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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,

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background
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
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
Current Process
  • Common conclusion:
    • SA paying too much for ARVs
    • This is partially correct
  • Why?
    • Market Dynamics
    • Registration
    • Poor data
factors to consider
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
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.
slide7

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

CHAI partnerships with suppliers reflect commitments on both sides

Suppliers build sustainable business while enabling lower prices for countries and patients

negotiating lower prices 1
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
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.
slide15

Optimizing paediatric formulations

  • Clinical Efficacy
  • Convenience
  • Cost
  • Key factors to consider
  • 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

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

lpv r
LPV/r

Formulations

Applicable Regimens

LPV/r

100/25mg

(tablet)

New patients

under 3 years, NVP exposed;

1st line

ABC+3TC+LPV/r

New patients

over 3 years;

2nd line

AZT+ddI+LPV/r

Existing patients under 3 years, NVP exposed;

1st line

d4T+3TC+LPV/r

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

Existing patients over 3 years;

2nd line ABC+3TC+LPV/r

  • 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
abc 3tc and abc
ABC/3TC and ABC

Applicable Regimens

Formulations

ABC/3TC

60/30mg

(tablet)

New patients

over 3 years;

1st Line

ABC+3TC+EFV

New patients

under 3 Years, NVP Exposed;

1st Line

ABC+3TC+LPV/r

New patients

under 3 Years,

not NVP Exposed;

1st Line

ABC+3TC+NVP

ABC

20 mg/mL

(syrup)

Existing patients

over 3 Years;

2nd Line

ABC+3TC+LPV/r

slide18
ddI

ApplicableRegimens

Formulations

Enteric-coated ddI

125 mg

(capsule)

New patients

over 3 Years;

2nd Line AZT+ddI+LPV/r

Enteric-coated ddI

200 mg

(capsule)

Chewable/buffered ddI

25 mg

(tablet)

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.

slide19
d4T

Formulations

ApplicableRegimens

d4T/3TC/NVP

6/30/50 mg

(tablet)

Existing patients

over 3 Years;

1st Line

d4T+3TC+EFV

d4T/3TC/NVP 12/60/100 mg

(tablet)

Existing patients

under 3 Years,

NVP Exposed;

1st Line

d4T+3TC+LPV/r

d4T/3TC

6/30 mg

(tablet)

Existing patients

under 3 Years

not NVP Exposed;

1st Line

d4T+3TC+NVP

d4T/3TC

12/60 mg

(tablet)

d4T

1 mg/ml

(syrup)

slide20
AZT

ApplicableRegimens

Formulations

AZT/3TC/NVP

60/30/50 mg

(tablet)

New patients

over 3 Years;

2nd Line

AZT+ddI+LPV/r

Existing patients

over 3 years

+ d4T toxicity;

1st Line

AZT+3TC+EFV

AZT/3TC

60/30 mg

(tablet)

Existing patients

under 3 years,

NVP exposure

+ d4T toxicity;

1st Line

AZT+3TC+LPV/r

AZT

100 mg

(capsule)

Existing patients

under 3 years,

No NVP exposure

+ d4T toxicity;

1st Line

AZT+3TC+NVP

AZT

10 mg/ml

(syrup)

summary
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