Procuring High Quality ARVs at Internationally competitive Prices.

Procuring High Quality ARVs at Internationally competitive Prices

Background

• South Africa has achieved rapid scale-up of antiretroviral therapy (ART) over the past five years, • with the number of patients on the Government’s

ART program increasing from just 3,000 in 2004 to over 900,000 in 2009.

• The cost of antiretroviral drugs (ARVs) under South Africa’s ART program – the largest in the world – is significant, amounting to more than R1.2 billion in 2009.

Looking ahead

• The South African Government faces additional budgetary pressures as it seeks to reach its goal of 80% treatment coverage by 2011.

• The resources required to implement and adopt the new ART guidelines would increase per patient treatment costs as well as significantly increase the number of patients on treatment rapidly over the MTEF.

• Consequently, there is an urgent need to minimize and control costs.

Current Process

• Common conclusion:– SA paying too much for ARVs– This is partially correct

• Why?– Market Dynamics– Registration– Poor data

Factors to Consider• It is important to note that the pharmaceutical industry argues that

the South African ARV prices are comparable to the median international price and the lowest prices are not appropriate comparators since they are based on predatory pricing strategies. – Predatory pricing is the practice of selling a product or service at

a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors.

• This raises a number of questions – firstly if the median international price is an appropriate comparator price.

• South Africa is the world’s largest purchaser of ARVs – economic theory would suggest that the largest purchaser obtains the best price so the most appropriate comparator is lowest price

CHAI Pricing Framework

• Since 2003, the Clinton HIV/AIDS Initiative (CHAI) has taken the lead in negotiating lower prices for ARV drugs and HIV-related tests in the world.

• CHAI has negotiated a set of agreements on adult and pediatric ARVs that have substantially and repeatedly lowered the costs of these drugs.

• The price ceilings set under CHAI agreements have determined benchmark prices whereby others can then purchase at lower prices.

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CHAI Commitments:

• Technical assistance on - process chemistry- raw material sourcing- R&D

• Share market intelligence including demand forecasts

• Increased PR visibility

• Work with countries to improve procurement and regulatory practices

Supplier Commitments:

Cost/price• Share information transparently

with CHAI, including cost data• Agree to price on cost-plus basis• Offer same pricing to entire CHAI

Procurement Consortium

Quality• Commit to meeting international

quality standards (WHO, FDA, etc.)• Submit to additional QA/QC

mechanisms as requested by purchasers

Suppliers build sustainable business while enabling lower prices for countries and

patients

CHAI partnerships with suppliers reflect commitments on both sides

ARV price reductions achieved through CHAI negotiations ($ per patient per year)

Adult D4T+3TC+NVP

Lowestavailable,

2002*

CHAI, 2003

CHAI, 2009

$281

$132

$89

TDF+3/FTC+EFV

Lowestavailable,

2007*

CHAI, 2007

CHAI, 2009

$613

$339

$210

Average LOW INCOME Country experiences

Negotiating Lower Prices (1)• It may be argued that factors aside from price also warrant

consideration in the procurement process. • In particular, it can be argued that local manufacturers should be

given special consideration because local supply promotes economic development and ensures security of supply (and keeps currency in the country).

• There is merit to this argument, but the dual objectives of competitive pricing and support for local manufacturers need not be mutually exclusive.

• A consideration of the various cost components of ARVs suggests that South African manufacturers, with their significant market share and sophisticated production plants, should be able to be competitive with foreign manufacturers.

Negotiating Lower Prices (2)• Active Pharmaceutical Ingredients (API) makes up the bulk (around 70%)

of the final costs of ARVs. • API’s are not produced domestically, so South African suppliers must

purchase API’s from abroad. • Based on data supplied by CHAI, South African suppliers are already

purchasing API’s at very competitive prices for products like d4T, AZT, and NVP.

• For newer products like TDF and EFV, CHAI’s efforts to lower API costs – – through technical assistance to API suppliers, including the development of

new innovative process chemistry that lowers the opportunities for cost of making the API, and identifying and qualifying new lower-priced sources of raw materials and intermediates –

• have helped to reduce API prices in the international market significantly over the past couple of years. Exhibit 2 shows the contribution of these activities to the overall price reduction on TDF have emerged between 2007 and 2009.

