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  • Thomas Roades & Andrea Feigl - United States of America

Blended finance solutions to the NCD funding gap

Funding for noncommunicable disease care doesn’t match the need, but blended finance is a promising opportunity.

The views expressed are those of the author and do not necessarily

reflect the position of Re:solve Global Health.


Every second NCDs are responsible for one death globally. That is equal to losing the entire population of the state of California – annually.

Unfortunately, these facts are not reflected in financing flows, and global health has yet to meet the need to improve care for NCDs, which are far and away the world’s leading cause of death. If current trends continue, this will lead to tens of millions of preventable deaths in the coming decades, and staggering trillions of dollars in economic losses. At the same time, blended finance solutions addressing NCD care and prevention offer massive potential to improve health, wellbeing, and productivity for billions of people.

The NCD financing gap

NCDs account for over 70% of global mortality every year. The four most common NCDs, namely cardiovascular diseases, cancers, respiratory diseases, and diabetes, are the leading contributors to these fatalities.

While NCDs can be more fatal in elderly populations, younger people are hardly exempt. About 15 million working-age people die from NCDs every year, and 85% of these deaths occur in low- and middle-income countries (LMICs).

The cumulative costs of NCDs are shocking, especially when considering not just direct medical costs but also the indirect costs of lost productivity from premature deaths and those whose capacity for work is reduced due to NCD-related disability. One study from the Harvard School of Public Health and the World Economic Forum estimated the economic losses from just the four leading NCDs from 2011-2030 will reach almost $50 trillion. The WHO has concluded that NCDs “force millions of people into poverty annually and stifle development.”

Given these devastating consequences, one might expect NCD prevention and care to be a top priority for stakeholders in global health and development. But while many key actors – including the WHO – have rightly begun to dedicate more attention and resources to the issue, funding for the necessary solutions simply has not materialized.

The Institute for Health Metrics and Evaluation (IHME) tracks development assistance funding for health. Their data on the past 30 years paints a bleak picture of global funding for NCDs.

Disappointingly, NCDs continue to lag behind all other health issues the IHME tracked during this period, despite being the most urgent issue by the most important metrics – fatality rates, economic impact, and prevalence. Another study found that NCDs have received just 1-2% of total global health financing since 2000.

Data shows the global burdens of these diseases are responsive to global health spending priorities. The most recent Global Burden of Disease Study, which covered the same time period, found that years lived with disability (YLDs) and disability-adjusted life-years (DALYs) have fallen for many infectious diseases, but less so for NCDs. “Since 1990,” the researchers report, “there has been a marked shift towards a greater proportion of burden due to YLDs from non-communicable diseases and injuries.” Rising funding for deadly infectious diseases like HIV reduced mortality for those diseases, but NCDs are still very much on the rise and have yet to be met with the necessary levels of investment.

Increased funding for NCDs should become a higher priority, not just because it’s needed to combat the most pressing issue in global health, but also because it’s one of the smartest investments global health stakeholders can make.

The case for new NCD investments

With the world currently reeling from the ongoing COVID-19 pandemic, now may not seem an opportune time for governments and other global health investors to be considering new funding for NCDs or any other global health priority. Increased investment in NCD care and prevention, however, could actually be even more important in the context of the pandemic.

NCDs have proven to be among the most dangerous underlying conditions for COVID-19 patients, contributing significantly to severity and lethality of the virus. People with NCDs are much more likely to experience severe symptoms from the virus, requiring hospitalizationCDC data from this summer found COVID-19 hospitalizations to be six times higher and mortalities to be twelve times higher among those with chronic conditions than those without.

Investing in NCDs – which tend to be expensive, chronic conditions if left untreated – already offered major returns even before the pandemic. The WHO’s list of “Best Buys” for NCD treatment and prevention is estimated to generate a return on investment (ROI) of more than seven times. Averting severe cases and deaths from COVID-19 only adds to that value.

Combining WHO data on the ROI for NCD Best Buys with cost data on U.S. COVID-19 hospitalizations illustrate the cumulative potential savings of reducing the burden of NCDs and alleviating the associated burden of severe COVID-19 cases. In the U.S. alone, these savings could total over $10 million. In LMICs, where the burden of NCDs is far higher on average, the savings could be even greater. While health budgets may be stretched thin by the pandemic, NCD care and prevention is one of the most cost-effective ways for governments to respond and recover.

