Global HIV/AIDS Epidemic
Selection of Antiretroviral Medications Provided Under U.S. Emergency Plan Is Limited Gao ID: GAO-05-133 January 11, 2005In developing countries, only about 7 percent of people with HIV/AIDS receive treatment. In 2003, the Congress authorized the President's Emergency Plan for AIDS Relief, a 5-year, $15 billion initiative under the Office of the U.S. Global AIDS Coordinator. The Emergency Plan focuses on 15 developing countries, with a goal of supporting treatment for 2 million people. Treatment regimens use multiple antiretroviral medications (ARV), which can be original or generic. Fixed-dose combinations (FDC) combine two or three ARVs into one pill. Questions have been raised about whether the plan is providing ARVs preferred by the focus countries at reasonable prices. GAO compared the selection of ARVs provided under the plan with that provided under other major treatment initiatives, compared the prices of those selections, and determined what the Coordinator's Office is doing to expand the plan's selection of quality-assured lower-priced ARVs.
The Emergency Plan provides a smaller selection of recommended first-line ARVs than other major HIV/AIDS treatment initiatives in developing countries. The plan's selection includes six original ARV products--the only ARVs that have met the plan's quality assurance requirement--and does not include some FDCs that are preferred by most of the focus countries because they can simplify treatment. In contrast, the other initiatives provide a selection that in addition to the six original ARVs includes generic ARVs and more of the preferred FDCs. The original ARVs provided under the plan are generally higher in price than the generic ARVs provided under the other initiatives. The differences in the prices, quoted to GAO during June and July 2004 by 13 manufacturers, ranged from $11 less to $328 more per person per year for original ARVs than for the lowest-priced corresponding generic ARVs provided under the other initiatives. At these prices, three of the four first-line regimens recommended by the World Health Organization could be built for less--from $40 to $368 less depending on the regimen--with the generic ARVs provided under the other initiatives than with the original ARVs provided under the plan. Such differences in price per person per year could translate into hundreds of millions of dollars of additional expense when considered on the scale of the plan's goal of treating 2 million people by the end of 2008. The Coordinator's Office has worked to expand the selection of quality-assured ARVs--including FDCs and lower-priced generics--that it provides to the focus countries under the plan. The selection of ARVs available under the plan is primarily limited by its quality assurance requirement. The Coordinator's Office is working with manufacturers to take the steps necessary for more ARVs to meet this requirement. However, if generic ARVs meet the plan's quality assurance requirement, a statutory prohibition on the purchase of any medication manufactured outside the United States if the manufacture of that medication in the United States would be covered by a valid U.S. patent could become a barrier to expansion because all ARVs are currently under U.S. patents. Unless the patent holders for ARVs that have met the plan's quality requirement give permission or the Coordinator's Office exercises its authority to purchase these products notwithstanding the patent requirement, the selection of ARVs provided under the Emergency Plan may not expand rapidly enough to address the AIDS emergency.
GAO-05-133, Global HIV/AIDS Epidemic: Selection of Antiretroviral Medications Provided Under U.S. Emergency Plan Is Limited
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Report to Congressional Requesters:
United States Government Accountability Office:
GAO:
January 2005:
Global HIV/AIDS Epidemic:
Selection of Antiretroviral Medications Provided under U.S. Emergency
Plan Is Limited:
GAO-05-133:
GAO Highlights:
Highlights of GAO-05-133, a report to congressional requesters:
Why GAO Did This Study:
In developing countries, only about 7 percent of people with HIV/AIDS
receive treatment. In 2003, the Congress authorized the President‘s
Emergency Plan for AIDS Relief, a 5-year, $15 billion initiative under
the Office of the U.S. Global AIDS Coordinator. The Emergency Plan
focuses on 15 developing countries, with a goal of supporting treatment
for 2 million people. Treatment regimens use multiple antiretroviral
medications (ARV), which can be original or generic. Fixed-dose
combinations (FDC) combine two or three ARVs into one pill.
Questions have been raised about whether the plan is providing ARVs
preferred by the focus countries at reasonable prices. GAO compared the
selection of ARVs provided under the plan with that provided under
other major treatment initiatives, compared the prices of those
selections, and determined what the Coordinator‘s Office is doing to
expand the plan‘s selection of quality-assured lower-priced ARVs.
What GAO Found:
The Emergency Plan provides a smaller selection of recommended first-
line ARVs than other major HIV/AIDS treatment initiatives in developing
countries. The plan‘s selection includes six original ARV products”the
only ARVs that have met the plan‘s quality assurance requirement”and
does not include some FDCs that are preferred by most of the focus
countries because they can simplify treatment. In contrast, the other
initiatives provide a selection that in addition to the six original
ARVs includes generic ARVs and more of the preferred FDCs.
The original ARVs provided under the plan are generally higher in price
than the generic ARVs provided under the other initiatives. The
differences in the prices, quoted to GAO during June and July 2004 by
13 manufacturers, ranged from $11 less to $328 more per person per year
for original ARVs than for the lowest-priced corresponding generic ARVs
provided under the other initiatives. At these prices, three of the
four first-line regimens recommended by the World Health Organization
could be built for less”from $40 to $368 less depending on the regimen”
with the generic ARVs provided under the other initiatives than with
the original ARVs provided under the plan. Such differences in price
per person per year could translate into hundreds of millions of
dollars of additional expense when considered on the scale of the
plan‘s goal of treating 2 million people by the end of 2008.
The Coordinator‘s Office has worked to expand the selection of quality-
assured ARVs”including FDCs and lower-priced generics”that it provides
to the focus countries under the plan. The selection of ARVs available
under the plan is primarily limited by its quality assurance
requirement. The Coordinator‘s Office is working with manufacturers to
take the steps necessary for more ARVs to meet this requirement.
However, if generic ARVs meet the plan‘s quality assurance requirement,
a statutory prohibition on the purchase of any medication manufactured
outside the United States if the manufacture of that medication in the
United States would be covered by a valid U.S. patent could become a
barrier to expansion because all ARVs are currently under U.S. patents.
Unless the patent holders for ARVs that have met the plan‘s quality
requirement give permission or the Coordinator‘s Office exercises its
authority to purchase these products notwithstanding the patent
requirement, the selection of ARVs provided under the Emergency Plan
may not expand rapidly enough to address the AIDS emergency.
In commenting on a draft of this report, the Department of State, the
Department of Health and Human Services, and the U.S. Agency for
International Development expressed concern about how GAO addressed ARV
quality. In the draft report GAO described the quality assurance
requirements used by the Emergency Plan and the other initiatives and
stated that quality is the primary factor determining the selection of
products provided under each. However, evaluating the quality assurance
processes used by each initiative was outside the scope of GAO‘s work.
What GAO Recommends:
www.gao.gov/cgi-bin/getrpt?GAO-05-133.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Janet Heinrich at (202)
512-7119.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Emergency Plan Provides Smaller Selection of ARV Products Than Other
Initiatives:
Emergency Plan's Selection of ARV Products Results in Higher Prices for
Most First-Line Treatment Regimens:
Coordinator's Office Has Taken Steps to Expand Selection of ARV
Products It Provides, but Patent Requirement Is Potential Barrier:
Concluding Observations:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Comparing Selection of ARV Products the Emergency Plan Provides to That
Provided under Other Initiatives:
Determining Prices of ARVs for the Focus Countries:
Examining the Efforts of the Coordinator's Office to Expand the
Selection of ARVs It Provides:
Appendix II: Price Information from Survey of ARV Manufacturers:
Appendix III: Comments from the Department of State:
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Acknowledgments:
Related GAO Products:
Tables:
Table 1: Prices for the First-Line Regimens:
Table 2: Standard International Terms for the Shipping and Insurance
Conditions of Purchase Agreements:
Figures:
Figure 1: WHO Recommendations for First-Line ARVs and Treatment
Regimens for Resource-Limited Settings:
Figure 2: Selection of First-Line ARV Products Provided under the
Emergency Plan and Selection Provided under Other Initiatives:
Figure 3: Manufacturers' Prices for First-Line ARV Products for the
Focus Countries (prices per person per year in U.S. dollars):
Figure 4: Manufacturers' Prices for FDC ARV Products for the Focus
Countries (prices per person per year in U.S. dollars):
Abbreviations:
ARV: antiretroviral medication:
CDC: Centers for Disease Control and Prevention:
d4T: stavudine:
EFV: efavirenz:
FDA: Food and Drug Administration:
FDC: fixed-dose combination:
FHI: Family Health International:
HHS: Department of Health and Human Services:
HIV/AIDS: human immunodeficiency virus / acquired immune deficiency
syndrome:
JSI: John Snow Incorporated:
MSH: Management Sciences for Health:
NGO: nongovernmental organization:
NVP: nevirapine:
UN: United Nations:
UNAIDS: Joint United Nations Programme on HIV/AIDS:
UNICEF: United Nations Children's Fund:
USAID: United States Agency for International Development:
WHO: World Health Organization:
ZDV: zidovudine:
3TC: lamivudine:
United States Government Accountability Office:
Washington, DC 20548:
January 11, 2005:
The Honorable Edward M. Kennedy:
Ranking Minority Member:
Committee on Health, Education, Labor, and Pensions:
United States Senate:
The Honorable Henry A. Waxman:
Ranking Minority Member:
Committee on Government Reform:
House of Representatives:
The Honorable John McCain:
United States Senate:
The Joint United Nations Programme on HIV/AIDS (UNAIDS) estimates that
3 million people worldwide died from HIV/AIDS in 2003, and an estimated
38 million or more people are currently living with HIV/AIDS. Although
there is no cure for the disease, there are treatments that can slow
its progression. Yet in developing countries only about 7 percent of
people living with HIV/AIDS receive treatment. Since the mid-1980s the
United States has supported HIV/AIDS initiatives in developing
countries directly and through its contributions to multinational
organizations such as agencies within the United Nations (UN) system--
including the World Bank and UNAIDS--and, more recently, the Global
Fund to Fight AIDS, Tuberculosis, and Malaria (Global Fund).[Footnote
1] In 2004, the President's Emergency Plan for AIDS Relief (Emergency
Plan)[Footnote 2]--a 5-year initiative under the Office of the U.S.