Impact of API PRICING

CHOICE OF FORMULATIONSRegimen Existing Single Drugs Potential Fixed-dose Combination Drugs

Drug 1 Drug 2 Drug 3 Daily Pill Count FDC Drug 3 Daily Pill Count

1a. D4T 3TC EFV 5 D4T+3TC EFV 3

1b. D4T 3TC NVP 6 D4T+3TC+NVP - 2

1c. AZT 3TC EFV 5 AZT+3TC EFV 3

1d. AZT 3TC NVP 6 AZT+3TC+NVP - 2

1e. TDF 3TC EFV 4 TDF+3TC+EFV - 1

1f. TDF 3TC NVP 5 TDF+3TC NVP 3

2a. AZT DDI LPV/r 8 n/a¹

2b. TDF 3TC LPV/r 7 TDF+3TC LPV/r 5

Advantages of FDCs:

• Easier dosing Reduced risk of measurement errors that could lead to dosing inaccuracies

• Improved adherence Simplified administration and neutral or positive taste may lead to improved adherence

• Simplified supply chain Fewer and less bulky products for patients and supply chain systems to manage

• Decreased stigma Lower product count permits discrete transport home, alleviating stigma

• Reduced cost

• Key factors to consider

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Optimizing paediatric formulations

• Clinical Efficacy• Convenience• Cost

25-60% cost savings on the product itself and further savings at every level of the supply chain

LPV/r

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Applicable RegimensNew patientsunder 3 years, NVP exposed;1st lineABC+3TC+LPV/r

Formulations

LPV/r100/25mg (tablet)

LPV/r 80mg/ml+20mg/ml (syrup)

• LPV/r sprinkles are in development, which will be preferable to syrup for very small children. The sprinkles will also be useful in older children who have difficulty swallowing the tablets, as the tabs cannot be cut or crushed, and are quite large.

• 133.33/33 mg soft-gel capsules are being phased out

New patients over 3 years; 2nd lineAZT+ddI+LPV/r

Existing patients over 3 years;2nd line ABC+3TC+LPV/r

Existing patients under 3 years, NVP exposed;1st lined4T+3TC+LPV/r

Considerations ● Heat stable● Does not need to be taken with food● Must be swallowed whole; can not be divided or crushed● FDA: Approved for patients 15 kg or more; WHO: Dosing guidance available for patients 10 kg or more. Dose is actually appropriate for smaller children, but pill is too large to swallow.

Price 2,089 Rand per patient per year

Registration 0 suppliers registered;2 pending registration

Considerations ● Not heat stable, and requires constant refrigeration during transport and storage● Can be administered to children too young to swallow pills

Price 1,783 Rand per patient per year

MCC Registration

1 supplier registered;1 pending registration

ABC/3TC and ABC

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Applicable RegimensNew patients over 3 years;1st LineABC+3TC+EFV

Formulations

New patients under 3 Years, NVP Exposed;1st LineABC+3TC+LPV/r

New patients under 3 Years, not NVP Exposed;1st LineABC+3TC+NVP

Existing patients over 3 Years;2nd LineABC+3TC+LPV/r

ABC/3TC60/30mg (tablet)

ABC20 mg/mL(syrup)

Considerations ●Scored, crushable and soluble tablets● Dosing guidance available for patients over 3 kg● Useful in combination with EFV and LPV/r●FDCs facilitate proper dosing and patient adherence.

Price 1,343 Rand per patient per year

Registration 0 suppliers registered;1 pending registration

Considerations ● May be preferable to crushable pills for young children. Although all children and infants can be dosed with FDCs, in practice it might be tricky to do so in a child that is breast feeding, when clean water or milk is necessary to dissolve the tablet.

Price 1,514 Rand per patient per year, although since ABC is always dosed with 3TC, the patient in this case must also use the more expensive 3TC syrup as well

Registration 3 suppliers registered;0 pending registration

ddI

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Applicabl

e RegimensNew patients over 3 Years;2nd Line AZT+ddI+LPV/r

Formulations

ddI powder for reconstitution needs to be diluted with antacid to obtain the final concentration, and must be refrigerated after preparation. It also must be taken twice daily. SA currently uses a combination of ddI 25, 50, and 100 mg buffered tablets. We recommend using the above three formulations to improve patient compliance and consolidate global demand around a smaller number of products.

