AFFIDAVIT

I, the undersigned
NICOLI JEAN NATTRASS

do hereby make oath and state as follows:
1.	The facts deposed to in this affidavit are within my personal knowledge except where I indicate otherwise.  To the extent that I rely on information supplied by others, I believe that such information is true and correct.
2.	Between 1981 and 1991 I obtained the following degrees:  1981: B.A. (cum laude) Stellenbosch University; 1983: Honours Soc.Sci. (first class) University of Cape Town; 1984: M.A. (Social Science) University of Natal Durban; 1985: M.Sc. (Development Economics) University of Oxford; 1991: D.Phil. (Economics) University of Oxford.  I was awarded the Rhodes Scholarship to Oxford (1984) and a Southern African Research Fellowship to Yale University (1993).  (Annexure: NN1 – Curriculum Vitae). 
3.	I am currently a full professor in the School of Economics, Director of the Centre for Social Science Research and founder of the AIDS and Society Research Unit at the University of Cape Town.  I have held academic positions at: the University of Natal Pietermaritzburg; the University Colleges of Galway and Dublin, and Stellenbosch University.  I have done consulting work for the World Bank, the United Nations Development Programme, the International Labour Organisation and the Organisation for Economic Co-operation and Development.  I served on the Technical Team of the Development Bank of Southern Africa Transformation Team, was a Commissioner on the South African Presidential Comprehensive Labour Market Commission, and have done work for the Taylor Committee into Comprehensive Welfare Reform in South Africa.
4.	I have produced a substantial body of academic research in the areas of economic policy, development economics, labour economics and political economy.  More recently, I have been working on the economics of mother to child transmission (MTCT) of HIV in South Africa.  It is my considered opinion that a programme to reduce MTCT of HIV is not only cost-effective, but will save the government money (by reducing the number of HIV+ children who will need health care for opportunistic infections).  There is, in other words, no basis for the argument that the government cannot afford a MTCT programme. 

The Key Conclusions:

5.	My central conclusions are:
•	HIV+ children require health care for opportunistic infections over their short lives.  Reducing the number of HIV+ children via a MTCT reduction programme reduces these paediatric costs.    These cost savings must be taken into account when analysing the net costs of a MTCT reduction programme. 
•	My analysis shows that the total cost to the health sector of MTCT programmes (i.e. the costs of voluntary counselling and testing, the costs of the anti-retroviral regimen and the costs of treating all children born HIV+ despite the MTCT programme) is less than the costs of treating all children born HIV+ in the absence of a MTCT programme.  This is true for all four of the MTCT programmes discussed here.  
•	In other words, saving children from HIV infection by implementing a MTCT programme will save the state money because the costs of a MTCT programme are less than the costs associated with treating the additional children who would be born HIV+ if no MTCT programme was in place.   It is therefore not tenable to argue that a MTCT reduction programme is too costly.
•	I estimate that the savings to the health sector per pregnancy as a result of a MTCT programme are as follows:
o	R171 (AZT Thai regimen and breast-feeding)
o	R197 (Nevirapine and breast-feeding)
o	R315 (AZT Thai regimen and substitute feeding)
o	R341 (Nevirapine and substitute feeding)

6.	Most research into the cost-effectiveness of MTCT programmes does not consider potential cost savings (as in my research).  This literature looks at cost-effectiveness measured in terms of a standard measure called the disability adjusted life year (DALY).  The implication of this literature is that irrespective of whether MTCT reduction saves the state money, it is nevertheless a cost-effective intervention.  (Annexure: NN2 – Geffen, 2001). 

Research Into Cost-Effectiveness Of MTCT Reduction

7.	There is a wealth of international scientific evidence that treating HIV+ pregnant women with antiretroviral drugs significantly reduces MTCT of HIV.  In conducting my analysis and formulating my opinions as an economist, I have relied on this evidence, some of which I summarise here. 

