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					                              HIV/AIDS Medicines Pricing Report
                            Setting objectives: is there a political will?
                                         UPDATE: DECEMBER 2000

                                      by: Carmen Pérez-Casas, Pharmacist

In a report released in June 2000, MSF studied the different prices and patent situations of life-saving
drugs for HIV/AIDS.1 This report provides a summary and update of the findings as of December 2000.
Prices were based on US wholesale prices and institutional2 prices in ten countries where data was
available.

Currently, 95% of all people infected with HIV – 32.3 million people -- live in developing countries.
More than 2.5 million people die each year from the disease. The introduction of anti-retrovirals has
dramatically reduced mortality from AIDS in wealthy countries,3 but has not significantly altered the
course of the disease in poor ones. Many factors affect access to medicines: quality of diagnosis,
accurate prescribing, selection, distribution and dispensing of medicines. But one of the most significant
barriers to access is the price of drugs. Currently, in most poor countries the prices of HIV drugs
condemn people with AIDS to a premature death. Yearly treatment cost in the US ranges from $10,000
to $15,000 per patient, while annual GDP per capita in developing countries ranges from $140 to
$6,190.4

In the past, Médecins Sans Frontières (MSF) HIV/AIDS programmes have mainly focused on the
prevention of infection, alleviating pain (palliative care) and combating social stigma. But MSF now
recognises that it is essential to move into treatment, to allow people to live healthier and longer lives
and to continue to contribute to their families and society. The organisation has expanded its approach
to encompass preventing transmission from mother to child, preventing and treating opportunistic
infections, and small-scale anti-retroviral programs. Treatment is a key component for strengthening
preventive efforts because it increases peoples’ willingness to get tested. Unless treatment is made more
widely available, HIV/AIDS will continue to cut a broad swath through many developing countries.

Quality, generic combination therapy is currently available at an annual cost of $800-$1000 per patient.
If large quantities are demanded, generic producers will in a few years be able to bring down the price
of triple therapy to approximately $200/year per patient. Although there are additional costs associated
with treating people with HIV/AIDS, price reductions of this scale would allow developing countries, in
partnership with developed countries, international organisations and donors, to tackle the problem of
providing care for people with HIV/AIDS. The means to accomplish this are available. What is needed
is the political will to mobilise resources on a global scale to combat this pandemic. As an organisation



1 Carmen Pérez-Casas, et. al. 2000. HIV/AIDS medicines pricing report. Setting objectives: is there a political
will? MSF Access to Essential Medicines Campaign. (www.accessmed-msf.org)
2
  Prices used in this study are defined as “institutional prices” meaning the non-commercial price (amount paid for a
drug by a public or non-profit institution and/or NGO). Note that the institutional price is only part of the picture.
Many people’s only way to access drugs is through the private sector and pay higher prices. For example, in South
Africa, most people buy their daily dose of fluconazole from the private sector where it costs $21.40, instead of the
public tender price of $4.10 used in this report.
3
  Data from the US illustrates that highly active antiretroviral therapy has reduced AIDS-related mortality by 75%
and morbidity by 73% over a period of 3 years.
4
  Human development report 2000: human rights and human development, UNDP, June 29, 2000.

                                                                                                                    1
that cares for people with AIDS, MSF believes that there is an ethical imperative to provide treatment to
people who are in need.

Which drugs are essential for HIV/AIDS in developing countries?
Advanced HIV-disease is a complex syndrome that presents a variety of symptoms and medical
conditions, many of which are manageable with drugs. The most important are:
    anti-infective agents to treat or prevent opportunistic infections (OIs);
    palliative drugs to relieve pain, physical and mental discomfort;
    anti-retrovirals (ARVs) to limit the damage that HIV does to the immune system and to prevent
     mother-to-child transmission (MTCT).

Where should the battle be focused?
Efforts to improve access should focus on two categories of drugs:
    1. Unpatented, older drugs that are not widely available as affordable generics (e.g. ceftriaxone);
    2. Patented drugs sold at prohibitive prices by companies (e.g. fluconazole or ARVs).

