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Antiretroviral Drug Prices

Access to antiretroviral (ARV) drugs in BotswanaOver the past decade activist pressure, the emergence of competition from generic manufacturers, and direct negotiation with pharmaceutical companies have all contributed to a dramatic drop in the price of certain HIV drugs to treat HIV and AIDS in developing countries.

The availability of cheap antiretroviral drugs has been instrumental in treatment scale-up for resource-poor settings hard hit by the AIDS epidemic. Around 8 million people in low- and middle-income countries are currently receiving drugs to treat HIV/AIDS. 1 This would simply not have been possible without a reduction in the price of antiretrovirals drugs (ARVs) .

Despite significant advances, a number of problems related to the price of HIV drugs remain. Not all drugs to treat HIV and AIDS are available at a suitably cheap price for poor countries, meaning that many of the newer, more effective drugs are only available in the West. This page looks at how the initial price reductions were achieved and the problems that many developing countries still face in accessing cheap, appropriate antiretrovirals.

Reducing the price of HIV/AIDS treatment

In 1996, HAART - an effective combination therapy that delays the onset of AIDS - became available to those living with HIV in rich countries. 2 Within four years, death rates caused by AIDS-related illnesses in developed countries had dropped by 84 percent. 3

At a cost of US$10,000-15,000 per person per year, these antiretroviral drugs (ARVs) were far too expensive for the majority of people infected with HIV in resource poor countries. Five years after HAART was introduced in the West, only 2 percent of people in developing countries were receiving the life-saving drugs. 4 In order for treatment to reach people living with HIV in the developing world, the price of the drugs clearly needed to come down to an affordable level.

At the beginning of the new millennium there was a breakthrough in treatment provision for resource poor areas when an Indian pharmaceutical company started to produce generic antiretrovirals that were exactly the same as those made by large pharmaceutical companies, but significantly cheaper. This sparked a price war between branded and generic drug makers, which forced the large pharmaceutical companies to lower the price of their HIV drugs. This competition, coupled with pressure from activists, organisations - such as the Clinton Foundation - and governments of poor countries with severe HIV epidemics, dramatically reduced the price of ARVs for developing countries. By the middle of 2001, triple combination therapy was available from Indian generic manufacturers for as little as $295 per person per year. 5

The price of ARVs for low and middle income countries (LMICs) has continued to fall. 6 In 2013, the average cost of first-line antiretroviral treatment (ART) for LMICs was $115 per patient per year (PPY) and $330 PPY for second-line ART. The price of third-line ART has also decreased but LMICs still pay on average, more than $1500 PPY. Many middle-income countries in Asia, Latin America, Eastern Europe and Central Asia continue to pay higher prices due their inability to access cheaper generic ARVs.

Generic drugs, FDCs and AIDS

In 2001, Indian generic drug manufacturer, Cipla, announced that it would sell a generic copy of a triple-therapy antiretroviral for US$350 per patient per year. This had an incredible impact as the competition this generated dramatically drove down the price of HIV drugs for developing countries, thereby increasing the range of affordable options for national treatment programmes.

The graph below illustrates the effect of generic competition on proprietary drug prices between 2000 and 2001. It shows the lowest world price per patient per year of triple combination therapy made up of stavudine (d4T) +lamivudine (3TC) +nevirapine (NVP) . 7

graph showing effect of generic drug competition

India is the largest supplier of generic ARVs to low- and middle- income countries, providing 80 percent of donor-funded ARVs to low- and middle-income countries. 8 Brazil, Thailand and South Africa also produce a significant amount of generic drugs and a number of African nations - such as Zambia, Ghana, Tanzania, Uganda, Zimbabwe and Kenya - have developed local HIV drug manufacturing facilities. 9 10 11 12 In 2008 UNAIDS reported that national governments of 94 percent of countries with generalised epidemics, and 61 percent of countries with concentrated epidemics, had national policies for using generics to promote antiretroviral access. 13

The manufacture and export of generic drugs was not only a turning point in terms of the price of ARVs, but also helped to revolutionise treatment for resource-poor settings by simplifying HIV and AIDS treatment. In 2001, an Indian generic manufacturer produced a combination of three antiretrovirals (patented by different pharmaceutical companies) into a single pill, known as a fixed dose combination (FDC) . This was only possible because India did not have to abide by TRIPS legislation at this time and was therefore able to ignore the patents on the drugs.

FDCs were a significant innovation as they reduce the number of pills taken each day. Because FDCs are easier to manage – for both patients and health workers – they increase adherence, thereby reducing the incidence of drug resistance. The drugs were also available in heat resistant forms, which proved extremely valuable for use in the developing world, where often there is scarce access to refrigeration facilities.

The role that the production of generic drugs had on the distribution of treatment for developing countries cannot be underestimated. Quite simply, as Stephen Lewis, former UN Special Envoy for AIDS in Africa, has said:

"…we wouldn’t have this extraordinary run of treatment in Africa now if it weren’t for the generic drugs." 14

Pressure and negotiation with ‘Big Pharma’

In the early 2000s, large pharmaceutical companies (sometimes referred to as ‘Big Pharma’) manufacturing drugs to treat HIV/AIDS were subject to intense pressure to lower their prices. Organisations such as the Clinton foundation, Médecins Sans Frontières and (later) UNITAID, alongside AIDS activists and a number of national governments, all worked to achieve price reductions.

