Increasing Access to Medicines and Diagnostics
Donor governments have tripled their annual funding for global health from approximately $10 billion in 2000 to nearly $30 billion in 2010. However, the global financial crisis has jeopardized a similar increase over the next decade, even though a majority of people around the world still lack access to essential diagnostics and medicines for infectious and childhood diseases. Building on our strong track record, CHAI continues to help extend the affordability and availability of treatment in the developing world.
On October 23, 2003, President Clinton announced the first major price reduction negotiated with generic drug companies for antiretroviral drugs (ARVs), cutting the cost by at least a third. “We began working in the Bahamas and found the market for lifesaving medicines was completely disorganized, operating at high cost and low volume. We convinced the manufacturers to adopt a grocery store model, to become a high-volume, low-cost, certain-payment business,” said President Clinton.
Later that week in The Economist, Ira Magaziner – once President Clinton’s health care adviser and now CEO of CHAI – explained “the key is to bring sound business analysis to the problem. Industry executives volunteered to pore over these companies’ operations for five months, looking for ways to save on production costs while preserving quality. These savings have been passed along as lower final prices, with a small profit margin to keep companies interested.”
This approach has continued to be successful in lowering the cost of new medicines and diagnostics for HIV/AIDS as they come to market, as well as those for malaria, tuberculosis, and now for other infectious and childhood diseases. Characteristics of our approach to increasing access to medicines and diagnostics include:
Engaging Both Supply and Demand
Because CHAI has staff in more than 25 countries and works closely with their governments, we are able to gather accurate market intelligence from the main procurers of these lifesaving supplies, as well as build local demand and participate in revising national treatment protocols. At the same time, we are able to work with suppliers to guide product development, advise on regulatory issues, and negotiate price reductions.
Understanding Market Dynamics
CHAI’s professional staff include former pharmaceutical executives, scientists, and management consultants who understand how to shape markets. While driven to make catalytic impact on diseases of poverty, our staff also understand what pharmaceutical or diagnostic companies require to succeed in their industries.
Thinking Outside the Box
CHAI played a central role in supporting the creation of two new and innovative organizations that leverage the power of the private sector and focus on market-shaping work: UNITAID and the Affordable Medicines Facility-malaria (AMFm). Since 2006, the nonprofit UNITAID has committed more than $1.5 billion to fund medicines and diagnostics in developing countries. AMFm, a targeted global subsidy, has provided $343 million to help nine countries purchase effective drugs.
Using More Carrots Than Sticks
At CHAI we do our homework to understand what incentives will help trigger price reductions. For example, in 2003, this “positive advocacy” in supporting the use of generic AIDS drugs was an important factor in also encouraging patent holders to cut prices.
Building on Success
CHAI has applied its competencies and identified a series of game-changing opportunities to scale up access to vaccines for preventable diseases and medicines for other infectious and childhood diseases. We are seeking to apply this model to increase access to more accurate, rapid point-of-care diagnostics for HIV, TB, and malaria, significantly reducing misdiagnosis of these diseases. CHAI is also partnering with the government of South Africa, where more than 5.6 million people are living with HIV – nearly 17 percent of the global total – to undertake the largest expansion of HIV testing and AIDS treatment ever attempted in the world. In parallel with these new initiatives, we are working to transfer skills and share with others the lessons learned about innovative ways of engaging the private sector in advancing global health.