                                      (SEE TABLE 1 FOR RESULTS)

                                          ANALYSIS OF RESULTS

1. Different prices in different countries
Among the range of prices of the ARVs studied, the lowest price in the developing countries is on
average 85% less than the US price, as a result of the availability of generic products. If we exclude
efavirenz from this calculation, for which no generic was included in the study5, the average reduction is
90%. Therefore, in most cases, even if prices were reduced by 85% (as has been offered by some
pharmaceutical companies), they would still be higher than the prices currently offered by generic
producers in some countries.

For many treatments, companies sell the same product at very different prices in different countries. For
example, Pfizer’s Diflucan (branded version of fluconazole) costs nearly 49% less in Thailand than in
Guatemala. Roche’s Rocephine® (branded version of ceftriaxone) is 33% less expensive in Colombia
than in South Africa.

The widely divergent prices for the 10 selected products within developing countries put into question
current pricing practices and highlight the lack of transparency with regard to the relationship between
production costs and prices. The existence of market monopolies is the most important determinant of
these differences; when multinational drug companies have exclusive marketing rights, they tend to
demand maximum possible prices, catering to country elites and leaving their drugs out of reach for the
vast majority of people living in developing countries. There are no links between prices and public
health needs.

Other factors influencing prices at the national level include: tariffs and taxes, price controls,
government price negotiations and mark-ups.

2. Impact of competition on prices
The presence or absence of generic competition in the market is a key determinant of pricing levels.
Competition brings down prices dramatically. For example, in Thailand, after three companies
introduced generic versions of fluconazole in 1998, Pfizer dropped its price for fluconazole from $7 per
200mg capsule to $3.60. (After initially responding to generic competition, Pfizer increased its




5
 There is at least one manufacturer of efavirenz generic in India, but no information concerning the manufacturer or
price was available at the time of writing this document.

                                                                                                                  2
Table 1: Institutional price of 10 HIV/AIDS in 8 countries, in US$

         THE PRICE INFORMATION PRESENTED IS NOT EXHAUSTIVE AND SHOULD ONLY BE CONSIDERED AS AN INDICATION OF VARIATION IN PRICES BETWEEN
         COUNTRIES
Drug (INN)           CEFTRIAXONE CIPROFLOXACIN DIDANOSINE EFAVIRENZ FLUCONAZOLE LAMIVUDINE                                 NEVIRAPINE   STAVUDINE ZIDOVUDINE   AZT +3TC
                                                  (ddI)     (EFV)                 (3TC)                                      (NVP)        (d4T)      (AZT)

Description                 1g                 250 mg              100 mg           200 mg             200 mg     150 mg     200 mg       40 mg     100 mg     300+150 mg
                            vial                 tab.               cap.             cap.               cap.       cap.       cap.         cap.      cap.          cap
Argentina                  N/A                   N/A                 0.8 G             4.3               N/A       0.4 G      3.5 G       0.2 G      0.2 G        0.8 G
Brazil                     N/A                   N/A                 0.5G              2.3               N/A       0.3 G      1.3 G       0.3 G      0.1 G        0.7 G
Colombia                    7.2                 0.05 G               0.8 G             3.3               0.4 G     1.7 G      4.3          2.4       0.7 G        N/A
Guatemala                  1.8 G                0.05 G                2.3              3.4               0.6 G     2.4        N/A          4.2       0.4 G        3.9
India                      1.8 G                 N/A                  1.1             N/A                0.6 G     0.4 G      1.5 G       0.3 G      0.2 G        0.9 G
South Africa               10.9                  0.40                *0.7             *2.4                4.1      1.1        *3.0        *2.5        0.4         1.5
Thailand                   1.7 G                0.06 G               0.7 G             2.7               0.3 G     2.5        3.5         0.4 G      0.2 G        2.3
Uganda                     *4.4                *0.14 G                1.3             N/A                *1.3      1.6        *4.7         3.1        0.7         3.7
US                         N/A                   3.40                 1.8              4.4               12.2      4.5        4.9          4.9        1.7         9.8
(wholesale
price)
Price                                          68.0 x               3.6 x             1.9 x            40.6 x     15.0 x     3.8 x       24.5 x     17.0 x       14.0 x
differential:
US vs. best
price
Price                                           98%                  72%              48%                98%       93%        73%         96%        94%          93%
differential:
US vs. best
price (%)
         XG is included when drugs are produced by a manufacturer other than the originator of the brand drug .
         N/A indicates that prices were not available at the time this report was written.
         * indicates non-institutional prices.