Global AIDS Coordinator (the Coordinator's Office) within the
Department of State[Footnote 3]--added over $9 billion of funding for
HIV/AIDS treatment, care, and prevention in certain developing
countries to its ongoing commitments, bringing the total U.S.
commitment to addressing the worldwide HIV/AIDS emergency to $15
billion through 2008.
The goals of the Emergency Plan, which focuses on 15 developing
countries with high rates of HIV/AIDS,[Footnote 4] are to support
treatment to 2 million people living with HIV/AIDS, prevent 7 million
new HIV infections, and support care to 10 million people infected or
affected by HIV/AIDS, including orphans, by the end of fiscal year
2008. The plan allocates more than half its budget to treatment,
approximately $4 billion of which is specifically for the purchase and
distribution of antiretroviral medications (ARV)--the standard
treatment for HIV/AIDS--in the focus countries. An HIV/AIDS treatment
regimen includes multiple ARVs. ARVs are marketed as either original
versions--all of which are currently under U.S. patents--or as copies
of the originals, that is, generic versions.[Footnote 5] In addition,
some manufacturers are marketing products that combine two or three
ARVs into one pill--known as a fixed-dose combination (FDC).
The World Health Organization (WHO) recommends five specific ARVs that
are used to build four regimens as the first line for treatment
programs in countries in which health care resources are limited, such
as the focus countries. WHO recommends one of the four regimens as the
first choice for rapid implementation of large-scale treatment programs
in these countries. Most focus countries have indicated a preference
for FDCs, which can simplify treatment and facilitate adherence to the
recommended treatment regimens, and for lower-priced generics in their
national treatment strategies.
While the Coordinator's Office has specified multiple objectives to
achieve the Emergency Plan's goals, two are most relevant to the
purchase of ARV products under the plan: first, coordination with the
national treatment strategies of the focus countries, and, second,
provision of ARV products of assured quality at the lowest possible
price. Officials from organizations involved in treating HIV/AIDS in
developing countries, such as Doctors Without Borders[Footnote 6] and
Catholic Relief Services Consortium, have criticized the plan for not
including the FDCs preferred by the focus countries in the selection of
ARV products it provides. In addition, concerns have been raised about
the plan's ability to provide ARV products at reasonable prices. You
asked us to examine the provision of ARVs under the Emergency Plan, as
compared with the provision of ARVs under the initiatives of major
multinational organizations.
In this report, we determine (1) how the selection of ARV products
provided under the Emergency Plan compares with the selection provided
under the initiatives of the World Bank, the United Nations Children's
Fund (UNICEF), and the Global Fund; (2) how the prices of the ARV
products provided under the Emergency Plan compare with the prices of
the ARV products provided under the other initiatives; and (3) what the
Coordinator's Office is doing to expand the selection of quality-
assured ARV products at the lowest possible price under the Emergency
Plan.
To compare the selection of ARV products provided under the Emergency
Plan to that provided under the other initiatives, we reviewed the
requirements that apply to the purchase of ARV products under the
Emergency Plan, as well as the requirements that apply to the purchase
of ARV products under the HIV/AIDS treatment initiatives funded by
three multinational organizations--the World Bank, UNICEF, and the
Global Fund. We interviewed officials from the Coordinator's Office and
the U.S. agencies primarily responsible for implementing the Emergency
Plan, such as the U.S. Agency for International Development (USAID),
regarding how they oversee the purchase of ARV products consistent with
applicable requirements. We also interviewed officials from the
multinational organizations regarding their requirements and the ARV
products they provide through their initiatives. In addition, we
reviewed documentation from U.S. agencies, nongovernmental
organizations (NGO) that are participating in the Emergency Plan, and
the multinational organizations showing the ARV products that have been
purchased under their initiatives. We focused specifically on the ARVs
that are recommended by WHO for first-line treatment of HIV/AIDS in
countries where health care resources are limited. We identified the
quality assurance process applied to each product, but we did not
evaluate the different quality assurance processes or independently
determine the comparative quality of the products.
To compare the prices of different ARV products provided under the
Emergency Plan and the other initiatives, we obtained price information
from selected manufacturers of ARV products that are generally
available to the focus countries.[Footnote 7] We report prices for the
focus countries quoted to us during June and July 2004 by 13
manufacturers. We asked ARV manufacturers to quote prices according to
a standard set of terms. Because the price information we requested is
proprietary to each manufacturer, we could not directly assess the
reliability of the price data given to us. However, we checked the
price data against several published sources and determined that they
are sufficiently reliable.
To determine what the Coordinator's Office is doing to provide an
expanded selection of ARV products at the lowest prices possible, we
interviewed officials from the Coordinator's Office regarding their
efforts to address potential barriers to providing additional ARV
products under the Emergency Plan. Because the Coordinator's Office is
working with the Department of Health and Human Services' (HHS) Food
and Drug Administration (FDA) to support the ability of additional ARV
manufacturers to meet the Emergency Plan's quality assurance
requirement, we also interviewed officials from FDA regarding these
efforts. Aspects of implementing treatment programs other than
purchasing ARVs, such as human resources and supply chain management,
and treatments other than ARVs, such as medications to treat
opportunistic infections, are outside the scope of this report. We
conducted our work from January 2004 through January 2005 in accordance
with generally accepted government auditing standards. For more details
on our scope and methodology, see appendix I.
Results in Brief:
The Emergency Plan provides a smaller selection of ARV products than
the selection provided under the initiatives funded by the World Bank,
UNICEF, and the Global Fund. Under the Coordinator's Office's
application of the Emergency Plan's quality assurance requirement, the
ARV products the plan provides must have approval from either FDA or
another acceptable regulatory authority. Because six original ARV
products have met this requirement, the plan provides these six in its
selection. Although this selection includes one double-ARV FDC that can
be used in two of the four regimens recommended by WHO as first-line
treatments in countries with limited resources, it does not include the
triple-ARV FDCs preferred by the majority of the focus countries. In
contrast, the other initiatives provide a selection of ARV products
that includes not only those that meet the plan's quality assurance
requirement but also generic ARVs and one of the preferred triple-ARV
FDCs that have met the quality assurance requirements of these
initiatives.
The Emergency Plan's selection of ARV products results in higher prices
for most of the first-line treatment regimens. At the prices quoted to
us during June and July 2004, the differences in price between the
original version of an ARV provided under the Emergency Plan and the
lowest-priced generic version of the corresponding ARV provided under
the other initiatives ranged from $11 less per person per year to $328
more for the original version. At these prices, three of the four
first-line regimens could be built for a lower price with the generic
ARV products provided under the other initiatives than with the
original ARV products provided under the Emergency Plan; there was no
difference in price for the remaining regimen. For the three regimens
that could be built for a lower price, which include WHO's first-choice
for rapid implementation of large-scale treatment programs, the
difference in the price of the regimens ranged from $40 to $368 less
per person per year. Such differences in the price of a regimen per
person per year could translate into millions of dollars of additional
expense when considered on the scale of the Emergency Plan's goal of
treating 2 million people by the end of 2008. For example, for every
100,000 patients on WHO's first-choice regimen for 5 years, the plan
could pay over $170 million more than the other initiatives to purchase
the ARVs.
The Coordinator's Office has taken steps to expand the selection of
quality-assured ARVs--including FDCs and lower-priced generics--that
it provides to the focus countries under the Emergency Plan, but a
statutory patent requirement may pose a barrier to expansion efforts.
Currently, the selection of ARV products available under the plan is
primarily limited by the quality assurance requirement. The
Coordinator's Office has worked with FDA to expand the plan's selection
of quality-assured ARV products, particularly FDCs. The Coordinator's
Office has encouraged manufacturers to seek FDA approval for their ARV
products--and thereby satisfy the plan's quality assurance requirement-
-and several manufacturers told us that they intended to do so.
However, if generic ARVs receive FDA approval, the patent requirement-
-a statutory prohibition on the purchase of any medication manufactured
outside the United States if the manufacture of that medication in the
United States would be covered by a valid U.S. patent--could become a
barrier to expansion. The Emergency Plan may not be able to provide
lower-priced generic ARVs and FDCs unless the Coordinator's Office
addresses this potential barrier. The Coordinator's Office has the
authority to provide ARVs notwithstanding the patent requirement. If
applications proceed as anticipated by ARV manufacturers and FDA, we
expect that FDA-approved generic ARVs will be available early in 2005.
However, unless the patent holders for these ARVs give permission or
the Coordinator's Office exercises its authority to purchase these
products notwithstanding the patent requirement, the selection of ARVs
provided under the Emergency Plan may not expand rapidly enough to
address the AIDS emergency.
In commenting on a draft of this report the Department of State,
responding on behalf of itself, HHS, and USAID, expressed concern about
how we addressed the issue of ARV quality. In the draft report we
described the quality assurance processes used by the Emergency Plan
and the other initiatives, specified which process applied to each ARV
product, and stated that quality is the primary factor determining the
selection of products provided under each. However, as the draft report
stated, evaluating the quality assurance processes used by each
initiative was beyond the scope of our work.