How blended finance can deliver

Though funding NCD care and prevention, especially in LMICs, could have an incredible impact, many traditional private-sector investors are hesitant to do so. These investments are often viewed to be too high-risk and low-reward. Public sector financing has yet to meet the need too, as shown in IHME’s development assistance for health data (see graph on page 2). Blended finance offers an opportunity to bring together these funding streams and catalyze greater levels of investment to maximize impact.

Combining public, private, and philanthropic funding streams into a blended finance investment vehicle offers benefits for all involved. Private investors can invest in emerging markets – which have recently been outperforming advanced markets on growth – at low risk. Governments can stretch their healthcare budgets much further by using funds to lower the risk of private investment, bringing in innovative, high-quality care, medical technologies, or other improvements at lower cost to the public sector. And most important, sustainable investment in local enterprises means healthcare programs in LMICs can scale up and function more efficiently, providing better care to more people.

This model already has some proven success stories in Social Impact Bonds (SIBs). In a SIB, impact investors take on the risk for launching a social program, and governments agree to pay out market-rate returns if the program achieves set benchmarks for successful outcomes. These blended finance vehicles harness private and philanthropic capital toward targets that benefit the public good, allowing governments to achieve their goals at lower cost and lower risk. As of 2018, more than 80 SIBs had been launched worldwide. A 2016 systematic review of 11 early SIB projects in population health in the U.S. found that the model “does indeed hold great promise as a way to bring private-sector resources to efforts aimed at improving population health and decreasing health inequities.”

Another promising instrument is the Social Success Note (SSN). Yunus Social Business and the Rockefeller Foundation have been successful in aligning the interests of social businesses with investors through a “pay-for-success” model, similar to an SIB. The key difference is that in a SSN, the social enterprise repays the principal to the investor directly, reducing the financial burden for the outcome payer. The instrument provides an incentive for profit-seeking entities to invest while allowing for social enterprises to create an impact.

Under this model, a social enterprise requires a loan at a discounted rate from an investor to sustain its operations. An independent “Monitoring and Evaluation” partner acts as an arbiter, verifying the predetermined goals of the investment, monitoring whether these impacts are achieved, and reporting the results to the outcome payer (usually a non-profit). The social enterprise repays the principal and interest to the investor if the it meets its pre-agreed outcomes. The outcome payer offers incentives to the risk investor and the social enterprise if the impact goals are met.

This model allows for rapid scalability without sacrificing sustainability. Social enterprises have the ability to break even and even generate a profit quickly, covering the cost of the loan to the principal plus interest. Furthermore, since social enterprises are simply underfunded private-sector players, they often have significant capacity to realize economies of scale. There are also benefits generated through leverage. This means that the initial private investment amplifies the outcome payer’s funding. The monitoring of impact through an independent third party also allow for transparency and increased information for all parties. All entities involved in the transaction see their incentives aligned under one instrument, allowing for quick access to low cost debt capital for a social enterprise, and an impact for philanthropic organizations and social enterprises.

Yet another promising model in blended finance is the impact investing fund. These funds can invest resources into companies, organizations, and even other funds with a deliberate intention to create positive, measurable impact alongside a financial return. The impact investors can range from banks to pension funds to government agencies. The investments generate a rate of return that is either below the market rate or at the market rate but create added value by addressing development needs.

All these blended finance approaches come with challenges. In particular, accurately measuring outcomes can be difficult – requiring an objective third party with access to robust data. Even then, some social impact may be difficult to quantify, and in healthcare, chronic diseases including NCDs may take quite some time to show a measurable response to new interventions. But as impact investing grows rapidly and governments begin to realize the potential value of these finance vehicles, there’s every reason to be optimistic for the future of blended finance for global health.

The NCD financing gap is enormous, and it will take innovative solutions to make sure global capital meets global need. Blended finance is the most promising way to jumpstart that process.  

TEXT Thomas Roades and Andrea Feigl — ILLUSTRATIONS Trine Natskår


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