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Høsbjør, 8-11April 2001, WHO-WTO Workshop Differential Pricing
1Ellen ‘t Hoen, MSF
WHO-WTO Workshop Differential Pricing and Financing of
Essential Drugs
Høsbjør, Norway 8-11 April 2001
Affordable Medicines for Developing Countries
Ellen ‘t Hoen, LL.M.
Médecins sans Frontières (MSF)
Access to Essential Medicines Campaign
8, rue Saint Sabin
75544 Paris Cedex 11, France
E-mail:[email protected]
Tel: + 33 1 40 21 28 36
www.accessmed-msf.org
Høsbjør, 8-11April 2001, WHO-WTO Workshop Differential Pricing
2Ellen ‘t Hoen, MSF
Factors Affecting Access to Essential Medicines
R&D
Production
Approval
Quality
Distribution
Drug information, rationale use
Diagnosis/prescription/monitoring
Price
Compliance
Pharmacovigilance
Høsbjør, 8-11April 2001, WHO-WTO Workshop Differential Pricing
3Ellen ‘t Hoen, MSF
Consensus Action Is Needed
Let us be frank about it: essential and life-saving drugs exist while millions and millions of people cannot afford them. That amounts to a moral problem, a political problem and a problem of credibility for the global market system. Gro Harlem Brundtland, Director General, World Health Organization
Høsbjør, 8-11April 2001, WHO-WTO Workshop Differential Pricing
4Ellen ‘t Hoen, MSF
Every year malaria, tuberculosis and AIDS kill around 6 million people, almost all of them in the developing world. These premature deaths are a reproach to us all. ….
Part of the problem is poor countries' lack of access to drugs. The poor cannot afford expensive medicines. Keeping an AIDS patient alive for a year can cost up to $15,000 - 24 times the average annual income in Zimbabwe, where one in four adults is HIV-positive.
Mike Moore, DG of the World Trade Organization
Høsbjør, 8-11April 2001, WHO-WTO Workshop Differential Pricing
5Ellen ‘t Hoen, MSF
Global Pharmaceutical Market 2002 $406 billion
Source www.ims-global.com/insight/report/global/report.htm
1.3%
5%
Market projected to
grow 7.8% annually
Høsbjør, 8-11April 2001, WHO-WTO Workshop Differential Pricing
6Ellen ‘t Hoen, MSF
Objective:Equitable Drug Prices
• The policy of assuring dramatically reduced drug prices so that they are truly affordable to the people who need them
• A policy that is
– sustainable (not based on charity or donations)
– Strengthens developing countries’ autonomy
– Attracts donor funding
– Not limited to HIV/AIDS medication only
Høsbjør, 8-11April 2001, WHO-WTO Workshop Differential Pricing
7Ellen ‘t Hoen, MSF
Strategies for Lowering Drug Prices
• Differential/tiered pricing (market segmentation) by Big Pharma
• Local production under voluntary licensing agreements
• Global procurement and distribution system
• Increased competitiveness in the pharmaceutical market
Høsbjør, 8-11April 2001, WHO-WTO Workshop Differential Pricing
8Ellen ‘t Hoen, MSF
Differential/tiered Pricing • Relies on spontaneous and voluntary lowering of
prices
• Drug firms prefer low volume –high price strategy
• Requires separation of markets
• Comes with strings attached or hidden agendas
• Does not encourage sustainability or self reliance
• Might hamper other, more sustainable approaches
Høsbjør, 8-11April 2001, WHO-WTO Workshop Differential Pricing
9Ellen ‘t Hoen, MSF
Local Production Under Voluntary Licensing
• Based on voluntary licensing agreements (will??)
• Requires manufacturing capacity agreements should allow for export to low income countries
• Encourages technology transfer and pharmaceutical industrial development in the South
• No risk of parallel-importation in high income markets
• Paradox: strong IP protection is a condition for technology transfer. In Practice: Voluntary licenses more likely when strong compulsory licensing system exists
Høsbjør, 8-11April 2001, WHO-WTO Workshop Differential Pricing
10Ellen ‘t Hoen, MSF
Global Procurement and Distribution System
• Experience and expertise with procurement exists (UNICEF)
• Might work for specific diseases/ products
• Requires a long term commitment
• Does not solve structural problems
• Might negatively affect local manufacturing capacity
• Regulatory barriers (pre-qualification) and patent barriers in certain countries (exceptions)
Høsbjør, 8-11April 2001, WHO-WTO Workshop Differential Pricing
11Ellen ‘t Hoen, MSF
Increased competitiveness
• Proven effective
• Encourages sustainable solutions and industrial development
• Requires a pro public health and flexible interpretation of the TRIPS Agreement
• Does TRIPS offer enough flexibility?
