affect treatment programs. For example, PEPFAR 

officials told us that they apply current ARV drug prices to data collected on ARV drug 

usage from country treatment-cost studies.

35PEPFAR collects data from delivery sites and categorizes the data into cost units. 

PEPFAR’s three broad cost unit categories are for the funding source, how it was spent 

(e.g., personnel, supplies, and equipment), and the type of program activity it was used for 

(e.g., clinical care and supply chain management).

Cost Estimation Approach
 

Page 21 GAO-13-345 PEPFAR Treatment Costs

order to examine ARV drug and non-ARV drug costs over time. Cost 

estimation allows PEPFAR to assess costs to itself and to other funding 

sources—country governments, including Global Fund contributions, and 

other local and international organizations. However, there are three key 

limitations.

First, the cost estimation approach has provided valuable information on 

the costs of delivering comprehensive HIV treatment services, but a lack 

of timely data is a significant limitation, particularly given the rapid pace of 

change in treatment programs. Data for five of the eight country 

treatment-cost studies were collected between April 2006 and March 

2007—before the significant expansion of country treatment programs. 

PEPFAR officials noted that changes in treatment program costs can 

happen too fast to be captured, and because the data collection and 

analysis for country treatment-cost studies are time and resource 

intensive, the reported results from the studies lag behind conditions on 

the ground. PEPFAR collects retrospective data for a determined period 

of time—typically a few months—and analyzes that data for treatment 

costs and results, which requires a period of typically 2 years. For 

example, Nigeria’s treatment-cost study involved data collection at nine 

delivery sites and supporting organizations from April to October 2006, 

but the final report on the results was completed in December 2009. 

Moreover, most country cost estimates included data collected in 6-month 

periods beginning at or around the start of PEPFAR support, thus 

providing cost information on the impact of treatment expansion with 

PEPFAR funds. Only one country treatment-cost study—Kenya’s 2012 

study—covered a time period of data collection that could indicate how 

costs changed after PEPFAR’s increased support of expanded treatment 

programs.

Second, PEPFAR’s cost estimation approach has been limited in the 

scope of information it has provided because of the small number and 

type of delivery sites selected. For seven of the eight country treatmentcost studies, patient record data consist mostly of data that typically were 

collected from nine outpatient clinics per country that received direct or 

indirect PEPFAR support. In addition, PEPFAR reports that the selected 

sites vary in how representative they are of the respective country 
 

Page 22 GAO-13-345 PEPFAR Treatment Costs

program.36

Third, although PEPFAR’s cost estimation process enables it to analyze 

costs at the treatment facility level for PEPFAR and other funding 

sources, it does not include program management costs incurred above 

the facility level. In addition, PEPFAR has identified but not analyzed 

possible cost benefits associated with improved patient outcomes from 

standardization and extended monitoring intervals for stable patients, and 

continued decreases in ARV drug pricing because of better tolerated 

regimens and declines in second-line regimen formulations. Challenges in 

linking cost data to patient outcomes data was identified as a limitation by 

all of the country treatment-cost studies. Information on program 

management costs and outcomes will become increasingly important as 

countries take on additional responsibility for supporting treatment 

delivery and allocating resources across all program sites.

The costs of comprehensive HIV treatment services vary 

among sites because the services provided may differ widely. 

Additionally, services and costs at sites in one country may not represent 

the type of services provided under comprehensive HIV treatment 

available across other PEPFAR partner countries, which makes it difficult 

to identify best practices that can be applied to other programs to 

increase program efficiency. However, PEPFAR’s most recent country 

treatment-cost study (completed in Kenya in October 2012) included 29 

delivery sites and was the first study to use random sampling to select 

sites. PEPFAR officials characterized the study as a representative 

sample of the country’s delivery sites. Separately, limited information is 

available for sites not supported by PEPFAR. Although entities outside 

PEPFAR have conducted studies to estimate treatment costs at different 

sites, PEPFAR reports that these studies have not assessed as many 

services (e.g., services for people living with HIV who are not yet on ARV 

treatment), and, as a result, there were not sufficient, comparable data 

available for a meaningful comparison of costs.

To obtain more timely cost information, PEPFAR began piloting the use of 

expenditure analysis in 2009 to review country-specific PEPFAR 

spending across program activities, including treatment. PEPFAR’s 

expenditure analysis approach involves collecting data from PEPFAR 

implementing partners on amounts that each partner spent to provide 

 

36The number of PEPFAR-supported delivery sites greatly increased as country treatment 

programs expanded. For example, in Ethiopia, the number of PEPFAR-supported delivery 

sites increased from no sites in September 2004 to over 350 sites by September 2008. 

Expenditure Analysis Approach
 

Page 23 GAO-13-345 PEPFAR Treatment Costs

direct or indirect treatment services, and links that spending to the 

numbers of patients receiving support for treatment through the partner. 

