World Health Organization Moving Ahead on Billions in Internet and Other Taxes

The World Health Organization is moving full speed ahead with a controversial plan to impose billions of dollars in global consumer taxes on such things as Internet activity and everyday financial transactions like paying bills online — while its spending soars and its own financial house is in disarray.

The World Health Organization (WHO), the United Nations' public health arm, is moving full speed ahead with a controversial plan to impose global consumer taxes on such things as Internet activity and everyday financial transactions like paying bills online — while its spending soars and its own financial house is in disarray.

The aim of its taxing plans is to raise "tens of billions" of dollars for WHO that would be used to radically reorganize the research, development, production and distribution of medicines around the world, with greater emphasis on drugs for communicable diseases in poor countries.

The irony is that the WHO push to take a huge bite out of global consumers comes as the organization is having a management crisis of its own, juggling finances, failing to use its current resources efficiently, or keep its costs under control — and it doesn't expect to show positive results in managing those challenges until a year from now, at the earliest.

Fox News initially reported last January on the "suite of proposals" for "new and innovative sources of funding," prepared by a 25-member panel of medical experts, academics and health care bureaucrats, when it was presented of a meeting of WHO's 34-member Executive Board in Geneva.

Now the proposals are headed for the four-day annual meeting of the 193-member World Health Assembly, WHO's chief legislative organ, which begins in Geneva on May 17.

The Health Assembly, a medical version of the United Nations General Assembly, will be invited to "take note" of the experts' report. It will then head back with that passive endorsement to another Executive Board meeting, which begins May 22, for further action. It is the Executive Board that will "give effect" to the Assembly's decisions.

What it all means is that a major lobbying effort could soon be underway to convince rich governments in particular to begin taxing citizens or industries to finance a drastic restructuring of medical research and development on behalf of poorer ones.

The scheme would leave WHO in the middle, helping to manage a "global health research and innovation coordination and funding mechanism," as the experts' report calls it.

In effect, the plan amounts to a pharmaceutical version of the U.N.-sponsored climate-change deal that failed to win global approval at Copenhagen last December. If implemented as the experts suggest, it could easily involve the same kind of wealth transfers as the failed Copenhagen summit, which will send $30 billion a year to poor nations, starting this year.

The WHO strategy involves a wide variety of actions to transfer "pharmaceutical-related technology," and its production, along with intellectual property rights, to developing countries, according to a condensed "global strategy and plan of action" also being presented to the World Health Assembly.

Regional "networks for innovation" would be cultivated across the developing world, and some regions, such as Africa, would be encouraged to develop technology to exploit "traditional medicines."

According to the condensed plan of action being presented to the Assembly, a number of those initiatives are already well under way.

Click here to read the plan of action.

The rationale for the drastic restructuring of medical R and D, as outlined in the group of experts' report, is the skewed nature of medical research in the developed world, which concentrates largely on non-communicable diseases, notably cancer, and scants research on malaria, tuberculosis and other communicable scourges of poor countries. It cites a 1986 study that claimed that only 5 percent of global health research and development was applied to the health problems of developing countries.

(In dissecting contemporary medical R and D, however, the expert report glosses over the historical fact that many drugs for fighting communicable diseases in developing countries are already discovered; the issue in many cases is the abysmal living and hygienic conditions that make them easily transmitted killers.)

What truly concerns the experts, however, is how to get the wealth transfers that will make the R and D transfers possible — on a permanent basis. The panel offers up a specific number of possibilities.

Chief among them:
• a "digital" or "bit" tax on Internet activity, which could raise "tens of billions of U.S. dollars";
• a 10 percent tax on international arms deals, "worth about $5 billion per annum";
• a financial transaction tax, citing a Brazilian levy that was raising some $20 billion per year until it was canceled (for unspecified reasons);
• an airline tax that already exists in 13 countries and has raised some $1 billion.

Almost casually, the panel's report notes that the fundraising effort would involve global changes in legal structures — and policing. As the report puts it: "Introducing a new tax or expanding an existing tax may require legal changes, nationally and internationally and ongoing regulation to ensure compliance."

As a backup, the panel offers some less costly, voluntary alternatives, including "solidarity contributions" via mobile telephone usage, or set-asides on income taxes.

Yet another alternative: new health care contributions from countries such as China, India or Venezuela, or higher contributions from rich countries — neither idea looking likely in the current climate of international financial crisis. In the report's words: "channeling these resources in this way can only be achieved if there is political will to do so and a convincing case is made."

Click here to read the financing report.