8.	In situations where resources are constrained, and where adherence to long and complicated drug regimens cannot be managed effectively, short course interventions are recommended.  These include:
•	the short-course AZT ‘Thai’ regimen (300 mg of Zidovudine every 12 hours from 36 weeks into the pregnancy and 300 mg every 3 hours during labour); and 
•	the HIVNET012 Nevirapine regimen (200 mg of Nevirapine during labour, and 2mg per kg for the baby).
In breastfeeding populations, research indicates that MTCT is reduced by 37% with the AZT short course, and by 35% by the Nevirapine regime. 

9.	Where substitute feeding is used rather than breast-feeding, MTCT is reduced in the AZT regime by 50%.  Indications are that substitute feeding combined with a Nevirapine regime reduces MTCT by 44%.  However the relative advantages of substitute feeding over breast-feeding for reducing MTCT in developing countries have yet to be established conclusively.  Indications are that an exclusive breast-feeding regime followed by abrupt weaning may be more effective than the mixed feeding regimes typically followed in breast-feeding populations.  And, given that substitute feeding is associated with higher infant mortality, the life-saving properties of formula-feeding will be reduced accordingly.  After reviewing the available evidence, the WHO Technical Consultation team recommended that where substitute feeding is feasible, affordable, sustainable and safe, then breast-feeding should be avoided altogether.  Otherwise, exclusive breastfeeding is recommended followed by abrupt weaning.  The decision should be based on counselling the woman so that she can make an informed choice.

10.	In this affidavit, I will consider the argument that the state cannot afford a MTCT reduction programme.  I conclude that not only does it cost very little to save babies from HIV infection, but that unless the state denies HIV+ children health care, it almost certainly costs the government more to care for HIV+ children over their short lives than it does to save them from HIV infection.  Put simply, the state cannot afford not to introduce a MTCT reduction programme.   The methodology used follows that in Skordis and Nattrass (2001).

Table 1: Summary	With breast feeding	With substitute feeding	
	Nevirapine (HIVNET012)	AZT (Thai regimen) 	Nevirapine (HIVNET012)	AZT (Thai regimen)	
Number of children saved as a result of a MTCT programme for 1000 pregnant women	21	23	39	41	
Cost of the MTCT programme per child saved	R3,824	R5,831	R4,723	R5,802	
Cost savings for the government of a MTCT programme for 1000 pregnant women	R197,388	R171,349	R340,986	R314,837	

11.	Table 1 summarises the results.  It shows that a programme to reduce MTCT by a single dose of Nevirapine is cheaper than a short-course AZT programme, but saves marginally fewer lives.   Using substitute feeding rather than breast feeding saves more lives than breast-feeding regimes.  Although the programmes with substitute feeding cost more per life saved than those using breast milk, the government saves more money by implementing a programme with substitute feeding.  This is as a result of the lower incidence of HIV infection – and hence lower associated paediatric costs of HIV+ children – under substitute feeding regimes.  Given that the Nevirapine interventions save the most money and are cost-effective and easy to administer, this suggests that the government should opt for a Nevirapine-based intervention to reduce MTCT in South Africa. 

12.	The data used in the calculations are ‘best estimates’ from the available local research and international literature.  In order to test for the robustness of the finding, I subjected the calculation to a sensitivity analysis that cut the paediatric costs of HIV+ children by 25%, and simultaneously inflated all programme costs by 25%.   The results (indicated in the last column of each table) remained robust: the government would still save money by introducing a programme to reduce MTCT.   

THE AFFORDABILITY OF MTCT REDUCTION PROGRAMMES

13.	 The affordability analysis is presented in terms of the costs associated with 1,000 pregnant women attending ante-natal clinics in South Africa.  The first 6 lines of Table 2 indicate that in the absence of a programme to reduce MTCT, 74 babies will be born HIV+.  These children will require medical attention to treat the opportunistic infections that will beset them over their short lives.  Line 5 provides an estimate of the paediatric costs associated with each HIV+ child.  Line 6 provides an estimate of the total health costs associated with all HIV+ children born in the absence of a programme to reduce MTCT.  
Table 2:  For every 1000 pregnant women visiting antenatal clinics:	Best estimate	Cost sensitivity analysis	
1.  Percentage who will be HIV+ (from SA Antenatal survey 2000)	0.245	0.245		
2.  Number of HIV+ women (line 1 x 1000)	245.00	245.00		
3,  Percentage who will transmit HIV to their babies	0.30	0.30		
4.  Number of HIV+ babies (line 3 x line 2)	73.50	73.50		
5.  Hospital costs per HIV+ child (2001 prices)	13,342.70	10,007.03	  25%	
6.  Total inpatient costs for HIV+ children (line 5 x line 4)	980,688.45	735,516.34		
				