The expenditure analysis approach updates costs rapidly and includes 

information on PEPFAR costs above the facility level. Between 2009 and 

2012, PEPFAR completed nine expenditure analysis pilots in eight 

countries.37 PEPFAR officials told us that, during fiscal year 2012, it 

began to use its formal expenditure analysis approach in a different set of 

nine countries,38

Expenditure analysis does not provide a comprehensive picture of 

treatment costs, because it only includes spending by PEPFAR 

implementing partners. Although expenditure analysis enables PEPFAR 

to allocate resources more efficiently by comparing its implementing 

partners, it does not include spending from partner-country resources and 

other funding sources. Because PEPFAR cannot require reporting for 

non-PEPFAR resources, PEPFAR officials stated that using diplomatic 

efforts with country governments has been a priority to enable sharing of 

expenditure data. PEPFAR has reported that the vast majority of patients 

on PEPFAR-supported ARV treatment receive services in the public 

sector (36 of the 43 delivery sites among the five country treatment-cost 

studies completed by 2009 were government-run facilities). As a result, 

cost information across all treatment partners at the facility and country 

level is important for facilitating fully informed discussions among those 

and these analyses were completed and disseminated to 

countries in February 2013. PEPFAR uses expenditure analysis to 

identify spending outliers among its implementing partners. PEPFAR 

officials said they use that information to discuss with implementing 

partners the causes of their relatively high or low expenditures per patient 

and to identify potential efficiencies that other partners can implement. 

For example, in Mozambique—the first country to complete a second 

expenditure analysis—PEPFAR officials found that the variation of perpatient expenditures for non-ARV drug costs narrowed among five 

implementing partners between 2009 and 2011. PEPFAR attributed the 

smaller range of expenditures in part to their ability to use expenditure 

analysis data to stress efficient delivery of services.

 

37For the most part, these expenditure analyses have covered all HIV program areas in a 

given country, but have also been used to focus on expenditures within a particular 

program area, such as treatment.

38The formal expenditure analysis approach includes an approved methodology that 

includes all program areas. 
 

Page 24 GAO-13-345 PEPFAR Treatment Costs

partners about current and future resource allocation. (The features of 

PEPFAR’s cost estimation and expenditure analysis approaches for 

obtaining cost information are described in table 2.)

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

Information 

Approach 

feature Cost estimation Expenditure analysis

Scope Country treatment-cost studies capture facility-level costs to 

PEPFAR, country government, and other funding sources 

Analysis captures PEPFAR implementing partner 

spending and includes costs above the facility level 

Time frame Delivery site data are captured for a period of at least 1 year 

in a retrospective analysis 

Data are captured as part of a rapid assessment 

covering a period of 1 year

Methodology In-depth analysis in country treatment-cost studies of cost 

units collected from patient records compared across 6-

month segments

Collects data on PEPFAR implementing partners’ 

spending to provide direct or indirect treatment 

services and links that spending to numbers of 

patients receiving support for treatment through that 

partner

Output Cost estimates of country’s comprehensive HIV treatment 

services to examine ARV drug and non-ARV drug costs 

over time 

Rapid analysis of expenditures across implementing 

partners to target and address outliers

Key limitations Lack of timely data due to resource-intensive data collection 

and analysis; a limited number and type of delivery sites 

included; does not include certain costs, such as above 

facility-level costs

Only includes spending by PEPFAR implementing 

partners 

Source: GAO analysis of PEPFAR documentation.

Each of PEPFAR’s complementary approaches provides cost information 

that can help countries to plan for the efficient expansion of treatment 

programs, and PEPFAR has made some plans to strengthen each 

approach. As of February 2013, PEPFAR was preparing three additional 

country treatment-cost studies, including a follow-up study in Tanzania—

PEPFAR’s first repetition of a study in a partner country. In addition, 

PEPFAR has shortened the time frame for examining costs, compared 

with the time frames for earlier studies. In the Kenya, Mozambique, and 

Tanzania treatment-cost studies that were completed in 2011 and 2012, 

the data collection period for all facilities was a maximum of 1 year (or two 

6-month periods). PEPFAR officials told us that cost estimation is 

important for identifying cost drivers, especially because it includes nonPEPFAR costs and can be used to develop cost projections for various 

treatment scenarios. However, because the studies are in-depth 

analyses, requiring extensive field work, they will continue to be time and 

resource intensive. PEPFAR officials told us that conducting country 

treatment-cost studies more regularly has not been their highest priority; 

they noted that their efforts have been focused on implementing 
 

Page 25 GAO-13-345 PEPFAR Treatment Costs

processes for routine expenditure analysis in PEPFAR partner countries. 

Although PEPFAR has taken steps to strengthen cost estimation, country 

treatment-cost studies have been conducted in only a small number of 

countries (eight partner countries) and delivery sites (usually about nine 

clinics per country). In addition, although PEPFAR-supported treatment 

programs are changing rapidly, for five of the eight studies that have been 

completed, data were collected between 2006 and 2007. PEPFAR 

currently does not have a plan for systematically conducting or repeating 

country treatment-cost studies, as appropriate, in partner countries. 

