Key data on prices, regulatory status, tariffs and the intellectual property situation
World Health Organization, Link
Peter Beyer and Joseph Perriëns
This paper provides information on the prices paid by 20 middle-income countries for adult and paediatric formulations of antiretroviral treatments recommended by WHO. It links this information with an analysis of the intellectual property situation of the selected medicines taking into account existing license agreements as well as compulsory licenses, and includes data and general information on a number of other determinants of prices and availability of ARVs, including tariffs, mark ups and taxes, as well as the regulatory status.
Executive summary
This paper was originally developed as a background paper for the Consultation on Access to HIV Medicines in Middle-Income Countries, which was held from 10 to 12 June 2013 in Brasília, Brazil. It focuses on the challenges middle-income countries are facing in accessing affordable HIV treatment. Middle-income countries include a wide array of countries ranging from US$ 1036 to US$ 12 615 GNI per capita.1 For example, the 103 countries that World Bank currently rates as middle-income countries, include 17 least developed countries. This is due to the different selection criteria used. While the World Bank’s main criterion for classifying economies is gross national income (GNI) per capita, the United Nations Committee for Development Policy uses three criteria for identifying countries as least developed countries: gross national income per capita, the human asset index and the economic vulnerability index. This results in a larger number of poor people (living on less than US$ 2 per day) living in middle-income countries than in low-income countries. Due to the increase in national income it is expected that by 2020 the vast majority of people affected by HIV will be living in middle-income countries. International aid and assistance, however, still focuses on low-income countries.
The paper provides information on the prices paid by 20 middle-income countries for adult and paediatric formulations of antiretroviral (ARV) drugs recommended by the World Health Organization (WHO).2 It links this information with an analysis of the intellectual property situation of the selected ARV medicines using the patent status database of the Medicines Patent Pool (MPP), and includes data and general information on a number of other determinants of prices and availability of ARVs, including tariffs, markups and taxes, as well as an overview of the regulatory status.
The data show that the middle-income countries are a heterogeneous group and that procurement prices vary widely. Middle-income countries supported by the Global Fund to Fight AIDS, Tuberculosis and Malaria, including India and middle-income countries in Africa, are paying low prices for first-line and many second-line treatment regimens, comparable to those paid by low-income countries. Some countries – mainly in eastern Europe (Kazakhstan, the Russian Federation and to a lesser extent Ukraine) – are paying very high prices for many ARV drugs. Middle-income countries in Latin America (Argentina, Brazil) and Asia (China, Thailand) do pay relatively high prices for a number of second-line and third-line treatments. With some exceptions, countries that are sourcing products from originator producers are likely to pay higher prices.
First-line treatment regimens. Countries that stand out as having paid more than US$ 300 per patient-year for at least one way of administering the WHO-recommended first-line treatment regimen include Brazil, China, Cuba, Ecuador, Kazakhstan, the Russian Federation, Thailand and Ukraine. Cuba, Thailand and Ukraine could have used an alternative way to administer this treatment, which would lead to lower procurement prices. For the Russian Federation, the 10% tariff line possibly contributes to this high price.
Second-line treatment regimens. Most countries were able to source a second-line regimen for less than US$ 500 per patient-year, except Brazil, China, Indonesia, Kazakhstan, the Russian Federation and Ukraine. The Russian Federation sourced lopinavir/ritonavir from the originator, which is a major cost driver. In all these countries, at least secondary patents on these products have been granted or applications are pending that may prevent the countries from purchasing generic versions.
Third-line drugs. All middle-income countries face the challenge of high to very high prices for third-line drugs. Even in Nigeria and South Africa, which can access third-line drugs at reduced prices from the originator companies, the cumulative price of darunavir, raltegravir and etravirine has been in excess of US$ 3000 per year. Patents relating to raltegravir and etravirine have been granted in China and India, two of the main sources for active pharmaceutical ingredients and generic products. Currently, there are no prequalified generic versions of raltegravir and etravirine available. This makes it impossible even for those countries where patents have not been granted to procure generic versions of these products. While in principle local production would be an option, the patents granted in China and India prevent the export of the respective active pharmaceutical ingredients. Setting up local production in countries where these drugs are not protected by patent would thus require local production of active pharmaceutical ingredients. Leaving aside questions of cost efficiency and quality standards, this is beyond the capacity of most manufacturers in these countries.
Paediatric formulations. As for adult formulations, countries of eastern Europe (Kazakhstan, Russian Federation and Ukraine) and China are paying the highest prices for paediatric formulations. They are sourcing their abacavir, zidovudine, lamivudine, nevirapine and lopinavir/ritonavir nearly exclusively from the originator companies, which may be due to the patent situation in these countries. In general, the price of paediatric treatment regimens, when available, is slightly higher than that of first-line adult formulations.
