University-based approaches to
ensuring access to medicines
Universities Allied for Essential Medicines
University of Penn...
Caveats
• Striking the balance between complexity and accessibility
• Stop me!
• HIV exceptionalism
Defining the problem
• Adequate drugs and diagnostics simply do not exist for many
neglected diseases
• Even where drugs a...
Price Disparity Across Markets
Average
NVP regimen
EFV ABC ddI TDF LPV/r SQVRTV
$270 $330
$705
$300 $250
$460
$840
$120
$3...
Consequences for developing countries
*World Health Organization. http://www.who.int/medicines/services/essmedicines_def/e...
January 2006
ARV Price Comparison: 3TC+d4T(40)+NVP
Branded Best
Price
$562
Generic List
Price
$290
$562
$192
October 2003
...
Effect of generic competition on market prices
Other problems associated with originator market exclusivity
• Untimely product launch
– Heat-stable LPV/r
– Tenofovir
• U...
Features of generic competition
Generic competition produces superior outcomes
Economics
(cost advantages,
competition)
In...
Potential university role in promoting generic competition
• Increasing rates of university patenting and licensing post-
...
Case study: Emory Univ. and Emtricitabine/Tenofovir
• Case study will be presented in greater detail tomorrow
• Emory deve...
TDF/FTC: Under-realized potential
Originator
$370
Potential
generic
$140
Price comparison
$190
Leading
first line
regimen
...
Current situation in the TDF market
• Possibility of patent protection in key
countries such as:
– India
– Brazil
– China
...
Ex post
Ex ante
Potential university approaches
Description of possible approaches
• Rely on potential for government marc...
Equitable Access License (EAL) overview
• Basic idea: Means of maintaining open door for robust generic
competition
• Deal...
EAL schematic: Cross-license and grant-back
EAL schematic: Notification
EAL schematic: Notifier improvements
4.
Royalties flow to university and
licensee
Universities
Objections to the EAL
Known and suspected objections
• Lost revenue
• Lack of leverage/lost deals if individu...
Changing strategic considerations for pharma
• Parallel importation poses severe risk to sales in developed nations
• Subs...
Eal etc. presentation de 30_sep06
Eal etc. presentation de 30_sep06
Eal etc. presentation de 30_sep06
Eal etc. presentation de 30_sep06
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Eal etc. presentation de 30_sep06

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  • (OPTIONAL) Thus two factors drove price reductions: lower production costs as a result of higher volumes, and a commitment by the companies to minimize overhead and margin while keeping the business sustainable.  Our role was to provide expertise in modeling cost and to negotiate a shift in mindset by management so that they would view these products as “low-margin, high-volume”.
  • The third challenge facing the ARV market is price disparity between low and middle-income countries. Middle-income countries are still paying 1.5 times the price of low-income countries for 1st-line ARVs. The price differential is a factor of 6 for these second-line ARVs. Many countries facing severe HIV/AIDS epidemics simply do not have the resources to pay for this premium.
  • There is more risk in 2nd-line guidelines. Already, the market is fragmented. NLF and IDV/r are used even though they are not recommended. SQV/r is used even though it can never be as affordable as LPV or ATV. We believe that countries need to revise their 2nd-lie guidelines to consolidate global demand around the products that will matter most, i.e. heat-stable LPV/r. If they do – and if they signal so to the supplier NOW – then we can plan for production early and bring these prices down more quickly.
  • (OPTIONAL) Thus two factors drove price reductions: lower production costs as a result of higher volumes, and a commitment by the companies to minimize overhead and margin while keeping the business sustainable.  Our role was to provide expertise in modeling cost and to negotiate a shift in mindset by management so that they would view these products as “low-margin, high-volume”.
  • (OPTIONAL) Thus two factors drove price reductions: lower production costs as a result of higher volumes, and a commitment by the companies to minimize overhead and margin while keeping the business sustainable.  Our role was to provide expertise in modeling cost and to negotiate a shift in mindset by management so that they would view these products as “low-margin, high-volume”.
