SCMS Update: Pricing Analysis

Publication date: 2007

Update: Pricing Analysis Year 2, Quarter 3 April – June 2007 (Year 2 Quarter 3) September 25, 2007 PEPFAR Implementing Partner 2 Background: tracking global ARV prices �Lowering the cost of medicines reduces one of the key barriers to providing treatment and helps: • Treat more people with the same amount of funds • Reach rapidly increasing scale-up requirements �Governments and donors worldwide are working to lower the cost of HIV/AIDS treatment. Success will depend on: • Collaboration to make prices and transactions transparent • Shared access for all purchasers to prices and terms achieved by any organization PEPFAR Implementing Partner 3 SCMS strategy for reducing ARV prices PEPFAR and its Supply Chain Management System (SCMS) project have secured lower prices for antiretroviral medications (ARVs) by: �Pooling procurement (consolidating multiple orders to buy in larger volumes) �Purchasing generics whenever possible �Establishing long-term, indefinite quantity contracts (IQCs) with manufacturers, leveraging lower prices through bulk purchases 4 Strategy 1: Pooling procurement through Regional Distribution Centers To pool procurement for multiple countries and then centrally store purchased medicines, SCMS has established regional distribution centers (RDCs) in Ghana, Kenya and South Africa PEPFAR Implementing Partner 5 Strategy 2: Procuring generic rather than branded ARVs 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Jan '07 Feb '07 Mar '07 Apr '07 May '07 June '07 Branded Generic Month P e r c e n t a g e Percentage of procured branded and generic ARVs (by volume*) *Units represents the smallest unit delivered (i.e. capsule, tablet, mL) Definition: Quantity of products and commodities delivered to clients by the respective product category. Volume is captured by individual dose, which is defined by the unit of measure PEPFAR Implementing Partner 6 Strategy 3: Long-term contracts with ARV manufacturers � Long-term contracts for the purchase of ARVs are now held with Aspen Pharmacare, Aurobindo, Cipla, Matrix and Strides Arcolab � The project expects to see further price reductions as it increases its use of pooled procurement and the number of long-term contracts with producers � SCMS’s long-term contracts with vendors will benefit all: • Other buyers will be allowed to access SCMS-negotiated prices, even if SCMS is not the procurement agent 7 Strategies bring results �SCMS was able to maintain or improve the per unit price point achieved between January and March 2007 on all 1st Line ARV purchases made from April through June 2007(1) �Comparing SCMS results with other selected benchmark pricing sources and buyers(2) SCMS purchase prices were lower than all others for 54 percent of first- line ARVs �The purchase of generic ARVs resulted in considerable savings for SCMS when compared against AAI prices(3) • SCMS Estimated Savings (from April - June 2007): $55.4 million • Since January 2007, SCMS estimated savings have totaled $86 million (1) SCMS performs a pricing analysis every 3 months. Analysis does not include all ARVs purchased by SCMS in the two time periods, but only those where purchases were made in both time periods (2) Benchmark pricing sources and buyers include: OGAC (excluding SCMS purchases), the Global Price Reporting Mechanism, those prices reported by Medecins Sans Frontieres and the Clinton HIV/AIDS initiative (3) SCMS savings are determined by calculating the difference between the actual cost of SCMS generic purchases and the cost of all generic ARVs if they had been purchased by SCMS at their AAI prices 8 SCMS achieved exceptionally low prices on many large purchases1 SCMS average pack prices for large purchases (Y2Q3)2 43.20 480.96 115.20 86.40 25.20 36.00 $158.40 SCMS Average Price per Patient Year 2.1030TABLamivudine/Stavudine 150mg/30mg 