Integrated Regional Information Networks - September 9, 2009

In 2007 Nigeria paid US$334 per patient per year for a combination of first-line ARVs that cost Congo only US$95. Both are low-income countries, but Nigeria has a higher HIV prevalence of 3.1 percent, compared to Congo's 1.2 percent.

A working paper released last week by the AIDS2031 project, which draws on expertise from around the world to consider the most effective long-term responses to the HIV/AIDS epidemic, looks at why the prices of ARVs vary so widely from one country to another, and what can be done to improve affordability.

The price of first-line ARVs has dropped substantially in the last decade, but affording them is still a problem in low-income countries with high HIV burdens, many of which are experiencing the effects of the global economic downturn in donor countries.

About 4 million people are accessing ARVs worldwide, out of an estimated 10 million thought to be in need of them, and the need is expected to grow to around 22 million by 2015.

Moreover, an increasing number of people will develop resistance to first-line ARVs and need second-line regimens, which currently cost at least nine times more.

The authors of the working paper looked at price variations in 12 ARVs between 2005 and 2008, and identified some of the key factors behind the differences.

Pharmaceutical companies have long used a sliding scale to set ARV drug prices according to a country's socioeconomic status, but this was not the only reason for the cost variations.

The ability of the Clinton HIV/AIDS Initiative (CHAI) to negotiate price reductions for its member countries, particularly for second-line drugs, was identified as one factor.

Whether countries purchased generic or brand-name versions of ARVs also played a major role - strict patent laws prevent some countries from buying generics.

The World Trade Organization's Trade Related Aspects of Intellectual Property Rights (TRIPS) allows countries to override patents - for public health purposes - by issuing "compulsory licenses" that enable the generic manufacture of drugs still under patent.

However, few developing countries have exercised this right, citing a lack of capacity and legal know-how to negotiate the complicated paperwork required, and political pressure from foreign governments.

Surprisingly, the volume of drugs a country purchased did not significantly affect price; higher-prevalence countries buying large quantities of ARVs often paid more than lower-prevalence countries.

"On one hand, volume gives countries more power to negotiate," the authors wrote. "On the other hand, the higher volume means that there are more people who will demand treatment, and the countries are facing political pressure to respond to this need, which could reduce their negotiating power."

The paper recommends various strategies to ensure that all countries obtain the best possible prices for ARVs: strengthening the ability of lower-income countries to take advantage of compulsory licensing, and providing technical assistance for the production of generic ARVs, could help increase competition among manufacturers; improving production efficiency and buying cheaper active ingredients could reduce manufacturing costs.

The authors also note that prices of first-line ARVs are unlikely to decline much further, but there is ample room for reduction in second-line drug prices.

"Many more patients could be treated if second-line therapy were closer to manufacturing costs," they commented. "Reducing the price of second-line therapy should remain a priority."

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