As follow-up, the experts suggest that WHO promote each and every suggested approach for new financing, along with "regulatory harmonization and integration" in the developing world, "research and development platforms in the developing world," and new "product development partnerships" to kick-start the global medicines program.

Just as big an issue for WHO, however, may be whether it can adequately manage the money it is already getting — or trying to get — for its current planned needs.

Other budget documents intended for the World Health Assembly, and obtained by Fox News, paint a picture of an organization where:

• spiraling financial demands are beginning to outstrip the ability of member-nations to pay;
• outsized headquarters budgets, in contrast to the regional and country networks where WHO's public health work is largely done, are rising even faster than the overall budget; and
• efforts to control onerous staff costs are just getting underway.

Those challenges are laid out in WHO's proposed biennial budget for 2010-2011, which calls for a combination of mandatory and voluntary contributions from the world's nations — meaning, overwhelmingly, the three dozen richest ones — of $5.4 billion — a whopping 27 percent increase over the same initial draft figure for 2008-2009.

But that increase, large as it is, will likely be far less than WHO needs before the latest biennium ends. In 2008-2009, the initial $4.23 billion draft budget was "revised" to a final $4.95 billion during the two-year period, a 17 percent increase.

Using the same inflationary measure, WHO's spending could well climb to $6.3 billion before the end of 2011.

Click here for the draft 2010-2011 budget.

One of the biggest jumps would come in the spending centered on WHO's headquarters in pricey Geneva — a 44 percent climb in its share of program budgets, from $1.18 billion to $1.7 billion, even before any future "revisions."

WHO planners point to the shrinking value of the U.S. dollar, its budgeted currency, against the Swiss franc as a major factor, which they say has increased costs by 15 percent. But other factors include more meetings for WHO's governing bodies and salary provisions for the top officers of the WHO Secretariat.

According to documents presented to the program, budget and administration committee of WHO's Executive Board, headquarters costs for the organization have remained proportionately steady for years at almost 38 percent of WHO's spending, however much that spending has grown. The ratio is striking, since WHO devotes most of its efforts to improving health care conditions in the developing world.

The organization's stated goal is to spend only 30 percent of its program funding in Geneva, but the same planners think it is "unrealistic" to think WHO will reach that objective, even by 2013.

In foggy bureaucratic language, they declare that "a change that is too swift and radical will be disruptive to the entire function of the Organization or fail because of an insurmountable accumulation of practical problems of execution."

Translation: the WHO bureaucracy won't easily cooperate.

In a bid to get the head-to-tail ratio under better control, WHO's top managers have set ceilings for headquarters hiring, but these only went into effect this year. The hiring limits will not cut the Geneva head-count but limit its further growth — "an acknowledgement," the document says, "that staff numbers are the main driver of WHO's expenditures."

That combination of WHO's sharp hikes in costs and a grim economic climate have led to another major management problem: "continued disparities between the approved budgets and the available resources."

In other words, WHO's member states and donors are not paying up as fast as the organization is spending the money across its many and varied priorities, leading to budgetary juggling and behind the scenes efforts to get major donor countries to ante up future contributions in advance, and cough up more voluntary funds in the future.

In its planning committee documents, the WHO bureaucracy promises to get a better grip on its finances in the near future.

Among the cost management efforts will be higher levies on voluntary donations to cover WHO staff costs — higher administrative fees, in short — along with more voluntary and "fully flexible" donations that can be used at the management's discretion, rather than being earmarked for specific programs.

Click here for the resource management report.

It will be another year, however, before WHO's overseers will be able to see if its management juggling will bear adequate fruit.

All in all, that is not a confidence-building credential for an organization that is simultaneously trying to reorganize the world's medical research, development, production and distribution system — and make the world's consumers and taxpayers pick up most of the multibillion-dollar tab.

George Russell is executive editor of Fox News.

Tax and Spend: U.N.'s Rx for New World Medical Order

Friday , January 22, 2010

By George Russell

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A member of a World Health Organization (WHO) panel of experts that is pondering new global taxes on e-mails, alcohol, tobacco, airline travel and consumer bank transactions, has charged that she was given only selective information at group meetings, that deliberations were rushed and that group was "manipulated" by the international pharmaceuticals industry.

All of her charges were strongly denied by the head of WHO's Expert Working Group on Research and Development Financing (EWG), a 25-member panel of medical experts, academics and health care bureaucrats which is due to present a 98-page report in Geneva on Monday, after 14 months of deliberations on "new and innovative sources of funding" to reshape the global medical industry.

