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Don't be defeatist about AIDS
by Tim Cohen, Associate Editor, Business Day (5 Sept 2002). Republished with kind permission.
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Any company seeking to evaluate the extent of the HIV/AIDS threat must involve itself in the macabre mathematics of death. Those companies that have more foresight have grasped this nettle, and found the task less daunting than it might seem. This partly explains why companies such as Anglo American have taken up the treatment option.
To most companies, the threat of HIV/AIDS seems so great that company-sponsored treatment appears unlikely, as it could endanger the solvency of the company. As a result, most companies do not even try it. The treatment option turns out to be not only viable in health terms, but less financially onerous than all other options, including the hopeless "ignore it and it will go away" option.
Manager of Metropolitan's AIDS Resarch Unit, Stephen Kramer, provides this example:
Treatment, including drugs, doctors' visits, blood tests and so on, can conceivably be offered for R15 000 a year. Other estimates are higher, and this figure is based on anti-retrovirals being provided at near cost price. In fact, Anglo is working on a R25 000 figure. In any event, compare this or a slightly higher amount to the employee's ultimate death benefit.
Take an employee who earns R4 000 a month; if you assume the cost of death benefits would be about four times the yearly salary, then the total death benefit would be about R200 000. Without treatment, the company or its insurer would be obliged to pay out this money practically immediately. However, the crucial point is this: the interest on the total death benefit is in fact less than the cost of treatment - about R23 000 a year.
Even though the death benefit will have to be paid eventually, in SA's environment of high interest rates, the cost of treatment does not mean that it outweighs the discounted cash flow of the future interest earnings on the death benefits.
Of course, there are all kinds of objections to this simple calculation. Interest rates might come down, the cost of drugs might go up, the buyers of death benefits might want the interest to accrue to them and not to improved health services, and so on.
It does show, however, that defeatism is the wrong response, not only to the disease itself but also to the financial implications that treatment might imply. For Metropolitan's Kramer, the danger is to become overly obsessed with incidence rates and to treat the issue as just another health issue. Establishing incidence, while important, is not the same as active prevention and treatment.
AIDS is unlike any other health risk for many reasons, but most importantly, it is unlike other diseases because it does not simply manifest itself immediately. There is an infection stage and only after that does the disease manifest. It is crucial to identify it quickly. The advantages of doing so are enormous, for the patient obviously, but also for the nature and expense of the treatment regime.
Hence, Kramer predicts that Anglo's treatment policy will be followed by many other businesses in the near future. To do otherwise would be to show an approach (to borrow a phrase) at best ambivalent and at worst pusillanimous.
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