3.6060TABNevirapine 200mg 40.08120TABLopinavir/Ritonavir 200mg/50mg [Aluvia] 9.6060TABLamivudine/Zidovudine 150mg/300mg 7.2060TABLamivudine/Stavudine/Nevirapine 150mg/30mg/200mg 3.0060TABLamivudine 150mg $13.2030TABEfavirenz 600mg SCMS Average Pack PricePack SizeARV (1) Based on SCMS purchases of more than $1 million in cost and/or 5 million units by volume (2) Pack prices are commonly reported by manufacturers and the benchmark pricing sources and buyers. Prices are calculated using the SCMS average price per unit and the quantity contained in a pack. Reported prices do not include freight and insurance costs 9 Recommendations for future actions � In order to improve pooled procurement and leverage even greater price reductions, countries and programs should increase: • Long-term forecasting and supply planning of ARVs and other HIV/AIDS-related medicines and supplies, including rapid test kits • Coordination of procurement activities of key stakeholders, including ministries of health, donors and NGOs • Transparency in reporting of transactions and prices paid to ensure global access to information on ARV prices Appendix �Selected Benchmark Pricing Sources and Buyers �SCMS Historical Prices �Generic Savings �Patient years procured 11 SCMS prices were compared to prices from four sources SCMS compiled OGAC data(4) Comparison prices are a weighted average per unit price using the smallest unit available (i.e. tablet, capsule, ml.) SCMS prices were excluded from the data set when computing the OGAC weighted averaged price Botswana, Cote D’Ivoire, Ethiopia, Guyana, Haiti, Kenya, Mozambique, Namibia, Nigeria, Rwanda, South Africa, Tanzania, Uganda, Vietnam, Zambia 10/01/06 – 09/30/06(3) 2,450(2) Office of the U.S. Global AIDS Coordinator (OGAC) Antiretroviral (ARV) Price List, May 2007 Untangling the web of price reductions 10th Edition, July 2007 (4) WHO GPRM Database(4)SCMS Purchase Order History(4)Source Comparison prices represent a weighted average purchase price from the manufacturer calculated using the total items purchased on a unit level (i.e. tablet, capsule, ml) and unit price paid per item 15 PEPFAR Countries 04/01/07 – 06/30/07 124(1) Supply Chain Management System (SCMS) Comparison prices are the “per pill” prices provided for all adult and some pediatric formulations and the per pack/per bottle divided by the pack/bottle size for the remainder of the pediatric formulations; Prices are reported by CHAI as a ceiling price and not based on actual transactions Prices offered to members of the CHAI’s Procurement Consortium Document dated May 2007 Not Applicable Clinton HIV/AIDS Initiative (CHAI) Comparison prices are an average of the unit price offered by manufacturers to eligible developing countries; Prices are reported by manufacturers and not based on actual transactions Price may not be available to all countries - data compiled from manufacturers with different restrictions on pricing Documented dated July 2007 Not Applicable Medecins Sans Frontieres (MSF) Comparison prices are the unit price for the smallest unit available (i.e. tablet, capsule, pill, ml) calculated by dividing total value by number of units Prices compiled from sources working with developing countries 04/01/07 – 06/30/07 69(1,3) WHO Global Price Reporting Mechanism (GPRM) Date Range Pricing Eligibility Pricing Methodology Number of transactions Data Attributes (1) Average unit prices for each ARV were often based on less than 5 transactions (2) SCMS prices have been excluded from the data set. Data for drugs not purchased by SCMS were eliminated (3) Some purchases for Albania, Ukraine and Russia were removed from the dataset because the reported prices were well above the average and would have skewed the analysis. (4) Some prices include CIP, “Carriage and Insurance Paid,” (i.e. freight and insurance) costs 12 0% 0% 0% 1% 2% 2% 4% 4% 4% 5% 5% 6% 9% 13% 13% 13% 21% 23% 0% 0% 5% 10% 15% 20% 25% L a m i v u d i n e / S t a v u d i n e 1 5 0 m g / 3 0 m g L a m i v u d i n e / S t a v u d i n e / N e v i r a p i n e 1 5 0 m g / 4 0 m g / 2 0 0 m g L a m i v u d i n e / Z i d o v u d i n e + N e v i r a p i n e 1 5 0 m g / 3 0 0 m g + 2 0 0 m g S t a v u d i n e 1 m g / m l L a m i v u d i n e / S t a v u d i n e / N e v i r a p i n e 1 5 0 m g / 3 0 m g / 2 0 0 m g T D F 3 0 0 m g [ V i r e a d ] Z i d o v u d i n e 1 0 m g / m l , o r a l s o l u t i o n L a m i v u d i n e 1 5 0 m g T D F / E m t r i c i t a b i n e 3 0 0 m g / 2 0 0 m g [ T r u v a d a ] S t a v u d i n e 3 0 m g A b a c a v i r ( a s s u l p h a t e ) 2 0 m g / m l N e v i r a p i n e 2 0 0 m g E f a v i r e n z 2 0 0 m g S t a v u d i n e 1 5 m g L a m i v u d i n e 1 0 m g / m l Z i d o v u d i n e 3 0 0 m g E f a v i r e n z 6 0 0 m g A b a c a v i r ( a s s u l p h a t e ) 3 0 0 m g N e v i r a p i n e 1 0 m g / m l SCMS was able to maintain or improve the per unit price point achieved between January and March 2007 on all 1st Line ARVs1 Discount/ premium (%) (1) Does not include all ARVs purchased by SCMS in the two time periods, but only those where purchases were made in both time periods SCMS Discount SCMS Premium SCMS April – June 2007 average price comparison against January – March 2007 average price(2) 13 0% 0% 1% 9% 24% -7% -3% -2% -1% 0% -10% -5% 0% 5% 10% 15% 20% 25% 30% D i d a n o s i n e E C 2 5 0 m g [ V i d e x E C ] N e l f i n a v i r 5 0 m g / g [ V i r a c e p t ] N e l f i n a v i r ( a s m e s i l a t e ) 2 5 0 m g [ V i r a c e p t ] S a q u i n a v i r 2 0 0 m g [ I n v i r a s e ] D i d a n o s i n e 5 0 m g [ V i d e x ] L a m i v u d i n e / Z i d o v u d i n e / A b a c a v i r 1 5 0 m g / 3 0 0 m g / 3 0 0 m g [ T r i z i v i r ] R i t o n a v i r 1 0 0 m g [ N o r v i r ] I n d i n a v i r 4 0 0 m g [ C r i x i v a n ] L a m i v u d i n e / Z i d o v u d i n e / N e v i r a p i n e 1 5 0 / 3 0 0 / 2 0 0 m g D i d a n o s i n e 1 0 0 m g SCMS was able to maintain or improve the per unit price point achieved between January and March 2007 on six 2nd Line ARVs SCMS Discount SCMS Premium SCMS April - June 2007 average price comparison against January - March average price(1,2) (1) Does not include all ARVs purchased by SCMS in both time periods, but only those where purchases were made in both time periods (2) Premiums represented a difference of less than 1¢ for the Nelfinavir and Saquinavir products and 4¢ for Didanosine EC Discount/ premium (%) 14 (1) Average per unit prices are rounded to the nearest cent. A negative percentage change represents an increase in price, a positive percentage change represents a discount achieved against the previous quarter’s price (2) % Price Change is calculated using the full average per unit price while the rounded price is represented on this chart (6) Price Change(2) (3 vs. 5) (5) April – June 2007 (4) Price Change (2) (2 vs. 3) (3) Jan – Mar 2007 (2) Oct – Dec 2007 (1) April – Sept 2006Drug 13.3%0.445.7%0.500.530.61Efavirenz 600mg 0.07Efavirenz 50mg 0.12Efavirenz 50mg [Stocrin/Sustiva] 0.09Efavirenz 30mg/ml [Stocrin/Sustiva] 5.6%0.1847.2%0.190.360.43Efavirenz 200mg 0.19Efavirenz 100mg 0.05Didanosine 2g/237ml [Videx] -6.5%0.650.61Didanosine EC 250mg [Videx EC] 0.0%0.160.0%0.160.160.16Didanosine 50mg [Videx] 0.27Didanosine 200mg 0.43Didanosine 200mg [Videx] 23.8%0.15-11.1%0.200.18Didanosine 100mg 0.120.12Didanosine 25mg [Videx] 21.3%0.464.9%0.580.610.74Abacavir (as sulphate) 300mg 4.8%$0.0712.5%$0.07$0.08$0.13Abacavir (as sulphate) 20mg/ml SCMS Historical Price Comparison(1) 15 (6) Price Change(2) (3 vs. 5) (5) April – June 2007 (4) Price Change(2) (2 vs. 3) (3) Jan – Mar 2007 (2) Oct – Dec 2007 (1) April – Sept 2006Drug 8.7%0.243.6%0.270.28Lamivudine/Zidovudine/Nevirapine 150/300/200mg 0.0%1.170.0%1.171.171.43Lamivudine/Zidovudine/Abacavir 