Background:
Although no cure exists for HIV/AIDS, the use of multiple ARVs in
combination has been shown to suppress the virus and slow the
progression of the disease. Twenty distinct ARV medications can be used
to treat people living with HIV/AIDS. The standard treatment is a
regimen that combines three or more ARVs. People receiving ARV
treatment can develop strains of HIV that are resistant to some or all
of their ARVs, and as a result their treatment regimens become
ineffective and they must switch to a different regimen. The risk of
developing resistance decreases when patients are able to adhere to
their recommended treatment by taking the prescribed ARVs, the right
number of times each day, and without missing doses.
Recommended ARV Treatment Regimens:
WHO has recommended certain regimens for settings in which resources
are limited.[Footnote 8] For people receiving ARVs for the first time
in such settings, WHO recommends one of four regimens, known as first-
line regimens. These regimens are built from combinations of the
following five first-line ARVs: stavudine (d4T), zidovudine
(ZDV),[Footnote 9] lamivudine (3TC), nevirapine (NVP), and efavirenz
(EFV).[Footnote 10] (See fig. 1.) Of the four first-line regimens, WHO
recommends d4T + 3TC + NVP as the first-choice regimen for rapid
implementation of large-scale treatment programs in resource-limited
settings because, for example, it is expected that most people will be
able to tolerate it without developing side effects that would require
switching to another regimen. Each of the focus countries highlighted
in the Emergency Plan has selected one or more of these first-line
regimens for its national treatment strategy, and most have selected
d4T + 3TC + NVP as their first-choice regimen.
Figure 1: WHO Recommendations for First-Line ARVs and Treatment
Regimens for Resource-Limited Settings:
[See PDF for image]
[A] WHO recommends d4T + 3TC + NVP as the first-choice regimen for
rapid implementation of large-scale treatment programs in settings with
limited health care resources.
[End of figure]
For people who have developed strains of HIV that are resistant to
their initial treatment regimen, WHO recommends one of four second-line
regimens. The second-line regimens use a different set of five ARVs.
Second-line regimens can have disadvantages, which may be magnified in
resource-limited settings. The disadvantages include the need to take
more pills, the potential for additional side effects, the need for
refrigeration during transportation and storage, and prices that are
generally higher than those for first-line regimens. WHO emphasizes
that promoting better adherence to a first-line regimen, thereby
reducing the occurrence of resistance and delaying the need to shift to
a second-line regimen, is particularly important in resource-limited
settings because of these disadvantages.
The Coordinator's Office, FDA, and the Institute of Medicine, as well
as the Global Fund, the World Bank, UNAIDS, and WHO, have endorsed the
use of FDCs, which combine two or more ARVs into one pill, as an
important strategy to promote adherence to ARV regimens.[Footnote 11]
These organizations have determined that the benefits of FDCs include
promoting adherence, by reducing the number of pills a person has to
take at one time, reducing the time and costs associated with
procurement and distribution of ARVs, and simplifying the selection and
prescribing of ARVs.
Funding for HIV/AIDS Treatment in the Focus Countries:
Both national initiatives--such as the Emergency Plan--and
multinational initiatives provide funding for HIV/AIDS treatment in the
focus countries. In general, these initiatives provide their funding
through grants, cooperative agreements, and contracts with governments
and NGOs. The NGOs provide technical assistance and support the
implementation of treatment programs by, for example, purchasing
medications. In recognition of the fact that several initiatives may be
active in any one country, the U.S. government and the multinational
initiatives have agreed to promote coordination across their
initiatives in order to use resources efficiently and effectively and
to ensure rapid expansion of treatment programs.
The Emergency Plan is the largest national initiative to combat the
global HIV/AIDS epidemic. Through the Emergency Plan, the U.S.
government both provides direct technical assistance through field
offices and funds NGOs that support HIV/AIDS treatment programs in the
focus countries. Under the direction of the Coordinator's Office, USAID
and HHS's Centers for Disease Control and Prevention have primary
responsibility for implementing the Emergency Plan, with USAID
responsible for overseeing the purchase of medications.[Footnote 12]
Multinational organizations, including the Global Fund and agencies
within the UN system, also provide funding to HIV/AIDS programs in the
focus countries. The Global Fund, which was initiated in 2002, expects
disbursements to total $1 billion by the end of 2004, over half of
which are intended to fund HIV/AIDS programs. Within the UN system, the
World Bank represents the largest source of funding for HIV/AIDS
activities in developing countries. Since 1986, the World Bank reports
that it has invested $2 billion in HIV/AIDS prevention, care, and
treatment services in developing countries.
Requirements Related to the Purchase of ARV Products:
All HIV/AIDS treatment programs must comply with the laws--including
patent and drug registration laws--that apply in the country for which
they are purchasing ARV products, as well as the requirements that
pertain to the source of funding they are using. The purchase of ARVs
under the Emergency Plan is subject to USAID quality assurance
requirements and a statutory patent requirement.[Footnote 13] To assure
quality, USAID requires that ARV products purchased under the plan have
either FDA approval or the approval of another acceptable regulatory
authority.[Footnote 14] Because the Emergency Plan is largely funded
under the Foreign Assistance Act of 1961, the purchase of ARVs with
these funds is subject to a provision of the act that prohibits the
purchase of any medication manufactured outside the United States if
the manufacture of that medication in the United States would be
covered by a valid U.S. patent, unless the patent owner gives its
permission.[Footnote 15] The purchase of ARV products with funds from
the other initiatives must meet the quality assurance requirements that
the World Bank, UNICEF, and the Global Fund have in common.
Specifically, these organizations require that all ARV products either
be approved by an acceptable regulatory authority such as FDA or be
prequalified through WHO's Prequalification Project. WHO's
Prequalification Project includes a process for assessing the quality
of products that have not been subject to review by an acceptable
regulatory authority. Prequalification relies on review of product
information and manufacturing site inspections to determine if the
product meets WHO standards.
Emergency Plan Provides Smaller Selection of ARV Products Than Other
Initiatives:
The Emergency Plan provides a smaller selection of ARV products than
the other initiatives. Because the plan provides only ARV products that
have been approved by FDA or another acceptable regulatory authority,
it provides six ARV products, all of which are original versions. In
addition to ARV products that have met the Emergency Plan's quality
assurance requirement, other initiatives also provide generic ARVs that
have been prequalified by WHO. While the plan does not provide the FDCs
preferred by the focus countries, these products are available through
the other initiatives.
Emergency Plan Provides One Version of Each First-Line ARV and a
Double-ARV FDC:
As of December 2004, the Emergency Plan provides one version--the
original version--of each of the five ARVs necessary to build all of
the first-line regimens. The plan also provides a double-ARV FDC (ZDV +
3TC) that can be used in half of those regimens, but not the regimen
that is recommended by WHO as the first choice for rapid implementation
of large-scale HIV/AIDS treatment programs in resource-limited settings
(d4T + 3TC + NVP). These six products, flagged with filled diamonds in
figure 2, are the only first-line ARVs that have been approved by FDA
or another acceptable regulatory authority and thus comply with the
plan's quality assurance requirement. Because no generic ARVs currently
meet the plan's quality assurance requirement, the Emergency Plan does
not provide generic versions of any of the first-line ARVs or the
double-ARV FDC provided under the plan. In addition, the Emergency Plan
does not provide any version of three other FDC products that are
generally available to the focus countries, including the triple-ARV
FDC (d4T + 3TC + NVP) that is preferred by the majority of the focus
countries.
Figure 2: Selection of First-Line ARV Products Provided under the
Emergency Plan and Selection Provided under Other Initiatives:
[See PDF for image]
Notes: Data from GAO survey of ARV manufacturers during June and July
2004, the Coordinator's Office, USAID, WHO, the World Bank, UNICEF, and
the Global Fund. As of December 2004, the ARV products flagged with a
filled diamond have been approved by FDA or another acceptable
regulatory authority; those flagged with an unfilled diamond have been
prequalified by WHO; and those not flagged with a diamond have been
neither approved by FDA or another acceptable regulatory authority nor
prequalified by WHO. We did not determine whether the different quality
assurance processes result in ARV products of differing quality.
Because laws of a country may affect whether a particular ARV product
is available there, not all ARV products are available in all of the
focus countries.
[End of figure]
Other Initiatives Provide Generic as Well as Original ARVs:
The other initiatives provide not only the original versions of the
first-line ARVs but also generic versions that meet their quality
assurance requirements. In addition to ARVs that have been approved by
FDA or another acceptable regulatory authority, the other initiatives
also accept those that have been prequalified by WHO. Thus the other
initiatives provide generic versions of most of the first-line single
ARVs, as well as a double-ARV FDC (ZDV + 3TC) and a triple-ARV FDC (d4T
+ 3TC + NVP), flagged with unfilled diamonds in figure 2, that are not
provided under the plan. Other generic versions of all ARV products are
available to the focus countries but are not provided under the
Emergency Plan or under the other initiatives. The additional generic
ARVs generally available to the focus countries, shown in figure 2 as
vertical lines without diamonds, have been neither approved by FDA or
another acceptable regulatory authority nor prequalified by WHO.
Emergency Plan's Selection of ARV Products Results in Higher Prices for
Most First-Line Treatment Regimens:
At the prices quoted to us during June and July 2004, most first-line
regimens could be built for a lower price with the generic ARV products
provided under the other initiatives than with the original ARV
products provided under the Emergency Plan. (See table 1.) The
difference in price between the original ARVs provided under the
Emergency Plan and the lowest-priced generic ARVs provided under the
other initiatives ranged from $11 less per person per year for original
3TC to $328 more for original NVP. (See fig. 2.) At these prices, three
of the four first-line regimens could be built for a lower price with
the generic ARV products provided under the other initiatives than with
the original ARV products provided under the Emergency Plan. The
difference in price for these three regimens when built with the
lowest-priced ARVs provided under the other initiatives and when built
with the lowest-priced ARVs provided under the Emergency Plan ranged
from $40 less per person per year for the regimen ZDV + 3TC + EFV to
$368 less for the regimen ZDV + 3TC + NVP. There was no difference in
price for the regimen d4T + 3TC + EFV because the lowest-priced ARVs
provided under the Emergency Plan and the other initiatives are the
same. All of the first-line regimens could be built for a lower price
using the lowest-priced generic ARVs that are generally available to
the focus countries but not provided under either the Emergency Plan or
the other initiatives.
Table 1: Prices for the First-Line Regimens:
Regimen: d4T + 3TC + NVP;
Price in U.S. dollars per person per year (difference compared to the
Emergency Plan): Using lowest-priced ARVs provided under the Emergency
Plan: $562;
Price in U.S. dollars per person per year (difference compared to the
Emergency Plan): Using lowest-priced ARVs provided under the World
Bank, UNICEF, and the Global Fund: $219 (-343);
Price in U.S. dollars per person per year (difference compared to the
Emergency Plan): Using lowest-priced ARVs generally available to focus
countries: $150 (-412).
Regimen: ZDV + 3TC + NVP;
Price in U.S. dollars per person per year (difference compared to the
Emergency Plan): Using lowest-priced ARVs provided under the Emergency
Plan: 675;
Price in U.S. dollars per person per year (difference compared to the
Emergency Plan): Using lowest-priced ARVs provided under the World
Bank, UNICEF, and the Global Fund: 307 (-368);
Price in U.S. dollars per person per year (difference compared to the
Emergency Plan): Using lowest-priced ARVs generally available to focus
countries: 225 (-450).
Regimen: d4T + 3TC + EFV;
Price in U.S. dollars per person per year (difference compared to the
Emergency Plan): Using lowest-priced ARVs provided under the Emergency
Plan: 471;
Price in U.S. dollars per person per year (difference compared to the
Emergency Plan): Using lowest-priced ARVs provided under the World
Bank, UNICEF, and the Global Fund: 471 (-0);
Price in U.S. dollars per person per year (difference compared to the
Emergency Plan): Using lowest-priced ARVs generally available to focus
countries: 433 (-38).
Regimen: ZDV + 3TC + EFV;
Price in U.S. dollars per person per year (difference compared to the
Emergency Plan): Using lowest-priced ARVs provided under the Emergency
Plan: 584;
Price in U.S. dollars per person per year (difference compared to the
Emergency Plan): Using lowest-priced ARVs provided under the World
Bank, UNICEF, and the Global Fund: 544 (-40);
Price in U.S. dollars per person per year (difference compared to the
Emergency Plan): Using lowest-priced ARVs generally available to focus
countries: 506 (-78).
Source: GAO.
Notes: GAO calculations based on price survey of ARV manufacturers.
Calculated using prices quoted during June and July 2004. The lowest
price for each regimen could consist of three single ARVs, a double-ARV
FDC plus a single ARV, or a triple-ARV FDC. See app. II for more
detailed information on prices.
[End of table]
Differences in the price of a regimen per person per year can translate
into millions of dollars of additional expense when considered on the
scale of the Emergency Plan's goal of treating 2 million people by the
end of 2008. For example, the price for the regimen that WHO recommends
as the first choice for rapid scale-up in settings with limited health
care resources (d4T + 3TC + NVP) is $343 more per person per year under
the Emergency Plan. Thus for every 100,000 patients on this regimen for
5 years, the plan could pay over $170 million more than the other
initiatives for purchase of these ARVs. The overall impact of these
price differences over the life of the plan and on the treatment goal
is difficult to estimate precisely because, for example, the mix of
ARVs and treatment regimens that will be used as the Emergency Plan
expands is unknown and product prices may change.
Coordinator's Office Has Taken Steps to Expand Selection of ARV
Products It Provides, but Patent Requirement Is Potential Barrier:
The Coordinator's Office has taken steps to expand the selection of
quality-assured ARV products it provides to the focus countries to
include the preferred FDCs and lower-priced generics. However, the
patent requirement could present a barrier to expanding the selection.
Coordinator's Office Has Made Efforts to Expand the Selection of
Quality-Assured ARV Products It Provides:
The Coordinator's Office has worked with FDA to expand the selection of
quality-assured ARV products, particularly the preferred FDCs, that the
Emergency Plan provides to the focus countries. The selection of ARV
products provided is currently limited primarily by the plan's quality
assurance requirement. The Coordinator's Office has been encouraging
manufacturers to seek FDA approval for their ARV products, and thereby
satisfy the plan's quality assurance requirement.[Footnote 16] FDA
officials told us that the agency has been helping existing and
potential manufacturers of ARV products, particularly FDCs, to prepare
applications for submission to FDA. Several manufacturers told us that
they have been working with FDA to develop applications. One of the
manufacturers we spoke with announced in October 2004 that it had
submitted an application, and the others told us that they intended to
do so. FDA officials said that these applications would have priority
for review and that they expect to be able to act on complete
applications within several months of submission. In addition, the
Coordinator's Office has worked with FDA to clarify that FDCs are
eligible for expedited review and to assemble into a single guidance
document several sets of regulations and guidelines that pertain to
this expedited review.[Footnote 17] As part of this guidance, FDA has
included a list of combinations of ARVs for which FDA believes there
are sufficient publicly available safety and effectiveness data that an
application would not need to include additional clinical studies.
Emergency Plan May Not Be Able to Provide Generic ARVs Unless Patent
Barrier Is Addressed:
The Emergency Plan may not be able to expand the selection of ARV
products it provides to include lower-priced generic ARVs unless the
Coordinator's Office addresses a potential barrier presented by the
applicable patent requirement in the Foreign Assistance Act of 1961.
Although the selection of ARV products available under the plan is
currently limited primarily by the quality assurance requirement, if
generic ARVs receive FDA approval, the patent requirement could be a
barrier to expansion. Because all five of the first-line ARVs are
currently under U.S. patents,[Footnote 18] even if a generic ARV were
to receive FDA approval, thus meeting the plan's quality assurance
requirement, the patent requirement would prevent its purchase unless
the patent holder had granted permission. If such permission is not
granted, this requirement could prevent the purchase of generic ARVs,
including generic FDCs, that have met the plan's quality assurance
requirement.
The Coordinator's Office has the authority to provide ARV products
notwithstanding the patent requirement.[Footnote 19] We asked officials
from the Coordinator's Office whether the Coordinator would use this
authority in order to purchase an FDA-approved generic ARV for which
permission could not be obtained from the patent owner. Officials from
the Coordinator's Office told us that they could not address
hypothetical situations but that the Coordinator would consider using
his authority to make funds available to purchase these products
notwithstanding this requirement if the ARV in question is critical to
the plan's treatment responsibilities and no readily available
substitute exists. It may not be possible for most generic ARVs to meet
these conditions because generics are by definition substitutes for
existing products. In addition, a representative of one of the generic
manufacturers we spoke with told us that the company is concerned and
is hesitating to apply to FDA because it has sought, but not yet
obtained, assurances from the Coordinator's Office that once its
products have met the plan's quality assurance requirement these
products will be eligible for purchase under the Emergency Plan.
Concluding Observations:
During its first year, the Emergency Plan has provided a limited
selection of ARV products that does not fully support the treatment
strategies of the focus countries and is not optimally coordinated with
other multinational initiatives because it does not include the FDCs
and lower-priced generics that the majority of these countries prefer.
Better coordination with the focus countries and with other treatment
initiatives could facilitate more rapid implementation of the Emergency
Plan. Moreover, given the intended scale of the plan, lower prices for
ARVs could result in savings of hundreds of millions of dollars, which
could be used to treat additional patients or to support other aspects
of the program. The Coordinator's Office has taken steps to expand the
selection of ARV products that meet its quality assurance requirement-
-with special focus on FDCs--by working with manufacturers and FDA to
increase the number of products that have FDA approval. If applications
proceed as anticipated by ARV manufacturers and FDA, we expect that
FDA-approved generic ARVs will be available early in 2005. However,
unless the patent holders for these ARVs give permission or the
Coordinator's Office exercises its authority to purchase these products
notwithstanding the patent requirement, the selection of ARVs provided
under the Emergency Plan may not expand rapidly enough to address the
AIDS emergency.
Agency Comments and Our Evaluation:
We provided a draft of this report to the Department of State, HHS, and
USAID. Written comments submitted by the Department of State on behalf
of itself, HHS, and USAID are reprinted in appendix III. In its
comments, the Department of State expressed concern about how our
report addressed the issue of ARV quality and urged us to mention
prominently in the report recent changes in the list of products that
are prequalified by WHO. However, we stated in the draft report that
concern about quality is the primary factor limiting the selection of
ARVs provided under the Emergency Plan and the other initiatives. Our
draft report recognized that quality assurance is a critical concern,
and provided background information on the quality assurance
requirements of the Emergency Plan and the other initiatives and
specified the quality assurance processes applied to each ARV product.
However, as the draft report stated, evaluating the quality assurance
processes used by each initiative was beyond the scope of our work. We
have updated the draft report to reflect all changes in the
availability of ARV products, including those highlighted by the
Department of State.
The Department of State also characterized figure 3 (see app. II) in
the report as misleading because not all of the generic ARV products
are sold on the market in all 15 focus countries. However, the draft
report explained that the laws of individual countries may not allow
for the purchase of some products. In response to the agency's
concerns, we clarified this further in notes to figure 3.
In addition, the agency expressed confusion over our use of the term
"generic" and offered the more formal term, "therapeutic equivalents,"
used by FDA. In the draft report, we used the word "generic" broadly to
mean a copy of an original product, regardless of whether FDA or
another national regulatory authority has determined the generic
product to be a therapeutic equivalent to an original product. We have
further clarified our use of the term in the report.
We agree with the agency's comment that it is important to distinguish
between issues of quality assurance and intellectual property, and
these issues were treated separately in the draft report. In addition,
our concern about the patent requirement being a potential barrier to
expanding the selection of ARV products provided under the Emergency
Plan is only with respect to those generic products that have first met
the plan's quality assurance requirement.
Lastly, the Department of State highlighted that the patent requirement
is a statutory restriction under the Foreign Assistance Act of 1961, as
we noted throughout the draft report. We revised the draft to further
clarify the source of the patent requirement. The Department also said
that the Coordinator's Office has decided to exercise its authority
with respect to the patent requirement "as necessary." However, because
the comments did not clarify when it might be necessary for the
Coordinator's Office to use its authority to make funds available to
purchase products notwithstanding the patent requirement, it remains
unclear if all generic products that have met the quality assurance
requirement will be eligible for purchase under the Emergency Plan.
In its comments, the agency also provided additional information on the
Emergency Plan's outreach activities and plans for bulk purchasing of
ARV products. The Department of State, HHS, and USAID individually
submitted technical comments, which we incorporated where appropriate.
As we agreed with your offices, unless you publicly announce the
contents of this report earlier, we plan no further distribution of it
until 30 days from the date of this letter. We will then send copies to
the Secretary of State, the Secretary of Health and Human Services, and
the Administrator of the U.S. Agency for International Development and
make copies available to others who request them. In addition, the
report will be available at no charge on GAO's Web site at http://
www.gao.gov.
If you or your staffs have any questions about this report, please call
me at (202) 512-7119. Another contact and key contributors are listed
in appendix IV.
Signed by:
Janet Heinrich:
Director, Health Care--Public Health Issues:
[End of section]
Appendix I: Scope and Methodology:
This report compares the selection of antiretroviral medication (ARV)
products that are being provided under the President's Emergency Plan
for AIDS Relief (Emergency Plan) with that provided under other
initiatives that also fund HIV/AIDS treatment programs in the focus
countries, as of December 2004.[Footnote 20] Our discussion is focused
specifically on the ARVs that are recommended by the World Health
Organization (WHO) for first-line treatment of HIV/AIDS in countries
where health care resources are limited. Our report also provides price
information for the ARV products provided under the Emergency Plan and
under the other initiatives. We report prices quoted, during June and
July 2004, by 13 selected manufacturers of ARV products that are
generally available to the focus countries. Lastly, we examine the
efforts of the Office of the U.S. Global AIDS Coordinator
(Coordinator's Office) within the Department of State to expand the
selection of quality-assured ARV products provided at the lowest
possible price to the focus countries. Aspects of implementing HIV/AIDS
treatment programs other than the selection and price of medications,
such as human resources and supply chain management, and treatments
other than ARVs, such as medications to treat opportunistic infections,
are outside the scope of this report. Similarly, the HIV/AIDS
prevention and care objectives of the Emergency Plan are outside the
scope of this report. We conducted our review from January 2004 through
January 2005 in accordance with generally accepted government auditing
standards.
Comparing Selection of ARV Products the Emergency Plan Provides to That
Provided under Other Initiatives:
To compare the selection of ARV products provided under the Emergency
Plan to that provided under the other initiatives, we reviewed the
requirements that apply to the purchase of ARV products under the
Emergency Plan. Specifically, we reviewed relevant laws, regulations,
and guidance from which the plan's requirements arise. We also reviewed
documentation from the Coordinator's Office and the U.S. Agency for
International Development (USAID) to determine which products had been
provided under the plan as of December 2004. In addition, we
interviewed officials from the Coordinator's Office, USAID, and the
Department of Health and Human Services' (HHS) Office of Global Health
Affairs, Centers for Disease Control and Prevention (CDC), and Food and
Drug Administration (FDA) about experience within federal programs with
purchasing ARVs for developing countries. Lastly, we interviewed
officials at the nongovernmental organizations (NGO) that have received
funding under the Emergency Plan to purchase ARVs in the focus
countries. These NGOs include Catholic Relief Services Consortium,
Columbia University Mailman School of Public Health, Elizabeth Glaser
Pediatric AIDS Foundation, and Harvard University School of Public
Health.[Footnote 21]
To determine the selection of ARV products provided under the other
initiatives, we reviewed the requirements that apply to the purchase of
ARV products under the HIV/AIDS treatment initiatives funded by the
World Bank, the United Nations Children's Fund (UNICEF), and the Global
Fund to Fight AIDS, Tuberculosis, and Malaria (Global Fund).
Specifically, we reviewed guidance documents from the Global Fund, the
World Bank, UNICEF, and WHO related to the purchase of ARVs under these
initiatives. We also interviewed officials from these organizations
regarding the requirements that apply to the provision of ARVs under
their treatment initiatives and to confirm the accuracy of information
obtained from their Web sites. In our comparison we determined the
quality assurance process applied to each product, but we did not
evaluate the different quality assurance processes required under the
Emergency Plan as compared with those required under the other
initiatives or determine the comparative quality of the products.
Our review of the ARV products provided under the Emergency Plan and
the other initiatives focuses specifically on the ARVs that are
recommended by WHO for treatment of HIV/AIDS in countries with limited
health care resources. In order to determine the appropriate treatment
recommendations to focus on in this report, we reviewed literature on
the use of ARVs in general and in countries with limited health care
resources in particular. Our literature review included searches of
scientific publications using electronic databases, including the
National Library of Medicine's PubMed, as well as the Web sites of the
New England Journal of Medicine, the Journal of the American Medical
Association, and The Lancet. We reviewed literature on ARV treatment
available from the Coordinator's Office, USAID, HHS, FDA, CDC, the HHS
Office of the Inspector General, the Congressional Research Service,
the Congressional Budget Office, and the Institute of Medicine. We also
reviewed treatment guidelines and related documentation from WHO, the
Global Fund, the World Bank, the Joint United Nations Programme on HIV/
AIDS, UNICEF, and the United Kingdom's Department for International
Development. We also interviewed officials from several of these
organizations. To understand the issues involved in providing ARVs in
countries with limited health care resources, we interviewed officials
from several NGOs that are working in these settings--including Doctors
Without Borders, the William Jefferson Clinton Foundation (Clinton
Foundation), the Bill and Melinda Gates Foundation, John Snow
Incorporated (JSI), Family Health International (FHI), and Management
Sciences for Health (MSH). We also reviewed documentation on the focus
countries' national HIV/AIDS strategies and treatment guidelines,
including information that we obtained from the Coordinator's Office
and NGOs.[Footnote 22]
Determining Prices of ARVs for the Focus Countries:
The prices we report are prices that 13 selected manufacturers quoted
to us during June and July 2004 for the focus countries. We surveyed
the manufacturers from which the major organizations that support
treatment programs in the focus countries have considered purchasing
their ARVs. These organizations include JSI, FHI, MSH, the Clinton
Foundation, the Global Fund, the World Bank, WHO, UNICEF, Doctors
Without Borders, the International Dispensary Association, and
MissionPharma. We selected a manufacturer for inclusion in our report
if it makes at least one of the ARVs included in the WHO-recommended
first-line regimens and was selling or willing to sell its ARV product
to at least one of the focus countries. Thirteen of the 15
manufacturers that we considered met these criteria and were willing to
quote their prices for the first-line ARVs for the focus countries. We
did not select products based on registration with the focus countries'
national drug regulatory authorities because information on country-
level registration was incomplete or not available.
Because some of the manufacturers we surveyed offer their products at
significantly lower prices to developing countries than to developed
countries,[Footnote 23] we requested price quotes specifically for the
focus countries. We did not attempt to determine the prices that
specific purchasers are paying for these products because at the time
we conducted our analysis there was limited experience in the focus
countries with using the funding sources discussed in this report for
large-scale purchase of ARVs.[Footnote 24] Because different
manufacturers offer their reduced prices according to differing
criteria,[Footnote 25] in some cases the lowest price offers are not
available to all of the focus countries. Specifically, Guyana and
Vietnam are not eligible to purchase ARVs at some manufacturers' lowest
price. In addition to these two focus countries, other developing
countries outside the scope of this report may not be eligible for the
prices we present.
To help ensure that the manufacturers' prices we present are as
comparable as possible across different manufacturers of the same ARV,
we surveyed manufacturers using a standard set of questions. We
developed our questions on the basis of our literature review and
discussions with various officials from U.S. government agencies,
officials from other initiatives, representatives from NGOs, and
representatives from pharmaceutical manufacturers. These questions
took into account differences in purchasing agreements, including price
negotiation based on volume and length of contract, inclusion of
shipping and insurance, and financing guarantees. Some of the
manufacturers we spoke with told us that they offer prices that are
negotiable depending on the volume of the purchase, the length of the
contract for purchase, and the degree to which financing can be
guaranteed. Therefore we requested prices based on the following
purchase scenarios, all of which assume financing has been guaranteed:
(1) purchase of enough medication to treat 500 patients for 1 year, (2)
purchase of enough medication to treat 10,000 patients for 1 year, and
(3) purchase of enough medication to treat 10,000 patients for 3 years.
All manufacturers were given the opportunity to provide prices
according to these scenarios, although some told us that their prices
were not negotiable. We developed the scenarios based on estimates of
the scale of existing treatment programs in the focus countries, and
the potential scale of programs over the next 3 years. We verified,
with officials from USAID and other experts in ARV procurement, that
these scenarios represented plausible purchasing arrangements both now
and over the next 3 years as treatment programs expand in developing
countries. Because the price information we requested is considered
proprietary by the manufacturer, we could not directly assess the
reliability of the price data given to us. However, we checked the
prices quoted to us against other published sources from our literature
search and manufacturers' Web sites and determined they were reliable
for our purposes.