Høsbjør, 8-11April 2001, WHO-WTO Workshop Differential Pricing
12Ellen ‘t Hoen, MSF
Learning: Price reductions from generic competition
Brazilian National AIDS Program, unpub. data
Average reduction: 82%
0
0.5
1
1.5
2
2.5
3
3.5
AZT, 100mg AZT 300mg /3TC150mg
ddI, 100mg d4T, 40mg 3TC, 150mg
199619971998199920002001
Cost
per
unit
, U
S$
0
0.5
1
1.5
2
2.5
3
3.5
IDV, 400mg NFV, 250mg RTV, 100mg SQV, 200mg NVP, 200mg
19961997199819992000
Ministry of Health, Brazil, unpub. data
Average reduction: 9% (without IDV in 2000 when it was generic)
Cost
per
unit
, U
S$
Learning: Price Stability w/o generic competition
Høsbjør, 8-11April 2001, WHO-WTO Workshop Differential Pricing
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Generic CompetitionSample AIDS triple-combination: lowest world prices
(stavudine (d4T) + lamivudine (3TC) + nevirapine)
0
2000
4000
6000
8000
10000
12000
Brand
Generic
Høsbjør, 8-11April 2001, WHO-WTO Workshop Differential Pricing
15Ellen ‘t Hoen, MSF
Generic CompetitionSample AIDS triple-combination: lowest world prices
(stavudine (d4T) + lamivudine (3TC) + nevirapine)
0
500
1000
1500
2000
2500
3000
July2000
Aug Sept Oct Nov Dec Jan Feb Mar apr-01
US
$ Brand
Generic
Brazil: $2767
Cipla: $800Cipla: $350
Hetero: $347
Brand: $10439
Brand: $931
Brand: $712
…?
…?
Høsbjør, 8-11April 2001, WHO-WTO Workshop Differential Pricing
16Ellen ‘t Hoen, MSF
0
500
1000
1500
2000
2500
3000
3500
May2000
June July Aug Sept Oct Nov Dec Jan Feb Mar Apr2001
US$
d4T-Brand
d4T-Generic
BrazilAAI
BMS
CiplaBMS
Hetero
Generic CompetitionPrices of d4T (40 mg capsule) per patient/year
(lowest world prices)
Høsbjør, 8-11April 2001, WHO-WTO Workshop Differential Pricing
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Generic Competition: d4T Prices of D4T (40 mg capsule) per patient/year
(lowest world prices)
$0,00
$50,00
$100,00
$150,00
$200,00
$250,00
$300,00 D4T-Brand
D4T-Generic
Brazil: $204
AAI: $274
Cipla: $40
BMS: $55
Hetero: $48
BMS: $3161
…?
…?
Høsbjør, 8-11April 2001, WHO-WTO Workshop Differential Pricing
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Price Development of Hepatitis B VaccineChange in Prices Over Time of Hepatitis B Vaccine (Plasma-Derived and
Recombinant DNA) offered to Developing Countries (lowest prices obtained) from Denise DeRoeck
0
5
10
15
20
25
30
35
40
1981 1983 1985 1987 1989 1991 1993 1995 1997 1998 1999
US
$ (
FO
B)
plasma-derived rDNA
Merck, then Pasteur sole producers
Indonesia int'l tender & bid ($.95/dose)
Philippines tender (plasma): $.65
Current plasma price (.45-.57/dose)
Merck sole producer of rDNA
Korean firms (Chiel, KGCC) acquire tech. And enter market
Biogen DNA patent expires in most of world
Asian & other producers enter rDNA market; price drops to close to $0.54-0.69/dose
Int'l Hepatitis B Task Force formed (1986)
PAHO's first HBV contract (for rDNA at $0.82/dose)
Høsbjør, 8-11April 2001, WHO-WTO Workshop Differential Pricing
19Ellen ‘t Hoen, MSF
Recommendations 1/3
• Not one single solution – mix of strategies that are mutually supportive
• Enforceable regulation to encourage equity pricing and prevent parallel re-importation in the EU, north America and Japan
– Example: EU directive on equity pricing that ensures that equitable priced drugs cannot be put on the EU market
Høsbjør, 8-11April 2001, WHO-WTO Workshop Differential Pricing
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Recommendations 2/3
• Global procurement strategies for selected drugs
– Designed to encourage and improve generic production
– Overcome regulatory barriers: need for international pre-qualification activities
– Overcome IP barriers: exceptions for globally procured goods
Høsbjør, 8-11April 2001, WHO-WTO Workshop Differential Pricing
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Recommendations 3/3• Actively encourage competition
– Recognise the role of generic manufacturing
– Support to expand and upgrade generic production in developing countries
– Take away barriers in the regulatory systems
– Encourage technology transfer – targeted at countries that have production capacity
– Encourage voluntary licensing agreements
– Assist with implementation of fast track compulsory licensing
• Launch debate on how to reconcile TRIPS requirements with health needs – Health TRIPS Council in June 2001