In May 2000, five pharmaceutical companies offered to negotiate steep cuts in the price of HIV and AIDS drugs for regions severely affected by the AIDS epidemic. Dr. Rolf Krebs, vice chairman of Boehringer Ingelheim recognised that this was ''… The first time that both the public and private sector are joining forces to implement a major change in the care of HIV/AIDS in the developing world.'' Although significant price reductions were achieved, the drugs remained prohibitively expensive for many poor countries. Dr. Peter Piot, at the time Executive Director of UNAIDS, called the negotiations ''…A promising step in a long-term process'', whilst Médecins Sans Frontières called the negotiations ''…A victory, but a small one, much like an elephant giving birth to a mouse''. 15

Around the same time, the Clinton administration issued an executive order which promised that the US government would not interfere with African countries that violate American patent law to obtain cheaper antiretroviral drugs.

In 2001 Bill Clinton - following the end of his second term as US president - confirmed his commitment to HIV/AIDS drug provision when he established the William J. Clinton Foundation, containing an HIV/AIDS programme. Using the former President’s contacts and knowledge, the foundation has continually worked to increase access to HIV treatment by negotiating pricing deals with drug manufacturers and working to improve health care services in developing countries. 16 Médecins Sans Frontières does similar advocacy work and runs a major 'Campaign for Access to Essential Medicines'. 17

South African AIDS activistsAnother significant event in drug price reduction also came in 2001 following an attempt by thirty-nine major pharmaceutical companies to prosecute the South African government for passing a law that allowed easy production and importation of generics. Big Pharma was eventually forced to back down and drop the case following a tremendous outcry from the international community including the South African government, the European Parliament and 300,000 people from over 130 countries who signed a petition against the action. One of the pharmaceutical companies involved in the case, GlaxoSmithKline, even granted permission (called a voluntary licence) to major South African generics producer Aspen, to share the rights to their drugs AZT, 3TC and the combination Combivir without charge. 18 This was a significant case as it brought access to medicines for poor countries into the public consciousness.

In 2006 UNITAID - an international drug purchase facility - was established to ensure a stable source of funding for drugs to treat HIV/AIDS, malaria and tuberculosis. UNITAID has partnered with the Clinton Foundation's Clinton Health Access Initiative (CHAI) since 2006, negotiating with manufacturers, including generic producers, to continually lower the price of HIV drugs and supply them in over 70 developing countries. In 2009, they announced they had reduced the price of a convenient once-daily pill (combining generic drugs tenofovir, lamivudine and efavirenz) by 30 percent compared to the price they had negotiated in 2008. 19 In partnership with drug manufacturers Pfizer and Mylan, they also brought the price of a second-line therapy regimen to below $500 dollars for the first time. 20 21 Overall, they estimated that they managed to reduce the price of leading child HIV treatment regimens by 64 percent and the price of leading adult regimens by 43 percent in lower-income countries from 2006 to 2009. In 2011, UNITAID and CHAI and the United Kingdom's Department for International Development (DFID) announced another set of negotiations had led to further reductions in pricing for a tenofovir based regimen (down to $159 per person per year, a 60 percent reduction on 2008) as well as a WHO-recommended second line drug regimen (reduced to $410 per person per year) . 22 The price reductions secured by the partnership since 2008 are projected to save $600 million from 2011 to 2014. Through their work, UNITAID and the Clinton Foundation have encouraged more suppliers to enter into the paediatric and second-line therapy markets which have not been seen by manufacturers as lucrative markets due to constraints on patent, lower demand, and more complex production techniques. 23

Negotiations with Big Pharma have led to a system of ‘tiered’ pricing. Tiered pricing means that the price at which the big pharmaceutical companies sell their drugs is calculated using formulas based on average income per head, leading to lower prices in poor countries. 24

"Preferential pricing is the only way how we can meet both conflicting needs in the fight against AIDS. We can refinance our high research and development costs for innovative, new treatments by the established price system in industrialised countries and can offer affordable medicines to patients in poor countries who otherwise cannot afford antiretroviral medication"Alessandro Banchi, chairman of Boehringer 25

Although this system is beneficial to the large pharmaceutical companies, there are concerns that the system is overcomplicated and overdependent on the goodwill of the large pharmaceutical companies.

Sometimes, a country will simply override patent applications by drug manufacturers. In 2009, India rejected patent applications on two antiretroviral drugs, tenofovir and darunavir. A generically-produced version of the former drug could cost over five times less than a branded version. 26 The ruling also allows other countries that have rejected patents on these drugs to import generic versions from India. A representative from Médecins Sans Frontières said:

“This is a really important day for HIV patients in developing countries. The rejection of the patents on tenofovir opens up the market for new generic competitors to drive down the price of this key HIV/AIDS drug.” 27

Later, in 2012, Indonesia's government issued compulsory licenses for a number of antiretroviral drugs, allowing local drug companies to legally bypass drug patents and make their own, cheaper versions for the treatment of HIV and Hepatitis. 28

Another initiative to achieve optimal pricing is The Global Price Reporting Mechanism (GPRM) . Launched by the AIDS Medicines and Diagnostics Service (AMDS) in April 2005, the mechanism provides information on transaction prices and quantities of antiretroviral drugs in low- and middle-income countries. 29 This web-based database assists countries in selecting the most affordable drug and supplier. Formed from the information of numerous organisations the GPRM allows a national and international market price comparison. Improving the access countries have to market information widens their options whilst placing more pressure on pharmaceutical companies to reduce their pricing.

A study of this database monitored ARV transactions in over 100 countries between 2002 and 2008. 30 The review indicated significant differences in the prices paid for ARVs and a clear decrease in the price of ARVs over this time period, particularly for generic ARVs. This fall is believed to be associated with, among other reasons, producers of branded ARVs continuing to waiver patents and lower their prices for low income countries as well as ongoing policy formation to address market imperfections. 31 However, vast differences in price still exist and pressure to lower the prices of some drugs, notably protease inhibitors (PI) , is still needed - particularly as the demand for second-line therapy increases.



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