150mg/300mg/300mg [Trizivir] 0.16Lamivudine/Zidovudine 150mg/300mg 0.33Lamivudine/Zidovudine 150mg/300mg [Combivir] 0.0%0.170.17Lamivudine/Zidovudine + Nevirapine 150mg/300mg+200mg 0.0%0.130.13Lamivudine/Stavudine/Nevirapine 150mg/40mg/200mg 1.3%0.120.0%0.130.13Lamivudine/Stavudine/Nevirapine 150mg/30mg/200mg 0.07Lamivudine/Stavudine 150mg/40mg 0.0%0.070.07Lamivudine/Stavudine 150mg/30mg 3.7%0.0516.7%0.050.060.07Lamivudine 150mg 12.5%0.010.0%0.010.010.02Lamivudine 10mg/ml 1.2%$0.27-3.7%$0.28$0.27$0.28Indinavir 400mg [Crixivan] SCMS Historical Price Comparison(1) (1) Average per unit prices are rounded to the nearest cent. A negative percentage change represents an increase in price, a positive percentage change represents a discount achieved against the previous quarter’s price (2) % Price Change is calculated using the full average per unit price while the rounded price is represented on this chart 16 (5) Price Change(2) (1 vs. 4) (2) April – June 2007 (3) Price Change(2) (2 vs. 3) (3) Jan – Mar 2007 (2) Oct – Dec 2007 (1) April – Sept 2006Drug -0.9%0.290.0%0.290.290.27Saquinavir 200mg [Invirase] 0.0%0.110.0%0.110.110.16Ritonavir 100mg [Norvir] 5.3%0.060.0%0.060.060.07Nevirapine 200mg 23.0%0.010.0%0.010.010.03Nevirapine 10mg/ml -2.5%0.220.22Nelfinavir 50mg/g [Viracept] -2.4.%0.303.3%0.290.300.30Nelfinavir (as mesilate) 250mg [Viracept] 0.140.14Lopinavir/Ritonavir 80mg/20mg/ml [Kaletra] 0.0%0.3426.1%0.340.46Lopinavir/Ritonavir 200mg/50mg [Aluvia] 0.240.33 Lopinavir/Ritonavir 133.3mg/33.3mg [Kaletra], Capsules SCMS Historical Price Comparison(1) (1) Average per unit prices are rounded to the nearest cent. A negative percentage change represents an increase in price, a positive percentage change represents a discount achieved against the previous quarter’s price (2) % Price Change is calculated using the full average per unit price while the rounded price is represented on this chart 17 SCMS Historical Price Comparison(1) (5) Price Change(2) (1 vs. 4) (2) April – June 2007 (3) Price Change(2) (2 vs. 3) (3) Jan – Feb 2007 (2) Oct – Dec 2007 (1) April – Sept 2006Drug 11.1%0.136.3%0.150.16Zidovudine 300mg 12.5%0.010.0%0.010.010.02Zidovudine 10mg/ml 0.130.10Zidovudine 100mg 3.3%0.832.3%0.860.88TDF/Emtricitabine 300mg/200mg [Truvada] 2.1%0.543.5%0.550.570.57Tenofovir disoproxil fumarate 300mg [Viread] 0.0%0.030.03Stavudine 40mg 15.3%0.030.0%0.030.030.05Stavudine 30mg 0.09Stavudine 20mg [Zerit] 30.0%0.010.0%0.010.010.01Stavudine 1mg/ml 16.7%0.0325.0%0.030.040.08Stavudine 15mg (1) Average per unit prices are rounded to the nearest cent. A negative percentage change represents an increase in price, a positive percentage change represents a discount achieved against the previous quarter’s price (2) % Price Change is calculated using the full average per unit price while the rounded price is represented on this chart 18 SCMS achieved considerable savings through the purchase of generic ARVs SCMS savings from generic purchases (April – June 2007) Total Savings = $55.4 million (1) AAI Prices are provided on a pack basis and converted to average per unit price using the smallest unit available (i.e. capsule, tablet, ml) (2) AAI prices are rounded to the nearest cent on this table, but the AAI Cost is calculated using the full price (3) SCMS savings are determined by calculating the difference between the actual cost of SCMS generic purchases (using Purchase Order history) and the cost of all generic ARVs purchased by SCMS at their AAI prices 847,688166,9361,014,6241,300,8000.78 Lamivudine/Stavudine/Nevirapine 150mg/40mg/200mg, tablets Actual Savings at SCMS Prices(3) Actual SCMS CostAAI Cost(2) Units Purchased by SCMS (Apr – June 2007) AAI Unit Price(1)ARV 38,027,9277,257,77545,285,70258,812,6000.77 Lamivudine/Stavudine/Nevirapine 150mg/30mg/200mg, tablets 1,296,618836,5282,133,14612,547,9200.17Lamivudine/Stavudine 150mg/30mg, tablets 