Without such a plan, PEPFAR may be missing opportunities to identify 

potential savings, which are critical for expanding HIV treatment programs 

to those in need.

Using the expenditure analysis approach to obtain more rapid cost 

information to inform planning efforts by country teams addresses the 

timeliness limitations of the country treatment-cost studies, but does not 

capture non-PEPFAR costs. However, PEPFAR officials told us that nonPEPFAR spending data are difficult to obtain because the budget 

processes of each partner are often not aligned and country systems may 

not be structured to aggregate HIV-specific data. For example, in an 

expenditure analysis pilot in Guyana, officials said that aligning 

expenditure categories across all treatment partners (PEPFAR, Global 

Fund, and Guyana Ministry of Health) was a time-consuming process 

requiring negotiation with the country government on the level of 

alignment needed. PEPFAR reports that it has engaged with country 

governments and multilateral partners to address the ability to capture full 

country-expenditure data. Further, it has begun collaborating with up to 

three countries to obtain expenditure data for the full country program 

during 2013. Although we recognize the difficulties involved in capturing 

non-PEPFAR expenditures, these spending data are important for 

decision makers as countries take on additional responsibility for 

allocating resources. PEPFAR officials told us that, by the end of fiscal 

year 2014, they plan to roll out formal expenditure analysis to all PEPFAR 

countries as part of annual reporting requirements; however, they said 

there are no current plans to routinely capture non-PEPFAR costs in 

those analyses. Without comprehensive data on expenditures, PEPFARsupported programs will not be fully informed when making decisions 

about how to allocate resources.
 

Page 26 GAO-13-345 PEPFAR Treatment Costs

The 2008 Leadership Act requires that more than half of PEPFAR funds 

be used to support specific aspects of treatment and care for people living 

with HIV.39 Using an OGAC-developed budgetary formula, PEPFAR has 

met this treatment spending requirement. Since PEPFAR was 

reauthorized in 2008, PEPFAR country teams’ budgets allocated to 

capacity building have increased. However, funding for capacity building 

is excluded from OGAC’s formula. OGAC currently does not have a 

methodology to account for the extent to which these funds contribute to 

HIV treatment and care. As a result, it is not possible to determine the full 

amount of PEPFAR funds that are allocated to support the HIV treatment 

and care services identified in the spending requirement.

Using a budgetary formula that OGAC developed, PEPFAR has met the 

treatment spending requirement each year since reauthorization. The 

2008 Leadership Act required that, for each of fiscal years 2009 through 

2013, more than half of the funds appropriated to PEPFAR be expended 

for specific elements of HIV treatment and care.40 In implementing this 

requirement, OGAC refers to the budget for these spending categories as 

the budget for “treatment and care of people living with HIV.” OGAC 

divides the budget for “treatment and care of people living with HIV” by 

total country team funds budgeted under the Treatment, Care, and 

Prevention program areas. OGAC guidance defines the formula used to 

implement the spending requirement as follows:41

Budgets for “treatment and care for people living with HIV”

>= 50%

(Budgets for Treatment + Care + Prevention program areas)

To determine the amount of the PEPFAR budget that constitutes 

“treatment and care for people living with HIV,” OGAC sums the amounts 

 

39Pub. L. No. 110-293, § 403.

40Section 403 of the 2008 Leadership Act required that, for each of fiscal years 2009 

through 2013, more than half of the funds appropriated pursuant to section 401 of the act 

shall be expended for (1) ARV treatment; (2) clinical monitoring of HIV-positive people not 

in need of ARV treatment; (3) care for associated opportunistic infections; (4) nutrition and 

food support for people living with HIV; and (5) other essential HIV-related medical care

for people living with HIV. Pub. L. No. 110-293, § 403.

41PEPFAR Fiscal Year 2012 Country Operational Plan (COP) Guidance (Washington, 

D.C.: 2011), p.28.

Using OGAC’s 

Budgetary Formula, 

PEPFAR Has Met the 

Treatment Spending 

Requirement, but the 

Formula Does Not 

Fully Account for All 

Funds

Using OGAC’s Budgetary 

Formula, PEPFAR Has Met 

the Treatment Spending 

Requirement
 

Page 27 GAO-13-345 PEPFAR Treatment Costs

allocated by all country teams each year to six of the seven budget codes 

within the Treatment and Care program areas (see app. II for more details 

regarding this calculation).

PEPFAR budget data indicate that, using OGAC’s budgetary formula, the 

program met the spending requirement each year since reauthorization. 

Between fiscal years 2008 and 2012, the calculated budget for “treatment 

and care for people living with HIV” ranged from approximately 54 to 52 

percent of total budgets for the Treatment, Care, and Prevention program 

areas.

