Affordability of HIV/AIDS treatment in developing countries: modeling ARV drug
price determinants for a better understanding of the market functioning
Luis Sagaon Teyssier; Yves Arrighi; Boniface Dongmo Nguimfack; Jean-Paul Moatti
Aknowledgements
This study is part of a project funded by UNITAID and developed by:
The French National Agency for Research on AIDS and viral Hepatitis (ANRS-SESSTIM)
AIDS Medicines and Diagnostics Service (AMDS/WHO)
Objectives
– To investigate in which extent originator and generic prices react differently to the same factors
– To study the evolution of prices through the life-cycle of patents• Originator drugs• Generic drugs produced under license and/or
taking advantage of TRIPS flexibilities
Data• Global Price Reporting Mechanism (AMDS/WHO)
http://apps.who.int/hiv/amds/price/hdd/• Period of analysis: 2003-2012
• 30.904 transactions of Adult ARVs– 126 countries – 21 ARVs ; 15 FDC/Co-blisters (57 formulations)
• 12 Sources providing information on transactions:– Global Fund (35.8%); SCMS (22.1%); UNICEF (14.3%); UNITAID (7.3%); IDA
(9.7%); PEPFAR (5.6%); Mission Pharma (2.5%); CHAI (1.1%); JSI (0.4%); WHO/CPS (0.4%); MSH (0.4%); WHO (0.4%)
ARV market structure• Demand-side
– Donor funded ARV transactions (80%)• Supply-side
– Originator segment• 8 manufacturers• 21 single and 6 co-formulations• Production: 30.5% in USA; 19.3 UK; 12.2 NL; 10.1 FR
– Generic segment• 25 manufacturers• 15 single. 11 co-formulations. and 4 co-blisters • Production: 92% in India
Methods: Price descriptives & OLSEconometric analysis of price determinants:• Dependent: price of patient-year treatment log(PYD)• Explanatory:
– Year & Geographical group dummies– Purchased quantity of yearly doses: log(QYD)– Formulation type (single=ref., co-blister, FDC)– Target group (pediatric=1. adult=0) – Number of observed suppliers– Present in 1st line (yes=1, no=0)– Segment (originator=1, generic=0)
– Gross National Income per capita (World Bank): log(GNIpc)– Drug age since FDA approval– Expiration of the reference patent (Medicines Patent Pool)
RESULTS
Quantities: procurement of generic yearly treatments by region
Generic segment controlled by only 6 manufacturers (out of 25)
Prices: ARVs recommended in 1st line by region
Prices: ARVs recommended in 2nd line by region
Multivariate analysis
EstimateIntercept 5.7966***Years2003 0.6839***2004 0.5617***2005 0.5887***2006 0.4747***2007 0.3117***2008 0.3310***2009 0.1730***2010 0.0508***
TIME TREND(ref: 2011-2012)
Significant at: ***1%; **5%; *10%; Ad-R²=49,6%
Multivariate analysis
EstimateIntercept 5.7966***Years2003 0.6839***2004 0.5617***2005 0.5887***2006 0.4747***2007 0.3117***2008 0.3310***2009 0.1730***2010 0.0508***
TIME TREND(ref: 2011-2012)
EA&P E&CA LA&C MENA SA-10%
-5%
0%
5%
10%
15%
20%
-5%***
15%***12%***
18%***
-6%**Aver
age
pric
e di
ffer-
entia
l
REGIONS (ref: Sub-Saharan Africa)
Significant at: ***1%; **5%; *10%; Ad-R²=49,6%
Multivariate analysis
EstimateIntercept 5.7966***Years2003 0.6839***2004 0.5617***2005 0.5887***2006 0.4747***2007 0.3117***2008 0.3310***2009 0.1730***2010 0.0508***
TIME TREND(ref: 2011-2012)
EA&P E&CA LA&C MENA SA-10%
-5%
0%
5%
10%
15%
20%
-5%***
15%***12%***
18%***
-6%**Aver
age
pric
e di
ffer-
entia
l
REGIONS (ref: Sub-Saharan Africa)
Significant at: ***1%; **5%; *10%; Ad-R²=49,6%
Originator prices are 60%(p< 0.001) higher than generics
Multivariate analysis by segment
Significant at: ***1%; **5%; *10%, Ad-R²(originator)=39.3%; Ad-R²(generic)=34.6%
Stratified estimation fits better the data (F-test=79.2 > 1.6)
EA&P E&CA LA&C MENA SA-40%
-20%
0%
20%
40%
60%
80%
100%
39%***
91%***
71%***56%***
13%
-17%*** -19%***-10%***
-1%-12%***
OriginatorGeneric
Aver
age
pric
e di
ffere
ntial
REGIONS (ref: Sub-Saharan Africa)
Multivariate analysis by segmentOther significant differences:
• Price differential in the generic segment according to the economic situation of the countries: 10% increase in the GNIpc is at the origin of an price increase of 0.7%
• Originator prices are more sensitive to the presence of an additional supplier in the market: prices decrease in average 3.6%, while the decrease of generic prices is 2%
• Generic 1st line drugs are 109% cheaper than generic 2nd line drugs; while originator 1st line drugs are only 81% cheaper than originator 2nd line drugs.
• Originator drugs for potential 3rd line are 54% more expensive than originator 2nd line drugs.
Price differentials through patent life cycle
-19
-18
-17
-16
-15
-14
-13
-12
-11
-10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6-20%
-10%0%
10%20%30%40%50%60%70%80%
42%
31%
62%
1%
66%
Originator-specific regressionYears before/after expiration of the reference patent
Pric
e di
ffere
ncia
l
Ref: purchase the same year of patent expiration
Price differentials through patent life cycle
-19
-18
-17
-16
-15
-14
-13
-12
-11
-10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6-20%
30%
80%
130%
180%
230%
42%
31%
62%
1%
66%
186%
115% 105%
-5%
71%
Originator-specific regression Generic-specific regressionYears before/after expiration of the reference patent
Pric
e di
ffere
ncia
l
Ref: purchase the same year of patent expiration
Main conclusions Procurement policies should account for the
different functioning of originator and generic segments
The important price-differentials between geographical regions highlight different strategies adopted by originator and generic manufacturers
Fluctuation of the price of generics under license through the patent life-cycle demonstrates that patent protection may also impair the delivery of newer generics