7.  Cost of pre-test counselling per woman 	18.20	22.75	 25%	
8.  Pre-test counselling for 1000 women (line 7 x 1000)	18,200.00	22,750.00		
9.   91.5% of the women will agree to a test = 915	915.00	915.00		
10. Cost of the Rapid test	16.80	21.00	 25%	
11. Cost of testing all those who accept the test (line 9 x line 10)	15,372.00	19,215.00		
12. The number of HIV+ cases that will result (line 9 x line 1)	224.18	224.18		
13. Cost of the confirmatory testing procedure	7.70	9.63	 25%	
14. Total cost of all confirmatory tests (line 13 x line 12)	1,726.15	2,157.68		
15. Cost of post-test counselling for each HIV- woman	3.70	4.63	 25%	
16. Post-test counselling costs for all HIV- women (line 15 x 690.82)	2,556.05	3,195.07		
17. Cost of post-test counselling for HIV+ (as in line 7) 	18.20	22.75	 25%	
18. Post-test counselling costs for all HIV+ women (line 17 x line 12)	4,079.99	5,099.98		
19. Site costs (management, phones, transport etc) per pregnancy	33.00	41.25	 25%	
20. Total site costs (line 19 x 1000)	33,000.00	41,250.00		
21. Total voluntary counselling and testing (VTC) costs 
      (line 8 + line 11 + line 14 + line 16 + line 18 + line 20)	74,934.19	93,667.73		
22. Percentage of women who will accept ARV therapy	0.925	0.925		
23. Number of participants in the programme (line 1 x line 12)	207.36	207.36		

14.	Lines 7 to 21 provide a costing exercise for a voluntary counseling and HIV testing programme for 1,000 women.  This includes provision for management and administration, and of the costs of tests (Rapid tests and confirmatory tests) and of pre- and post-test counseling.   It is assumed that after pre-test counseling, 91.5% will agree to an HIV test (line 9).  Of those who test positive, it is assumed that 92,5% (i.e. 207 women) will agree to a short course of antiretroviral therapy (ARV) in order to prevent MTCT. 

15.	In this affidavit, I will present a costing exercise for four regimens:  short-course AZT (Thai regimen) and short-course Nevirapine (HIVNET012) under a breastfeeding regimen; and short-course AZT and short-course Nevirapine under a substitute feeding regimen.    

Net Costs of a Short-Course AZT MTCT Reduction Programme

16.	As can be seen from Table 3, 23 children (out of 1,000 born) would be saved from HIV infection by a MTCT reduction programme using a short course of AZT (the Thai regimen) with breastfeeding.  According to the best estimate, this would cost the government R5,831 (in drugs, counselling, testing etc) per child saved (and R7,288) per child saved if all costs were 25% higher than expected.  Notice that the government actually saves money by saving these children.  This is because the total health costs under a MTCT programme (i.e. cost of the MTCT reduction programme and the costs of caring for all HIV+ children born) are about R171,000 less than would be the case in the absence of a MTCT reduction programme (i.e. caring for all the HIV+ children born if no programme to reduce MTCT was in place).  Notice that the government still saves money if we assume that the costs of caring for HIV+ children are reduced by 25%, and if the costs associated with the MTCT programme are simultaneously 25 percent higher than expected. 