310,209357,956668,1657,033,3200.10Lamivudine 150mg 26,54610,44236,9881,319,0400.03Lamivudine 10mg/ml 1,838,6373,788,2255,626,8628,656,7100.65Efavirenz 600mg, tablets 6,05211,02117,072147,6000.12Efavirenz 50mg, capsule 101,14798,560199,707554,4000.36Efavirenz 200mg, capsule 72,971127,510200,481471,7200.43Didanosine 200mg, tablets 21,05149,12570,176330,2400.21Didanosine 100mg, tablets 885,146988,7711,873,9172,150,2200.87Abacavir (as sulphate) 300mg $105,502$210,698$316,2003,035,520$0.10Abacavir (as sulphate) 20mg/mll 19 SCMS achieved considerable savings through the purchase of generic ARVs SCMS savings from generic purchases (April – June 2007) Total Savings = $55.4 million (1) AAI Prices are provided on a pack basis and converted to average per unit price using the smallest unit available (i.e. capsule, tablet, ml) (2) AAI prices are rounded to the nearest cent on this table, but the AAI Cost is calculated using the full price (3) SCMS savings are determined by calculating the difference between the actual cost of SCMS generic purchases (using Purchase Order history) and the cost of all generic ARVs purchased by SCMS at their AAI prices 55,437,82919,925,17075,362,999TOTALS: Actual Savings at SCMS Prices(3) Actual SCMS CostAAI Cost(2) Units Purchased by SCMS (Apr – June 2007) AAI Unit Price(1)ARV 259,854221,152481,0061,658,6400.29Zidovudine 300mg, tablets 182,00933,676215,6843,848,6400.06Zidovudine 10mg/ml, oral solution 194,800122,000316,8004,800,0000.07Stavudine 30mg, capsules 80511,27012,0751,610,0000.01Stavudine 1mg/ml, powder for oral solution 17,5757,68625,261307,4400.08Stavudine 15mg, capsules 2,516,038567,7403,083,77810,279,2600.30Nevirapine 200mg, tablets 48,12213,22861,3501,177,9200.05Nevirapine 10mg/ml, oral suspension 2,607,500682,5003,290,0002,820,0001.17 Lamivudine/Zidovudine/Nevirapine 150/300/200mg, tablets 4,105,6333,952,3718,058,00524,793,8600.33Lamivudine/Zidovudine 150mg/300mg, tablets 1,966,000410,0002,376,0002,400,0000.99 Lamivudine/Zidovudine + Nevirapine 150mg/300mg+200mg, tablets 20 SCMS has achieved over $86 million in savings since January 2007 86,023,27332,864,035118,887,308TOTALS: Actual Savings at SCMS Prices(2) Actual SCMS CostAAI Cost(1)ARV 55,437,82919,925,17075,362,999April – June 2007 30,585,44412,938,86543,524,309January – March 2007 (1) AAI prices are rounded to the nearest cent on this table, but the AAI Cost is calculated using the full price (2) SCMS savings are determined by calculating the difference between the actual cost of SCMS generic purchases (using Purchase Order history) and the cost of all generic ARVs purchased by SCMS at their AAI prices SCMS savings from generic purchases (January – June 2007) Total Savings = $86.0 million 21 SCMS has achieved over $86 million in savings since January 2007 (cont.) 0 10,000,000 20,000,000 30,000,000 40,000,000 50,000,000 60,000,000 70,000,000 80,000,000 90,000,000 100,000,000 Jan '07 Feb '07 Mar '07 Apr '07 May '07 Jun '07 Month D o l l a r V a l u e ( U S D ) Total saved = $86.0 million* Dollars saved by month Cumulative dollars saved (*) SCMS savings are determined by calculating the difference between the actual cost of SCMS generic purchases and the cost of all generic ARVs if they had been purchased by SCMS at their AAI prices. 22 SCMS has procured ARVs to provide 575,072 patient years through June 2007 Note: ARVs are generally packaged for one month’s worth of treatment, therefore patient years are estimated by counting the number of packs delivered and dividing by 12 427 24,479 78,372 124,438 161,576 200,432 283,300 339,268 435,256 524,208 575,072 27,337 26,791 24,479 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 May '06 June '06 July '06 Aug '06 Sept '06 Oct '06 Nov '06 Dec '06 Jan '07 Feb '07 Mar '07 Apr '07 May '07 Jun '07 Month P a t i e n t Y e a r s Patient years Total procured = 575,072

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