Enteric-coated ddI125 mg(capsule)

Enteric-coated ddI200 mg(capsule)

Chewable/buffered ddI25 mg(tablet)

Considerations ● Dosed once daily● More convenient and lower risk of gastrointestinal side effects than current chewable form● Dosage appropriate for 10 - 13.9 kg

Price 500 Rand per patient per year

Registration 0 suppliers registered;0 pending registrations

Considerations ● Dosed once daily● More convenient and lower risk of gastrointestinal side effects than current chewable form● Dosage appropriate 14 -19.9 kg

Price 604 Rand per patient per year

Registration 0 suppliers registered;2 pending registration

Considerations ●Dosed twice daily● Two tablets must be taken at each dose● Dosage appropriate for 5 – 9.9 kg

Price 1,567 Rand per patient per year

Registration 2 suppliers registered;0 pending registration

d4T

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Applicabl

e Regimens

Existing patients over 3 Years;1st Lined4T+3TC+EFV

Formulations

Existing patients under 3 Years, NVP Exposed;1st Lined4T+3TC+LPV/r

Existing patientsunder 3 Yearsnot NVP Exposed;1st Lined4T+3TC+NVP

d4T/3TC/NVP6/30/50 mg(tablet)

Considerations ●Pills can be split, crushed, and/or dispersed•Dosing is harmonized to fit with ABC-based and AZT-based FDCs

Price 448 Rand per patient per year

Registration 1 supplier pending registration

d4T/3TC/NVP 12/60/100 mg(tablet)

Considerations ●Pills can be split, crushed, and/or dispersed•Dosing is half that for the smaller d4T FDC, but is not harmonized to other FDCs

Price 403 Rand per patient per year

Registration 1 supplier pending registration

d4T/3TC6/30 mg(tablet)

Considerations●Pills can be split, crushed, and/or dispersed

Price 358 Rand per patient per year

Registration No existing or pending registrations

d4T/3TC12/60 mg(tablet)

Considerations●Pills can be split, crushed, and/or dispersed

Price 306 Rand per patient per year

Registration No existing or pending registrationsd4T1 mg/ml(syrup)

Considerations ● Syrups pose challenges w/r/t dosing refrigeration and adherence

Price 358 Rand per patient per year

Registration 1 supplier registered

AZT

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Applicabl

e RegimensNew patients over 3 Years;2nd LineAZT+ddI+LPV/r

Formulations

Existing patients over 3 years + d4T toxicity;1st LineAZT+3TC+EFV

Existing patients under 3 years,NVP exposure + d4T toxicity;1st LineAZT+3TC+LPV/r

AZT/3TC60/30 mg(tablet)

Considerations ● Scored, crushable tablets●FDCs facilitate proper dosing and patient adherence●Very useful for EFV or LPV/r-based regimens ● Also useful during the 2-week lead-in phase for NVP-based regimens

Price 597 Rand per patient per year

Registration No existing or pending registrationsAZT100 mg(capsule) Considerations ● Not crushable, splittable

Price 269 Rand per patient per year

Registration 5 suppliers registered

AZT10 mg/ml(syrup)

Considerations ● Can be administered to children too young to swallow pills

Price 477 Rand per patient per year

Registration 4 suppliers registered

AZT/3TC/NVP60/30/50 mg (tablet)

Considerations ●Scored, crushable, dispersible tablet●FDCs facilitate proper dosing and patient adherence● Lead-in period requires once daily dosage of NVP for two weeks before escalating to normal twice daily dose(can be achieved with dual AZT+3TC FDC)

Price 806 Rand per patient per year

Registration No existing or pending registrations

Existing patients under 3 years,No NVP exposure + d4T toxicity;1st LineAZT+3TC+NVP

Summary

• DOH approaching new Tender from a greater analytical base

• PER PERSON PER YEAR Costs can be reduced • Tender needs to have flexibility on product

and formulation availability• Constant review of market dynamics to inform

prices during Tender