New ARVs and pipeline products. The prices of drugs that are in the development pipeline or which have recently received regulatory approval are not yet known. It will be important to secure access to any new drugs that offer new therapeutic perspectives and that might need to be introduced in ARV therapy programmes soon. This will probably include drugs such as cobicistat, dolutegravir, elvitegravir, tenofovir alafenamide fumarate and rilpivirine. Patents on all of these ARVs either have been granted (elvitegravir, rilpivirine and tenofovir alafenamide fumarate) or are pending (cobicistat and dolutegravir) in India, where the largest ARV manufacturers are based today, and have all been granted in China, which is another important manufacturer of active pharmaceutical ingredients. This may have a significant impact on the competitive procurement of these new ARVs in the future, unless the patent holders will grant licences for their manufacture and sale. Currently, the patent holders of cobicistat, elvitegravir and rilpivirine have granted voluntary licenses for generic production and sale in 100 to 112 countries (the first two via the MPP). The MPP negotiates further agreements on dolutegravir, and tenofovir alafenamide fumarate (TAF). If concluded these agreements will facilitate procurement of cheaper generic versions by those countries that are included in the licenses, while middle-income countries outside these agreements will have to pursue other avenues to reduce costs. The MPP announced the conclusion of an agreement on dolutegravir on 1 April 2014 which has not been taken into account in this publication.
Regulatory status. In addition to price, slow regulatory approval was identified as an obstacle to access to ARVs. For example, out of the countries assessed, only 10 are on record as having registered the WHO-recommended three-drug fixed-dose combinations used in first-line treatment. Regulatory approvals for solid formulations for children are lagging behind. This limits the ability to provide patients with the best possible user-friendly treatment options, which is a known risk for non-adherence. This leads to less-than-achievable treatment outcomes and higher hospital and care costs to deal with complications, and might result in the emergence of drug resistance. An additional problem is that, when key formulations are registered, there is often only one supplier with regulatory approval. This limits the supply options and competition, with a potential negative impact on procurement prices.
Data exclusivity rules can delay the market entry of generic manufacturers, as they cannot register their products during the exclusivity period unless they replicate the clinical tests. The available data show that at least 9 out of the 20 middle-income countries have implemented data exclusivity in their national laws. Besides data exclusivity, the reason for lack of regulatory approval can be that manufacturers simply choose not to apply for regulatory approval for their products in a given market. In this case, consideration of the decisions of other (trusted) regulatory authorities or – where appropriate – WHO
prequalification outcomes may facilitate the registration of generic versions. This could also lead to lower prices for current or future products.
Tariffs, markups and taxes. With respect to tariffs, the data show that in general tariffs are zero per cent or rather low, with a few exceptions. Overall, tariffs are not likely to be a major price driver. Controlling markups added along the supply chain is important and can contribute to cost savings, in particular for drugs distributed through the private sector. Where ARVs are provided through the public sector free of charge, markups play a limited role. Taxes can be a major cost driver for medicines in general, but this paper does not provide data enabling an assessment of their impact on access to ARV drugs. In general, countries should consider abolishing taxes on essential medicines and control markups. Detailed guidance is provided in the new WHO guideline on country pharmaceutical pricing policies.
Patents, voluntary and compulsory licences. To assess the impact of patent protection on prices of and access to ARVs, one has to look at the patent status of each drug on a country-by-country basis, taking into account the current voluntary licence agreements as well as compulsory licences.
Voluntary licences are allowing those middle-income countries that are included in the geographical scope of these agreements to procure generic products from the licensees, but only certain middle-income countries are included in the scope of the agreements (for a detailed list of products and countries, see Table A3.1, Annex 3). Given that pharmaceutical companies consider many of these countries as markets, it is unlikely that all middle-income countries will be included in future agreements under the current conditions. Key questions in this regard are:
- What criteria should be used to determine a reasonable price for middle-income countries?
- How can the inclusion of more middle-income countries be facilitated?
Compulsory licences have been used by a number of countries to access cheaper ARV treatment, including Brazil and Thailand (for a list of all compulsory licences, see Table A3.2, Annex 3). The WHO Global Strategy and Plan of Action on Public Health, Innovation and Intellectual Property, and the United Nations 2011 Political Declaration on HIV/AIDS, mention the flexibilities of the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), which includes compulsory licences as one mechanism that can be used to increase access to essential medicines. The mere fact that a compulsory licence could be issued by a government also increases the bargaining power of governments in price negotiations. When used, compulsory licences allow for the import or local production of generic versions. Where there is no generic production (yet), as in the case of some of the third-line drugs, countries cannot import the products readily and the only option would be local production with all its caveats. Where local production is not possible, countries can revert to an additional flexibility adopted by WTO members in 2003. This mechanism allows the import of pharmaceutical products from a WTO member country that has granted a special compulsory licence exclusively for the export of these medicines. However, the use of this mechanism, often referred to as the Paragraph 6 System, has been limited and its impact remains to be evaluated. Strict rules on patentability criteria, as introduced by some countries, can limit the number of secondary patents. For example, the absence of patents on fixed-dose combinations or paediatric versions allows earlier market entry of these products.
Click here for the full report (PDF)
