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
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Caveats
• Striking the balance between complexity and accessibility
• Stop me!
• HIV exceptionalism
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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)
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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
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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
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January 2006
ARV Price Comparison: 3TC+d4T(40)+NVP
Branded BestPrice
$562
Generic ListPrice
$290
$562
$192
October 2003
Branded BestPrice
Generic ListPrice
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Effect of generic competition on market prices
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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’
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Features of generic competition
Generic competition produces superior outcomes
Economics(cost advantages,
competition)
Innovation (eg, FDCs, pediatric
formulations) + + Quality
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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
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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
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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
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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
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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?
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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.
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EAL schematic: Cross-license and grant-back
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EAL schematic: Notification
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EAL schematic: Notifier improvements
4.Royalties flow to university and
licensee
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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
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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