OGAC’s budgetary formula implementing the treatment spending 

requirement does not account for the increasing proportion of funds that 

PEPFAR country teams have allocated to country capacity building. The 

2008 Leadership Act identifies health capacity building in order to 

promote the transition toward greater sustainability through country 

ownership as one of the purposes of the law. Consistent with this 

principle, PEPFAR country teams have increased investments to 

strengthen country health systems. These funds, which are typically 

allocated in the “Other” program area budget codes—health systems 

strengthening, strategic information, and laboratory infrastructure—are 

excluded from OGAC’s budgetary formula. However, from fiscal year 

2008 to fiscal year 2012, country team budgets for the Other program 

area increased from $574 million to $710 million. Over the same time 

frame, OGAC-defined budgets for “treatment and care for people living 

with HIV” declined from about $1.8 billion to $1.4 billion. Total budgets for 

the Treatment, Care, and Prevention program areas were relatively 

constant from fiscal year 2008 to 2011 but declined to $2.6 billion in fiscal 

year 2012. (See fig. 4.) By fiscal year 2012, budgets in the Other program 

area represented more than 21 percent of all program area budgets, up 

from about 15 percent in fiscal year 2008.

Current Budgetary 

Formula Does Not

Account for Increased 

Proportion of Funding 

Allocated to Country 

Capacity Building
 

Page 28 GAO-13-345 PEPFAR Treatment Costs

Figure 4: Components of Approved PEPFAR Country Budgets Accounted for and Not Accounted for in OGAC Budgetary 

Formula, Fiscal Years (FY) 2008 to 2012

a

The OGAC-defined budget for “treatment and care for people living with HIV” includes PEPFAR 

country team budgets for adult treatment, pediatric treatment, ARV drugs, adult care and support, 

pediatric care and support, and TB/HIV. 

b

“Budgets for Treatment, Care, and Prevention program areas” includes total PEPFAR country team 

budgets for those program areas. 

c

“Other subtotal” includes budget codes for health systems strengthening, laboratory infrastructure, 

and strategic information. 

OGAC officials told us that the current budgetary formula was developed 

based on OGAC’s interpretation of the intent of the treatment spending 

requirement. Calculating the proportion of funds allocated to specific 

activities as a percentage of total country budgets allocated to the 

Treatment, Care, and Prevention program areas—excluding budgets for 

the Other program area—is consistent with the methods OGAC used to 

track spending under the first PEPFAR authorization. OGAC officials said 

that this approach allows OGAC to isolate budgeted funds that support 

the direct services that PEPFAR delivers to patients at the facility level, 
 

Page 29 GAO-13-345 PEPFAR Treatment Costs

consistent with PEPFAR’s early focus on directly delivering treatment 

services as part of a broad emergency response.

As PEPFAR’s role in each country has evolved, the components of 

PEPFAR country team budgets that contribute to the HIV treatment and 

care services specified in the spending requirement have also evolved. 

However, some of those funds are not accounted for in the current 

budgetary formula. In particular, although budgets allocated to capacity 

building have increased, those funds are not accounted for in either 

component of OGAC’s budgetary formula: the budget for “treatment and 

care for people living with HIV” or the total budgets for the Treatment, 

Care, and Prevention program areas. Some capacity-building efforts, 

such as enhancements to drug supply chain systems that are budgeted 

under health systems strengthening, also contribute to HIV treatment and 

care services. Other health systems strengthening activities may have a 

less direct effect on those services.42

OGAC officials told us that they currently do not have an agreed 

methodology that would allow them to determine the extent to which 

funds for capacity building, or certain prevention activities, contribute 

directly to HIV treatment and care. As a result, it is currently not possible 

to determine accurately the proportion of total country budgets that 

support the services specified in the treatment spending requirement, if 

the contributions of PEPFAR country teams’ capacity-building and 

prevention budgets are taken into account. OGAC officials acknowledged 

that as PEPFAR continues to evolve, addressing the challenge of 

accounting for the contributions that funds from budgets for capacity 

building and prevention make to HIV treatment and care programs may 

Moreover, OGAC officials said that 

some funds budgeted for prevention activities—particularly funds for 

prevention of mother-to-child transmission of HIV that cover ARV 

treatment and care services for HIV-positive pregnant and breastfeeding 

women—also contribute to HIV treatment and care services. Those 

contributions are likewise not accounted for in the calculated budget for 

“treatment and care for people living with HIV.” 

 

42PEPFAR guidance says that the health systems strengthening budget code should 

generally be used to capture capacity-building efforts at national, regional, or district 

levels. It also says that some capacity-building activities that are specific to one program 

area—such as treatment-specific laboratory capacity—should be budgeted under their 

respective program area. OGAC allows country teams flexibility in determining how to 

allocate activities within program areas and budget codes.
 

Page 30 GAO-13-345 PEPFAR Treatment Costs

require revisions to the current budgetary formula. However, the 

treatment spending requirement expires at the end of September 2013.

