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Article Excerpt
Introduction
New goals on providing universal access to HIV/AIDS services by 2010 were announced in 2007 by WHO, the Joint United Nations Programme on HIV/AIDS (UNAIDS) and the United Nations Children's Fund (UNICEF). (1) The need for life-long HIV/AIDS treatment and the high cost of antiretroviral (ARV) agents present challenges to achieving and sustaining universal access targets. During the past decade, various large-scale strategies have been used to reduce ARV prices in low- and middle-income countries. This paper focuses on three price-reduction strategies: procurement arrangements designed to increase purchase volumes, third-party price negotiation for generic ARVs and differential pricing for branded ARVs.
The first strategy, procurement arrangements to increase purchase volumes, often involves pooled procurement schemes that group multiple purchasers into a single purchasing unit in the hope that economies of scale will lead to lower prices. A pooled procurement mechanism is currently being developed at the Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund). (2,3)
The second large-scale strategy involves third-party consultation and price negotiation with generic ARV suppliers, a practice introduced by the Clinton Foundation HIV/AIDS Initiative (CHAI) in 2003. (4) In practice, CHAI attempts to make ARVs more affordable by negotiating price ceilings that reflect suppliers' costs plus reasonable and sustainable profit margins. (4) Moreover, CHAI furthers this strategy by providing direct technical assistance to some suppliers to help lower their production costs. (4) The resulting ceiling prices are made available to all members of the CHAI procurement consortium. (4) Countries that wish to become part of the consortium sign a memorandum of understanding with CHAI and manufacturers are required to offer ARVs to these countries at prices equal to or less than CHAI-negotiated ceiling prices. (4)
The third strategy involves differential pricing, sometimes referred to as price discrimination or tiered pricing. In 2000, the Accelerating Access Initiative, a collaborative endeavour of multiple international agencies and pharmaceutical manufacturers, first launched such a strategy for ARVs. (5) Whereas CHAI price negotiation deals exclusively with generic ARVs, differential pricing pertains to branded ARVs and was introduced at a time when generic ARVs were not yet available. Under differential-pricing schemes, each manufacturer selects certain branded ARVs to be sold to low- and middle-income countries at prices lower than those charged in high-income countries. (5) Each manufacturer determines which countries are eligible to purchase ARVs under their differential-pricing scheme, with eligibility typically being based on the country's income level and prevalence of HIV infection.
Data on transactions involving the procurement of ARVs with donor funds are made public by the Global Fund and WHO. (6,7) The Global Fund and WHO databases can be used to monitor and examine the global ARV marketplace. Although some analyses of these databases have been carried out, (8-11) none has examined the global impact of the various ARV price-reduction strategies mentioned above. We used the Global Fund and WHO databases to test the following hypotheses on three different ARV price-reduction strategies: prices for high-volume ARV purchases are less than for low-volume purchases; prices for generic ARVs purchased within the CHAI consortium are less than for generic ARVs purchased outside the consortium; and prices for branded ARVs purchased under differential-pricing schemes are equal to or less than those for generic ARVs.
Methods
Data sources
We used data on ARV procurement transactions from the Global Fund Price Reporting Mechanism and the WHO Global Price Reporting Mechanism (GPRM) for the period between July 2002 and October 2007. (6,7) The Global Fund posts details of ARV procurements reported by their international aid recipients on the web-based Price Reporting Mechanism. (6) In addition, procurement data from the Global Fund as well as procurement data provided by WHO country offices, international organizations, procurement agencies and others are posted by WHO on the web-based GPRM, which serves as the global repository for data on ARV procurement. (7,12) As shown in Fig. 1, data from these two sources were combined in a way that allowed us to remove any overlap in procurement data either within or between data sources. We also made sure that the data concerned valid transactions by removing incomplete records, erroneous reports (e.g. the wrong manufacturer) and suspect data entries with extremely low or high prices. Suspect data entries were identified using standard box-plot equation intervals.
For the current analysis, we restricted our data set to ARV products supplied in a solid form, such as tablets, capsules and caplets. To focus on the more commonly used ARVs and to ensure reasonable sample sizes for regression models, we chose ARVs with procurement sample sizes of 100 or more (i.e. the ARV was purchased at least 100 times between July 2002 and October 2007). As a result, the analysis included 7253 procurement transactions for 24 ARV dosage forms. These. 24 dosage forms provide the basis for the regimens commonly used for the prevention of mother-to-child transmission of HIV as well as for first- and second-line treatment of HIV/AIDS. They belong to three major classes of ARV: nucleoside reverse transcriptase inhibitors, non-nucleoside reverse transcriptase inhibitors and protease inhibitors. We adjusted all prices, which were reported by the Global Fund and WHO in United States dollars (US$), to the July 2006-June 2007 time period using the United States annual consumer price index. (13)
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The public data sources provided basic transaction information; however, to examine determinants of price,...
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