In some cases a manufacturer's prices include costs that other
manufacturers do not include--such as shipping and insurance charges.
We note where these differences exist, and have determined that they do
not undermine the essential comparability of the prices presented in
our report. In making this determination, we first requested specific
information from each manufacturer about what is included in its price
and the terms of the purchase agreements it uses. The manufacturers we
surveyed for this report used one of six standard agreements to cover
shipping and insurance (see table 2). We also asked multiple purchasers
about the shipping and insurance costs they have incurred when
purchasing ARVs. While systematic evidence was not available, the
organizations we spoke with provided estimates ranging from 3 to 15
percent additional cost for shipping and insurance for large-scale ARV
purchases. One NGO that was purchasing ARVs under the Emergency Plan
told us that purchasing the same ARV product through two different
distribution channels--one directly from the manufacturer with shipping
and insurance costs included in the price and one through a distributor
that added those costs to its price--made no appreciable difference in
the final cost of the product. We also found, after reviewing responses
to our survey, that manufacturers of both original and generic products
used a range of purchase agreements, both more and less inclusive of
shipping and insurance costs. Other factors that may contribute to the
total cost of ARVs to a specific treatment program, such as taxes and
distribution surcharges, are beyond the scope of this report.
Table 2: Standard International Terms for the Shipping and Insurance
Conditions of Purchase Agreements:
International commercial term[A]: Ex-Works (EXW);
Shipping and insurance conditions: The seller transfers the goods to
the buyer at the seller's named place of business (the factory,
warehouse, etc.). The buyer is responsible for the full risk of loss of
or damage to the goods, clearing the goods for export, and any costs
related to transport. EXW places the minimum obligation on the seller.
International commercial term[A]: Free on Board (FOB);
Shipping and insurance conditions: The seller clears the goods for
export and is responsible for the risks and costs of delivering the
goods past the "ship's rail" (that is, off the dock onto the ship) at
the domestic port of shipment. The risks and costs related to transport
are transferred to the buyer when the goods pass the ship's rail. This
term is exclusively for maritime transport.
International commercial term[A]: Free Carrier (FCA);
Shipping and insurance conditions: The seller clears the goods for
export and delivers them to a carrier selected by the buyer (at the
domestic port, terminal, etc.). The buyer is responsible for the full
risks and costs related to transport.
International commercial term[A]: Cost, Insurance, and Freight (CIF);
Shipping and insurance conditions: The seller clears the goods for
export and is responsible for the risks and costs of delivering the
goods past the "ship's rail" at the domestic port of shipment. The
seller is also responsible for paying the costs of transport and
insurance of the goods to the port of destination. Any additional risks
or costs related to transport, including applicable import tariffs, are
transferred to the buyer when the goods pass the ship's rail. This term
is exclusively for maritime transport.
International commercial term[A]: Carriage Paid To (CPT);
Shipping and insurance conditions: The seller clears the goods for
export and is responsible for paying for carriage through to the named
port of destination, including applicable import tariffs. The buyer
assumes all risks once the seller has delivered the goods to the
carrier at the port of shipment.
International commercial term[A]: Carriage and Insurance Paid To (CIP);
Shipping and insurance conditions: The seller clears the goods for
export and is responsible for paying for carriage and insurance through
to the named port of destination, including applicable import tariffs.
The buyer assumes all risks once the seller has delivered the goods to
the carrier at the port of shipment.
Source: International Chamber of Commerce.
[A] Manufacturers offer prices for their medications in accordance with
an international system of shipping and handling terms--known as
international commercial terms, or incoterms--that describe various
possible purchase agreements. These incoterms are published by the
International Chamber of Commerce.
[End of table]
Examining the Efforts of the Coordinator's Office to Expand the
Selection of ARVs It Provides:
To examine the efforts of the Coordinator's Office to expand the
selection of quality-assured ARV products provided under the Emergency
Plan to the focus countries, we reviewed relevant laws, regulations,
and guidance from which the plan's quality assurance and patent
requirements arise. We interviewed officials from the Coordinator's
Office and USAID regarding how they interpret these laws, regulations,
and guidance and how they apply these requirements to the provision of
ARVs under the plan. We also interviewed officials from the
Coordinator's Office regarding their efforts to address potential
barriers to expansion. Lastly, because the Coordinator's Office is
working with FDA to support the ability of additional ARV manufacturers
to meet the Emergency Plan's quality assurance requirement, we
interviewed officials from FDA regarding these efforts.
[End of section]
Appendix II: Price Information from Survey of ARV Manufacturers:
We surveyed the following 13 manufacturers during June and July 2004 to
obtain price quotes for the focus countries for the ARVs used to build
the WHO-recommended first-line regimens:
* Aurobindo Pharma Limited (Aurobindo):
* Boehringer Ingelheim (BI):
* Bristol-Myers Squibb Company (BMS):
* Cipla Limited (Cipla):
* Combino Pharm:
* Cristalia Produtos Quimicos Farmaceuticos LTDA (Cristalia):
* Far-Manguinhos FIOCRUZ Ministry of Health (Far-Manguinhos):
* GlaxoSmithKline (GSK):
* Government Pharmaceutical Organization Thailand (GPO):
* Hetero Drugs Limited (Hetero):
* Merck & Co., Inc. (Merck):
* Ranbaxy Laboratories Limited (Ranbaxy):
* Strides Arcolab Limited (Strides):
The price per person per year for each ARV product--stavudine (d4T),
zidovudine (ZDV), lamivudine (3TC), nevirapine (NVP), and efavirenz
(EFV)--is shown in figures 3 and 4. Figure 3 shows prices quoted for
single-ARV products, and figure 4 shows prices quoted for fixed-dose
combination (FDC) ARV products. For each product we indicate the type
of standard agreement used to cover shipping and insurance charges and
whether the manufacturer indicated that the price quoted was negotiable
or based on a specific purchase scenario (see figure notes a, b, and
c). Both figures also show which ARV products are provided under the
Emergency Plan, which additional products are provided under the other
initiatives, and which products are generally available to the focus
countries but not provided under either the Emergency Plan or the other
initiatives, as of December 2004.
Figure 3: Manufacturers' Prices for First-Line ARV Products for the
Focus Countries (prices per person per year in U.S. dollars):
[See PDF for image]
Notes: Data from GAO survey of ARV manufacturers during June and July
of 2004, the Coordinator's Office, USAID, WHO, the World Bank, UNICEF,
and the Global Fund. Numbers in this figure may not sum to numbers
shown in table 1 due to rounding. As of December 2004, the ARV products
shaded in black have been approved by FDA or another acceptable
regulatory authority; those shaded in gray have been prequalified by
WHO; and those without shading have been neither approved by FDA or
another acceptable regulatory authority nor prequalified by WHO. We did
not determine whether the different quality assurance processes result
in medications of differing quality. Because laws of a country may
affect whether a particular ARV product is available there, not all ARV
products are available in all of the focus countries. Guyana and
Vietnam are not eligible to receive the prices shown for some of the
products shaded in black. Information about the 100-mg dose of ZDV and
the 200-mg dose of EFV is provided in fig. 3 but not included in fig. 2
and table 1.
[A] Manufacturer indicated that price quoted was nonnegotiable.
[B] Manufacturer indicated that price quoted was based on a 1 year /
10,000 patients per year purchase scenario.
[C] Manufacturer indicated that price quoted was negotiable, but not
based on any specific purchase scenario.
[End of figure]
Figure 4: Manufacturers' Prices for FDC ARV Products for the Focus
Countries (prices per person per year in U.S. dollars):
[See PDF for image]
Notes: Data from GAO survey of ARV manufacturers during June and July
of 2004, the Coordinator's Office, USAID, WHO, the World Bank, UNICEF,
and the Global Fund. Numbers in this figure may not sum to numbers
shown in table 1 due to rounding. As of December 2004, the ARV product
shaded in black has been approved by FDA or another acceptable
regulatory authority; those shaded in gray have been prequalified by
WHO; and those without shading have been neither approved by FDA or
another acceptable regulatory authority nor prequalified by WHO. We did
not determine whether the different quality assurance processes result
in medications of differing quality. Because laws of a country may
affect whether a particular ARV product is available there, not all ARV
products are available in all of the focus countries. Guyana and
Vietnam are not eligible to receive the price shown for the product
shaded in black.
[A] Manufacturer indicated that price quoted was negotiable, but not
based on any specific purchase scenario.
[B] Manufacturer indicated that price quoted was nonnegotiable.
[C] Manufacturer indicated that price quoted was based on a 1 year /
10,000 patients per year purchase scenario.
[End of figure]
[End of section]
Appendix III: Comments from the Department of State:
United States Department of State:
Assistant Secretary and Chief Financial Officer:
Washington, D.C. 20520:
Ms. Jacquelyn Williams-Bridgers:
Managing Director:
International Affairs and Trade:
Government Accountability Office:
441 G Street, N.W.
Washington, D.C. 20548-0001:
DEC 6 2004:
Dear Ms. Williams-Bridgers:
We appreciate the opportunity to review your draft report, "GLOBAL HIV/
AIDS EPIDEMIC: Selection of Antiretroviral Medications Provided under
U.S. Emergency Plan Is Limited," GAO Job Code 290336.
The enclosed Department of State comments are provided for
incorporation with this letter as an appendix to the final report.
If you have any questions concerning this response, please contact
Myron Meche, Director, Office of the Global AIDS Coordinator, at (202)
663-2727.
