Funding for Health Innovation: How Does South Africa Measure Up?

Innovators, policymakers, and investors gathered in Johannesburg last month for the South Africa Innovation Summit and after this, it is worth asking, are we as a nation doing enough to finance health innovation and technology? South Africa faces many challenges when it comes to the health of our people. As South African Minster of Health Dr. Aaron Motsoaledi said, “We must markedly reduce this burden of disease because it is too high a burden for the nation to carry.” It is encouraging to see South Africa raising its game to advance home-grown solutions for the challenges we face.

Investments in science, technology, and innovation for health by governments around the world will be critical to meeting the ambitious targets of the Sustainable Development Goals (SDGs). However, when investment is not significant enough, or a supportive policy environment does not exist, many promising products and innovations will not be taken to market and reach the people who need them the most to avoid preventable deaths. I have seen this happen far too often in my four decades in health research and development (R&D) and innovation.

How does South Africa measure up?

PATH, an international NGO dedicated to saving lives through global health innovation, partnered with the Centre for Economic Governance and AIDS (CEGAA) to produce an analysis titled Health Research and Development Budget Allocations and Expenditures in South Africa: A baseline report. This report tracks investments by the South African government in health R&D and highlights gaps. It provides important evidence for civil society to inform advocacy for investments in health R&D.

So, what is the gist of the report and what interesting data is in it? Below are some of the topline findings.

The South African government is committed to health R&D. South Africa has undoubtedly made commitments over the past decade toward ensuring that R&D is prioritized and funded to bolster the economy and create jobs. Positive developments include the fact that the South African government has established various research institutes in the country and has committed to ensuring that research funding is prioritized.

An example of government commitment towards health R&D, mainly through support from the Department of Science and Technology, has been the establishment of the Medical Research Council’s Strategic Health Innovation Partnerships (SHIP) which acts as an upstream R&D catalyst for the development of transformative health technologies. SHIP has now partnered with PATH to create the Global Health Innovation Accelerator (GHIA) in South Africa, for downstream commercialization and introduction of technologies together with industry. The government has also set a target in the 2014–2019 Medium Term Strategic Framework (MTSF) that investment in R&D should increase to 1.5 percent of GDP by 2019.

However, funding for health R&D has yet to reach its full potential. Currently, health R&D only accounts for 0.1 percent of total government spending and is not increasing at a rate that keeps up with inflation. Moreover, investment in health R&D is decreasing as a share of total government spending. As the financial climate in South Africa is becoming increasingly burdened with other issues such as food and nutrition security, energy security, climate concerns, and financial instabilities, those commitments remain in doubt.

Health R&D funding is inconsistent across government. The report also shows that health R&D is inconsistent across government with the Department of Science and Technology (DST) currently funding the most in health R&D while the Department of Trade and Industry and the Department of Health spend less. It is important that government departments all contribute a significant portion of their budgets towards health R&D to ensure that health innovations are adequately financed. This should ensure that local health technology manufacturers are able to grow their sector leading to job creation and lifesaving technologies for those in need.

A funding gap remains. The South African government has set a target that investment in R&D should increase to 1.5 percent of GDP by 2019. However, in 2013 investment dropped to 0.76 percent of the GDP, declining from 0.92 percent cited by the National Development Plan in 2007. Clearly more funding is needed to ensure that health technologies are developed to reach the people in need with the added benefit of local manufacture and job creation.

Recommendations

Based on the analysis, PATH and CEGAA have several recommendations. First, government spending on health R&D should align with the National Research Strategic Plan in order to reach set gross expenditure targets for R&D, and additional resources should be made available to enhance evidence generation and innovation.

Additionally, the government should measure contributions of other sectors, such as donors and the private sector, in R&D to ensure that those investments cover high-priority health needs. The private sector needs to invest more in health R&D in order to reach targets of the South African National Development Plan. One way to increase private sector participation is for the government to implement strategies for incentivizing private-sector investment. The government has, for example, introduced tax incentives for R&D with the aim of encouraging South African companies to invest in scientific or technological R&D.

Lastly, more in-depth assessments are needed to get a deeper understanding of where R&D funding is spent in the South African public sector, what drives the spending, and what are the results. Much of the R&D spend has been wasted on poorly selected opportunities and lack of expert scientific scrutiny. Expenditure should be driven primarily by in-depth needs assessments, followed by rigorous scientific and technological due diligence. With such limited resources, R&D funding needs to be spent with every chance of a successful outcome. Entities such as SHIP and GHIA have been established toward this end.
 
Monitoring accountability

Armed with such evidence, civil society has a critical role to play in monitoring government accountability to ensure funding commitments are fulfilled and activities are aligned with national plans.

For this reason I recently joined a group of nongovernmental organizations to launch the South Africa Health Technologies Advocacy Coalition (SAHTAC). SAHTAC represents organizations with interests in healthcare and advocacy who work together for an enabling environment for R&D and access to lifesaving health technologies and innovations. The organizations within SAHTAC work in partnership to strengthen the voice of civil society in advocating for health R&D.

We have many pressing financial priorities in South Africa, but investing in the future is a tangible way to attack the vicious cycle of poverty and underdevelopment. A healthy nation is a wealthy nation, and the efforts being made in health R&D today will positively impact the economic status of South Africa tomorrow. It is key that we invest in long-term, sustainable health technologies for local manufacture that can potentially save millions of lives.

  • Dr. Tony Bunn is a Senior Advisor/Consultant with the MRC-PATH Global Health Innovation Accelerator

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