Why Roche can decrease its prices and why it has a moral obligation to do so
15 November 2002
Roche's policy and declarations of intent *According to the ACCELERATING ACCESS INITIATIVE in which Roche has been a member for over two years now, your company is committed to " work with committed governments, international organisations, and other stakeholders to find ways to broaden access while ensuring rational, affordable safe and effective use of drugs for HIV/AIDS-related illnesses." (in: "Principles of the Access Initiative Programme", Joint statement of intent from UNAIDS) Of the six pharmaceutical companies committed to the Accelerating Access Initiative, Roche is the only one that has not decreased its prices for adult drugs by 85-98% for the eligible countries (see table attached). The discounts provided by Roche amount to only 40 to 60%. This discrepancy in price reductions was referred to by WHO and UNAIDS secretariat in a background document: "The last year saw a continuous decline in the price of ARV's in developing countries. Noteworthy from the research-based industry are the price decreases of 76% for ddC (to US$ 222 on a yearly basis), of 36% for saquinavir (to US$ 1635 per year), and of 22% for nelfinavir (to US$2730 per year) by Hoffman La Roche. Even with these prices decreases, however, saquinavir and nelfinavir remain significantly more expensive than other protease inhibitors. " (in: background document, 4th meeting of Contact Group on Accelerating Access to HIV/AIDS-related care 28-05-02 / session 1) We therefore consider that Roche, unlike the other companies, has not expanded access to an acceptable level. *According to Roche's own policy, "Roche is committed to providing HIV medication to the 63 countries in sub-Saharan Africa and the Least Developed Countries at sustainable reduced prices and has pledged not to profit from its HIV portfolio in these countries." (in: "Roche policy and principles for the Least Developed Countries and sub-saharan Africa" , www.roche-hiv.com) There are examples where Roche charges least developed countries (LDC) which would be eligible for their best offer, much more (e.g: US$ 4124 per patient per year in Cameroon) than the price they announced publicly for ViraceptÃ?® (US$ 3130 per patient per year). In addition, Roche proceeds only through case-by-case negotiations, which are time-consuming and present real hurdles for some countries to access ViraceptÃ?® at lower costs. This process is complicated, lacks transparency, and in no way helps to increase access to healthcare and drugs. Roche does not apply the same pricing schemes to NGOs and governments; as a result, governments sometimes have to pay much more than NGOs for the same medicines (e.g. in Guatemala, the government pays US$ 8358 per patient per year for ViraceptÃ?®: more than twice as much than MSF (US$ 4015 per patient per year). Roche has not announced a pricing policy for so called middle-income countries. Therefore, in Guatemala, ViraceptÃ?® is more expensive than in some European countries. Roche, like its competitors, should charge poor countries less for the drugs than wealthy countries. Why not abandon this policy and apply a general pricing scheme with adjusted discounts for the different countries? *This same policy paper states that "Roche does not intend to file patents on new HIV drugs in sub-Saharan Africa and LDCs. In addition Roche will not take action against patent breaches of bioequivalent generic versions of our HIV drugs in these countries where Roche holds patents." (www.roche-hiv.com) We are encouraged that Roche has recently committed itself not to take action against bioequivalent generic versions of its HIV drugs in sub-Saharan Africa. But this is not enough, even though generic producers have played an important part in making ARVs accessible in poor countries. Currently generic versions of nelfinavir are not widely available, this is thus not a solution in the short term. Roche cannot on the one hand participate in AAI and on the other hand not lower their price and try and shift the responsibility to generic manufacturers. