GLOBAL FUND OBSERVER (GFO)
NEWSLETTER, a service of Aidspan.
Issue 22 - Tuesday 6 April 2004. (For formatted web, Word and PDF versions of
this and other issues, see www.aidspan.org/gfo/archives/newsletter
)
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The Global Fund and three other organizations today announced ways in
which grant recipients can obtain high quality antiretroviral drugs and
diagnostics at very low prices that previously were only available to a few
countries. (This issue of GFO does not
deal with any other topics.)
by Richard Stern
"In the past few years we
have heard many announcements about scaling up plans and programs regarding
HIV/AIDS treatment. But after the press
coverage dies down, things don't seem to change very much for the people
who need these drugs."
3. PRESS RELEASE:
The Press Release Announcing the Pricing Agreement
4. Q&A: Further Details Regarding Pricing
Agreement, Released by the Four Participants
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The Global Fund
and three other organizations today announced ways in which grant recipients
can obtain high quality antiretroviral drugs and diagnostics at very low prices
that previously were only available to a few countries.
The press
statement by the four organizations is reproduced below, together with a
supporting "Question and Answer" document.
This article is based in part upon interviews that GFO conducted today with
the Global Fund and the Clinton Foundation.
Under the plan, generic
drugs made by four Indian companies and one South African company could eventually
become available in over 120 countries eligible for Global Fund grants at
prices as low as $140 per patient per year.
The drugs in these
agreements include two- and three-drug fixed dose combinations which have been certified
by the WHO as being of acceptable quality and efficacy.
The four organizations
that have agreed to work together are the Global Fund, the William J. Clinton
Presidential Foundation, the World Bank, and UNICEF. The Clinton Foundation helps to negotiate
price agreements with drug manufacturers; the Global Fund and the World Bank
provide AIDS-related grants; and UNICEF offers a bulk procurement facility.
Last year, the
Clinton Foundation negotiated agreements whereby suppliers of generic ARV drugs
agreed to offer prices to a few countries in Africa and several in the
Caribbean that were significantly lower than any prices previously available. The Foundation did so by pooling volumes
across multiple countries, by moving to a system of multi-year tenders,
and by finding ways in which the buyers could guarantee full and prompt
payment. This gave the manufacturers the
ability to plan their production more efficiently and to realize cost savings
that they could pass on in the form of lower prices.
In today's
agreement, these terms and prices will be made available, in principle, to all
countries that have received Global Fund HIV/AIDS grants and that meet certain additional
conditions for participation.
In each such
country, the Clinton Foundation has negotiated or will negotiate a low "ceiling
price" for each relevant ARV drug. Any
company - be it a generic manufacturer or one of the original patent-holders -
that is willing to produce these drugs to acceptable standards and to sell them
at or below this price is welcome to compete for contracts within the program.
A Global Fund Principal
Recipient (PR) that is administering an HIV/AIDS grant and that wishes to
become eligible for these low prices should proceed as follows:
Starting in mid-2004,
the Global Fund will publish information on the products purchased and the
prices paid by all its grant recipients.
This transparency will help to keep prices low.
The strength of
the plan announced today is that as more and more recipients of Global Fund and
World Bank grants get involved, the procurement budgets that they have access
to can, in effect, become aggregated and can make possible substantial
competition and very large production runs.
This, in turn, means that the drug manufacturers can guarantee large
long term contracts to their own suppliers, leading to yet further reductions
in cost.
In the past,
prices were kept high because low volume, uncertain demand and late payment led
to inefficient production runs and high administrative costs per order. Today's agreement seeks to avoid all these problems,
and to pass the benefits to those who need the drugs.
Stephen Lewis, the UN Secretary General's Special Envoy for HIV/AIDS in
Africa, commented, "This is all tremendously exciting, and it will be made even
more so if WHO finally receives the seed money it needs - $200 million over two
years - to help to coordinate the interventions at country level [and] to
provide the emergency technical assistance [that is needed] to achieve '3 by 5.'
"The inexplicable financial torpor which has anaesthetized the donor
world may now be broken, as the donor countries see the extraordinary
opportunity to come in behind this initiative and give it an additional
dramatic push. Surely the increasingly realistic prospect of prolonging and
saving the lives of millions of men, women and children, will galvanize the
international community."
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by Richard Stern
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In the
past few years we have heard many announcements - such as today's - about
scaling up plans and programs regarding HIV/AIDS treatment. They have come from UNAIDS, WHO, PAHO and
the Global Fund, as well as generic and originator drug
companies. But after the press coverage dies
down, things don't seem to change very much for the people who need these
drugs. Lots of our AIDS leaders like to
be in the headlines, but they don't seem to focus on the follow-up issues related
to being sure that the promised medications actually reach the target
populations.
I have
seen little interest by the Global Fund in organizing a press conference
that would point out that of the 30,000 people in Peru, Ecuador, Nicaragua and
the Dominican Republic who could and should have received ARV therapy from
Global Fund projects approved in Round Two, fourteen months ago, not one
person has as yet received a single pill. Very likely a third of the people who
needed treatment when the projects were approved have died.
To me
these tragedies related to bureaucracy, negligence and
indifference are newsworthy, but you don't see them in the New York Times.
Announcements
such as this, coming one after the other, may actually be counterproductive in
the sense that they give everyone a false sense of complacency. People reading about them think, "Well,
the AIDS problem is solved in developing countries," and go on to some
other issue. The media operates on one
level, while the reality of the epidemic and the challenge of implementing
effective solutions is often ignored.
UNAIDS, PAHO, WHO, the Clinton Foundation and the Global Fund should
start to hold press conferences focusing on why, with so much money available
and prices so dramatically low, so few people are actually receiving
treatment.
[Richard Stern (rastern@racsa.co.cr)
is Director of Agua Buena Human Rights Association (www.aguabuena.org), based in
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3. PRESS
RELEASE: The Press Release Announcing the Pricing Agreement
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[The following press release was issued on 6 April 2004 by the William
J. Clinton Foundation, The Global Fund, UNICEF, and The World Bank.]
6 April 2004
New Agreements Aim
to Make Lowest-Priced AIDS Drugs and Diagnostics Available to Hundreds of
Thousands of Patients Throughout the Developing World
Global Fund, World
Bank and UNICEF join with the
Geneva, New York, Washington -- The Global Fund, the World Bank, UNICEF
and the Clinton Foundation today announced agreements that will make it
possible for developing countries to purchase high-quality AIDS medicines and
diagnostics at the lowest available prices, in many cases for more than fifty
percent less than is currently available.
Today's agreements will pave the way for countries supported by the
Global Fund, the World Bank and UNICEF to gain access to drug and diagnostic
prices negotiated by the Clinton Foundation. Beneficiaries of Global Fund and
World Bank grants who are interested in accessing these agreements should
contact the Clinton Foundation to initiate the process that is provided for
under the Clinton Foundation's agreements with its suppliers. Countries will be required to provide guarantees
of payment, to conduct long term tenders and to ensure the security of drug
distribution. The Global Fund, World Bank and UNICEF will support their funding
recipients in complying with these terms, as consistent with their policies and
existing practices. As a result of these agreements, the Clinton Foundation
will work with its suppliers to find ways to make the low-priced medicines and
tests available to more countries as soon as feasible.
The Global Fund and the World Bank are among the world's largest sources
of funding commitments to AIDS treatment. The Global Fund focuses more than 60
percent of the $2.1 billion committed for two years to 122 countries to the
fight against AIDS. The World Bank has
currently committed $1.6 billion to fight AIDS through the Multi-country
HIV/AIDS Programs (MAP) and other AIDS operations, including grants for the
poorest countries. UNICEF spent $111
million during 2003 in the fight against AIDS and is rapidly accelerating the
procurement of antiretroviral medicines (ARVs) and AIDS diagnostic equipment
and tests for developing countries.
The prices have been negotiated by the Clinton Foundation with five
manufacturers of ARVs and five manufacturers of HIV/AIDS diagnostic tests. These prices were announced originally in
October 2003 and January 2004, and to date they have been available to the 16
countries in the
The drugs in these agreements include individual formulations and two-
and three-drug fixed dose combinations which have been pre-qualified by the
World Health Organization to assure quality and efficacy. This standard is a prerequisite for
procurement under Global Fund, World Bank and UNICEF policies.
These medicines are critical components of the four regimens recommended
by the World Health Organization as "first line" treatment for AIDS in its 3x5
initiative. In developing countries
outside of
The pharmaceutical manufacturers included in these agreements are Aspen
Pharmacare Holdings in
The diagnostic tests included in these agreements are offered by five
leading medical technology companies and include CD4 tests from Beckman
Coulter, Inc. and BD (Becton Dickinson and Company) and viral load tests from
Bayer Diagnostics, bioMérieux and Roche Diagnostics. The prices available for these tests under
the agreement include machines, training, reagents and maintenance and are up
to 80% cheaper than otherwise available in the market.
Speaking about these agreements, former U.S. President William J.
Clinton said, "I am grateful for this collective effort, which will soon help
many hundreds of thousands of people, and eventually millions of people, live
longer, healthier lives. With these
agreements, we are one step closer to making sure future generations can live
without the scourge of AIDS. We are
hopeful that developing countries and those who support them in the fight
against AIDS will take full advantage of this agreement and act quickly to do
all they can to help in this fight."
Richard Feachem, Executive Director of the Global Fund, affirmed that,
"Access to HIV treatment for all who need it is a moral imperative and now the
target of growing financial commitments.
Today's agreements build on sound science, agreed policy and market
economics to maximize the reach of those commitments. As a result, hundreds of thousands of
additional people will receive the drugs they need to stay alive and remain
healthy."
According to the agreements announced today, the governments and NGOs
supported by Global Fund, World Bank and UNICEF policies will be able to use
the resources of these organizations to procure drugs and tests available under
the Clinton Foundation arrangements.
These agreements are consistent with existing policies of all three
international organizations.
World Bank President James Wolfensohn said of today's announcement, "We
regard AIDS as being the single most important issue at the moment in Africa
because of the devastating effect that it has had throughout the Continent, and
it is not something that is deferrable to discussions of economic or other
issues. The emerging epidemic in
The Executive Director of UNICEF, Carol Bellamy, added, "This new
partnership works to break down some of the barriers - - such as price, supply
and demand - - that are impeding access to life-saving AIDS medicines and
diagnostics in developing countries. UNICEF is very proud to be part of this
creative initiative that promises to save lives and bring hope to millions of
children and families around the world."
The Clinton Foundation, Global Fund, World Bank and UNICEF are committed
to exploring additional forms of cooperation to expand treatment access.
* * * *
The Global Fund is a unique
and independent global public-private partnership dedicated to attracting and
disbursing additional resources to prevent and treat AIDS, tuberculosis and
malaria. This partnership between
governments, civil society, the private sector and affected communities
represents a new approach to international health financing. The Global Fund
works in close collaboration with other bilateral and multilateral
organizations to supplement existing efforts dealing with the three diseases.
In 2003 the World Bank
provided $18.5 billion and worked in more than 100 developing countries,
bringing finance and/or technical expertise toward helping them reduce poverty.
In addition to financial assistance, the Bank is also a major provider of
implementation support for HIV/AIDS programs through direct provision of
expertise (especially fiduciary), dissemination of good practice and lessons
learned, and sponsorship of country-to-country learning. The World Bank is also
working with all major stakeholders in scaling up antiretroviral therapy and
its recently issued technical guide, "HIV/AIDS Medicines and Related Supplies:
Contemporary Context and Procurement" sets out principles and advice to
countries and has generated many messages of support and appreciation from UN
agencies, donors, policymakers, and NGOs.
For more on the Bank's work in the area of HIV/AIDS, visit: www.worldbank.org/aids
UNICEF works in 158
countries to ensure that all children survive and thrive through adolescence.
UNICEF's efforts on the ground emphasize immunization and micronutrients; the
best start in life, including safe water and sanitation, basic health and
nutrition, and loving interaction; education for all children; fighting
HIV/AIDS and caring for children orphaned by the disease; and a protective
environment that shields children from abuse, exploitation and violence. UNICEF
is funded entirely by voluntary contributions from governments, foundations,
businesses and individuals.
The Clinton Foundation
HIV/AIDS Initiative has been at work for more than a year helping individual
governments in
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4. Q&A: Further Details Regarding Pricing
Agreement, Released by the Four Participants
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[The following Q&A regarding the pricing agreement was released on 6
April 2004 by the same four organizations as the above press release.]
Questions &
Answers
1. Who will actually conduct procurement under
these agreements?
Governments and nongovernmental
organizations (NGOs) purchase the drugs and diagnostics or outsource this task
to procurement agents, such as UNICEF. In some cases as in
Right now, the Global Fund and World Bank
are by far the largest sources of funds for AIDS treatment in the world. A
number of donor governments including
2. What steps must recipients take to obtain the
prices made possible by these agreements?
HIV/AIDS programs wishing to access these
agreements should contact the Clinton Foundation to express their interest to
become a Member Purchaser. Each applicant will be considered on a case-by-case
basis. Once a Member Purchaser, recipients will conduct their normal tender
processes to buy drugs and tests. There are only a few additional requirements
that must be met. They must secure letters of credit or other guarantees that
ensure that the funds are available to pay for the drugs or tests. They must
make tenders for extended periods and they must have sufficient security in
their distribution and storage systems to ensure that the drugs and reagents
are not stolen or diverted to unauthorized sources. In the case of Global Fund grantees,
consistent with current Global Fund policies, assessments conducted by Local
Fund agents will be used to determine the grantee's capacity to meet
procurement and supply management requirements.
3. What countries are likely to benefit from
these arrangements?
Countries that have received World Bank or
Global Fund funds can potentially participate. Their participation will happen
in a gradual fashion as they implement the systems necessary to meet the
procurement and distribution terms of the Clinton Foundation's agreements.
4. Do
these agreements endorse the use of generics?
Of fixed-dose combinations?
The Clinton Foundation, Global Fund, World Bank and UNICEF all rely upon
the World Health Organization to assess the quality of drugs and the suppliers
of those drugs. The WHO has prequalified fixed dose combinations produced by
high quality generic suppliers.
The Clinton Foundation would be happy to
make agreements with patent-holding manufacturers of antiretroviral drugs to
include them in its drug agreements. Patent- holding companies based in the
5. Does this undermine the intellectual property
of patent-holding manufacturers?
No. All four organizations support strong
protection of intellectual property. However, the world community has
recognized the emergency of the global AIDS health crisis and made provisions
in world trade agreements for the use of generic drugs to fight AIDS. All
countries will act according to their own laws and in the context of
international laws and agreements in purchasing drugs. For diagnostic tests,
the agreement includes the major patent-holding manufacturers.
6. If Governments are authorized to buy medicines from
generic producers without the consent of the patent holder will not this
undermine the ability of pharmaceutical industry to pursue research and
development on the treatments?
A very small portion of pharmaceutical industry income comes from sales
to the countries that form part of this initiative. The prices that are
provided for in the agreements are very low and intended to provide maximum
access for patients in need. Mechanisms are in place to prevent the sale of
these low cost medicines in the major developed country markets so this will
not have an impact on profit margins of the research-based pharmaceutical
industry in the high-income countries. This initiative should have very little
or no impact on research and development efforts. It is intended to benefit
people in need.
7. How
will it be assured that the drugs get to the people that need them and that
they are of good quality?
The World Bank, the World Health
Organization (WHO), the Clinton Foundation and many additional organizations
provide technical assistance to countries to strengthen their supply chain
management and to ensure secure and timely distribution. This includes training and the engagement of
specialized agencies to assist recipient countries. Global Fund and World Bank
funding is conditioned on the adoption and implementation of adequate fiduciary
controls and evidence of mismanagement will lead to the suspension of that
funding. The WHO is collaborating with
countries to address weaknesses of the national and regional laboratory
capacities and assisting countries to ascertain the quality of the
batches.
Moreover, both the Global Fund and the World
Bank have mechanisms to monitor compliance with their policies and agreements
in countries where they are dispensing funds. This includes a price reporting
mechanism that the Global Fund will use, beginning in the summer of 2004, to
publish transparently the products procured and prices paid by its
recipients. In partnership with these
organizations, the Clinton Foundation will monitor the progress of countries in
developing efficient tendering processes and efficient and secure drug and
diagnostic test distribution processes.
8. Have any of the partners involved changed
their policies to make this possible?
These agreements are consistent with the
overall policies established by each of the participating organizations to
accelerate access to AIDS treatment for the developing world.
The relationship with the Global Fund, World
Bank, UNICEF, and the Clinton Foundation is entirely consistent with its
existing policies, which require recipients to purchase quality-assured
medicines at the lowest available prices, consistent with national laws and
international agreements. This policy will be maintained under this agreement.
The World Bank has adapted a few of its procurement procedures to make them
consistent with the principles that underlie the agreements between the
countries and the Clinton Foundation to accommodate the special circumstances
associated with the AIDS epidemic.
9. What will be the most immediate impacts of
these agreements?
These agreements will mean that hundreds of
thousands of additional people will be able to receive treatment for AIDS with
funds already allocated to countries by the Global Fund and the World Bank. As
additional grants are made, millions of patients may benefit from these
procurement arrangements and their associated prices.
10. Is the
No. The Clinton Foundation
provides technical assistance to countries interested in scaling up care and
treatment and establishes programs to change the economics of AIDS treatment in
resource poor settings by lowering the costs of treatment. The Clinton
Foundation's work therefore complements the financing role of the Global Fund
and the World Bank. This technical assistance may involve helping the
government to prepare applications for funds to the Global Fund or World Bank.
Fundraising is not the primary mission of the Foundation, which recognizes and
affirms the central financing role of mechanisms like the Global Fund and the
World Bank. The Global Fund, in particular, as an independent foundation
relying on ad hoc contributions for resource mobilization, has urgent
fundraising needs that all four collaborating partners support. In addition to its role as procurement agent,
UNICEF supports significant programs in developing countries to stop the spread
of AIDS and care for those affected by it, particularly children and families.
UNICEF is funded entirely by voluntary contributions and has continued funding
needs for its HIV/AIDS programs.
11. What are the
price savings associated with these agreements?
For the four regimens recommended by the
World Health Organization as first line responses to HIV/AIDS treatment, the
drug prices available through these arrangements save up to $130 per patient
per year when compared to the lowest price generic equivalent (or about half of
the cost) and up to $420 per patient per year when compared to the lowest price
branded equivalent (or about two-thirds of the cost). The diagnostic savings
range from $8 to as much as $80 per test depending on the country and the
particular test.
12. Do these
agreements make unnecessary the availability in developing countries of
antiretrovirals manufactured by patent holders?
No.
While some compounds are available at high and assured quality at the
lowest possible price from generic manufacturers, others are not. Some compounds can be purchased most cheaply
through procurements from patent-holding manufacturers. Countries may also be required to purchase
originator products depending on national laws and international agreements.
In all cases, the four collaborating
organizations encourage patent-holding pharmaceutical manufacturers to make
their products available at low prices to poor countries and to sustain
research and development investments to improve the scientific basis of
fighting HIV/AIDS and other infectious diseases.
Consistent with this spirit, GlaxoSmithKline
has made available to all Global Fund Principal Recipients the deepest
discounts it offers on products to fight HIV/AIDS and malaria. The Global Fund
is also drawing on the inputs and additional manufacturers to explore the
feasibility of channeling in-kind donations of medicines to its recipients as a
voluntary option for meeting grant obligations.
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END OF NEWSLETTER
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