Africa: AIDS Drug Pricing, 10/23/00

Africa: AIDS Drug Pricing, 10/23/00

Africa: AIDS Drug Pricing Date distributed (ymd): 001023 Document reposted by APIC

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Region: Continent-Wide Issue Areas: +economy/development+ Summary Contents: This posting contains a speech on HIV/AIDS drugs, stressing the huge reductions in pricing necessary to make such treatment accessible in developing countries. Speaking at a Roundtable in Geneva this summer, Bernard Hirschel, who chaired the 12th World AIDS Conference in Geneva in 1998, argued that such drugs must become hundreds to thousands of times cheaper a possibility because drug manufacturing costs often represent 1% or less of the price, Hirschel notes that although prevention is more "cost- effective", the treatment issue will not go away. He concludes that "only differential pricing by current manufacturers or through parallel licensing can produce orders-of-magnitude reductions in drug prices."

For earlier postings and links on this issue, with documents from ACT-UP, Treatment Access Compaign, Medecins sans Frontieres, and others, see:


For current news on AIDS in Africa, see

October 20 story on Treatment Action Campaign's import into South Africa of generic Biozole from Thailand in violation of Pfizer's patent on Fluconazole, as part of its 'defiance campaign against patent abuse and AIDS profiteering.'

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HAART (highly active antiretroviral therapy*) - How Large is the Gap?

by Bernard Hirschel

(*): The Roundtable on Comprehensive HIV/AIDS Treatment Access Consensus was held in Geneva on June 19th and 20th. The Roundtable began with Prof. Bernard Hirschel, President of the 12th World AIDS Conference - "Bridging the Gap", introducing the worldwide treatment access problems, specifically the treatment gap between the North and the South. Participants included the five pharmaceutical manufacturers involved in the announcement (Merck, Hoffman-La Roche, Boehringer, Glaxo Wellcome, Bristol Meyer Squibb), UN agencies (UNAIDS, WHO, WIPO, WTO), African (Cote d Ivoire, Namibia, Uganda and South Africa) and Brazilian government representatives, national and international NGOs, and the private sector.

These remarks were first posted on then re-posted on and breaking-the- [APIC note: as of this posting, the archives at seem not to be being updated. However, an extensive discussion on these issues is available at the e- drugs discussion archive at drug-hma]

Two years ago the 12th World Aids Conference took place in Geneva. Its logo contained a rainbow of hope and the slogan "Bridging the Gap," expressing the best of intentions. But today the gap between rich and poor, n relation to access to highly active antiretroviral therapy, yawns as wide as it did in 1998.

How Large is the Gap? (Table 1)

Country CH Ivory Coast UG Z'bwe

Pop. (Millions) 7 14 21 12

HIV+ (1000s) 12 700 930 1500

HAART for all (in Billions) 0.14 8.4 11.2 18

Percent of GNP 0.06 84 172 265

Sources: World Bank, UNAIDS. Costs of HAART 12000 US$/year

Table 1 shows the population of Switzerland, Ivory Coast, Uganda and Zimbabwe (in millions), the number of HIV-positives (in thousands) and the gross national products (in billions of US dollars [3rd line of table missing in original]). The theoretical costs of HAART for all HIV-infected at 12,000 dollars per person per year is on the fourth line, and the fifth line lists the cost of HAART for all as a percentage of GNP, ranging from 0.06 in Switzerland to an unbelievable 265% in Zimbabwe.

How cheap would HAART have to become for the gap to close ? For Zimbabwe to treat all the HIV positives and use for this the percentage of GNP Switzerland uses : about 5000 times cheaper. For Zimbabwe to treat all their HIV positives and increase the percentage of GNP used for this in proportion to the HIV prevalence: about 70 times cheaper. But note that this is an unrealistic proposition because it would mean that Zimbabwe spend 4.4% of its GNP only on HAART, about 50 percent of the total health expenditure.

In conclusion, for HAART to become an option for the hardest hit countries in Africa, it must become hundreds to thousands of times cheaper. In view of these brutal facts, should we give up promoting access to HAART in LDCs? All studies show that prevention is much more cost effective than treatment. "For the health ministry of a developing country, HAART is a diversion from more pressing needs and a threat to more cost-effective programs to combat HIV, such as the targeted distribution of condoms"(**). However, whatever we may think about priorities, the access issue will always push its way into the fore ground of political discussions. There are two main reasons for this. First of all, the sick cry out for help, whereas the healthy don't cry out for condoms...

In addition, there is an Aids-specific issue: the position of the African elites concerning Aids. Consider that 2 million people have died of Aids in Uganda alone, more than 300 persons a day, every day, from 1985 to 2000. Prevalence of HIV is such that all politicians in sub-Saharan countries must have relatives and friends who have HIV; some are infected themselves. Presumably, they themselves will want to take HAART... If they prioritize prevention to the exclusion of treatment they are in an impossible personal political and moral situation. For all these reasons, efforts to avoid or deflect the access issue are doomed.

Let us now turn to the economics of pharmaceuticals. The essentials are easily grasped. Drugs are expensive to develop because drug discovery, safety testing, trials, registration, marketing, and distribution are all expensive. However, drugs are cheap to produce. Marginal production costs often are below 1% of the sales price. And essentially all income from sales of drugs is generated in the "North".

If we think about ways of providing cheaper drugs to LDCs, we may first consider savings from shaving profits, from bulk buying, from more efficient distribution, from increased competition and increased production volume. Such savings may, if circumstances are favorable, reach 50 to 75%. However, this is far short of the orders-of-magnitude savings that would be needed to Bridge the Gap. Such savings can only come from differential pricing, with prices reflecting total costs in the North and marginal costs in the South.

