Responding to market failures in tuberculosis control
From the publication, Science Express:
19 July 2001
R. Gupta, M. A. Espinal, and M. C. Raviglione are with the Stop TB Initiative, Communicable Diseases, World Health Organization, Geneva, Switzerland. R. Gupta, J. Y. Kim, and P. E. Farmer are in the Programme in Infectious Diseases and Social Change, Harvard Medical School, Boston, MA, 02115, USA. M. Caudron and B. Pecoul are with Médecins Sans Frontières, Artsen Zonder Grenzen - Rue Dupréstraat, 94 1090, Brussels. *To whom correspondence should be addressed. E-mail: firstname.lastname@example.org Multidrug-resistant tuberculosis (MDR-TB) is caused by strains of Mycobacterium tuberculosis resistant to at least isoniazid and rifampin, the two most powerful first-line antituberculosis (anti-TB) drugs. Although drug resistance in TB is not a new phenomenon (see footnote 1), several factors, including irrational antibiotic use, poor quality anti-TB drugs, the collapse of public health infrastructures, the HIV epidemic, war, famine, and increasing inequality and poverty— have all contributed to the increasing incidence of TB (see footnotes 2–3). In recent years, outbreaks of MDR-TB in public institutions [hospitals, prisons, and homeless shelters) in the United States, Europe, and Latin America have caused many deaths and have raised concerns about epidemic transmission of drug-resistant strains of M. tuberculosis (see footnote 4)]. The World Health Organization’s (WHO's) strategy for tuberculosis control, DOTS, consists of five elements: political commitment; case detection using sputum microscopy; standard short-course chemotherapy (SCC) under proper case-management conditions, including directly observed treatment; regular drug supply; and a standardized recording and reporting system. Although DOTS has dramatically increased the effectiveness of TB control programs (see footnote 5) and priority has been placed on preventing MDR-TB via DOTS (see footnotes 6–7), recent data show that the reemergence of MDR-TB may threaten TB control efforts in some settings, primarily because of the low cure rates achieved with SCC (see footnotes 8–9). Some have suggested that MDR-TB may be untreatable in low-income settings in part because of the high costs of treatment (see footnotes 10–11) regimens. In addition, the diagnostic procedures are complex and the laboratory services required may be unavailable. In many cases, there is minimal evidence of successful clinical management, or of national-scale management of MDR-TB. There is the further danger of destabilizing DOTS-based TB control programs by focusing on costly MDR-TB management. Ultimately a vicious cycle between health policy and market economics can result, i.e., a lack of international policy contributes to high drug prices, which, in turn, serves as a primary justification for not implementing projects (to develop policy). In response to this scenario, WHO established a Working Group for the DOTS-Plus approach, which is still under development, but which aims to manage MDR-TB using second-line drugs in low- and middle-income countries. The Working Group emphasizes the need for DOTS-Plus projects to be underpinned by functioning national TB programs that promote sound TB control practices for all patients (see footnote 12). One of the main obstacles to implementing DOTS-Plus projects has been the prohibitive cost of second-line drugs (see footnote 13). Nevertheless, the Working Group has achieved major cost reductions, and simultaneously fostered rational use of and access to the drugs. We believe this model could be adopted for other chronic infectious diseases prevalent in resource-poor settings. Decreasing Cost and Increasing Access Drug costs have several determinants (see footnotes 14–15), and our method to decrease prices and increase proper use of second-line drugs focused on a six-step process (see footnote 16). (i) After quality-assurance criteria were used to filter a comprehensive list of manufacturers, market analysis revealed three categories of drugs, i.e., monopoly status as patent-holder, monopoly status without a patent, and the involvement of multiple manufacturers. Once the market status for each drug was established, an appropriate negotiation strategy could be chosen. (ii) A single negotiator acted for all parties, Médecins Sans Frontières, thereby consolidating the various sources of demand, and they also provided the technical support and financial capital. (iii) Six categories of the most important second-line drugs were submitted for inclusion on the WHO Model List of Essential Drugs (EDL). Two markets were offered to the industry: one constituted countries and organizations that had made firm financial and programmatic commitments to establishing pilot projects (approximately 2000 patients initially constituting over three million doses of the various drugs in total). The second based on the estimated number