Table 3: AZT (Thai regime) with breastfeeding 	Best Estimate	Cost Sensitivity Analysis 	
24. Cost of the AZT ARV Regimen for each woman	280.00	350.00	 25%	
25. Total cost of AZT therapy (line 24 x line 23)	58,061.33	72,576.66		
26. Transmission under an AZT ARV regimen	0.19	0.19	 	
27. Number of HIV+ children despite the ARV programme 
      (line 26 x line 23)	39.40	39.40		
28. Inpatient costs of children born HIV+ despite ARV 
      therapy (line 5 x line 27)	525,685.79	394,264.34		
29. Number of HIV+ children born to non-participants      	11.29	11.29		
30. Inpatient costs of the HIV+ children born to the non-
      participants (line 5 x line 29)	150,658.26	112,993.70		
31. Total health costs under Thai regime 
      (line 21 + line 25 + line 28 + line 30)	809,339.56	673,502.42		
32. Number of children saved (line 4 – line 27 – line 29)	22.81	22.81		
33. Total health cost savings (line 6 – line 31)	171,348.89	62,013.91		
34. Cost of VCT + ARV per child saved 
     (line 21 + line 24) / line 32	5,830.63	7,288.29		

Net Costs of a Short-Course Nevirapine Regimen
17.	Table 4 provides a costing exercise for a Nevirapine regime (with breast-feeding).  The table shows that 21 children (out of 1,000 born) would be saved from HIV infection by a MTCT reduction programme using Nevirapine. According to the best estimate, this would cost the government about R3,824 (in drugs, counselling, testing etc) per child saved (and about R4,780) per child saved if all costs were 25% higher than expected.  Notice that the government saves more money by introducing this MTCT reduction programme than it would with the AZT Thai regime.  Total health costs under a MTCT programme (i.e. cost of the MTCT reduction programme and the costs of caring for all HIV+ children born) are about R197,000 less than would be the case in the absence of a MTCT reduction programme.  The cost-savings result is highly robust even if we assume that the costs of caring for HIV+ children are reduced by 25%, and that the costs of the MTCT programme are 25% higher than expected. 

Table 4: Nevirapine (HIVNET) with Breastfeeding	Best Estimate	Cost Sensitivity Analysis 	
35. Cost of the Nevirapine ARV programme	R21.00	26.25	 25%	
36. Total cost of Nevirapine therapy (line 23 x line 35)	4,354.60	5,443.25		
37. Transmision rate under a Nevirapine ARV regimen	0.20	0.20		
38. Number of HIV+ children born under a Nevirapine
      ARV regimen (line 37 x line 23) 	41.47	41.47		
39. Inpatient costs of these HIV+ children (line 5 x line 38)	553,353.46	415,015.09		
40. Inpatient costs of children born HIV+ to the non-
      participants (line 30)	150,658.26	112,993.70		
41. Total health costs under a Nevirapine regimen
      (line 21 + line 36 + line 39 + line 40)	783,300.51	627,119.77		
42. Number of children saved (line 4 – line 38 – line 29) 	20.74	20.74	 	
43. Total health cost savings (line 6 – line 41)	197,387.94	108,396.57	 	
44. Cost of VCT + ARV per child saved 
      (line 21 + line 36) / line 42	3,823.69	4,779.61	 	

18.	In the cost analysis performed here, it is assumed that the government purchases Nevirapine at the current state-tender price.  However, Boehringer Ingleheim, the manufacturers of Nevirapine, have offered to donate Nevirapine to the government. 

Net Costs of a Short-Course AZT Regimen with Substitute Feeding
19.	Table 5 provides a costing exercise for the Thai AZT short-course regimen with six months of substitute feeding for the infant (rather than breast-feeding).   
20.	One of the disadvantages of substitute feeding is that the risk of (non-AIDS related) infant mortality is higher.  The calculation has been adjusted to include an estimate for the increased risk of infant mortality as a result of the substitute feeding regime.