  • (OPTIONAL) Thus two factors drove price reductions: lower production costs as a result of higher volumes, and a commitment by the companies to minimize overhead and margin while keeping the business sustainable.  Our role was to provide expertise in modeling cost and to negotiate a shift in mindset by management so that they would view these products as “low-margin, high-volume”.
  • (OPTIONAL) Thus two factors drove price reductions: lower production costs as a result of higher volumes, and a commitment by the companies to minimize overhead and margin while keeping the business sustainable.  Our role was to provide expertise in modeling cost and to negotiate a shift in mindset by management so that they would view these products as “low-margin, high-volume”.
  • (OPTIONAL) Thus two factors drove price reductions: lower production costs as a result of higher volumes, and a commitment by the companies to minimize overhead and margin while keeping the business sustainable.  Our role was to provide expertise in modeling cost and to negotiate a shift in mindset by management so that they would view these products as “low-margin, high-volume”.
  • We are acting on many fronts to bring these prices down. First, we are addressing the chemistry directly by recruiting experts to help the API manufacturers bring production costs down as quickly as possible. We are also improving demand forecasts to help move the supply-side of the market towards the products that will matter to countries and patients. Third, we want to help avoid the demand-side of the market from becoming fragmented given the number of regimen options that are available for 2nd-line treatment. Finally, we are working with the WHO’s prequalification program to ensure it has the resources to act quickly – so once drugs are being commercially manufactured, they can quickly reach patients.
  • Eal etc. presentation de 30_sep06

    1. 1. University-based approaches to ensuring access to medicines Universities Allied for Essential Medicines University of Pennsylvania September 30, 2006
    2. 2. Caveats • Striking the balance between complexity and accessibility • Stop me! • HIV exceptionalism
    3. 3. Defining the problem • Adequate drugs and diagnostics simply do not exist for many neglected diseases • Even where drugs and diagnostics do exist, prices in developing countries are often out of reach when the market is not competitive • Even where prices are affordable, other barriers to delivery exist (human resources, infrastructure, management capacity)
    4. 4. Price Disparity Across Markets Average NVP regimen EFV ABC ddI TDF LPV/r SQVRTV $270 $330 $705 $300 $250 $460 $840 $120 $390 $480 $1,580 $3,560 $3,540 $1,930 $540 1st -Line ARVs 2nd-Line ARVs Low-Income Countries Middle-Income Countries Disparity driven largely by originator price discrimination; Potential prices are even lower than LIC prices for drugs that lack robust generic competition
    5. 5. Consequences for developing countries *World Health Organization. http://www.who.int/medicines/services/essmedicines_def/en/ 0 10 20 30 40 50 60 70 Developed Countries Developing Countries Percentage of Total Public and Private Health Spending
    6. 6. January 2006 ARV Price Comparison: 3TC+d4T(40)+NVP Branded Best Price $562 Generic List Price $290 $562 $192 October 2003 Branded Best Price Generic List Price
    7. 7. Effect of generic competition on market prices
    8. 8. Other problems associated with originator market exclusivity • Untimely product launch – Heat-stable LPV/r – Tenofovir • Unreliability of supply in single- source situations • Barriers to innovation Pricing is not the sole concern with respect to patent- protected market exclusivity: do not equate ‘access’ with ‘low prices’
    9. 9. Features of generic competition Generic competition produces superior outcomes Economics (cost advantages, competition) Innovation (eg, FDCs, pediatric formulations) + + Quality
    10. 10. Potential university role in promoting generic competition • Increasing rates of university patenting and licensing post- Bayh-Dole: roughly two-fold increase 1993-2003 • 4 of top 10-12 antiretroviral compounds were developed at universities (d4T, 3TC, FTC, ABC) • Recent report found that 15 of the 21 drugs with the most therapeutic impact emerged from university research • Out-licensing to biotech & pharmaceutical companies for downstream development creates moment of opportunity