Sincerely,
Signed by:
Christopher B. Burnham:
cc: GAO - Chad Davenport:
S/GAC - Randall Tobias:
State/OIG - Mark Duda:
Department of State Comments on GAO Draft Report GLOBAL HIV/AIDS
EPIDEMIC: Selection of Antiretroviral Medications Provided under U.S.
Emergency Plan Is Limited (GAO-05-133):
On behalf of the United States Departments of State, Health and Human
Services (HHS) and the United States Agency for International
Development (USAID), we appreciate the opportunity to comment on the
draft Government Accountability Office (GAO) report entitled GLOBAL
HIV/AIDS EPIDEMIC: Selection of Antiretroviral Medications Provided
under the U.S. Emergency Plan Is Limited (GAO-05-133).
The President's Emergency Plan for AIDS Relief (PEPFAR) has been
committed from the beginning to providing treatment at the most cost-
effective prices that can be found - but only drugs that are proved
safe and effective. The Emergency Plan has moved forward with urgency
to help build the human and physical capacity needed to deliver
treatment, and to fund the purchase of HIV/AIDS drugs. The
Administration strongly believes that persons served by the President's
Emergency Plan deserve the same assurances of safety and efficacy that
we expect for our own families. There should not be any double
standard.
There is economic, human and ethical value in drug quality, which the
draft report completely overlooks, and the significant health risks
posed by poor quality anti-retrovirals (ARVs). Some drugs approved for
the World Health Organization (WHO) pre-qualification list may not be
equivalent to drugs approved by the Food and Drug Administration (FDA)
within HHS, as they cannot be guaranteed to have undergone quality-
assurance tests of the same rigor. Significantly, several generic drug
manufacturers have voluntarily withdrawn their ARVs from the WHO pre-
qualification list because of concerns over quality and potential risk
to patients.
In early November, the Indian company Ranbaxy announced that it was
withdrawing all of its generic versions of ARVs from the WHO pre-
qualification list because of the company's uncertainty that their copy
drugs were not bio-equivalent to the patented versions. On November 19,
Hetero Drugs Limited, also of India, announced that it was withdrawing
six ARVs from the WHO pre-qualification list to review data on their
bioequivalence.
Though the events are recent, we have urged the GAO to mention these
de-listings prominently in the report, because they go to the heart of
the definition of what is "available" in these countries. Many nations
make purchasing or procurement or even licensure/registration decisions
on the basis of the WHO pre-qualification list: the WHO de-listings
plus the voluntary withdrawal from the market and the list means that a
number of products from several manufacturers in the GAO's charts are
no longer "available" in the same way as before. It should be noted
that the manufacturers and the WHO Secretariat are both recommending
that no new patients be placed on these drugs until the manufacturers
clear up the quality-assurance problems.
In addition, the chart provided on page 29 of the report is misleading,
because not all of the generic ARV products listed are sold on the
market in all of the 15 focus countries of the Emergency Plan. (Some,
like those produced in Brazil and Thailand, might not be regularly
available in any of the 15 focus countries.) The chart therefore gives
a distorted impression that the possible selection of ARVs in the 15
focus countries is wider than it actually is.
Poor quality drugs can add substantial cost in terms of adverse drug
effects and lack of efficacy in treating HIV/AIDS. When appropriate
concentrations of active drugs are not reached in the body, the human
immunodeficiency virus is able more rapidly to mutate such that it
becomes resistant to the drugs. This allows the virus to resume its
devastation of the body's immune system more quickly. The only recourse
in this situation is another combination of three or more drugs. Such
"second-line" drugs, if available at all, are often several times the
cost of the "first-line" drugs, which leads to a significant escalation
in the cost of treatment.
It is also important to distinguish the issues of intellectual property
and quality assurance. These issues are separate, but the draft report
obscures the distinction between the two, and suggests that they arise
in a sequential manner, which is not necessarily so. The Emergency Plan
maintains that it will only use the highest-quality, safest drugs
available, but that issue is separate from patent and intellectual
property issues.
Clarification about Generics:
The draft report uses the term "generic" throughout without defining
it, and appears in certain cases to refer to drug products that are
other than those manufactured by the innovator or brand-name company,
and that are approved in some manner by non-U.S. regulatory bodies. At
other points, the document uses the term to refer to products other
than those manufactured by the innovator that HHS/FDA has approved or
might approve. As this issue and the term "generics" are at the center
of major controversy surrounding the fight against HIV/AIDS, it is
worth spending some time to clarify the term as used in the United
States compared to how it is used elsewhere in the international
community.
The federal Food, Drug, and Cosmetic Act or HHS/FDA regulations do not
define the term "generic drug." It is generally used informally to
refer to drugs that 1) are not marketed by the brand-name company and
2) are substitutable for the brand-name product. HHS/FDA's more formal
term to denote substitutable products is "therapeutic equivalents."
Therapeutic equivalents are drug products approved by HHS/FDA as safe
and effective; contain identical amounts of the same active drug
ingredient in the same dosage form and route of administration; meet
applicable standards of strength, quality, purity, and identity; are
bioequivalent; are adequately labeled; and are manufactured in
compliance with Current Good Manufacturing Practice. Therapeutic
equivalents can be expected to have the same clinical effect and safety
profile when administered to patients under the conditions specified in
the labeling.
Because of the varying standards used to classify drugs as "generics"
by regulatory authorities other then HHS/FDA, we do not know whether
these drugs should be considered to be generic drugs (i.e., therapeutic
equivalents) within the general meaning of the term as used in the
United States.
To add even more complexity to the situation, many of the drug products
HHS/FDA expects to approve or tentatively approve, and which will be
subsequently acquired for use in the Emergency Plan, will not be drugs
that are generic versions (i.e., therapeutic equivalents) of innovator
products. Rather, a number of these drugs under consideration will be
new fixed-dose combinations of previously approved single-entity drug
products, or they will be new co-packaged products of drugs previously
available only separately. These products would not be considered
substitutable "generics" in the United States because they are not
therapeutic equivalents to an approved brand-name product.
Outreach Under the Emergency Plan:
The United States Government (USG) is reaching out to national drug
regulatory agencies in the 15 Emergency Plan focus countries and
providing training and technical assistance in the process of
certifying the quality of ARVs. In the long run, this should increase
the capabilities of these countries to manage the pharmaceutical supply
chain and thereby help to reduce attendant costs.
To ensure the availability of high-quality pharmaceuticals under the
Emergency Plan, HHS/FDA is reaching out to companies in the 15 focus
countries as well as in other developing countries to facilitate their
applications to the expedited review process. At least two generic drug
companies have released press announcements that they have entered the
expedited review process and are working with HHS/FDA to receive
tentative approval for anti-retroviral drugs in support of the
Emergency Plan.
This outreach effort will have tangible and rapid results because of
procedures already in place in the Office of the Global AIDS
Coordinator (OGAC). When a new combination drug for HIV/AIDS treatment
receives a positive outcome (approval or tentative approval) under the
expedited HHS/FDA review, OGAC will recognize that result as evidence
of the safety and efficacy of that drug. Thus, the drug will be
eligible to be a candidate for funding by the Emergency Plan for AIDS
Relief, so long as international patent agreements and local government
policies allow their purchase.
And we are already building momentum in reaching the President's
treatment goals. As of July 31, 2004, the Emergency Plan is supporting
ARVs for, at minimum, 24,900 HIV-infected men, women, and children in
nine countries. Of this number, the Emergency Plan is directly funding
ARV therapy for approximately 18,800 HIV-infected individuals at the
point of service delivery. At least an additional 6,100 persons are
receiving indirect treatment support through U.S. Government
contributions to national, regional, or local activities, such as
laboratory support, training, logistical systems strengthening, and
treatment policy and protocol development. Over the next few months,
numerous sites in all 15 focus countries have begun to provide ARV
therapy with the goal of reaching at least 200,000 by June 2005. The
Emergency Plan is well on its way to meeting that goal. By meeting this
goal, the Emergency Plan will approximately double the number of
persons receiving ARV therapy in sub-Saharan Africa. Outreach to
national drug regulatory agencies in Emergency Plan focus countries is
a key component of meeting treatment goals set by the President.
Bulk Purchasing:
USG bulk purchasing will be made available in calendar year 2005
through the Emergency Plan Supply Chain Management System (SCMS)
contract. The purpose of this project is to establish and operate a
safe, secure, reliable, and sustainable SCMS to procure pharmaceuticals
and other products needed to provide care and treatment of persons with
HIV/AIDS and related infections. As described in "The President's
Emergency Plan for AIDS Relief: U.S. Five-Year Global HIV/AIDS
Strategy", an important focus of the Plan and a necessary tool for
ensuring sustainability, is building the capacity of local providers to
implement effective programs. In this regard, this project will have as
a priority capacity building of essential supply chain management
personnel to strengthen the quality and expand the reach of effective
HIV/AIDS interventions. Emergency Plan focus countries will be able to
voluntarily buy into this contract. This mechanism is expected to
reduce costs significantly.
The United States Government supports several other activities as key
parts of its treatment initiative. As the price of drugs continues to
decrease, and individual governments and international donors purchase
an increasing share of ARVs, the Emergency Plan support will:
shift to those elements that are supportive and necessary for effective
treatment of patients:
* Clinical guidelines and selection of ARV products;
* Laboratory;
* Training;
* Counseling;
* Adherence interventions; and:
* Supportive care, including palliative care.
Within the category of direct procurement and distribution of drugs,
the Emergency Plan is also supporting an increasing array of
interventions that increase the efficiency and lower the total cost of
ARV distribution:
* Shipping and attendant costs;
* Storage and product maintenance;
* Distribution;
* Rational Use; and:
* Post-marketing surveillance for product defects or adverse reactions
among patients.