                                                                                                                                                                          3
price back up to $6.20 in March 2000.) One of the generic versions is available for $0.30 per 200mg
capsule. This dramatic price reduction means that fluconazole is now readily available to
patients, making cryptococcal meningitis a treatable illness in Thailand.

Another striking example is Brazil, where locally-produced ARVs are sold at a fraction of their
international prices. For example, generic stavudine is 24.5 times cheaper in Brazil than in the US. In
order for developing country governments to address their acute AIDS crises, low-cost, quality
generic production should be facilitated. Research and development costs for originator’s branded
drugs should be borne by wealthy countries.

3. Current cost of treatment regimens
The cost of treatment with branded drugs is often dramatically more expensive than treatment with
generics. For example, the triple combination AZT/3TC (600/300 mg) + NVP (400 mg), taken daily,
costs $122/month in Brazil where the drugs are produced locally. In Thailand, where none of these
are available as generics, the total cost comes to $348 (2.9 times as much). In other words, it costs
the Brazilian public health system the same amount to treat 1,000 people living with HIV/AIDS
as it does the Thai government to treat 350 (excluding the cost of diagnostics and other expenses).

The availability of cheaper drugs has enabled the Brazilian government to provide anti-retrovirals to
over 90,000 people.6 Generic drugs reduced the mean monthly cost of triple therapy (with a protease
inhibitor [PI]) from $611 in 1997, to $393 in 2000. Treatment regimens without PIs, went from $381
to $250 in 2000. In addition, by offering ARV treatment, the government saved more than $472
million on hospitalisations7 and treatment for opportunistic infections8 between 1997 and 1999. It
may cost a government more not to offer treatment, because of the high cost of caring for
people with AIDS.

4. Previous international procurement initiatives
Concerted international procurement efforts on vaccines and contraceptives have also been able to
significantly reduce prices for drugs. For example, the oral polio vaccine is sold to developing
countries at 33.3 times less than to the US government. Likewise, oral contraceptive prices are 130-
240 times cheaper in poor countries than in the US (retail). In comparison, is the current offer
from five pharmaceutical companies and UNAIDS to reduce prices by 6.7 times (85%) a
response of adequate magnitude to the current pandemic?

5. Public involvement in research and development
Pharmaceutical companies claim that high prices are necessary to fund research and development.
But upon review, it was found that for 5 of the 6 ARVs analysed, public funding played a significant
role in the drug development process. The important contribution of national governments is
demonstrated by the fact that patents for important AIDS drugs are held by the US government. This
is the case for 2 drugs covered in this report: didanosine and stavudine.

In addition to research and development, the industry cites long time-to-approval as another
justification for high prices. However, anti-retrovirals have the shortest time-to-approval of any class
of drugs: the mean is 44.6 months, which is half the industry average of 87.4 months.9 Significant
government sponsorship further reduces the cost of clinical trials for these drugs: more than a third of
patients enrolled in US trials participated in trials funded by the US government .10



6
  Unpublished data from the Brazilian Department of Health.
7
  146, 000 hospitalisations avoided (data estimated by the Ministry of Health, Brazil)
8
  Reduction on 60% to 80% in the most common opportunistic infections related to HIV/AIDS (cryptococcosis,
citomegalovirus, Kaposi’s sarcoma and tuberculosis).
9
  Kaitin, K & Healy E. The new drug approvals of 1996, 1997, and 1998: drug development trends in the user fee
era, Drug Information Journal, Vol. 34, pp. 1–14, 2000.
10
   http://www.cptech.org/ip/health/aids/sizeoftrials.html

                                                                                                            4
Whatever the true investment of the pharmaceutical industry in researching and developing anti-
retrovirals, these drugs have earned the companies consistent revenue. Between 1997 and 1999,
Glaxo Wellcome’s sales for AZT, 3TC, and Combivir (a one-pill combination of AZT and 3TC)
totalled more than $3.8 billion. Bristol-Myers Squibb sold more than $2 billion worth of d4T and ddI
over the same period.

