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

Fox News

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.”

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