A copy of the executive summary of the report was obtained by Fox News on January 15 — the same day, as it happens, that the EWG's dissident member first aired her charges in a letter to members of WHO's 34-member supervisory Executive Board.

The executive summary first revealed the possibility of a multibillion-dollar "indirect consumer tax" as one means of financing an epic shift of drug-making research, development and manufacturing capabilities to the developing world that is the central aim of WHO's fund-raising strategy.

Fox News has obtained a copy of the full EWG report, Research and Development: Coordination and Financing, in advance of its publication Monday, which lays out in greater detail the working group's proposals for fund-raising. These include not only indirect consumer taxes but also greater donations by wealthy governments as a percentage of gross domestic product, voluntary individual payments tied to such things as individual mobile phone use, health care lotteries, new commitments from charitable and philanthropic organizations, and the possible diversion of current philanthropic giving from developed-world causes into developing world health care.

The report lays out, and generally endorses, a number of public-private partnerships in the developing world with some of the world's biggest pharmaceutical firms. But it also raises the idea of a tax on pharma-profits from low-income countries that could raise as much as $160 million a year.

The report labels that tax idea a "particularly attractive" option for funding health research and development, and says that revenues from it would "rise considerably if the profits from one or more high income countries was included."

One dissident member of the working group, Cecilia Lopez Montano — a federal senator of Colombia and former national environmental minister — insisted that working sessions of the group she attended were truncated, that her suggestions of looking critically at intellectual patent rights held by Big Pharma companies were ignored, and that neither she nor "the majority of the members of the group" actually participated in the findings "in a full manner."

In a telephone interview on Thursday with Fox News, Lopez Montano declared that she did not "understand, if we are talking about getting cheaper medicines for poor people, how we could discuss this without talking about intellectual property rights."

Frustrated, she says, she walked out of the group's last working session in December 2009, and did not return.

"The only comment I would make for public consumption is that her allegations are completely unfounded," replied the EWG chairperson, Sir George Alleyne, to an email query by Fox News about the incident. A tropical medicine specialist from Barbados who served as a onetime U.N. Secretary-General's special envoy for HIV/AIDS in the Caribbean, Alleyne wrote that "to my knowledge, not a single member of the group has associated himself or herself with her comments."

The tempest created by Lopez Montano's accusations is liable to fade quickly as people around the world — especially Americans, who are far and away the world's biggest funders of medical research and development — absorb the variety of the EWG's revenue ideas and the full extent of WHO's ambitions to reshape the international health care industry in favor of research and development for the "neglected" diseases of developing countries.

The full EWG report lays out in some detail a battery of other possible consumer taxes on citizens of rich countries for such things as alcohol and tobacco use, weapons sales, and airline travel, to create a burgeoning medical R&D industry spread across the developing world.

Click here for the full report.

A 5 percent to 10 percent increase in alcohol taxes in developing countries, it notes, could raise anywhere from $5.5 billion to $11 billion per year.

It also cites approvingly a 0.38 percent Brazilian tax on bills paid online and unspecified "major withdrawals" that was raising an estimated $20 billion a year before it was revoked. "There is scope globally for expansion of bank transaction taxes," the report notes.

The Internet or "digital" tax offered up as an example by the EWG would amount to 1 cent per 100 emails, yielding a conservative $3 billion a year. It "might be appealing to politicians and consumers, who will accept a low tax across a broad base with an altruistic purpose." But almost in the same breath, the document observes a complication, that "introducing a new tax or expanding an existing tax may require legal changes, nationally and internationally, and ongoing regulation to ensure compliance."

Getting mobile phone users to sign up for a voluntary medical fee per call could yield anywhere from $280 million to $1.8 billion, depending on the tax bite and the consumer enthusiasm for the idea, while a voluntary fee tied to airline ticket purchase, the document says, could raise nearly $1 billion.

The report estimates WHO would raise $7.4 billion a year if donor nations hiked their percentage of GNP targeted on the new health care model. But the report still holds out hope for substantially more money if "donors diverted current financial support" from medical research that meets their own current requirements to WHO's agenda.

After itemizing all those potential sources of new money, however, the report suggests that only a "balance" of options be selected, which it projects would amount — again, conservatively — to about $4.6 billion a year. That would "nearly triple current research and development funding for neglected diseases in developing countries."

How would all the money be channeled? Mainly, it appears, through institutions that in many of cases have close ties with WHO.