            MECHANISMS TO REDUCE THE COST OF HIV/AIDS TREATMENT

Governments of developing countries are able make AIDS drugs more affordable by using the key
legal mechanisms outlined below. They should be supported by WHO, UNAIDS, other governments,
and NGOs, with the input of both proprietary and generic pharmaceutical companies.
     1) Use of generics: Generic versions of many products could be made available today in many
        developing countries, since most were patented before many of these countries put their
        patent systems into effect. The most recent patent of all products in this report was granted
        for efavirenz on August 7th 1992.11 Countries need first to identify quality affordable
        suppliers and register these products with regulatory authorities. Nevertheless, patent status
        is a national issue and needs to be researched on a country-by-country basis.
     2) Price studies: Organisations such as WHO or UNAIDS should carry out international
        comparative price studies on an ongoing basis, as mandated by the 2000 World Health
        Assembly, to give developing countries the tools to spend their health budgets most
        effectively. 12 They should include both raw material and finished product prices, taking into
        account internationally recognized quality standards. The first steps have already been taken,
        in a joint effort with UNAIDS, WHO, and UNICEF, and a report on the database is
        available.13
     3) International procurement: UN organisations (WHO or UNAIDS) should enable
        governments to access low-cost, quality medicines to support their national AIDS
        programmes, by beginning international procurement of AIDS drugs. They should
        immediately issue tenders to the proprietary and generic industry for mass procurement of
        opportunistic infection and anti-HIV medicines. The UN should use previous vaccine and
        contraceptive procurement projects as a guide.
     4) Technology transfer: Technology transfer should be supported by international
        organisations and national governments as a way to guarantee the sustainable production of
        affordable medicines. For those countries with production capacity, the goal should be to
        begin producing raw materials in addition to finished products.
     5) Safeguards on patents: In countries in which patent protection presents a barrier to access to
        essential medicines, international organisations should actively support countries’ efforts to
        improve access. (See Annex 2) This can be achieved through the following means:
        a. Voluntary licensing: The government, an individual, or an organisation can request a
           voluntary license, allowing life-saving drugs to be supplied by the generic industry
           (through imports or by local production), and thereby reducing prices.
        b. Compulsory licensing: If a voluntary license cannot be obtained then a compulsory
           license can be granted by national governments.
        c. Parallel imports: If a required drug is patented in the country, and is sold in other
           countries by the same company at a lower price, parallel importing should be considered.




11
   Patent situation of HIV/AIDS-related drugs in 80 countries, UNAIDS/WHO. Geneva, January 2000. Orange
Book, Food and Drug Administration. (www.fda.gov)
12
   HIV/AIDS: confronting the epidemic, WHA53.14, Resolution of the World Health Assembly 2000.
13
   Selected drugs used in the care of people living with HIV: sources and prices. October 2000. Joint Unicef,
UNAIDS, WHO/EDM, MSF project. (www.unaids.org)

                                                                                                                5
                                     ANNEX 1: Sources of prices

Only manufacturers/products approved by the drug regulatory agency in each country were taken into
account. The sources used for prices varied from country to country:

Argentina: Prices gathered from the last tender, September 2000, from the Ministry of Health.

Brazil: Prices were gathered directly from the federal manufacturer as estimated for the Ministry of
Health by the year 2001.

Colombia: Redsalud, the national medical emergency association, was the main source for ARV
prices.14 For drugs used for OIs, prices came from a non-profit supplier15 and include distribution
costs.

Guatemala: Public sector prices, where available, are presented. For AZT/3TC, d4T, ddI, and
efavirenz, prices offered to NGOs were used.