PEPFAR has supported rapid expansion of HIV programs since 2008, 

providing direct support for more than half of the estimated 8 million 

people on ARV treatment in low- and middle-income countries. Data from 

the last 4 years indicate that the growth in treatment programs is 

accelerating. Substantial declines in the costs of providing treatment to 

each individual have contributed to recent accomplishments. Despite this 

progress, there is substantial unmet need. More than 15 million people 

are estimated to be eligible for ARV treatment based on current WHO 

guidelines. Moreover, 23 million would be eligible if programs expanded 

eligibility to include groups such as all pregnant and breastfeeding women 

and certain high-risk populations, consistent with recommendations in 

recent updates to WHO guidelines.

In order for the country programs that PEPFAR supports to be able to 

expand to meet these needs, it will be important that they maximize how 

efficiently they use available resources. Given the scale of the unmet 

need, countries’ plans to expand HIV treatment may continue to drive up 

the total costs of providing treatment even if per-patient treatment costs 

further decline. Each country’s ability to expand treatment, then, hinges 

on thorough planning based on data-driven analyses of the cost of 

delivering the full scope of comprehensive HIV treatment services. This is 

a complex task as cost inputs often cut across PEPFAR budget codes, 

and costs are incurred by PEPFAR and other donors, partner-country 

governments, and multilateral partners. Although PEPFAR has used its 

cost estimation and expenditure analysis approaches to assist countries’ 

planning efforts and describe opportunities for savings, treatment costs 

have not yet been fully studied. In particular, existing data are not always 

timely, come from a limited number of sites in select countries, and do not 

always capture non-PEPFAR costs. Thus, PEPFAR may be missing 

opportunities to identify further savings. Given the rapid pace of change in 

PEPFAR-supported programs, effectively identifying potential savings 

requires more timely and comprehensive information on treatment costs 

than PEPFAR’s approaches currently provide.

The 2008 Leadership Act has required PEPFAR to spend half of the 

funds appropriated to PEPFAR on specific HIV treatment and care 

services and has also set a major policy goal of promoting country 

ownership. Using OGAC’s budgetary formula, PEPFAR has met the 

current spending requirement. Over the same time frame, PEPFAR funds 

Conclusions
 

Page 31 GAO-13-345 PEPFAR Treatment Costs

have been devoted increasingly to building country capacity. However, 

because OGAC cannot fully account for the contributions that its country 

capacity building activities have made to the HIV treatment and care

services identified in the treatment spending requirement, it cannot 

provide complete information on how PEPFAR funds are being allocated 

to meet both the treatment spending requirement and the goal of 

promoting country ownership. The current treatment spending 

requirement, however, is in effect only until September 30, 2013, when it 

expires.

To improve PEPFAR’s ability to help countries expand their HIV treatment 

programs to address unmet need, and do so through the efficient 

allocation of resources and effective program planning, the Secretary of 

State should direct PEPFAR to develop a plan to do the following:

• systematically expand the use of country treatment-cost studies to 

additional sites and partner countries, where it is cost-effective to do 

so, to help estimate costs and examine country-specific 

characteristics of comprehensive HIV treatment that may result in cost 

savings; and

• work with partner countries, where feasible, to broaden PEPFAR’s 

expenditure analysis to capture treatment costs across all partners 

that support each country program and develop more timely 

information on the full costs of comprehensive HIV treatment.

We provided a draft of this report to State, USAID, and HHS’s CDC for 

comment. Responding jointly with CDC and USAID, State provided 

written comments, reproduced in appendix III. In its comments, State 

agreed with our findings and conclusions and concurred that high-quality 

information on costs and expenditures is vital for program management. 

State’s comments also emphasized that, because in-depth cost studies 

are time- and resource-intensive to conduct, those studies should be 

complemented with more timely data from expenditure analysis to help 

ensure that PEPFAR-supported programs have a portfolio of information 

that can be used to inform program decision making. In response to our 

first recommendation, State commented that PEPFAR is developing 

guidance on an optimal schedule for evaluating costs—at the country 

level and across the program—to balance in-depth analysis with more 

timely data from expenditure analyses. This approach is consistent with 

our recommendation that PEPFAR develop a plan to expand country 

treatment-cost studies where it is cost effective to do so. In response to 

Recommendations for 

Executive Action

Agency Comments 

and Our Evaluation
 

Page 32 GAO-13-345 PEPFAR Treatment Costs

our second recommendation, State agreed that expenditure analysis 

would be more valuable if it included non-PEPFAR spending, but noted 

that PEPFAR cannot compel its partners to routinely report on their 

spending. However, State said that PEPFAR designed its expenditure 

analysis approach so that it can be adapted to capture spending from 

other partners. Moreover, State commented that in the last year PEPFAR 

has collaborated with multilateral partners in up to three countries to plan 

expenditure analyses that will capture non-PEPFAR spending. While we 

recognize that PEPFAR cannot require its partners to report on their 

spending, because HIV treatment costs are increasingly supported 

through a mix of funding from PEPFAR, other donors, partner-country 

governments, and multilateral partners such as the Global Fund, it is 

critical that PEPFAR continue exploring opportunities to work with 

partners, where feasible, to broaden the use of expenditure analysis. In 

addition, State and CDC each provided technical comments that were 

incorporated, as appropriate.

