Three international organizations have negotiated reductions on key first- and second-line, and paediatric antiretrovirals (ARVs) that will help countries save at least US$600 million over the next three years.
The deal expected to affect most of the 70 countries comprising CHAI’s Procurement Consortium, features notable reductions in the prices of tenofovir (TDF), efavirenz, and the second-line ritonavir-boosted atazanavir (ATV/r) used in HIV patients who have failed initial, or “first-line”, regimens.
As part of the deal, the three bodies set price ceilings for more than 40 adult and paediatric ARVs with eight pharmaceutical manufacturers and suppliers, including Cipla Ltd, Matrix Laboratories and Autobindo Pharma.
Together these eight companies account for most ARVs sold in countries with access to generic drugs, according to David Ripin, scientific director of CHAI’s Drug Access Programme.
As a result, the cost of ATV/r is down by two-thirds from just three years ago. Meanwhile, a once-a-day fixed-dose combination (FDC) pill containing TDF and efavirenz will now cost countries less than US$159 per patient per year. In 2008, low-income countries paid about $400 per patient per year for the same pill.
How did they do it?
According to UNITAID and CHAI, this success is a product of increased demand for these drugs and more efficient manufacturing of the active ingredients, which are estimated to account for as much as 75 percent of generic ARV costs.
“When you make an active ingredient, you use a multistep chemical process, to reduce costs, you can look for a less expensive source of raw materials of which there are a few examples, including TDF … or you can tinker with the chemical process used to make the product to make them more efficient.” -Ripin.
But Ripin added that doing either comes at a cost for pharmaceutical companies, for whom a change in raw material suppliers or manufacturing processes means re-applying for approval of the drug with regulatory bodies.
“Any time you change anything with the way you make a drug, you need to get regulatory approval,” he said. “You have to do a fair amount of work to prove that your product works just as well now as it did before. “The pharmaceutical companies and generic manufacturers are fantastic at making these types of improvements… [but] they have a limited set of research and development resources available to them. They often need to make a decision where they are going to get a higher return on that research and development, and typically that comes from the introduction of new products on the market.”
According to Ripin, the key is providing companies with data on the large and growing markets for ARVs.
“We help companies evaluate for themselves whether it’s a worthwhile business opportunity, the second key factor they have to consider is the competitive marketplace for their drugs, where there is an incentive for lower [production] costs and lower-priced products as they want to maintain their market share.”
CHAI also provides countries with data on best market prices for drugs to help inform national procurement, as was the case with South Africa’s recent ARV tender. Although South Africa is not expected to benefit from the new price cuts, the country has the largest ARV tender in the world, and could secure the drugs at competitive prices. In terms of the CHAI agreement, lower prices are available to members of the Procurement Consortium but are dependant on volumes ordered.
How low can we go?
TDF has become an important drug for many countries, including South Africa, hoping to implement the 2009 World Health Organization (WHO) HIV treatment guidelines, which recommend starting HIV patients on treatment sooner but also a shift away from more toxic ARVs to TDF.
However, the high cost of earlier treatment and better drugs has prohibited many countries from fully implementing the WHO recommendations. According to a recent report released by Médecins Sans Frontières (MSF), both Malawi and Zimbabwe reversed their move to WHO guidelines due to financial constraints.
While new price reductions bring TDF’s price closer to that of the long-time and widely adopted first-line ARV Zidovudine, further drops in TDF’s price will have to be logged to ensure widespread uptake, said Brenda Waning, coordinator of market dynamics for UNITAID.
For Waning and others like MSF, the issue of sustainable funding for the HIV response looms large ahead of the June UN meeting on HIV/AIDS in New York, rumoured to be the last for years to come, according to MSF’s report.
“There has been a lot of attention on commodities and not at other major drivers of cost,” she told IRIN/PlusNews. “We have to look at other places in the health system where we can capture cost-effectiveness.”
In particular, Waning pointed to the potential savings associated with the roll-out of new point-of-care diagnostics, which, although not high on the global agenda, will help countries task shift such testing away from scarce doctors.
Although the cost remains high, introducting FDC would help governments save on ARV shipping, transportation and storage, while improving adherence and patient outcomes.