BACKGROUND: External assistance can rapidly strengthen health programmes in developing countries, but such funding can also create sustainability challenges. From 2004-2011, the U.S. President's Emergency Plan for AIDS Relief (PEPFAR) provided more than $ 8 million to the Blood Transfusion Service of Namibia (NAMBTS) for supplies, equipment, and staff salaries. This analysis describes the impact that support had on actual production costs and the unit prices charged for red cell concentrate (RCC) units issued to public sector hospitals.

MATERIAL AND METHODS: A costing system developed by NAMBTS to set public sector RCC unit prices was used to describe production costs and unit prices during the period of PEPFAR scale-up (2004-2009) and the 2 years in which PEPFAR support began to decline (2010-2011). Hypothetical production costs were estimated to illustrate differences had PEPFAR support not been available.

RESULTS: Between 2004-2006, NAMBTS sold 22,575 RCC units to public sector facilities. During this time, RCC unit prices exceeded per unit cost-recovery targets by between 40.3% (US$ 16.75 or N$ 109.86) and 168.3% (US$ 48.72 or N$ 333.28) per year. However, revenue surpluses dwindled between 2007 and 2011, the final year of the study period, when NAMBTS sold 20,382 RCC units to public facilities but lost US$23.31 (N$ 170.43) on each unit.

DISCUSSION: PEPFAR support allowed NAMBTS to leverage domestic cost-recovery revenue to rapidly increase blood collections and the distribution of RCC. However, external support kept production costs lower than they would have been without PEPFAR. If PEPFAR funds had not been available, RCC prices would have needed to increase by 20% per year to have met annual cost-recovery targets and funded the same level of investments as were made with PEPFAR support. Tracking the subsidising influence of external support can help blood services make strategic investments and plan for unit price increases as external funds are withdrawn.