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Secretary of State and 

the U.S. Global AIDS Coordinator. The report also will be available at no 

charge on the GAO website at http://www.gao.gov. 

If you or your staff have any questions about this report, please contact 

me at (202) 512-3149 or gootnickd@gao.gov, or contact Marcia Crosse at 

(202) 512-7114 or crossem@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 
 

Page 33 GAO-13-345 PEPFAR Treatment Costs

of this report. GAO staff who made major contributions to this report are 

listed in appendix IV.

David Gootnick

Director, International Affairs and Trade

Marcia Crosse

Director, Health Care
 

Page 34 GAO-13-345 PEPFAR Treatment Costs

List of Requesters

The Honorable Lamar Alexander

Ranking Member

Committee on Health, Education, Labor, and Pensions

United States Senate

The Honorable Tom Coburn, MD

Ranking Member

Committee on Homeland Security and Governmental Affairs

United States Senate

The Honorable Richard Burr

Ranking Member

Subcommittee on Primary Health and Aging

Committee on Health, Education, Labor, and Pensions

United States Senate

The Honorable Michael B. Enzi

Ranking Member

Subcommittee on Children and Families

Committee on Health, Education, Labor, and Pensions

United States Senate

The Honorable Johnny Isakson

Ranking Member

Subcommittee on Employment and Workplace Safety

Committee on Health, Education, Labor, and Pensions

United States Senate
Appendix I: Objectives, Scope, and 

Methodology

Page 35 GAO-13-345 PEPFAR Treatment Costs

In this report, we examine

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

implementation;

2. how PEPFAR’s cost information supports countries’ efforts to expand 

treatment; and

3. how PEPFAR has met the treatment spending requirement.

To describe how per-patient costs have changed and their effect on 

program implementation in treatment programs supported by the 

President’s Emergency Plan for AIDS Relief (PEPFAR), we focused our 

work on PEPFAR’s reported trends in cost information relating to fiscal 

years 2005 through 2011. We also reviewed agency documents on 

PEPFAR’s detailed cost estimation approach, results from eight country 

treatment-cost studies,1

 

1

As of February 2013, country treatment-cost studies had been completed in Botswana, 

Ethiopia, Kenya, Mozambique, Nigeria, Tanzania, Uganda, and Vietnam. 

and summary information that PEPFAR has 

published on available cost estimates and characteristics of HIV 

treatment programs. These included two PEPFAR reports summarizing 

estimated per-patient treatment for fiscal years 2010 and 2011, including 

how the estimates varied across partner countries. Separately, we 

analyzed data on PEPFAR’s antiretroviral (ARV) drug purchases in fiscal 

years 2005 through 2011 to identify trends in drug prices across 

PEPFAR-supported countries. We also reviewed PEPFAR’s estimates for 

savings attributable to purchasing generic ARV products. To assess the 

reliability of the ARV drug data used in our analysis, we interviewed 

PEPFAR officials and officials from a supply chain contractor that 

manages the bulk of PEPFAR’s ARV drug purchases and collects data 

annually on almost all ARV purchases by PEPFAR implementing 

partners. We also reviewed documentation on their data collection 

processes. Finally, we performed checks, such as examining the data for 

missing values and discussing the results of our analyses with officials 

responsible for the data. On the basis of these steps, we determined that 

the ARV drug data were sufficiently reliable for our purposes. In addition, 

we conducted field work in three PEPFAR partner-countries—Kenya, 

South Africa, and Uganda—in June 2012 to obtain information costing 

activities and challenges faced in implementing treatment programs. We 

selected these countries on the basis of program size, estimates of HIV 

disease burden, travel logistics, and other factors. We interviewed key 

Appendix I: Objectives, Scope, and 

Methodology 
Appendix I: Objectives, Scope, and 

Methodology

Page 36 GAO-13-345 PEPFAR Treatment Costs

implementing partners, technical experts in costing methodology, and incountry officials and reviewed documentation from the selected countries. 

Finally, we examined trends in the number of patients treated in 

PEPFAR-supported country treatment programs, including PEPFAR data 

reported by its country teams as well as global figures from the Joint 

United Nations Programme on HIV/AIDS (UNAIDS). On the basis of our 

reviews of documentation for these data as well as interviews with 

PEPFAR officials, we determined that the data were sufficiently reliable 

for our purposes.

