eal etc. presentation de 30_sep06
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University-based approaches to ensuring access to medicines
Universities Allied for Essential MedicinesUniversity of PennsylvaniaSeptember 30, 2006
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 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)
Price Disparity Across Markets
AverageNVP 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
Consequences for developing countries
*World Health Organization. http://www.who.int/medicines/services/essmedicines_def/en/
0
10
20
30
40
50
60
70
DevelopedCountries
DevelopingCountries
Percentage ofTotal Public andPrivate HealthSpending
January 2006
ARV Price Comparison: 3TC+d4T(40)+NVP
Branded BestPrice
$562
Generic ListPrice
$290
$562
$192
October 2003
Branded BestPrice
Generic ListPrice
Effect of generic competition on market prices
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’
Features of generic competition
Generic competition produces superior outcomes
Economics(cost advantages,
competition)
Innovation (eg, FDCs, pediatric
formulations) + + Quality
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
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
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
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
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?
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.
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 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
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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