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Effective credit system to pay for global health

19 April 2013

(From left) Dr Carrasco, Dr Cook and Prof Coker collaborated to come up with the global trading system for health

An innovative global trading system for health may be the approach towards establishing a cost-effective way for medical interventions, just like that used in the carbon credits market to help control climate change. The paper was drawn up by experts from NUS and the London School of Hygiene and Tropical Medicine (LSHTM) in PLOS Medicine.

Authors Assistant Professor Roman Carrasco from the NUS Department of Biological Sciences, Professor Richard Coker, head of the LSHTM's Communicable Diseases Policy Research Group based in Thailand and a visiting professor at the Saw Swee Hock School of Public Policy (SSHSPP) at NUS, and Assistant Professor Alex Cook from SSHSPP, explained that their proposal was inspired by carbon trading markets used to mitigate climate change as one of the few areas where global commons are efficiently managed.

The new global market of Disability Adjusted Life Years (DALY), which looks at different countries' health expenditures and how cost-effective those interventions are, could allow scaling up of global health donations to achieve the health Millennium Development Goals. These goals include reducing child and maternal mortality and improving the management of infectious diseases, such as HIV/AIDS, malaria and tuberculosis.

The DALY global credit market would be composed of a global cost-effectiveness criterion and a cap-and-trade rule. The functioning of the market would be such that high-income countries that undertake health interventions of low cost-effectiveness should buy DALY permits from low-income countries by supporting highly cost-effective projects.

For instance, if Singapore were to adopt a mass vaccination campaign of pneumococcal conjugate vaccination which has a low cost effectiveness of approximately US$100,000 per DALY averted, according to the system, Singapore should buy DALY credits to support much more cost-effective projects in low-income countries. An example of supported projects would be measles vaccination in Sub-Saharan Africa where 1 DALY can be averted at only US$5. Credits for a very small value of 0.1 per cent of the costs of the health intervention would be sufficient to bring down the cost-effectiveness of the intervention below a universal threshold.

Although an international agreement similar to the Kyoto Protocol would be needed to establish the DALY trading system, and this might be complex given the current global financial situation, the encouraging results of carbon credit markets (that rapidly grew from US$11 billion in 2005 to the current US$140 billion) suggest that such a market could boost global health financing.

In addition, using the system enables the expected contributions from each country to be identified. Those that would need to substantially expand their contributions are China, Germany, Japan and the US, while countries that surpass their expected contributions are Luxembourg, Norway, the United Arab Emirates and the UK.

The report argues that given the lack of global health, the world should be ready to implement the most powerful strategies to manage global health commons. The DALY credit market could represent one of the most effective ways to attain this.

By Asst Prof Roman Carrasco