Return on investment in needle and syringe programs in Australia: report

Financial effects of NSPs

Page last updated: 2002

Expenditure on NSPs
Treatment costs avoided
Financial return on investment

Expenditure on NSPs

Between 1991 and 2000, an estimated $141 million ($150 million in 2000 prices) was expended on NSPs across Australia, comprised of $122 million (87%) by government, and $19 million (13%) in consumer expenditure.

These data cover expenditure on NSPs operating within the programs managed by State and Territory health authorities. It excludes costs associated with the many retail pharmacies that also sell needles and syringes on a commercial basis, for which reliable data is not available on the number of needles sold or the level of expenditure by consumers.

Treatment costs avoided

Estimates of the lifetime costs of treatment for HIV and HCV cases avoided are based on past and current treatment regimes by disease stage and applied over the projected lifetime of cases. Standardised costs have been used for each component of health care using year 2000 prices.

HIV

For HIV, annual treatment costs are estimated to rise progressively to the year 2008 as patients progress to later stages of the disease, at which time they peak at approximately $269 million. Thereafter, annual costs decline, brought about mainly by the declining number of patients in the second and third stages of HIV. Total HIV treatment costs avoided over the lifetime of cases are estimated at $7,025 million (undiscounted). These represent the savings that accrue from a combination of the following:
  • Approximately 25,000 cases of HIV avoided, who
  • live for an average of about 24 years after infection, and who
  • incur average treatment costs of nearly $14,000 each year of their life after diagnosis.

HCV

For HCV, annual treatment costs rise progressively to the year 2040, at which time they peak at approximately $18.8 million and decline thereafter. The major factor influencing this cost profile is the number of patients who progress to liver failure who, while relatively small in number, have extremely high costs of treatment. Total HCV treatment costs avoided over the lifetime of cases are estimated at $783 million (undiscounted).

Overall, total treatment costs avoided over the life of the cases of HIV and HCV avoided by NSPs are approximately $7,808 million (before discounting). The costs of HIV treatment avoided are approximately ten times those for HCV, which reflects a combination of the number of cases avoided in the first instance (25,000 for HIV compared to 21,000 for HCV), a higher diagnosis rate for HIV than HCV, and higher average annual treatment costs for HIV than for HCV. Top of page

Financial return on investment

The calculation of financial return on investment discounts future cashflows associated with the investment in the NSP program and treatment costs avoided by an agreed discount rate. The discount rate most commonly used in government programs of this nature is 5% per annum. For the purposes of illustration, we have also applied discount rates of 3% and 0%.

HIV impacts

The results of the analysis of financial return on investment in NSPs to government and in total, having regard to the impacts on HIV alone, are presented in Table 1.

The analysis indicates that there have been significant financial savings accruing to government from the investment in NSPs to date, and that these savings will continue to accrue into the future.

Table 1 Net present value, 1991 ($million, year 2000 prices) of investment in NSPs for HIV

Government expenditureAll expenditure
Lifetime costs of treatment (5% discount)
$2,277
$2,262
Lifetime costs of treatment (3% discount)
$3,415
$3,398
Lifetime costs of treatment (0% discount)
$6,896
$6,876

HIV and HCV impacts combined

The financial return on investment in NSPs to government and in total, having regard to the impacts on HIV and HCV combined, are presented in Table 2.

The analysis indicates that the incorporation of HCV into the NPV calculations has further increased the savings accruing to government and in total.

In summary, the study indicates that the financial return on investment will exceed manyfold the original investment in NSPs, and that the original investment had been fully recouped and surpassed by the end of the investment period, before any future savings are taken into account. The investment in NSPs is justified by the effect on HIV alone, with the effect on HCV providing an additional financial benefit, albeit a smaller one than HIV. Sensitivity analysis on the main variables used in the analysis indicates that the results are robust under a range of alternative assumptions and scenarios.

Table 2 Net present value, 1991 ($million, year 2000 prices) of investment in NSPs for HIV and HCV combined

Government expenditureAll expenditure
Lifetime costs of treatment (5% discount)
$2,402
$2,386
Lifetime costs of treatment (3% discount)
$3,653
$3,637
Lifetime costs of treatment (0% discount)
$7,678
$7,658
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