An analysis of antiretroviral procurement using data provided by the Global Fund and WHO’s Global Price Reporting Mechanism between 2002 and 2007 has found that for many drugs, large volume purchases do not necessarily work out cheaper, calling into question the view that pooled procurement of large volumes of drugs will always deliver lower prices.
The research is published in the Bulletin of the World Health Organization, and was carried out by Brenda Waning at Boston University School of Medicine and colleagues at Boston University, Massachusetts College of Pharmacy and Health Sciences and Utrecht Institute for Pharmaceutical Sciences.
The study was funded by the United Kingdom’s Department for International Development through the Medicines Transparency Alliance (MeTA) project, which is intended to improve the availability of information on prices, demand and supply in developing countries in order to improve access to medicines.
The analysis looked at 7253 procurement transactions between 2002 and 2007. The Global Fund compiles data on all ARV purchases made with its funds by country programmes, and WHO compiles data from a variety of sources, including country offices and international organisations. The data were combined and duplicate purchase records were eliminated, as were records for drugs purchased infrequently (
The purchases were also categorised according to whether they were made by countries eligible for discounted prices negotiated by the Clinton HIV/AIDS Initiative, whether they were made by countries eligible for differential pricing on branded products, whether they were high, medium or low-volume purchases, and, as an indicator of quality, whether or not the product had been approved by the US FDA or WHO.
The researchers found that for 19 of 24 products, there was no association between purchase volume and price. “Although conventional business practice suggests that making a large-volume purchase at the country level will result in a discounted price, this appears not to be the case for these medicines,” the authors comment.
In the remaining cases high volume purchases did result in lower prices, but the degree of cost-saving varied by product. The authors say that one limitation of their analysis is an inability to detect the effect of national tendering arrangements on prices. National purchases determined as a result of a tendering exercise are delivered as a series of purchases, and databases record the prices paid for each purchase, not the tender price. More investigation is needed of the impact of tendering on the relationship between purchase volume and price.
The authors note that the Global Fund has recommended the development of voluntary pooled procurement, but point out that any savings achieved by pooled procurement need to be balanced against the running costs of a pooled procurement system.
“While mechanisms for improving procurement efficiency are certainly desirable, they should be designed to develop and increase the technical capability for managing these procurement systems in the countries concerned. New procurement arrangements, whereby donors and international organizations act on behalf of countries for selected diseases, may fail to strengthen those countries’ health systems,” they comment.
The analysis also found that in most cases, differentially priced branded products were significantly more expensive than branded products. The only exceptions were lopinavir/ritonavir and didanosine, where products offered by Abbott and Bristol Myers-Squibb access schemes remained 60-70% cheaper during the period under study. (The Clinton HIV/AIDS Initiative has since negotiated prices from generic manufacturers undercutting the differential price offer for both products; these prices should be accessible where patents or licenses do not prevent imports of generic versions of these drugs).
An analysis of 13 products for which the Clinton HIV/AIDS Initiative negotiated price ceilings with generic manufacturers found that compared to products purchased outside CHAI consortium countries, purchases in CHAI consortium countries were significantly lower in nine cases. In the case of efavirenz 600mg tablets CHAI consortium countries paid 27% less. However the authors note that the degree of difference between CHAI and non-CHAI countries diminished after one to two years, and say more research is needed to determine why this difference narrows.
Waning B et al. Global strategies to reduce the price of antiretroviral medicines: evidence from transactional databases. Bull World Health Organ 87, 2009.