There are advantages to differential pricing and production of drugs by established manufactures, such as efficient production facilities, quality control and distribution networks which are all already in place. It is also, if not a win-win so at least a win-not lose situation where the "South" gets cheaper drugs, the "North" sees no change and the drug companies get a return on their investment. Precedents exist, notably vaccines, where costs in the North are typically hundreds of times higher than those paid for vaccination in LDCs.

However, price is not all. There are many other obstacles to HAART in less developed countries. HAART has been developed without regard to cost-effectiveness and simplicity, let alone the special costraints of less developed countries such as lack of refrigeration. HAART carries the image of a complicated treatment with many side-effects and necessitating sophisticated laboratory surveillance, as shown in a poster published last year by the Swiss Federal Office of Public Health, representing the 213 pills that an HIV positive patient was supposed to ingest in a week.

However, this is already the past. Marketed regimens provide HAART with only 4 and soon with only 2 pills a day; once daily regimens are within reach. This opens possibilities that have proven their worth for other infectious diseases, such as swallowing under supervision (directly observed therapy).

Even cheaper HAART will have to be used in a cost-effective manner. Cost-effectiveness has not either been a priority in Aids research. For instance, all calculations of costs are based on an indefinite duration of treatment, but is this really necessary?

A typical patient with HIV will lose 60 to 70 CD4 cells/mL/year without treatment. With HAART, he will typically gain 150 to 200 CD4 cells in a year. That is plenty to keep him or her out of trouble, i.e. to essentially eliminate all danger of opportunistic infection. If treatment was stopped after a year what would happen? A reasonable assumption is that CD4 cells would start to fall again at their previous rate which would suggest that maybe you could treat one year in two or three without risk of intervening opportunistic disease. These are theoretical calculations; nobody has tested them. If we envisage organizing a trial of cheaper treatment we can foresee difficulties because the clinical trial expertise is heavily concentrated in the North and there is no trial "culture" at UNAIDS and WHO. There is reason for hope, however, for instance the involvement of UNAIDS in the perinatal infection trials, and the fact that drug-holidays are becoming a subject of legitimate study in the North.

So, to conclude, only differential pricing by current manufacturers or through parallel licensing can produce orders-of-magnitude reductions in drug prices. Downstream from pricing, LDC-specific obstacles to HAART, such as simplicity and cost-effectiveness, need to be addressed.

What are the obstacles to progressing in that direction? At the risk of offending everybody in this room, I will now describe these obstacles as I see them:

* lack of a sense of urgency for industry,

* incompatible and partly hidden agendas for NGOs and UNAIDS and other governmental organizations in the confusion about priorities.

Industry representatives must realize what kind of a ferocious tiger they are riding. HAART has decreased mortality from HIV by 84% in Switzerland from 1992 to 1998. This relative fall of 84% is greater than the 72% fall produced by penicillin in the treatment of pneumoccocal septicemia between 1930 and 1965, and of course occurred in a much shorter period of time. Now contrast this with the fact that less than 5% of HIV infected people have currently access to such treatment and that you can produce these drugs and can produce them cheaply. You will then start to understand the urgency and indeed the rage behind the clamor for access. It is an exceptional and unprecedented situation and one which calls for exceptional measures.

The problem that I see with the NGO's is one of mixed and hidden agendas. This becomes clearer when one examines who participates in electronic forums on treatment access and who lobbies and protests at political gatherings. There are three types of organizations : the Aids-related such as ActUp, the humanitarian such as Medecins sans Frontieres, and finally the consumer activists such as the Consumer project on technology (Nader, Love et al.). All these groups have agendas in addition to "access". They are in general moralistic, anti-capitalist and anti-multinational. And especially the last groups, if you examine their websites and publications, cite price differentials between nations mostly to put pressure on prices at home. Of course, this will scare off drug companies that consider differential pricing and I have written somewhere else that with friends like these, less developed countries don't need enemies. So here is a maxim to ponder for NGOs in the North : Solidarity means accepting to pay more so others may pay less.

And finally UNAIDS and affiliated organizations : here is a quote from an E-mail, written by a high official on UNAIDS, and commenting on a draft of a paper for a medical journal, calling for LDC-specific trials of HAART, and for applying the lessons learned in treating TB to HIV: "I fear that using foreign currency for even limited target groups that would receive HAART will decrease the ability of developing countries to provide essential health services to their population. I'm not ready to endorse the idea that the trials proposed in the paper be done.... Consequently, I need to request that my name be removed from the list of authors".

The quote is from January 2000 and the position was reaffirmed in May. I started out by acknowledging the possible conflict between prevention and treatment and have explained why the access issue will not go away. It seems to me that UNAIDS needs to reaffirm its leadership by acknowledging frankly that, yes, HAART is not the solution for Aids nor is it a cost-effective way to fight HIV, but that UNAIDS accepts a responsibility towards those who are already infected, will further access to drug, and will try to insure that what drugs are available are used in the most appropriate and cost-effective way.

Professeur Bernard Hirschel

President of the 12th World AIDS Conference, Geneva (Bridging the Gap) Medecin adjoint, responsable de l'unite VIH/SIDA Hospital universitaire de Geneve CH-1211 Geneve 14 Telephone ++ 41 22 372 98 12; FAX ++ 41 22 372 9820 Email:

(**) Sources : New England Journal of Medicine 1998 ;338 :906-908, Confronting AIDS: public priorities in a global epidemic. World Bank, 1997.

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Message-Id: <> From: "APIC" <> Date: Mon, 23 Oct 2000 10:11:44 -0500 Subject: Africa: AIDS Drug Pricing

Editor: Ali B. Ali-Dinar

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