Executive summary for Economics of Malaria
Ctr for Int'l Development, Harvard University and the London School of Hygiene and Tropical Medicine

Economic analyses indicate that the burden of malaria is great

Malaria takes an enormous toll on human health and well-being, in tropical regions including Africa south of the Sahara, South and Southeast Asia, Oceania, and parts of the Americas. In many of these regions, the burden has been increasing even further in recent years.

The costs of malaria are also enormous when measured in economic terms. Highly malarious countries are among the very poorest in the world, and typically have very low rates of economic growth; many have experienced outright declines in living standards in the past thirty years. Malaria has played a significant role in the poor economic performance of these countries.

Malaria imposes a heavy cost not only on a country's current income, but also on its rate of its economic growth, and therefore on its level of economic development in the long run.

The evidence strongly suggests that malaria obstructs overall economic development. Statistical analysis shows that during the period 1965-1990, highly malarious countries suffered a growth penalty of more than one percentage point per year (compared with countries without malaria), even after taking into account the effects of economic policy and other factors that also influence economic growth. The annual loss of growth from malaria is estimated to range as high as 1.3 percentage points per year. If this loss is compounded for fifteen years, the GNP level in the fifteenth year is reduced by nearly a fifth, and the toll continues to mount with time. (see table 1)

These considerations indicate that the cost of malaria is substantially greater than economists have previously estimated. Traditional estimates have looked at some of the short-run costs of malaria without taking into account the longer-term effects of malaria on economic growth and development. Short-run costs— including lost work time, economic losses associated with infant and child mortality and morbidity, and the costs of treatment and prevention— are typically estimated to be higher than one percent of a country’s gross national product.

Traditional analyses have underestimated the short-run costs of malaria.

These estimates, however, neglect many other short-run costs. For instance, very few studies include the economic costs of the pain and suffering associated with the disease. Yet researchers have found that households might be willing to pay several times the direct income loss caused by malaria in order to avoid it, suggesting that the pain, suffering and uncertainty associated with the disease is very high and should certainly be included among its short-term costs.

Furthermore, these short-run costs are likely to have risen in recent years due to the increasing number and complexity of cases in many countries. Moreover, the spread of drug-resistant malaria is substantially raising the costs of treatment in many cases, as well as the burdens of morbidity and mortality. Children and adults needing blood transfusions due to malaria are too often inadvertently infected with HIV, hepatitis C virus, and other infectious agents which taint the blood supply.

Furthermore, these analyses have completely neglected the long-run costs.

Beyond these high and rising short-run costs, malaria impedes economic growth and long-term development in many ways. Malaria may impede the flows of trade, foreign investment, and commerce, thereby affecting a country’s entire population. Multinational firms choosing the location of foreign investments shun regions with high malaria, as might many potential tourists. Also, the economic effect of malaria on infected individuals may greatly exceed the direct costs of any single episode of the disease. Repeated bouts of malaria tend to hinder a child’s physical and cognitive development, and may reduce a child’s attendance and performance at school. Furthermore, repeated bouts of malaria may expose individuals to chronic malnutrition, anemia and to increased vulnerability to other diseases.

Malaria may have adverse demographic consequences as well. Malaria substantially raises the chances of infant and child mortality. Households respond to this increased risk by having more children, thereby increasing the overall rate of population growth. In addition, the investments which parents of many children can afford to make in the well-being of each child is limited— so that average levels of health care and education per child tend to be reduced. Moreover, mothers of large numbers of children are less able to participate in the formal labor force, thereby also reducing the household income.

Malaria interventions should be an important part of poverty alleviation.

Individual households in malarious regions do not escape the risk of malaria infection simply by being relatively well off. In surveys of households from 22 countries in Africa, no correlation could be found between the incidence of childhood fever in households and their relative wealth. Malaria is not a simple consequence of poverty. The wealth of the household, however, does play a substantial role in determining whether a child receives treatment for fever and influences the kind of treatment. Poor families very often lack the resources to obtain proper treatment of the disease even in complicated and life-threatening cases. Poverty alleviation strategies should therefore recognize the importance of effective antimalaria interventions, since the poor by themselves are unable to escape the burdens of the disease.

The burden of malaria is very high and rising. Short-term costs alone are likely to result in economic losses of several percent of GDP in a single year. Moreover, malaria hinders long-term economic growth, so that the burden of the disease increases over time as countries are deprived of the rise in living standards that they would experience if not for malaria.

There are important differences in malaria across regions and countries

The patterns and costs of malaria incidence are highly place-specific.

No single biological, economic or political reason can be adduced for the observed patterns and trends in malaria transmission. No single intervention, therefore, is appropriate in all contexts. Interventions should be adapted to specific local ecological, epidemiological, economic, and social conditions. Even the goals of malaria interventions should be place-specific.