The report that will be released Monday suggests that a global blossoming of developing-world research networks, many of which appear to be rapidly sprouting up in tandem with WHO's efforts to create new ways of financing them, could be "coordinated" via an "effective global health governance structure" by WHO itself — an organization whose 34-member executive board is made up largely of non-elected health bureaucrats from around the world.

Funding for the burgeoning medical research industry would be dispensed by a not-yet-created "global health research and innovation, coordination and funding mechanism."

The new money-dispensing machine would ladle out funds for "new drugs, vaccines, diagnostics and intervention for the poor, as well as medical research in low- and middle-income countries, new centers for the collection and analysis of research and development data, and new authority to distribute research assignments among public and private entities.

Its estimated cost, in the early stages: anywhere from $3 billion to $15 billion per year.

Many of the new parts of the proposed medical industry network in developing countries would also appear, according to the report, to be fostered by WHO itself, with collaboration from other parts of the United Nations' system of funds, programs, agencies and other institutions.

The report singles out favorably, for example, a new and fast-growing group of research institutions known as the African Network for Drug Discovery and Innovation (ANDI), launched in 2008. ANDI was created under the auspices of an institution known as TDR, a tropical disease research program that is part of WHO, and is now jointly sponsored by WHO, UNICEF, the United Nations Development Program, and the World Bank (also a U.N. institution).

According to the EWG report, networks like ANDI, which could involve a welter of local public and private financing, government participation, international agencies and global pharmaceutical firms, could not only coordinate regional research policy in such areas as traditional African medicine, but also fund-raise, allocate funds between different developing countries in Africa, and work to harmonize local medical regulations.

It would all be, as the report puts it: "a multi-level, multi-party, multi-purpose partnership for global health governance, a platform coordinated by WHO and supported by high-level political commitment and policy coherence."

Not by coincidence, new health research networks like ANDI cropped up in 2008 — at about the same time that WHO's legislative World Heath Assembly adopted a global strategy and plan of action that mandated the organization, as the EWG report puts it, to "play a strategic, central role in the relations between public health and innovation and intellectual property."

Among other things, that meant driving the global health-care agenda "to promote a new approach to innovation and access to medicines, which would encourage needs-driven rather than market-driven research." The aim: "to target diseases that disproportionately affect people in developing countries."

Behind that new direction is the U.N. organization's belief, evidently shared by many medical researchers, that medical research and development in rich countries aims to cure the ailments of their rich citizens, while the diseases that afflict poor nations, like malaria, tuberculosis and HIV/AIDS, are "neglected." Even when the medicines are appropriate, the EWG report relates, they are too expensive.

"In 56 of the 58 countries in which the bottom billion [poorest people] live, virtually every person has at least one neglected tropical disease," the report states. It adds that "95% of the 33 million people living with HIV are in low- and middle-income countries (68% in sub-Saharan Africa), and 27% of new cases and 31% of registered deaths from tuberculosis were in Africa."

Only a massive shift in research and development capacity to low- and medium-income countries — fueled by funds from rich ones — will correct that imbalance, the report, and the WHO strategic plan, argue.

The EWG report maintains that argument even as it also reveals that poor countries are increasingly afflicted with the same non-communicable diseases as rich ones: cancer, cardiovascular ailments, diabetes. Indeed, the report cites a projection that $84 billion in lost income will result between 2006 and 2015 in 23 low- and middle-income countries as a result of heart disease, stroke and diabetes alone."

Regardless of the afflictions, the WHO remedy remains "the production of new knowledge, especially through the investments in research and development." Especially under the many-faceted initiatives of WHO.

George Russell is executive editor of Fox News.

U.N.'s World Health Organization Eyeing Global Tax on Banking, Internet Activity

Friday , January 15, 2010

By George Russell

The World Health Organization (WHO) is considering a plan to ask governments to impose a global consumer tax on such things as Internet activity or everyday financial transactions like paying bills online.

Such a scheme could raise "tens of billions of dollars" on behalf of the United Nations' public health arm from a broad base of consumers, which would then be used to transfer drug-making research, development and manufacturing capabilities, among other things, to the developing world.

The multibillion-dollar "indirect consumer tax" is only one of a "suite of proposals" for financing the rapid transformation of the global medical industry that will go before WHO's 34-member supervisory Executive Board at its biannual meeting in Geneva.

The idea is the most lucrative — and probably the most controversial — of a number of schemes proposed by a 25-member panel of medical experts, academics and health care bureaucrats who have been working for the past 14 months at WHO's behest on "new and innovative sources of funding" to accomplish major shifts in the production of medical R&D.

