A new benchmark promising further downward pressure on drug prices emerged yesterday with the announcement that the Clinton Foundation has secured an agreement from Indian and South African drug manufacturers to supply a triple combination of AZT/3TC and nevirapine for $132 a year.
This price is more than 50% lower than the previous best price offered by a generic manufacturer for this triple combination.
The Foundation has negotiated the price reduction with four companies – Cipla, Ranbaxy, Matrix and Aspen – to supply the individual components of the combination to antiretroviral programmes in Mozambique, Tanzania, Rwanda and South Africa and nine Caribbean states. All the beneficiary states are receiving support from the Clinton Foundation in scaling up antiretroviral therapy.
The key to the deal, according to Cipla chairman Yusuf Hamied, was a predictable volume of drug orders that will allow manufacturers to take the risk of scaling up production. “This is the
first time a group has come forward with predictable volumes” he told the Wall Street Journal.
The Clinton Foundation expects that by 2008 1.5 million people will be receiving treatment in the 13 countries targeted by its work. Mozambique aims to treat over 100,000 people and Tanzania aims to treat 400,000, but the bulk of the drugs will be consumed in South Africa. Although no official decision has been announced by the South African government, yesterday’s drug deal appears to suggest that the government will aim to treat 50% of those eligible for antiretrovirals by 2008 (around 800,000 patients) (click here for details of the proposed South African treatment programme).
Merck, manufacturer of efavirenz, yesterday confirmed that it was also involved in negotiations with the Clinton Foundation to secure a lower price for efavirenz. Yesterday’s announcement did not reveal any price reduction for stavudine (d4T) implying that first line regimen choices will consist of AZT/3TC plus nevirapine or efavirenz, as in Botswana.
The Clinton Foundation was able to secure the prices by negotiating with generic manufacturers in an open fashion. The companies were asked to open their books to identify where cost savings could be made, and the Foundation also negotiated with Chinese manufacturers to bring down the price of raw materials needed to make antiretrovirals. This latter step is an important development, because there has been concern that unless investment in raw materials production happened immediately, a bottleneck in world antiretroviral production might be reached due to lack of capacity in the Chinese manufacturing sector.
Although the Clinton Foundation has been talking big numbers, it is still unclear how the treatment programmes will be funded. Although Tanzania, Mozambique and Rwanda have secured some support from the Global Fund to Fight AIDS and the World Bank, their treatment programmes are not fully funded yet. Ireland is the only major donor nation to have committed to bilateral support for programmes in these countries so far ($58 million over five years to Mozambique), and the United States is unlikely to support Clinton Foundation-inspired programmes that appear to compete for attention with President Bush’s own AIDS treatment programme.