Table 5: AZT (Thai regime) with Substitute Feeding (SF) for 6 months	Best Estimate	Cost Sensitivity Analysis	
45. Total cost of AZT therapy (line 25)	58,061.33	72,576.66		
46. Cost of the substitute feeding for 6 months 	499.20	624.00	 25%	
47. Total cost of the substitute feeding (line 23 x line 46)	103,515.05	129,393.81		
48. Transmission rate under an AZT and substitute feeding 
      regimen	0.10	0.10		
49. Number of HIV+ children born despite the treatment 
      regimen (line 23 x line 48)	20.74	20.74		
50. Inpatient costs of these HIV+ children (line 5 x line 49)	276,676.73	207,507.55		
51. Inpatient costs of children born HIV+ to the non-
     participants (line 30)	150,658.26	112,993.70		
52. Assume an increase in infant mortality of 4 in a 1000 due 
     to substitute feeding	0.004	0.004		
53. Number of children who die as a result of the substitute
      feeding (line 23 x line 52)	0.83	0.83		
54. The number of additional deaths that will be amongst 
      HIV+ children (line 53 x line 48)	0.08	0.08		
55. The number of additional deaths that will be amongst 
      HIV- children (line 53 x (1 – line 48))	0.75	0.75		
56. Assume these children die after 3 months. Savings on 
      substitute feeding (line 53 x (line 46)/2 	207.03	258.79		
57. Assume medical costs of these children dying early is 30 
      percent of HIV+ children (line 5 x line 53 x 0.3) 	3,320.12	2,490.09		
58. Inpatient costs of HIV+ children adjusted for these early 
      deaths (line 50 – (line 54 x line 5))    	275,570.02	206,677.52		
59. Total health costs under Thai regime with substitute 
      feeding (line 21 + line 45 + line 47 +  line 51 +  line 57 +
      line 58 – line 56)	665,851.93	617,540.71		
60. Number of children saved 
      (line 4 – line 49 – line 29 – line 55)  	40.73	40.73	 	
61. Cost savings (line 6 – line 59)	314,836.52	117,975.62	 	
62. Cost of VCT+ARV+SF per child saved 
      (line 21 + line 45 + line 47 – line 56) / line 60  	5,802.30	7,252.87	 	

21.	 The results indicate that more children could be saved by providing women with substitute feeding so as to reduce the risks of MTCT through breast-milk (and mixed feeding).  The costs per child saved are marginally higher than they are for the AZT regime with breastfeeding.   However, as a result of the greater number of children saved, the government saves more money by introducing a MTCT programme with substitute feeding than it would by using a AZT or a Nevirapine regime with breastfeeding. 

Net Costs of a Single Dose Nevirapine Regimen with Substitute Feeding

22.	Table 6 provides a costing exercise for the Nevirapine intervention with six months of substitute feeding (rather than breastfeeding).  The calculation is based on research findings from Kenya that indicate that breastfeeding increases transmission by 44 percent.

23.	Table 6 shows that a MTCT reduction programme using Nevirapine and substitute feeding has the greatest potential to save lives – and saves the government the most money.  The amount saved by not having to treat as many HIV+ children as would have been the case in the absence of a MTCT reduction programme exceeds the costs of implementing a MTCT reduction programme by R341,000 (and by R164,000 if programme costs are 25% higher than expected, and if the costs of treating HIV+ children is reduced by 25%).   This shows that there is no basis to the government’s claim that it cannot afford a MTCT reduction programme.  Unless the government is planning to deny HIV+ children health care, it costs the government more in terms of health costs to treat HIV+ children than it would to save many of them via a MTCT reduction programme. 

