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The widely divergent prices for the ten 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.
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 (Combivir, a one-pill combination of AZT [Retrovir] and 3TC
[Epivir], 600/300 mg)+nevirapine (Viramune, 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 antiretrovirals to over 90,000 people. 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 hospitalizations and
treatment for OIs 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.
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 U.S. government. Likewise,
oral contraceptive prices are 130-240 times cheaper in poor countries
than in the U.S. (retail). In comparison, is the current offer from
five pharmaceutical companies and the Joint United Nations Programme
on HIV/AIDS (UNAIDS) to reduce prices by 6.7 times (85%) a response
of adequate magnitude to the current pandemic?
Public involvement in research and development
Pharmaceutical companies claim that high prices are necessary to fund
research and development. But upon review of five of the six ARVs analyzed,
public funding was discovered to play 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 U.S. government. This is the case for two drugs covered
in this report: ddI (Videx) and d4T.
In addition to research and development, the industry cites long time-to-approval
as another justification for high prices. However, antiretrovirals 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. Significant
government sponsorship further reduces the cost of clinical trials for
these drugs. For instance, more than a third of people enrolled in U.S.
trials participated in trials funded by the U.S. government.
Whatever the true investment of the pharmaceutical industry in researching
and developing antiretrovirals, these drugs have earned the companies
consistent revenue. Between 1997 and 1999, Glaxo Wellcome's sales for
AZT, 3TC, and Combivir 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 can make AIDS drugs more affordable
by using the key legal mechanisms outlined below. They should be supported
by MSF, the World Health Organization (WHO), UNAIDS, other governments,
and nongovernmental organizations (NGOs), with the input of both proprietary
and generic pharmaceutical companies.
- 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 7, 1992. Countries first need 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.
- Price studies: Organizations 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 tools to assist in spending their health budgets most effectively.
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 the United Nations Children's Fund (UNICEF), and a report
is available.
- International procurement: United Nations (UN) organizations
(WHO or UNAIDS) should enable governments to access low-cost, quality
medicines to support their national AIDS programs, by beginning international
procurement of AIDS drugs. They should immediately issue tenders to
the proprietary and generic industry for mass procurement of drugs
to treat OIs and anti-HIV medicines. The UN should use previous vaccine
and contraceptive procurement projects as a guide.
- Technology transfer: Technology transfer should be supported
by international organizations 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.
- Safeguards on patents: In countries in which patent protection
presents a barrier to accessing essential medicines, international
organizations should actively support countries' efforts to improve
access (see "Sources of prices"
below). This can be achieved through the following means:
a. Voluntary licensing: The government, an indi-
vidual, or an organization 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.
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 Ministry of Health, September
2000.
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. For drugs used for OIs, prices came
from a nonprofit supplier and include distribution costs.
Guatemala: Public sector prices, where available, are presented.
For Combivir, 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 28, 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.
The nevirapine price came from a recent pricing study in the region
(private hospital price).
USA: A mail-order wholesaler with minimum mark-up (excluding
distribution cost) was the main source of
information.
Intellectual property rights
Implementation
of the Trade-Related Aspects of Intellectual Property Rights (TRIPS)
Agreement
Since the creation of the World Trade Organization (WTO) in 1994 and
the completion of the TRIPS Agreement, more and more countries are obligated
to grant 20-year patent protection for drugs. 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:
- Compulsory licensing: Compulsory licensing is one element
of TRIPS that is designed to mitigate the negative consequences of
granting monopoly rights. 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 (…)." When compulsory licenses are granted
for medicines, all normal safety, quality, and efficacy standards
would be respected.
- Parallel imports: A second critical safeguard is parallel
imports, which is based on the principle of exhaustion of rights.
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.
- "Bolar" provisions: Finally, national laws should
include "Bolar" provisions. These are provisions that allow
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.
Carmen Pérez-Casas is a pharmacist affiliated with
Médecins Sans Frontières-Spain.
Selected Sources
For source information see the original report from
Médecins Sans Frontières at www.accessmed.msf.org.
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last updated 20 March 2001
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people
die each year from the disease. The introduction of antiretrovirals
has dramatically reduced mortality from AIDS in wealthy countries, 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, and 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 U.S. ranges
from $10,000 to $15,000 per patient, while annual gross domestic product
(GDP) per capita in developing countries ranges from $140 to $6,190.