• Introduction
• Different Prices in Different Countries
• Institutional Price of 10 HIV/AIDS Drugs in 8 Countries, in U.S. Dollars
• Current Cost of Treatment Regimens
• Previous International Procurement Initiatives
• Public Involvement in Research and Development
• Mechanisms to Reduce the Cost of HIV/AIDS Treatment
• Sources of Prices
• Intellectual Property Rights
• Public Health Safeguards
• Selected Sources

Introduction

In a report originally released in June 2000, Médecins Sans Frontières (MSF), also known as Doctors Without Borders, published the results of a study of the different prices and patent situations of life-saving drugs for HIV/AIDS. Prices were based on U.S. wholesale prices and institutional prices in ten countries where data were available.

The following report provides a summary and update of the findings as of December 2000 and is reproduced with permission from MSF's Campaign for Access to Essential Medicines. The original report (with sources) is available at www.accessmed.msf.org, and from MSF, Rue du Lac 12, PO Box 6090, CH-1211 Geneva 6, Switzerland (telephone: +41-22-849-84-07, fax: +41-22-849-84-04).

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 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.

In the past, MSF's HIV/AIDS programs have mainly focused on the prevention of infection, alleviating pain (palliative care), and combating social stigma. But MSF now recognizes 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 organization has expanded its approach to encompass preventing transmission from mother to child, preventing and treating opportunistic infections (OIs), and facilitating small-scale antiretroviral 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-$1,000 per person with HIV. If large quantities are demanded, generic producers in a few years will be able to bring down the price of triple therapy to approximately $200/year per person. 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 organizations, and donors, to tackle the problem of providing care for people with HIV/AIDS. The means to accomplish this are available. What is needed to combat this pandemic is the political will to mobilize resources on a global scale. As an organization 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; and
• antiretrovirals (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 [Rocephine]); and
2. Patented drugs sold at prohibitive prices by companies (e.g., fluconazole [Diflucan] or ARVs).

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 U.S. price, as a result of the availability of generic products. If efavirenz (Sustiva) is excluded from this calculation, for which no generic was included in the study, 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.

• 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.

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.

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 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.

2. 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.

3. 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.

4. 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.

5. 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:
   1. Voluntary licensing: The government, an individual, 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.

   2. Compulsory licensing: If a voluntary license cannot be obtained then a compulsory license can be granted by national governments.

   3. 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:

1. 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.

2. 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.

3. "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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