of new MDR-TB cases globally (207,000 to 338,000 in 2000) (see footnote 17) included countries assessed by their need for TB drugs, and who had intentions to join DOTS-Plus, together with an estimate of their consumption of second-line drugs. This second potential market is growing because of the decreasing cost of second-line drugs and the increasing number of cases. (iv) A direct negotiation strategy was used to address the needs for the first market. This was based on quality criteria and price. A "tiered-tender" approach, which gives a large percentage to the lowest priced, quality-assured, company, and a proportional percentage to a select number of the remaining company (or companies), is also being used for the second market. (v) The advantages to the suppliers were highlighted. This included the pooled procurement process reflecting a single client for global demand, participation in a high profile partnership, potential penetration to other markets, assurance that drugs would not be lost by further creation of resistance and potential facilitation of drug registration when needed. (vi) Access to the concessionally priced second-line drugs is only given to projects deemed to adhere to the international recommendations for establishing DOTS-Plus pilot projects by a multi-institutional body known as the Green Light Committee (GLC) (see footnotes 18–19). Implementation of the six-step strategy increased supply and decreased the cost of quality-assured second-line drugs (Table 1) (see footnote 20), and per patient treatment costs dropped dramatically as a result of unit price decreases (Fig. 1). If countries continue their spending trend on second-line drugs as they have done for 1998–2000, they could save as much as 93.6% of their expenditure on second-line drugs (Fig. 2). Overall, this could produce a median saving of approximately US$454,000 for the countries surveyed. Countries with an established TB control program and with budgets that include the purchase of second-line drugs could save up to 57.5% (e.g., Estonia) of their overall budget for TB control. Nicaragua, for example, reports 14.9% of the TB control budget is spent on seond-line drugs. Via the GLC mechanism, Nicaragua could spend only 2.7% of its budget for the same drugs. These savings should be re-invested in TB control efforts, including those designed to increase cure rates for MDR-TB patients. The challenge is complex and seems paradoxical: increase access to quality-assured drugs by decreasing costs, while simultaneously increasing rational use of these very drugs. Our response was to consolidate the market and to create a regulatory mechanism promoting access to concessionally priced drugs to projects with adequate technical capacity. The unified approach to both the monopoly and non-monopoly producers combined with tailored negotiation strategies proved effective in reducing prices and reaching long-term sustainability in price reduction. This Is the Start, Not the End However, given the relatively new existence of the GLC and the ever-growing demand for assistance, it remains to be seen whether monitoring of projects and provision of technical assistance can be sustained. It is also unclear whether the industry will view the GLC as a limit to or a stimulus to demand, whether projects will bypass the GLC mechanism in favor of manufacturers that supply outside the mechanism, and whether the modifications needed to ensure that these factors are addressed will be applied to the current model. Additional issues deserve close examination. Although concessional prices were achieved through direct negotiation with monopoly producers, the price of treatment regimens could be further reduced, as any two of the four highest priced drugs [capreomycin, cycloserine, para-aminosalicyclic acid (PAS), and ofloxacin] comprise the largest proportion of regimen cost. The marginal cost of production should be determined to establish a fair price for drugs required for public health emergencies. Patented drugs remain prohibitively expensive, and still account for a large proportion of the cost of treatment regimens. Nevertheless, some countries are purchasing the same drugs from quality-assured generic manufacturers at much lower costs. Ofloxacin is under patent protection in many countries, where it is currently supplied at a price that is up to eight times the price in countries where ofloxacin is not patented (and where it is comparable to the price for the nonpatented ciprofloxacin). This phenomenon raises the question of whether or not true "at-cost" prices have been achieved by recent efforts targeted at the price reduction of the antiretroviral drugs necessary for the treatment of HIV/AIDS. Although the profit motives of the industry are acknowledged, it is still reasonable to limit profits in the context of public health emergencies. It is also important to maintain high standards of quality-assurance, as low-quality