The Enduring Debate Over Cost Sharing for Essential Public Health Tools

In the translation of health technology innovations into actual public health, among the most consequential decisions to be made is what to charge the end user.Achieving sufficient coverage with essential tools to control diseases like HIV and malaria requires price subsidies, particularly in low-income countries.Subsidies are necessary because willingness to pay and ability to pay are both assumed to be low in these settings.Economic theory predicts that willingness to pay will be too low because individual demand for essential health tools will not take community benefits, or externalities, into account.Ability to pay is likely low because of poverty.Owing to their crucial role in attaining high levels of coverage, subsidies for preventive, diagnostic, and treatment technologies make up a substantial portion of donor funding for infectious disease control. 1 While the need for subsidies is clear, the appropriate level of subsidy is not clear, and is often chosen based on guesses and trial and error.Higher subsidies should increase coverage, with the greatest coverage occurring when the subsidy is 100% (ie, the product is free).However, higher subsidies can pose trade-offs with respect to targeting products to the highest-value users. 2 A concern about free distribution of health tools such as insecticide-treated nets to prevent malaria, water purification kits to prevent diarrheal disease, and HIV self-tests is that anyone will take these tools when they are free-including people who do not need them and will not use them.If people who value and need tools most are also the ones most willing to pay, then lower subsidy levels could be a cost-effective approach to allocating scarce resources.Arguments for cost sharing (ie, partial rather than full subsidies) are generally based on this reasoning.However, cost sharing can also screen out the poorest households, who have limited financial resources but need the product most.The optimal subsidy will depend on how sensitive people are to price and how successfully price functions as a targeting mechanism.Chang and coauthors 3 add strong evidence to the growing body of work suggesting that even small amounts of cost sharing for health products can have substantial effects on uptake in low-income countries.2,4 Chang et al 3 used a randomized trial to evaluate the impact of various distribution strategies-including variation in pricing, distribution point, and messaging-on demand for rapid HIV self-tests in Zimbabwe.Households were given vouchers that could be redeemed for a test, with randomly assigned prices between $0 (full subsidy) and $3, and a cross-cutting random assignment of distribution point (public sector vs retail sector) and of promotional messaging.The authors found extremely high price sensitivity, with 32.5% of households redeeming their vouchers for the test at the full subsidy and only 0.8% willing to pay $3 for it.Furthermore, the most dramatic response to subsidy variation was in the comparison of the full subsidy ($0) with the nearly full subsidy ($0.50); in this case, demand decreased by more than 25 percentage points.Several key takeaways emerge from this study.First, increasing subsidies for HIV self-tests, which currently cost $3 to $6 (subsidized) in the public sector, could dramatically increase uptake.Second, higher prices do not appear to improve targeting.On the contrary, the most extreme price sensitivity was observed in the highest-priority populations, with demand among people who had never been tested before being 23 percentage points lower at $0.50 than at $0.Unfortunately, the study does not report whether the tests were used, the actual test results, or any behavior change that resulted from the testing, such as condom use or initiation of antiretroviral therapy.It is also not known whether the tests obtained through the study simply substituted for tests people would have +