Table 6: Nevirapine Regimen with Substitute Feeding (SF) for 6 months	Best Estimate	Cost Sensitivity Analysis	
63. Total cost of Nevirapine therapy (line 36)	4,354.60	5,443.25		
64. Cost of the substitute feeding for 6 months (line 46)	499.20	624.00	 25%	
65. Total cost of the substitute feeding (line 47)	103,515.05	129,393.81		
66. Transmission rate under a Nevirapine and SF regimen	0.11	0.11		
67. Number of HIV+ children born despite the treatment 
      regimen (line 23 x line 66)	22.81	22.81		
68. Inpatient costs of these HIV+ children (line 5 x line 67)	304,344.40	228,258.30		
69. Inpatient costs of children born  HIV+ to the non-
     participants (line 30)	150,658.26	112,993.70		
70. Assume an increase in infant mortality of 4 in a 1000 due
      to substitute feeding (line 52)	0.004	0.004		
71. Number of children who die as a result of the substitute 
      feeding (line 23 x line 70)	0.83	0.83		
72. The number of additional deaths that will be amongst 
      HIV+ children (line 66 x line 71)	0.09	0.09		
73. The number of additional deaths that will be amongst 
      HIV- children (line 71 x (1 – line 66))	0.74	0.74		
74. Assume these children die after 3 months. Savings on 
      substitute feeding (line 71 x (line 46)/2)  	207.03	258.79		
75. Assume medical costs of these children dying early is 30
     percent of HIV+ children (line 5 x line 71 x 0.3)	3,320.12	2,490.09		
76.  Inpatient costs of HIV+ children adjusted for these early 
       deaths (line 68 – (line 5 x line 72) 	303,127.02	227,345.27		
77. Total health costs under Nevirapine regime with 
       substitute feeding (line 21 + line 63 + line 65 + line 68 –
       line 74 + line 76 + line 75) 	639,702.21	571,075.06		
78. Number of children saved 
     (line 4 – line 67 – line 29 – line 73) 	38.66	38.66	 	
79. Cost savings (line 6 – line 77)	340,986.24	164,441.28	 	
80. Cost of VCT+ARV+SF per child saved
      (line 21 + line 63 + line 65 – line 74) / line 78	4,723.08	5,903.85	 	

The Cost of Orphans

24.	There are, of course, various objections to this kind of costing exercise.  One is that it does not take into account the costs of orphans.  The problem of orphans is certainly going to increase significantly as deaths from the AIDS pandemic escalate. But this does not constitute an economic argument in favour ‘orphan elimination’, even when human rights arguments are put aside for the purpose of considering financial implications.  

25.	First, the vast majority of orphaned children are cared for by their extended families – and not by state institutions.  Increasing the number of HIV+ children simply places extra burdens on these families.  

26.	But increasing the number of HIV+ children also increases the level of unproductive expenditure by the state.  The most common form of state support for these children is the child support grant which, in the case of a child with a normal life expectancy, can be regarded as a form of investment in human capital.   However, when spent on an HIV+ child who is likely to die before its fifth birthday, the child grant can only be regarded as an unrecoverable form of consumption spending.   If we include an estimate of this ‘unrecoverable’ form of welfare expenditure into the estimate of the costs of HIV+ children, then the savings to the government of a Nevirapine MTCT programme (with substitute feeding) rise by over 50%. 

27.	Secondly, emerging anecdotal evidence suggests that orphans are more likely to be abandoned to state institutions by their extended families if they are HIV+ than if they are HIV–.  Taken together, this suggests that the government could end up spending more on institutional child welfare than would be the case if a programme to reduce MTCT was in place.   

Other Research

28.	Other researchers have also examined the cost-effectiveness of implementing an MTCT reduction programme. They have not given the same prominence to the cost-saving argument presented here. Instead, they have shown that MTCT reduction is cost-effective using a metric known as the Disability Adjusted Life Year (DALY).  According to the World Bank, health interventions in developing countries that cost less than $100 per DALY saved, are worth considering.     

29.	There is a consensus in the South African academic research into MTCT reduction that such programmes are affordable and cost-effective.  Wilkinson, Floyd and Gilks (1999 and 2000), Marseille et al. (1998 and 1999), Soderlund, Zwi, Kinghorn and Gray (1999) and Hensher (2000) have all examined the cost-effectiveness of MTCT reduction. Annexure NN2 includes an analysis of these studies.   

DEPONENT

I CERTIFY THAT THE DEPONENT HAS ACKNOWLEDGED THAT SHE KNOWS AND UNDERSTANDS THE CONTENTS OF THIS AFFIDAVIT WHICH WAS SIGNED AND SWORN TO BEFORE ME AT CAPE TOWN ON THIS 15 DAY OF AUGUST 2001 AND THAT SHE HAS NO OBJECTION TO TAKING THE PRESCRIBED OATH AND CONSIDERS SAME BINDING ON HER CONSCIENCE.

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