drugs often penetrate emerging markets, resulting in low cure rates for patients and an increase in resistance to second-line drugs. Given the increase in expenditure for TB control that may be required in coming years, existing economic analyses (see footnote 21) should be redefined and recalculated. It is no longer acceptable to assume that treatment of patients with infectious diseases is to be denied to resource-poor countries. Treatment of individual patients benefits society as well, by reducing the additional economic burden on the health-care system caused by further transmission of MDR-TB from untreated, infectious patients. Although TB remains a leading cause of adult mortality, it is appalling that no new classes of drugs have been developed for TB during the past 30 years. Between 1975 and 1997, only 13 of 1,223 new chemical entities were approved for use in tropical diseases (see footnote 22). Furthermore, market failures result in millions of people not having access to life-saving treatments routinely available in resource-rich countries. Attempts to use international trade agreements to increase access to essential drugs have also been met with political resistance and economic consequences (see footnotes 23–24). In the case of diseases where demand is evident, we must ask why prices remain prohibitively high for developing countries, and why are such mechanisms for price negotiation needed? In the context of TB control, HIV/AIDS raises several issues. Despite the recent action by nongovernmental organizations, U.N. agencies, the pharmaceutical industry, and other actors to increase access to anti-HIV drugs, as in the case of MDR-TB drug procurement program, significant long-term problems, including target prices; involvement of the generic industry; rational use; and equitable, efficient distribution, still have to be faced in the purchase of antiviral drugs. Given the rapid progression of the AIDS pandemic and the potential increase in funding (see footnote 25) for HIV/AIDS control, we have no choice but to move forward, and quickly. And given the epidemic spread of TB in areas with a high prevalence of HIV (see footnote 26), it is imperative that efforts are pursued for both diseases to decrease the costs of medication and to increase access to effective treatment programs. References and Notes:
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16. Detailed methodology is available as supplementary material on Science Online at www.sciencemag.org/cgi/content/full/1061861/DC1
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19. The Green Light Committee is currently comprised of the following institutions: Royal Netherlands TB Association (KNCV), Harvard Medical School, National TB Program (NTP)-Peru, Centers for Disease Control and Prevention (CDC), Médecins Sans Frontières, and WHO.
20. Data for Table 1 and Figs. 1and 2 were provided by NTPs responding to a WHO survey sent to countries participating in the WHO/International Union Against TB and Lung Disease (IUATLD) Drug Resistance Surveillance (DRS) project. Data for the USA (Boston) were obtained from the Brigham and Women’s Hospital and Harvard Medical School. Unit purchase prices for drugs were supplied in US$ for standard formulations as indicated in Table 1. Second-line drugs purchased in formulations not supplied by the procurement agents were excluded in the analysis, as was pricing information for countries not purchasing drugs from patent holders. PAS in its desired formulation is under Orphan Drug Exclusivity status in the USA until July 2001. Fluoroquinolones (ciprofloxacin and ofloxacin) still remain on patent in some countries, and ofloxacin is under patent in more countries than ciprofloxacin. GLC prices are inclusive of a procurement fee of less than 6%.
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27. The authors would like to thank the IDA Foundation and Ariel Pablos-Mendez for providing helpful comments on this paper, and to the NTP managers providing the data for the analysis. This research was made possible by grants from the Rockefeller Foundation (grant number RF 99038 ##5) and the Open Society Institute.
Fig. 1. Cost of MDR-TB treatment regimens. Standard prices for first-line drugs were used across all regimens. Treatment regimens were selected according to the WHO guidelines and are available on Science Online (16). Treatment regimens are selected for resistance to the following drugs: isoniazid (H), rifampicin (R), ethambutol (E), pyrazinamide (Z), streptomycin (S), and kanamycin (K).
Fig. 2. Potential savings to countries. This is based on expenditures (in US$) reported by NTPs from 1998 to 2000 using country-specific prices and projected expenditures if GLC prices were available for that country during the same time period. Data are not inclusive of nongovernmental organization expenditures or external sources of funding.
Table 1. Market status of second-line drugs.