More on the cost of drugs

I find it extremely profound, monumental and a wonderful symbol of advocacy that in the course of a year, the cost of drugs dropped by $10 000  (about K3.4 million) per person! That is why I have to bring it up again this week. Thanks to Indian pharmaceutical competitors and lobbying of governments and NGOs. The cost of ARV drugs is very complex…there are formulas, negotiations, deals, international policies and laws that influence the price.

The largest cost for drug manufacturers is the cost of research and development.  Companies that manufacture generic drugs do so cheaply because they do not incur the costs associated with research and development of new drugs. Big pharmaceuticals like to argue that cheaper generic drugs undermine their profits and affect their ability to undertake research and development on new drugs. To safeguard their drug design, what big pharmaceuticals do is take out a patent (an intellectual property right), this right prevents others from copying their drug for 20 years.

This legislation came in place in 1995 and has since had a huge effect on drug production; a transition period of 10 years was given so India was able to continue to manufacture generic drugs till 2005. India is the largest supplier of generic drugs, providing 80 percent of donor-funded drugs. Countries such as Thailand, Brazil and South Africa also produce generic drugs and in places such as Kenya, Zimbabwe and Zambia, they have local manufacturers.

Negotiations with big pharma have led to a system of ‘tiered’ pricing. Tiered pricing means that the price at which the big pharma sell their drugs is calculated using formulas based on average income per head, leading to lower prices in poor countries. There are several different drug combinations and these have different costs as well. For example the combination of efavirenz, tenofovir and FTC, which is the WHO recommended first line combination, can cost in developing countries between $613-$1 033 per person per year while generic companies can sell it at a cost of $219-243 per person per year.

Malawi is extremely vulnerable because our HIV programmes rely heavily on donor funding. The government supports five percent of HIV programming i.e. staffing and buildings but 100 percent of ARVs come through Global Fund to Fight Aids, Malaria and Tuberculosis. A 2012 Medecins san Frontier report states Malawi’s existing global fund grant which pays for drugs expires in early 2014. This seriously jeopardises the 500 000 people who are in need of lifesaving treatment as well as the very important switch from stavudine to tenofovir. Funding setbacks meant the new regimen was previously only offered to pregnant women; patients infected with TB and HIV and patients experiencing severe side effects.

For 2011, ARVs alone cost about $60 million, compared to the country’s total health budget of $90 million. Our government has to be creative to develop and maintain a sustainable supply of important lifesaving treatment. In 2009, our late president, Bingu wa Mutharika announced plans for a local drug manufacturing company, the current government has been silent on this.