The effects of human behavior on malaria are similarly place-specific. Anthropogenic changes such as deforestation, road-construction and agricultural development often increase the intensity of malaria transmission. But the specific effects of such ecological disturbances vary from place to place, due to geographical diversity in the biology of the mosquitoes that transmit the disease.

Any drug therapy strategy should be designed to minimize the threat of resistant parasites. Specific strategies, however, must be tailored to the patient, the community and the region in which they are employed. The selection of drugs and treatment protocols must be based on reliable clinical and epidemiological assessments of efficacy.

Therefore, the patterns of incidence of malaria, and the costs associated with it, are different in different contexts. No magic bullet can be applied universally.

Many cost-effective malaria interventions are available

Various available cost-effective interventions may strengthen efforts designed to prevent and treat malaria, including:

• interventions that improve case management, such as prepackaging drugs and improving access to second and third line drugs for treatment failures;
• chemoprophylaxis or intermittent treatment during pregnancy;
• anti-vector activities through insecticide-treatment of mosquito nets and indoor residual spraying.

All have been demonstrated to provide excellent value in terms of the health gains achieved per dollar spent.

More effective treatment is a first priority

Although improved treatment in the public sector is essential, we must recognize that most malaria cases are first treated through self-administration of drugs purchased in a variety of private outlets. Improving the quality of treatment for all will require interventions targeted at both households and providers:

• careseekers should be better informed about appropriate treatment
• providers in both the public and private sectors should be provided with reliable information concerning drug choice and dose, as well as incentives to act on this information
• the availability of effective antimalarial drugs should be increased
• prepackaging of drugs can help improve both prescribing practices and household use of drugs.

Much can, thereby, be done to improve care using existing drugs and technologies.

In addition, various promising technologies are becoming available:

• Artesunate suppositories can help reduce the most dangerous symptoms of severe malaria while the patient is being transported for further care.
• New rapid malaria tests can expand access to accurate diagnosis and should help reduce the cost of treating malaria where more expensive antimalarials (such as mefloquine) are used as a first line drug. Improved diagnosis may also improve health outcomes and potentially reduce selection pressure favoring resistance.

Addressing the problem of drug resistance requires intensive attention. Replacing an ineffective first line drug brings substantial and immediate health benefits, but strategies must be put in place to prevent resistance growing rapidly to the replacement, as there are few effective, safe and affordable antimalarials available. There are a range of implementation issues to consider, such as the effects on compliance of changing drug regimens, and the need to inform public and private providers about the new policy. Combination therapy, which has the potential to protect new drugs from the development of resistance, is a promising new development, but needs to be introduced together with strategies to promote rational drug use in the public and private sectors.

A substantial expansion of preventive interventions is required

Although insecticide-treated mosquito nets (ITNs) provide a cost-effective means of ameliorating the effects of malaria, this measure will be expensive if large human populations must be protected. Innovative mechanisms for financing and providing ITNs are needed to increase their use. In many places there are well-established commercial markets in nets, although coverage levels are inadequate in most rural communities. Insecticide for net treatment, by contrast, is a new commodity, and the idea that it could be sold as a form of domestic insecticide, along with coils or sprays, is only now beginning to be explored. It is essential to find ways of expanding such markets sustainably:

• the development of dip-it-yourself insecticide retreatment kits as a mass market product provides a promising approach, and a variety of strategies is being developed for expanding access to, and coverage by, existing commercial markets for nets. These measures include social marketing and public/private partnerships with commercial firms.
• governments should introduce complementary interventions to encourage the development of commercial markets, such as large scale promotion activities, and tax and tariff reforms that would reduce prices and create a level playing field for domestic producers attempting to compete with international firms.

Although commercial markets for ITNs can be expanded substantially, the poorest households will be unable to afford to purchase nets and insecticide at commercial prices, and innovative mechanisms will be required to subsidize the purchase of ITNs by such people:

• voucher schemes can help direct subsidies to needy mothers and children
• targeting through maternal and child health clinics is also a promising approach.

Social marking can help raise awareness of the value of ITNs and encourage their appropriate use.

Enhanced commitment to research will improve the effectiveness of existing technology

Research is essential at every level, from basic scientific studies to social science and policy analysis, in order to design, evaluate and reevaluate new and existing malaria intervention strategies. Any effective strategy will require enhanced scientific capacity at the local level to monitor the disease and its ecology, and to evaluate the effectiveness of alternative strategies.

Ongoing research is a vital part of any intervention.