India: Prices were obtained directly from manufacturers as they are applied in India (as announced in
a statement to the European Union, September 28th 2000).

South Africa: Public sector prices were used. Since d4T, ddI, efavirenz and nevirapine are not
available through the public health system, wholesale private prices were used in their place to give
an idea of the price differences.

Thailand: Wholesale prices offered to NGOs are presented.

Uganda: UNAIDS was the main source of information for ARVs. 16 The NVP price came from a
recent pricing study in the region (private hospital price).17

USA: a mail-order wholesaler with minimum mark-up (excluding distribution cost) was the main
source of information.18




14
   redsalud@multiphone.net.co, F. Rossi, quoted in e-drug 09/06/2000, e-drug@usa.health.net
15
   Coodemcum (Redsalud), Price list, March 21st 2000.
16
   Comparison of ARV drug prices in Brazil (unpublished), UNAIDS. Uganda data taken from Drugs Access
Initiative.
17
   Myhr K. Pharmaceutical pricing: law of the jungle, June 2000 (unpublished).
18
   http://www.globalrx.com (accessed June 29, 2000) as used in Report on the global HIV/AIDS epidemic, June
27, 2000, UNAIDS.

                                                                                                              6
                                 ANNEX 2: Intellectual property rights


Implementation of TRIPs agreement
Since the creation of the World Trade Organization (WTO) in 1994, and the completion of the Trade
Related Aspects of Intellectual Property Rights (TRIPS) Agreement, more and more countries are
obligated to grant 20-year patent protection for drugs.19 According to TRIPS, this minimum standard
must be enshrined in national law by 2006 in all signatory countries. Developing countries had a
deadline of January 2000, with some exceptions, while least-developed countries have until 2006.

Least-developed countries should take advantage of this transitional period. When new laws are
drafted, ministries of health should be involved in the process, and should seek advice and counsel
from UN specialised agencies including WHO, which has a mandate to provide technical assistance
on this issue.


Public health safeguards
In practical terms, implementation of TRIPS means that poor countries will soon lose access to
affordable life-saving medicines unless they write safeguard provisions into their national laws. Three
safeguards are paramount:
1.) Compulsory licensing: Compulsory licensing is one element of TRIPS that is designed to mitigate
the negative consequences of granting monopoly rights.20 According to this article, WTO member
states may allow the use of a patent by a third party without the owner’s consent. There are no
limitations within TRIPS regarding the grounds for issuing a compulsory license, only conditions to
be fulfilled. For instance, a potential user must make efforts to obtain a license on reasonable
commercial terms before a government can issue a compulsory license. However, even this condition
can be waived “in cases of national emergency, other circumstances of extreme urgency, public non-
commercial use (…)”.21 When compulsory licenses are granted for medicines, all normal safety,
quality and efficacy standards would be respected.
2.) Parallel imports: A second critical safeguard is parallel imports, which is based on the principle
of exhaustion of rights.22 When written into national law, this allows cross border trade in a patented
product without the manufacturer’s permission. Parallel imports allow countries to import brand
name products from countries where they are sold by the patent holder or licensee at lower prices.

3.) “Bolar” provisions: Finally, national laws should include “Bolar” provisions. This allows generic
manufacturers to begin preparing generic production and completing regulatory procedures before
patents expire so that upon expiration they can immediately begin selling their products. This
provision means that less expensive generic products can be available much more rapidly after patents
expire. 23, 24




19
   The WTO had 137 member states as of 14 June 2000. www.wto.org
20
   TRIPS, article 31.
21
   Velasquez G. & Boulet P. Globalization and Access to drugs. Perspectives on the WTO/TRIPS Agreement,
Health Economics and Drugs DAP series n° 7. Revised. Geneva, Switzerland, WHO 1999.
22
   TRIPS, article 6.
23
   Unpublished data from the Brazilian Department of Health.
24
   B.Sam, UNAIDS, quoted in WHO-Health Technology and Pharmaceuticals, Revised Drug Strategy, April
2000.

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