1. Affordability of HIV/AIDS treatment in developing countries: modeling ARV drug price determinants for a better understanding of the market functioning Luis Sagaon Teyssier; Yves Arrighi; Boniface Dongmo Nguimfack; Jean-Paul Moatti

2. Aknowledgements This study is part of a project funded by UNITAID and developed by: The French National Agency for Research on AIDS and viral Hepatitis (ANRS-SESSTIM) AIDS Medicines and Diagnostics Service (AMDS/WHO)

3. Objectives – To investigate in which extent originator and generic prices react differently to the same factors – To study the evolution of prices through the life-cycle of patents Originator drugs Generic drugs produced under license and/or taking advantage of TRIPS flexibilities

4. Data Global Price Reporting Mechanism (AMDS/WHO) http://apps.who.int/hiv/amds/price/hdd/ Period of analysis: 2003-2012 30.904 transactions of Adult ARVs – 126 countries – 21 ARVs ; 15 FDC/Co-blisters (57 formulations) 12 Sources providing information on transactions: – Global Fund (35.8%); SCMS (22.1%); UNICEF (14.3%); UNITAID (7.3%); IDA (9.7%); PEPFAR (5.6%); Mission Pharma (2.5%); CHAI (1.1%); JSI (0.4%); WHO/CPS (0.4%); MSH (0.4%); WHO (0.4%)

5. ARV market structure Demand-side – Donor funded ARV transactions (80%) Supply-side – Originator segment 8 manufacturers 21 single and 6 co-formulations Production: 30.5% in USA; 19.3 UK; 12.2 NL; 10.1 FR – Generic segment 25 manufacturers 15 single. 11 co-formulations. and 4 co-blisters Production: 92% in India

6. Methods: Price descriptives & OLS Econometric analysis of price determinants: Dependent: price of patient-year treatment log(PYD) Explanatory: – Year & Geographical group dummies – Purchased quantity of yearly doses: log(QYD) – Formulation type (single=ref., co-blister, FDC) – Target group (pediatric=1. adult=0) – Number of observed suppliers – Present in 1 st line (yes=1, no=0) – Segment (originator=1, generic=0) – Gross National Income per capita (World Bank): log(GNIpc) – Drug age since FDA approval – Expiration of the reference patent (Medicines Patent Pool)

7. RESULTS

8. Quantities: procurement of generic yearly treatments by region Generic segment controlled by only 6 manufacturers (out of 25)

9. Prices: ARVs recommended in 1 st line by region

10. Prices: ARVs recommended in 2 nd line by region

11. Multivariate analysis Estimate Intercept5.7966*** Years 20030.6839*** 20040.5617*** 20050.5887*** 20060.4747*** 20070.3117*** 20080.3310*** 20090.1730*** 20100.0508*** TIME TREND (ref: 2011-2012) Significant at: ***1%; **5%; *10%; Ad-R²=49,6%

12. Multivariate analysis Estimate Intercept5.7966*** Years 20030.6839*** 20040.5617*** 20050.5887*** 20060.4747*** 20070.3117*** 20080.3310*** 20090.1730*** 20100.0508*** TIME TREND (ref: 2011-2012) REGIONS (ref: Sub-Saharan Africa) Significant at: ***1%; **5%; *10%; Ad-R²=49,6%

13. Multivariate analysis Estimate Intercept5.7966*** Years 20030.6839*** 20040.5617*** 20050.5887*** 20060.4747*** 20070.3117*** 20080.3310*** 20090.1730*** 20100.0508*** TIME TREND (ref: 2011-2012) REGIONS (ref: Sub-Saharan Africa) Significant at: ***1%; **5%; *10%; Ad-R²=49,6% Originator prices are 60%(p< 0.001) higher than generics

14. Multivariate analysis by segment Significant at: ***1%; **5%; *10%, Ad-R²(originator)=39.3%; Ad-R²(generic)=34.6% Stratified estimation fits better the data (F-test=79.2 > 1.6) REGIONS (ref: Sub-Saharan Africa)

15. Multivariate analysis by segment Other significant differences: Price differential in the generic segment according to the economic situation of the countries: 10% increase in the GNIpc is at the origin of an price increase of 0.7% Originator prices are more sensitive to the presence of an additional supplier in the market: prices decrease in average 3.6%, while the decrease of generic prices is 2% Generic 1 st line drugs are 109% cheaper than generic 2 nd line drugs; while originator 1 st line drugs are only 81% cheaper than originator 2 nd line drugs. Originator drugs for potential 3 rd line are 54% more expensive than originator 2 nd line drugs.

16. Price differentials through patent life cycle Ref: purchase the same year of patent expiration

17. Price differentials through patent life cycle Ref: purchase the same year of patent expiration

18. Main conclusions  Procurement policies should account for the different functioning of originator and generic segments  The important price-differentials between geographical regions highlight different strategies adopted by originator and generic manufacturers  Fluctuation of the price of generics under license through the patent life-cycle demonstrates that patent protection may also impair the delivery of newer generics

19. Thank you! Contact: luis.sagaon-teyssier@inserm.fr