No strategy should ever be exempt from scrutiny by the research community. Any policy has unintended consequences— ongoing program analysis is essential to identify these consequences and mitigate their costs. Implementation of any intervention is an adaptive process, requiring performance evaluation and operational research. This includes identifying the reasons for low compliance, and finding more efficient and cost-effective implementation strategies.

Even one of the most promising antimalaria intervention strategies, employing the use of insecticide treated nets (ITNs) will benefit from further ongoing research. ITNs constitute a cost-effective means for ameliorating the effects of malaria. Their effectiveness in different epidemiological conditions, however, must be reassessed continually. In addition, the mechanisms of morbidity reduction by incomplete ITN coverage, and the potential for similar effects by other incomplete interventions should be explored.

Research helps to identify unintended consequences, to refine even the most promising strategies, and to streamline the use of existing resources.

Research into underutilized technologies is important. Analysis of the historical record indicates that many successful interventions employed techniques which were highly effective, but have since been abandoned, possibly due to socioeconomic upheavals and loss of interest among donors. In certain cases, these techniques may still be useful, although research is essential to adapting them for specific contexts. Many of these approaches would require research input by epidemiologists, environmental scientists, entomologists, agronomists, and economists.

Research is also necessary in order to understand what communities are already doing on their own to defend themselves against malaria vectors. Many residents of malarious areas buy commercial products for this purpose even in the absence of externally designed interventions. In many cases, the market in these products may be worth much more, and may save more lives, than publicly financed interventions. Researchers and policy makers must learn all they can from local communities.

A commitment must be made to track status and trends in malaria more closely.

There is a dire lack of extensive and comparable data about malaria. For example, there is inadequate information available on the status and trends in incidence and prevalence, epidemic outbreaks, clinical epidemiology, and interactions with other conditions (including for example other diseases, nutrition, and growth). The absence of this information is very costly to advocacy, policy design and implementation, epidemic preparedness, and resource allocation. A commitment must be made to ongoing, sustainable collection of these data in order to replace the existing gross extrapolations, widely varying estimates, and missing information.

Interventions against malaria can have synergistic beneficial effects. Research is essential for designing programs which provide increasing returns to scale.

Economic analysis can provide support for targeted interventions designed to produce additive or synergistic beneficial effects even beyond their direct impact on human well-being. As first shown a century ago, for example, where important ports or centers of economic activity are malarious the economic burden of disease tends to be particularly high; interventions which target such locations are likely to improve economic conditions directly, in addition to improving individual well-being.

Similarly, malaria infection can aggravate underlying micronutrient deficiencies in children; interventions aimed at such malnutrition are likely to improve the nutrition and decrease the impact of malaria on children.

Malaria requires a commitment to applied as well as basic research as much as it does to a broad implementation of existing intervention methods.

There is an urgent need for developing powerful new technologies.

In addition to increased research into existing technologies, new antimalaria intervention tools are required. In the long run, a vaccine is likely to provide the best, most cost-effective, and safest approach to radically reducing the burden of malaria. Interest in developing such a vaccine among private pharmaceutical and biotechnology firms, however, is limited.

One important policy initiative to spur private sector interest in this effort would be for donor governments, international organizations and private foundations to ensure a profitable market for a malaria vaccine, if one were to be developed. Such a policy would ensure that those with the most information would decide which projects are to be pursued. In addition, it would ensure that no public funds are expended unless the technology were successfully developed.

In order to encourage the development of a malaria vaccine, donors should commit in advance to purchase an appropriate malaria vaccine, if one is developed.

President Clinton has proposed a policy along these lines, involving a tax credit for companies that develop new vaccines. James Wolfensohn, President of the World Bank, has said that through its International Development Agency, the Bank plans to set up a $1 billion revolving fund to be made available to buy specified vaccines if and when they are invented.

These proposals should be expanded with commitments from donor governments, foundations, and international agencies into a Malaria Vaccine Purchase Fund. This fund would provide guarantees to the private sector and to the research community that any successful malaria vaccine will have a large market, thereby encouraging the necessary outlays on research and development in future years.

Even with these efforts, however, a useful vaccine may not be available for many years. In the meantime, new medicines are essential to address problems of spreading drug resistance as well as drug affordability. These projects are also of little interest to firms. The dynamics of drug markets are not identical to those of vaccine markets, but enhancing private sector interest in drug development is just as necessary. Any effort to spur the development of new drugs must explicitly take market dynamics into account.

In the meantime, new therapeutic, preventive, and diagnostic tools must be developed-particularly drugs, insecticides, and dipstick tests.

Similarly, few general purpose insecticides suitable for use in entomological malaria interventions are under development now. These insecticides are essential to future antimalaria programs, due to widespread and intensifying insecticide resistance among anopheline vector populations. Market-based policies to facilitate insecticide development projects must be designed and implemented. In the meantime, however, the use of DDT in malaria interventions should not be banned.