Patent Requirement:
The report repeatedly raises what it refers to as the Emergency Plan's
"patent requirement." To be sure, the Emergency Plan's "patent
requirement" is not a requirement that OGAC imposed upon itself.
Rather, it is a statutory restriction that applies to the use of any
funds subject to the Foreign Assistance Act of 1961, as amended. This
section, Section 606, states the following:
Funds appropriated pursuant to this Act shall not be expended by the
United States Government for the acquisition of any drug product or
pharmaceutical product manufactured outside of the United States if the
manufacturer of such drug product or pharmaceutical product in the
United States would involve the use of, or be covered by, an unexpired
patent of the United States which has not previously been held invalid
by an unappealed or unappealable judgement or decree of a court of
competent jurisdiction, unless such manufacture is expressly authorized
by the owner of such patent.
Because the Emergency Plans' funds are subject to the Foreign
Assistance Act of 1961, as amended, the Global AIDS Coordinator must
carry out the Emergency Plan consistent with Section 606. As set forth
in the GAO Report, it is the case that the Foreign Operations, Export
Financing Act and Related Programs Appropriations Act of 2004 provides
"notwithstanding" authority that the Coordinator may use to overcome
the statutory prohibition of Section 606. After careful consideration,
the Office of the Global AIDS Coordinator has decided to exercise this
available notwithstanding authority with respect to Section 606, as
necessary.
We appreciate the opportunity to respond to this report, and we hope
that this information is useful to you. Please do not hesitate to
contact us if we can be further assistance.
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Michele Orza, (202) 512-7119:
Acknowledgments:
Other key contributors to this report are George Bogart, Chad
Davenport, J. Alice Nixon, Nkeruka Okonmah, and Roseanne Price.
[End of section]
Related GAO Products:
Global Health: U.S. AIDS Coordinator Addressing Some Key Challenges to
Expanding Treatment but Others Remain. GAO-04-784. Washington, D.C.:
July 12, 2004.
United Nations: Reforms Progressing, but Comprehensive Assessments
Needed to Measure Impact. GAO-04-339. Washington, D.C.: February 13,
2004.
Global Health: Global Fund to Fight AIDS, TB and Malaria Has Advanced
in Key Areas, but Difficult Challenges Remain. GAO-03-601. Washington,
D.C.: May 7, 2003.
Global Health: Assessment of First Year Efforts of the Global Fund to
Fight AIDS, TB and Malaria. GAO-03-755T. Washington, D.C.: May 7, 2003.
The Global Fund to Fight AIDS, Tuberculosis, and Malaria Has Been
Established but It Is Premature to Evaluate Its Effectiveness. GAO-02-
819R. Washington, D.C.: June 7, 2002.
Foreign Assistance: USAID Relies Heavily on Nongovernmental
Organizations, but Better Data Needed to Evaluate Approaches. GAO-02-
471. Washington, D.C.: April 25, 2002.
Global Health: Joint U.N. Programme on HIV/AIDS Needs to Strengthen
Country-Level Efforts and Measure Results. GAO-01-625. Washington,
D.C.: May 25, 2001.
Global Health: U.S. Agency for International Development Fights AIDS in
Africa, but Better Data Needed to Measure Impact. GAO-01-449.
Washington, D.C.: March 23, 2001.
Global Health: The U.S. and U.N. Response to the AIDS Crisis in Africa.
GAO/T-NSIAD-00-99. Washington, D.C.: February 24, 2000.
FOOTNOTES
[1] The Global Fund was established in January 2002 as a mechanism for
attracting and distributing resources to programs targeting AIDS,
tuberculosis, and malaria in developing countries. It is an independent
private foundation under Swiss law and is governed by an international
board that includes recipient and donor countries, including the United
States.
[2] As authorized by the United States Leadership Against HIV/AIDS,
Tuberculosis, and Malaria Act of 2003 (U.S. Leadership Act). Pub. L.
No. 108-25, § 301, 117 Stat. 711, 728 (adding section 104A to the
Foreign Assistance Act of 1961, as amended, classified to 22 U.S.C. §
2151b-2) (for fiscal years 2004 through 2008, authorizes a total of $15
billion to carry out the purpose of the U.S. Leadership Act to combat
HIV/AIDS, tuberculosis, and malaria and authorizes such sums as may be
necessary to prevent, treat, and monitor HIV/AIDS and carry out related
activities).
[3] The U.S. Leadership Act established the position of the Coordinator
within the Office of the Secretary of the Department of State. § 102,
117 Stat. 721.
[4] The focus countries are Botswana, Cote d'Ivoire, Ethiopia, Guyana,
Haiti, Kenya, Mozambique, Namibia, Nigeria, Rwanda, South Africa,
Tanzania, Uganda, Vietnam, and Zambia.
[5] The original version of an ARV is the first version brought to
market. In this report, any copy of the original is considered a
generic regardless of whether it fits any particular national
regulatory authority's definition of generic.
[6] Doctors Without Borders is the English translation for Médecins
Sans Frontières.
[7] We selected the manufacturers from which major organizations that
support treatment initiatives in the focus countries told us they
consider purchasing ARVs.
[8] WHO states that its recommendations are based on considerations
including a regimen's potency, potential side effects, the need for
laboratory monitoring, anticipated patient adherence, treatment of
coexisting conditions, treatment of pregnant women, and the
availability and cost of the medications.
[9] Also commonly known as azidothymidine (AZT).
[10] These five ARVs are produced in multiple forms--such as capsule,
tablet, or liquid--and in several different doses (for example, 100 mg
and 300 mg). The pill form is generally used for adolescents and
adults, and liquid forms are primarily used for children.
[11] See, for example, Institute of Medicine, Scaling Up Treatment for
the Global AIDS Pandemic: Challenges and Opportunities (Washington,
D.C.: 2004).
[12] Several other federal entities--including the Departments of
Commerce, Defense, and Labor and the Peace Corps--also have
responsibilities under the program. For additional information on the
structure and operation of the Coordinator's Office, see GAO, Global
Health: U.S. AIDS Coordinator Addressing Some Key Challenges to
Expanding Treatment but Others Remain, GAO-04-784 (Washington, D.C.:
July 12, 2004).
[13] Medications purchased under the Emergency Plan are also subject to
rules pertaining to source, origin, and nationality for commodities
that USAID finances, unless USAID issues a waiver to allow otherwise.
See, 22 C.F.R. Part 228. These include a requirement that
pharmaceutical products must be manufactured in the United States in
order to be eligible for USAID financing. 22 C.F.R. § 228.13(c). The
Coordinator's Office confirmed that USAID can issue a specific waiver
of these rules, has already done so for ARVs purchased under the
Emergency Plan, and will continue to issue waivers for the purchase of
ARVs to carry out the plan.
[14] The Coordinator's Office defined "acceptable regulatory authority"
in guidance issued to field staff on March 24, 2004. See also, USAID
Automated Directives System, § 312.5.3c, for USAID's internal
regulations and guidance regarding the purchase of pharmaceutical
products.
[15] Foreign Assistance Act of 1961, Pub. L. No. 87-195, § 606, 75
Stat. 424, 440 (1961) (codified, as amended, at 22 U.S.C. § 2356
(2000)).
[16] A generic manufacturer may seek FDA approval for a U.S. patented
medication if marketing of the generic version in the United States
would occur after expiration of that patent. See, 35 U.S.C. 271(e)(1).
FDA may issue tentative approval for such a product that is shown to be
safe and effective for its intended use but may not yet be marketed in
the United States due to the unexpired patent.
[17] Regulations that give FDA greater flexibility to rapidly review
and approve medications intended to treat certain severe diseases are
contained in 21 C.F.R. Part 312 and 21 C.F.R. Part 314.
[18] The patent on ZDV is due to expire on September 17, 2005. The
patents on the remaining first-line ARVs are scheduled to expire
between December 2008 and May 2013.
[19] This authority is provided in the foreign operations
appropriation, which largely funds the Emergency Plan. For each of the
last 3 years, the foreign operations appropriation has made funds
available for the prevention, treatment, and control of HIV/AIDS
"notwithstanding any other provision of law." Consolidated
Appropriations Act, 2004, Pub. L. No. 108-199, 118 Stat. 3, 175
(appropriation for fiscal year 2004) (specifies exemptions unrelated to
the patent requirement); Consolidated Appropriations Resolution, 2003,
Pub. L. No. 108-7, 117 Stat. 11, 187 (appropriation for fiscal year
2003); and Foreign Operations Export Financing, and Related Programs
Appropriations Act, 2002, Pub. L. No. 107-115, 115 Stat. 2118, 2146
(appropriation for fiscal year 2002).
[20] The focus countries are Botswana, Cote d'Ivoire, Ethiopia, Guyana,
Haiti, Kenya, Mozambique, Namibia, Nigeria, Rwanda, South Africa,
Tanzania, Uganda, Vietnam, and Zambia.
[21] As of August 2004, the Harvard program had not finalized any ARV
purchases under the Emergency Plan.
[22] Some of the focus countries were modifying their treatment
guidelines at the time of our analysis.
[23] This practice is known as differential pricing, sometimes also
called "tiered pricing."
[24] The three NGOs that have completed purchases of ARVs under the
Emergency Plan reported that as of September 2004 they have received
prices that were either similar to or higher than the prices presented
in our report.
[25] Some manufacturers offer their lowest prices to Least Developed
Countries, or to countries in Sub-Saharan Africa, while others base
their discounted offers on the Human Development Index or the World
Bank's rankings of country income levels, sometimes in combination with
estimates of the prevalence of HIV infection among a country's adult
population.
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