Test of New Master

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Access to Essential Medicines Overview
Sonali Duggal Harvard Business SchoolSeptember
29, 2006
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A third of the worlds population does not have
access to essential medicines
Treatment scale-up
Availability of medicines/testing
Health infrastructure
Political will

• Price of certain drugs is high
• Available drugs may not have received
  international quality approvals
• Patent protection may prohibit generic production
• Funding may be limited
• Drugs may not be available since there is little
  RD taking place for certain diseases

• Overall health systems can be weak- access to
  clean water, maternal mortality, nutrition
• Few health professionals to support treatment
• Few health centers/clinics to provide treatment
• Lack of distribution networks

• Governments may not want to address particular
  diseases due to stigma
• Even if funding is available, it may not be taken
  advantage of

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Agenda

• Background
• Price
• Quality
• Patents

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40M people are infected with HIV globally
Source AIDS Epidemic Update (WHO/UNAIDS,
December 2005)
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Only 25 of people that require HIV treatment
globally are receiving it
At best, one in ten Africans and one in seven
Asians in need of antiretroviral treatment were
receiving it in mid-2005.
Source AIDS Epidemic Update (WHO/UNAIDS,
December 2005)
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Countries vary widely in the percentage of
patients on treatment
Source AIDS Epidemic Update (WHO/UNAIDS,
December 2005)
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The epidemic in India is concentrated in the
South and Northeast
Source WHO 3 by 5 India Summary (WHO/UNAIDS,
June 2005)
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Key barriers to scale-up of treatment for India

• Political will
• Getting treatment to rural areas
• Moving from tertiary to secondary and primary
  health centers
• Building procurement system required to ensure
  consistent supply

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Agenda

• Background
• Price
• Quality
• Patents

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The price of first line medicines has declined
significantly
January 2006
October 2003
562
75
562
384
50
290
221
192
140
140
Branded Best Price1
Generic Actual Price2
Branded Best Price1
Generic Actual Price4
Generic List Price3
Generic List Price5
Best Price
Best Price

• 1 As reported by the manufacturers and by
  Médecins Sans Frontières (MSF) in Untangling the
  Web of Price Reductions
• 384 was the weighted average price being offered
  to CHAI purchasers in October 2003.
• MSFs May 2003 guide reported the best prices
  offered by Cipla, Hetero and Ranbaxy as 304,
  281 and 285.
• Weighted average of price being paid in middle
  and low-income countries, according to World
  Health Organization.
• Average price, per MSFs June 2005 guide, of
  three suppliers currently WHO prequalified
  (Cipla, Hetero, Ranbaxy).

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Prices of second line drugs are at least 10 times
those of first-line
Price of 2nd-Line Treatment (Annual cost in US)

• Key issues re 2nd-Line Treatment
• Price differential is so high that even small
  volumes can double national treatment budgets
• 5-10 of patients switch to 2nd-line meds each
  year, so upwards of 0.5 million will be affected
  in 2 years
• Generic supply today is extremely limited, and
  few generic versions of second line drugs have
  received regulatory approvals
• Supply of meds in greatest demand by branded
  companies is limited their prices are not
  widely available

40x
6,000
10x
1,400
140
1st Line (Africa)
2nd Line (Africa)
2nd Line (Middle Income)
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...Resulting in second-line as an increasing
portion of ARV costs (India example)
Note Assumes 10 decrease in per person per year
cost of second-line treatmentSource CHAI
analysis
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High cost is partially based on a lack of
competition
Formulation
Generic manufacturers eligible under GFATM
Generic manufacturers with commercially
available product
Further generic commercial availability

• Abacavir 300mg tablets

• 4

• 4 (Aurobindo, Cipla, Hetero, Ranbaxy)

• N/A

• Didanosine 250mg caps

• 1 (Cipla)

• 3 (Cipla, Hetero, Ranbaxy)

• N/A

• Didanosine 400mg caps

• 1 (Cipla)

• 2 (Cipla, Hetero, Ranbaxy)

• N/A

• Lopinavir/Ritonavir 133.33/33.33mg caps

• 1 (Cipla)

• 2 (Cipla, Hetero)

• 6 mo-1year

• Ritonavir 100mg caps

• 1 (Cipla)

• 4 (Aurobindo, Cipla, Hetero, Strides)

• N/A

• Saquinavir 200mg caps

• 1 (Cipla)

• 2 (Cipla, Hetero)

• N/A

• Tenofovir 300mg tabs

• 0

• 1 (Cipla)

• 6 mo

• Emtricitabine 200mg tabs

• 0

• 0

• 1 year

• Atazanavir 200mg caps

• 0

• 0

• 1 year

Source Untangling the Web of Price Reductions
(MSF, June 2005) Global Fund Compliance List
(November 9th, 2005) CHAI data
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Generic competition is critical given the large
volumes of generic products purchased
Source WHO Global Price Reporting Mechanism,
April 2006
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Pricing for other products, such as ACTs for
malaria, is largely driven be distributor and
retailer margins
TOGO EXAMPLE FOR ARAQ
Clearing and forwarding
Import duty
VAT
Distributor Margins
Retailer
Ex-factory price

• -

• 10

• 5

• 10

• 20-30

• 30-40

• margin

75-95

• margin

• 2.30

• 0.23

• 0.12

• 0.23

• 0.72

• 1.26

4.86
Note Clearing forwarding, import duty and VAT
are calculated on ex-factory price distributor
and retailers make a margin on the previous
step Source Supplier interview
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Agenda

• Background
• Price
• Quality
• Patents

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High quality products are critical for generic
supply

• WHO prequalification process acts as global
  quality assurance mechanism for generics
• Team of international assessors and inspectors
  review dossiers and visit facilities
• Prequalification considered one of the most
  stringent processes for quality approval
• PEPFAR also grants tentative approval for
  generics
• Most funders require quality approval from
  stringent regulatory authority and/or WHO

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However, many products still have no suppliers
that are approved by the WHO
Source WHO Prequalification List, April 2006
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Agenda

• Background
• Price
• Quality
• Patents

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Post-TRIPS Shift to Product Patents

• Indias decision to join to the WTO created an
  obligation to comply with the Agreement on Trade
  Related Aspects of Intellectual Property Rights
  (TRIPS)
• The most recent amendment was in March of 2005-
  all new drugs are now covered by a product patent
  for a period of 20 years
• Previously, only process patents were allowed to
  be submitted to the patent office

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What is being done?

• Cost reduction
• UNITAID The French government (with others) is
  using an airline tax to fund essential medicines,
  particularly second-line, pediatric drugs, and
  artemisinin for malaria
• Quality improvement
• Gates funding more inspectors/assessors for WHO
  process
• Patents
• Efforts by various NGOs to change patent
  situation
• MSFs Access Campaign
• Indian civil society groups filing pre-grant
  oppositions
• Various patent-holding companies are offering
  voluntary licenses for key second line
  products- but efficacy is questionable?
• BMS for Atazanavir
• Gilead for Tenofovir

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Summary

• Access to essential medicines is currently at key
  crossroads, particularly for second line products
• While initiatives are underway to reduce costs
  and improve quality, next year to two years will
  determine patent situation in India for generic
  production