Inability to diagnose malaria quickly is often a contributing factor to increased mortality, prolonged morbidity, the spread of drug resistance and delayed response to emerging epidemics. Dipstick tests and other rapid, user-friendly field diagnostics are necessary for addressing these challenges. Enhanced effort should be given to producing these tests at lower cost and increasing their availability in developing countries. Private sector interest in developing new, cheaper, and hardier diagnostics should be encouraged.

It is important not to forget that the primary objective is improving human well-being.

Development of new intervention methods, however, should not occur at the expense of new and innovative uses of existing technology. Ethical issues in clinical research and development must be acknowledged in any policy that is adopted, and ethical guidelines must be strictly enforced.

Therefore, new technologies can provide important avenues for mitigating the burden of malaria, provided that appropriate markets can be created for these technologies.

These considerations call for an integrated global effort against malaria.

Global investment in antimalaria activities must be increased many times over. Incremental increases are not sufficient.

Anti-malaria programs, whether at the national, regional, or global level, suffer from a chronic lack of funding. Funding decisions have been based on dramatic underestimates of the real costs of malaria. The international community of nations, together with the multilateral agencies and private foundations, should commit to increased current expenditures for malaria interventions and research programs of at least $1 billion per year, in the coming years. This level of effort should be sustained for an indefinite period, and concentrated primarily in Sub-Saharan Africa. Today, the level of effort worldwide amounts to only a small fraction of this amount.

In addition to greatly increased current expenditures, the donor governments, foundations, and international agencies, should establish a Malaria Vaccine Purchase Fund. Such a fund would only disburse money if an effective malaria vaccine becomes available, but its establishment now would greatly increase research and development incentives, and thereby greatly reduce the time until such a vaccine is available.

An increase of $1 billion per year, sustained for many years, is clearly justified in economic terms.

The amount of $1 billion per year, heavily concentrated in Sub-Saharan Africa, is appropriate based even on traditional assessments of the burden of malaria which do not take the economic growth penalty into account. Such traditional assessments suggest that malaria’s economic costs are likely to exceed one percent of GDP and could well be several times higher than that. Since Sub-Saharan Africa’s GDP is around $300 billion, and since malaria affects nearly the entire region, the short-term benefits of malaria control can reasonably be estimated at greater than $3 billion per year. Thus, interventions costing $1 billion per year which substantially reduce the disease burden are justified.

The case for the large increase in expenditures is further strengthened by taking into account the sustained growth penalty associated with malaria, which greatly multiplies the true economic burden of the disease. Taking into account the growth effects of malaria, the benefits of controlling the disease are in the dozens of billions of dollars per year after a few years of malaria control. These benefits would exceed the costs by a widening margin over time, as the program supports a sustained increase in economic growth with cumulative benefits to the level of national income.

This money must be committed to a multifaceted program, including capacity enhancement in malarious countries.

The international community, working closely with the countries of Sub-Saharan Africa and other malarious regions, must immediately begin to elaborate the interventions which would make the most effective use of this additional $1 billion per year. Efforts would focus on the increased use of impregnated bednets, improved case management, enhanced vector control programs where feasible, basic research into drugs and vaccines, and ongoing massive disease surveillance and project evaluation efforts.

In addition, international cooperation in training and research in epidemiology, ecology, entomology, immunology, economics, program evaluation, and other relevant fields must be enhanced. This training and research should be designed to enhance technical capacity in developing countries, and should involve interaction between the public and private sector, and between developed and developing countries. The combination of direct interventions (e.g. bednets) with increased surveillance, project evaluation, basic research, and training constitute an integrated approach to malaria control that will be vital for a long-term, successful, and sustainable effort.

The benefits of committing substantial new economic resources to malaria will greatly exceed the costs. Furthermore, the benefits will be greatest when the new resources are deployed in an integrated and multifaceted program of anti-malaria interventions, enhanced surveillance, and greatly intensified research and training programs.

Table 1. Loss from the economic growth penalty of malaria endemicity in 31 African countries, 1980-1995

Based on results in John Luke Gallup and Jeffrey D. Sachs, "The Economic Burden of Malaria" in Economics of Malaria (forthcoming).
Please note that these figures are reported in purchasing power parity (PPP) adjusted dollars held constant at 1987 prices. This corrects for the effects of price inflation, as well as the fact that in Africa, non-traded goods and services (for example, health services or land) are cheaper relative to internationally traded goods than they are in the United States. In order to convert these units into current US dollar terms, it would be necessary to divide by a factor of about 3, then multiply by the rate of price inflation between 1987 and 1995.