    11. 11. Case study: Emory Univ. and Emtricitabine/Tenofovir • Case study will be presented in greater detail tomorrow • Emory developed Emtricitabine (FTC) and licensed the compound to Gilead for development • Gilead linked FTC with Tenofovir (TDF) in a fixed-dose combination called Truvada that proved very successful • Gilead and Royalty Pharma recently bought Emory’s rights to royalty stream for $525 million
    12. 12. TDF/FTC: Under-realized potential Originator $370 Potential generic $140 Price comparison $190 Leading first line regimen • TDF is a wonder drug: - Low toxicity - Potentially dominant 2nd line drug in near term - Potentially dominant 1st line drug in medium term - Potentially widely used prophylactic in long term • Unbridled generic competition is essential for TDF (+ FTC) to realize full potential
    13. 13. Current situation in the TDF market • Possibility of patent protection in key countries such as: – India – Brazil – China • Patent opposition in India • Gilead voluntary licenses to Indian suppliers but with restrictions Pricing will not be as low as is achievable due to restrictions, in market where every $ matters Yet this outcome represents close to the best possible outcome in absence of ex ante university-pharma agreement
    14. 14. Ex post Ex ante Potential university approaches Description of possible approaches • Rely on potential for government march-in • Address access concerns and seek exceptions post-launch and only upon activist pressure (as with d4T) • University non-patenting in Low and Middle Income (LMI) countries • Potential ex ante agreements with licesee (pharma or biotech): – Equitable Access License (to be discussed) – “Fair pricing” provisions – Provisions stipulating voluntary license program meeting certain minimum standards – Other means of retaining some discretion for licensees?
    15. 15. Equitable Access License (EAL) overview • Basic idea: Means of maintaining open door for robust generic competition • Deals with three basic hurdles: patent, regulatory/data, and production capacity • Major benefits include simplicity and ease of administration, maximum flexibility for generic producers, and wide coverage • Leaves relatively little discretion to university or licensee: self- executing rights, covers all LMIs, no eligibility (eg, quality) restrictions on suppliers, etc.
    16. 16. EAL schematic: Cross-license and grant-back
    17. 17. EAL schematic: Notification
    18. 18. EAL schematic: Notifier improvements 4. Royalties flow to university and licensee
    19. 19. Universities Objections to the EAL Known and suspected objections • Lost revenue • Lack of leverage/lost deals if individual universities adopt EAL alone; big disincentives to ‘first movers’ • Anti-trust concerns if universities move toward EAL in concert • EAL-specific concerns: – Lack of discretion over licensed suppliers – Lack of discretion over companies – Limited discretion re: license terms • Usual concerns about generic production as general matter: – Parallel importation – Quality and legal liability concerns – Fear of price/cost transparency – Loss of revenue will force cut-backs in R&D because R&D costs will not be recouped Pharma
    20. 20. Changing strategic considerations for pharma • Parallel importation poses severe risk to sales in developed nations • Substantial risk of legal liability if generic producers/licensees sell poor-quality product that produces adverse clinical events • Fear of cost transparency • Revenue loss will compromise R&D • Public pressure to reduce prices via generics in LMIs can be withstood • Excess manufacturing capacity can be allocated to developing world demand • No benefit to be gained from licensing to generics Initial perspectives • Little empirical evidence of widespread parallel importation • Increasing confidence in quality standards among leading Indian generic manufacturers, coupled with expanded WHO and FDA quality assurance • Costs have become quite transparent, at least in HIV/AIDS sphere, with only modest increase in public pressure on pricing in developed nations • Disingenuous claim from beginning • High levels of public pressure on pricing in LMIs, and generic competition difficult to avert entirely • Little desire to invest in new manufacturing capacity to serve rapidly growing low-margin developing world demand • Potential strategic benefits to voluntary licensing: new sources of intermediates/API, and significant potential for grant-backs of process improvements Emerging perspectives

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