To describe how PEPFAR’s cost information supports countries’ efforts to 

expand treatment, we assessed the timeliness and completeness of 

information generated through PEPFAR’s cost estimation and 

expenditure analysis approaches. Specifically, we assessed PEPFAR’s 

cost estimation approach and eight country treatment-cost studies for 

their ability to provide key information for program planning and resource 

allocation. We assessed PEPFAR’s expenditure analysis approach by 

examining PEPFAR documentation on expenditure analysis and results 

to date. We also interviewed PEPFAR officials about the strengths and 

weaknesses of the cost estimation and expenditure analysis approaches, 

and any plans to revise these approaches. In addition, we reviewed 

PEPFAR country operational plans and country treatment-cost studies for 

information on expected cost trends and country goals for expanding 

treatment programs. Last, we reviewed World Health Organization (WHO) 

HIV treatment guidelines and their impact on the estimated number of 

people requiring treatment as country programs expand.

To describe how PEPFAR has met the treatment spending requirement in 

the Tom Lantos and Henry J. Hyde United States Global Leadership 

Against HIV/AIDS, Tuberculosis, and Malaria Reauthorization Act of 2008 

(2008 Leadership Act),2 we reviewed applicable authorizing language, 

PEPFAR strategy and guidance documents,3

 

2

Pub. L. No. 110-293, § 403. 

PEPFAR country 

operational plans, and approved PEPFAR country operational plan 

3

See: Department of State, Office of the U.S. Global AIDS Coordinator, PEPFAR 

Blueprint: Creating an AIDS-free Generation (Washington, D.C.: November 2012); The 

U.S. President’s Emergency Plan for AIDS Relief: 5-year Strategy (Washington, D.C.: 

December 2009); PEPFAR Fiscal Year 2012 Country Operational Plan (COP) Guidance 

(Washington, D.C.: August 2011); PEPFAR Fiscal Year 2013 Country Operational Plan 

(COP) Guidance, Version 2.0 (Washington, D.C.: October 2012).
Appendix I: Objectives, Scope, and 

Methodology

Page 37 GAO-13-345 PEPFAR Treatment Costs

budget data for fiscal years 2008 through 2012. We interviewed PEPFAR 

budget officials about the budget data to ensure the completeness of the 

data and discuss any changes in budget methodology over time. We also 

interviewed OGAC officials regarding the budgetary formula that OGAC 

uses to implement the treatment spending requirement.
Appendix II: PEPFAR Program Areas, Budget 

Codes, and Budgetary Formula for Treatment 

Spending Requirement 

Page 38 GAO-13-345 PEPFAR Treatment Costs

PEPFAR support for country programs is categorized into four broad 

program areas—Treatment, Care, Prevention, and Other—each 

comprising multiple budget codes. The types of services captured within 

each program area and the associated budget codes are shown in table 3 

below.

Table 3: PEPFAR Program Areas and Associated Budget Codes 

Program area Summary of services Budget codesa

Treatment Clinical and laboratory services for adult and pediatric patients who 

have initiated antiretroviral (ARV) treatment

Adult treatment

ARV drugs

Pediatric treatment

Care Clinical, laboratory, and support services for adult and pediatric 

patients and their families throughout the continuum of illness; care and 

support services needed to treat HIV-positive patients with a 

tuberculosis (TB) co-infection; and support services for orphaned and 

vulnerable children

Adult care and support

Orphans and vulnerable children

Pediatric care and support

TB/HIV

Prevention Interventions that prevent HIV infection, such as prevention of motherto-child transmission, medical male circumcision, and HIV counseling 

and testing

Prevention of mother-to-child transmission 

Abstinence/be faithful

Other sexual prevention

Blood safety

Counseling and testing

Injection safety

Voluntary medical male circumcision

Injecting and non-injecting drug use

Other Health systems strengthening activities that contribute to national, 

regional, or district systems, such as support for strengthening 

institutional capacity, supply chain or procurement systems, and donor 

coordination; strengthening laboratory networks, facilities, quality 

assurance, and staff training; and building country capacity for 

surveillance, monitoring, reporting, and establishing and/or 

strengthening national health information systems.

Health systems strengthening

Laboratory infrastructure

Strategic information

Source: GAO analysis of PEPFAR documents.

a

We analyzed PEPFAR country operational plan guidance and budget data. We categorized the 

budget codes within various program areas based on fiscal year 2012 country operational plan 

guidance. In previous years, certain budget codes have been included in a different program area. 

For example, in fiscal year 2009 laboratory infrastructure was part of Treatment, but since fiscal year 

2010 it has been budgeted under the Other program area. 

Section 403 of the 2008 Leadership Act required that, in each fiscal year, 

more than half of the funds appropriated pursuant to section 401 of the 

act shall be expended for the following: (1) ARV treatment; (2) clinical 

monitoring of HIV-positive people not in need of ARV treatment; (3) care 

for associated opportunistic infections; (4) nutrition and food support for 

Appendix II: PEPFAR Program Areas, Budget 

Codes, and Budgetary Formula for Treatment 

Spending Requirement

PEPFAR Budgetary 

Formula for Treatment 

Spending Requirement
Appendix II: PEPFAR Program Areas, Budget 

Codes, and Budgetary Formula for Treatment 

Spending Requirement

Page 39 GAO-13-345 PEPFAR Treatment Costs

people living with HIV; and (5) other essential HIV-related medical care 

for people living with HIV.1

OGAC refers to the budget for the five spending categories delineated in 

section 403 of the act as the budget for “treatment and care of people 

living with HIV.” OGAC divides the total amount of spending within these 

categories by total country team funds budgeted under the Treatment, 

Care, and Prevention program areas. OGAC guidance defines the 

formula used to implement the spending requirement as follows:2

Budgets for “treatment and care for people living with HIV”

