The Global Procurement Fund provides access to affordable HCV medicines in low and middle-income countries The new curative hepatitis C medicines represent a breakthrough in medical technology; although much of this breakthrough has been overshadowed by the debate around the prices of these therapies. Although the list price of these drugs is still high, governments in high-income countries require rebates and discounts before providing reimbursement for the new therapies, which has resulted in significant discounting behind the scenes. Competition has also brought down the hepatitis C virus (HCV) drug prices to $17,000 - $35,000 per patient (depending on the purchasing agency) in the US and $10,000 - $30,000 per patient (depending on the drug) in the UK. These prices are expected to drop further as new therapies will launch over the next two years and as the competition for a disappearing market is expected to further intensify. An estimated 71 million people are infected with HCV globally but last year alone, 2% of all infections (1.7 million) were treated and cured. In Western Europe and the US, the treatment rate ranged from 7-10%. Competition in low and middle-income countries is significantly lower with only half of the companies with new therapies participating in these markets. Gilead and Bristol-Myers Squibb have provided licenses to the generic manufacturers that can provide generic copies of their products in over 100 low and middle-income countries. These countries account for over 60% of HCV infections globally. However, this strategy did not always result in the desired outcome. In several markets, including Pakistan, Gilead was forced to register and launch its own generic copies at a lower price to force its licensees to lower their prices. In addition, small countries like Kiribati, an Island nation in the Pacific Ocean, could not negotiate low prices for the generic drugs due to the small order size. A solution was launched in April by the non-profit organization called the Center for Disease Analysis Foundation (CDAF) in the US. The foundation, which is funded by private donors, has been working with over 85 countries to help develop national hepatitis plans. Two years ago, it launched the Polaris Observatory, which keeps track of how many individuals are infected with Hepatitis C and B and how many are treated and diagnosed. It works with a network of more than 500 experts across the globe to gather up to date information. “We kept hearing the same thing from low and middle-income countries,� says Dr. Homie Razavi, the managing director of the foundation. The countries were supposed to have access to low priced generic drugs, but they were paying 3-10 times higher than Egypt where they had generic companies competing for orders for 100,000-500,000 treated patients per year. To find out what to do about this, the CDA Foundation sponsored a meeting to discuss alternative methods to finance the elimination of hepatitis in low and middle-income countries. Attendees included representatives from the World Hepatitis Alliance, the World Bank, Global Fund, Viet Nam ministry of health, Malaysia Ministry of health, US CDC, CHAI, Viral Hepatitis Board, PharmAccess, Pharos Global Health, Wisper Public Affairs, diagnostic companies (Abbott, Cephied,
Roche), originator pharmaceutical companies (Abbvie, Gillead, Merck) and generic companies (Cadila, Ferozsons, Hetero, Strides Shasun, Mylan). A key insight from the meeting was the position in which generic companies find themselves. They have to apply for registration in each country, which can take a year or more to approve, and most countries require their own labels and packaging. These costs are often the same if the country is going to order enough medicine for 1,000 patient or 100,000 patients. In addition, receiving payments can be an issue with smaller countries who don’t know when, if ever, they will get paid. A key recommendation of the meeting was to develop a procurement fund that takes orders from multiple countries, so the order size is attractive to generic companies, and guarantee timely payment. In return, they would provide lower negotiated prices. The Foundation launched the Global Procurement (GPRO) fund in April. The fund has negotiated prices based on a pre-agreed minimum volume. The model we use is very similar to big-box-store where we negotiate low prices for our members based on large volume orders, according to Dr. Razavi. There is no fee for a country to become a member, but they do have to provide us with their estimated order size. We combine all the orders and ask the manufacturers to provide bids. We are bringing an efficient competitive bidding process to countries where competition is often lacking. Right now, we have been able to negotiate a price of $50 for a bottle of Sofosbuvir and $35 for a bottle of daclatasvir. Combined, the two-drug combination can be used to treat nearly all hepatitis C genotypes for a total cost of less than $260 per patient. This is less than most countries can negotiate on their own. When we first started, we thought negotiating prices would be the most difficult part of this initiative. It turned out that this was the easy part. Generic companies were more than willing to negotiate if the volume and payment could be guaranteed. In fact, we learned that competition can be too much of a good thing and can lead to prices below cost. In the long term, this will lead to a reduction in the number of competitors and an increase in overall prices or delays in delivery time. During negotiations, we had manufacturers bidding below one another. One key criteria now included in the selection process is sustainability – making sure there is enough generic companies left to compete in the long run. What has been surprising is how no country has applied for membership. Although GPRO is still new, so far no country has committed to become a member. I think a big barrier has been to get over the expectation of donor funded programs. The HIV, tuberculosis and malaria programs have left the countries with the expectation that donors from high-income countries will pay for the hepatitis programs. The big difference between GPRO and previous initiatives is that we expect the national governments to pay for purchases in the public health sector. We are working on lining up funds to help with the upfront financing and currency exchange risk, but at the end of the day, the national governments are expected pay and this has not been easy for many countries. There is an expectation that if they wait long enough,
donors will come forward to support hepatitis programs. In addition, many countries rely on their national tendering process to promote competitive bidding. However, it is fairly clear that these systems are not working properly as demonstrated by much higher negotiated prices already in place. Today, we offer affordable high quality products for over 100 countries listed on our website (http://gprofund.org). We screen all of our suppliers to make sure they can provide quality products and that they have sufficient capacity to provide the products in a timely manner. We are trying to make it as easy as possible for low and middleincome countries to provide access to HCV treatment and diagnostics but we need the countries to sign up. What about the high-income countries getting access to the generic products and the negotiated prices? I don’t see that happening. The question is whether the current prices in high-income countries provide a good value for money and study after study has shown that the answer is yes. Curing someone with HCV is less costly than doing nothing at the current prices. Normal market forces and competition seems to be working well and have brought down prices significantly over the last two years. These therapies provide good value for the money. We are trying to help the 100+ countries that account for most of the HCV infections globally and can use the help of a central purchasing agent. The key barrier, right now, seems to be the will to do something about hepatitis in these countries. We have removed price as a barrier to access. We now need to work on the will to commit to help all those infected with hepatitis C.