WHO's so-called Expert Working Group has also suggested asking rich countries to set aside fixed portions of their gross domestic product to finance the shift in worldwide research and development, as well as asking cash-rich developing nations like China, India or Venezuela to pony up more of the money.

These would also add billions in additional funds to international health care for the future — as much as $7.4 billion yearly from rich countries, and as much as $12.1 billion from low- and middle-income nations.

But the taxation ideas draw the most interest. The expert panel cites a number of possible examples. Among them:

—a 10 per cent tax on the international arms trade, "which might net about $5 billion per annum";

—a "digital tax or 'hit' tax." The report says the levy "could yield tens of billions of U.S. dollars from a broad base of users";

—a financial transaction tax. The report approvingly cites a levy in Brazil that charged 0.38 percent on bills paid online and on unspecified "major withdrawals." The report says the Brazilian tax was raising an estimated $20 billion per year until it was cancelled for unspecified reasons.

The panel concludes that "taxes would provide greater certainty once in place than voluntary contributions," even as the report urges WHO's executive board to promote all of the alternatives, and more, to support creation of a "global health research and innovation coordination and funding mechanism" for the planned revolution in medical research, development and distribution.

Click here to read the executive summary of the report.

The WHO scheme to transfer impressive amounts of money, technology, patents and manufacturing ability to the developing world in a global battle to conquer disease looks similar in many respects to the calls for huge transfers of wealth and technology that were at the heart of the just-failed U.N.-sponsored conference on lowering greenhouse gas emissions at Copenhagen.

Indeed, the volume of revenues that the experts foresee from their global indirect tax — if it should ever be approved by enough national governments — might well come close to the $30 billion annual wealth transfer that rich nations approved at Copenhagen to hand over to poor countries until 2012.

But a global health tax would go one big step further. And, as the experts point out, one trail-blazing version of their global consumer tax for medical research already exists: a germinating program known as UNITAID, which aims to battle against HIV/AIDS, malaria and tuberculosis.

UNITAID, which began in 2006 and is also hosted by WHO, is financed in part by a "solidarity contribution" levy of anywhere from $1.20 to $58 on airline tickets among a group of nations led by France, Brazil, Chile, Norway and Britain. According to the WHO experts report, it has raised around $1 billion since its inception, with 13 countries having already passed the airline tax legislation and "several" others in the process of doing so.

The idea, as with the "indirect" taxes that WHO is about to consider, is that a relatively small consumer levy, once implemented, is a low-profile and relatively painless way to create a global health-care tax system.

UNITAID's board chairman, Philippe Douste-Blazy, a former French Cabinet Minister and currently special advisor to U.N. Secretary General Ban Ki-moon on "innovative financing for development," is also a member of the WHO expert working group.

The global financial mechanism that the experts have been exploring is the keystone to WHO's entire program for the transformation of the world's health industry, which was endorsed as a "global strategy and plan of action" by the health organization's World Assembly in May 2008.

The plan includes more than 100 specific actions across the areas of research and development, technology transfer and intellectual property rights, among others, according to an update that will also be presented to the executive board next week.

Click here for the update.

New regional and national networks for medical innovation and development are being planned in Asia, Latin America and Africa — where, for example, there will be "African-led product research and development innovation," including delivery of drugs based on traditional medicines.

Another major effort is the transfer of technology to poorer countries to produce vaccines. One example: H1N1 flu vaccine, which is being manufactured in China, India and Thailand under licensing arrangements created under WHO auspices.

After WHO issued repeated warnings of a serious H1N1 influenza pandemic over the past two years, countries such as Britain and France ordered hundreds of millions of dollars worth of vaccine, only to decide that they were unnecessary, leading to mass cancellations of orders. WHO is reviewing how it handled the crisis.

According to the WHO update, the U.N. organization is already promoting transfers of new medical products for vaccines against rabies, even though that disease is now something of a rarity in the West.

A significant aim of the WHO effort is expanding production and distribution of remedies for what it calls "neglected diseases," mainly meaning those that are more common in poor, underdeveloped countries than in richer ones. These include a variety of parasitic ailments, including trypanosomiasis, or sleeping sickness.

Behind all of the effort is the "persistent and growing concern," as the expert's paper puts it, that "the benefits of the advances in health technology are not reaching the poor," which the paper calls "one of the more egregious manifestations of inequity."

As with "climate change" at Copenhagen, the WHO's experts see that health inequity as a malady that innovative and permanent forms of global taxation are just the right thing to help cure.

George Russell is executive editor of Fox News.