>= 50%

(Budgets for Treatment + Care + Prevention program areas)

To determine the amount of the PEPFAR budget that constitutes 

“treatment and care for people living with HIV,” OGAC sums the amounts 

allocated by all country teams each year within six of the seven budget 

codes within the Treatment and Care program areas:

• adult treatment,

• adult care and support,

• ARV drugs,

• pediatric treatment,

• pediatric care and support, and

• TB/HIV.

3

 

1

Pub. L. No. 110-293, § 403.

2

PEPFAR Fiscal Year 2012 Country Operational Plan (COP) Guidance (Washington, 

D.C.: 2011), p.28.

3

The formula does not include the budget code for orphans and vulnerable children within 

the Care program area, in part because there is a separate spending requirement specific 

to budgets for services for orphans and vulnerable children. 
Appendix III: Comments from the Department 

of State

Page 40 GAO-13-345 PEPFAR Treatment Costs

Appendix III: Comments from the 

Department of State
Appendix III: Comments from the Department 

of State

Page 41 GAO-13-345 PEPFAR Treatment Costs
Appendix III: Comments from the Department 

of State

Page 42 GAO-13-345 PEPFAR Treatment Costs
Appendix IV: GAO Contacts and Staff 

Acknowledgments

Page 43 GAO-13-345 PEPFAR Treatment Costs

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

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

In addition to the contact named above, Jim Michels, Assistant Director; 

Chad Davenport; E. Jane Whipple; David Dayton; Fang He; Todd M. 

Anderson; Kay Halpern; Brian Hackney; Erika Navarro; Katy Forsyth; 

Grace Lui; and Etana Finkler made key contributions to this report.

Appendix IV: GAO Contacts and Staff 

Acknowledgments 

GAO Contacts

Staff 

Acknowledgments
Related GAO Products

Page 44 GAO-13-345 PEPFAR Treatment Costs

President’s Emergency Plan for AIDS Relief: Agencies Can Enhance 

Evaluation Quality, Planning, and Dissemination. GAO-12-673. 

Washington, D.C.: May 31, 2012.

President’s Emergency Plan for AIDS Relief: Program Planning and 

Reporting. GAO-11-785. Washington, D.C.: July 29, 2011.

Global Health: Trends in U.S. Spending for Global HIV/AIDS and Other 

Health Assistance in Fiscal Years 2001-2008. GAO-11-64. Washington, 

D.C.: October 8, 2010.

President’s Emergency Plan for AIDS Relief: Efforts to Align Programs 

with Partner Countries’ HIV/AIDS Strategies and Promote Partner 

Country Ownership. GAO-10-836. Washington, D.C.: September 20, 

2010.

President’s Emergency Plan for AIDS Relief: Partner Selection and 

Oversight Follow Accepted Practices but Would Benefit from Enhanced 

Planning and Accountability. GAO-09-666. Washington, D.C.: July 15, 

2009.

Global HIV/AIDS: A More Country-Based Approach Could Improve 

Allocation of PEPFAR Funding. GAO-08-480. Washington, D.C.: April 2, 

2008.

Global Health: Global Fund to Fight AIDS, TB and Malaria Has Improved 

Its Documentation of Funding Decisions but Needs Standardized 

Oversight Expectations and Assessments. GAO-07-627. Washington, 

D.C.: May 7, 2007.

Global Health: Spending Requirement Presents Challenges for Allocating 

Prevention Funding under the President’s Emergency Plan for AIDS 

Relief. GAO-06-395. Washington, D.C.: April 4, 2006.

Global Health: The Global Fund to Fight AIDS, TB and Malaria Is 

Responding to Challenges but Needs Better Information and 

Documentation for Performance-Based Funding. GAO-05-639. 

Washington, D.C.: June 10, 2005.

Global HIV/AIDS Epidemic: Selection of Antiretroviral Medications 

Provided under U.S. Emergency Plan Is Limited. GAO-05-133. 

Washington, D.C.: January 11, 2005.

Related GAO Products
Related GAO Products

Page 45 GAO-13-345 PEPFAR Treatment Costs

Global Health: U.S. AIDS Coordinator Addressing Some Key Challenges 

to Expanding Treatment, but Others Remain. GAO-04-784. Washington, 

D.C.: June 12, 2004.

Global Health: Global Fund to Fight AIDS, TB and Malaria Has Advanced 

in Key Areas, but Difficult Challenges Remain. GAO-03-601. Washington, 

D.C.: May 7, 2003.

(320875)
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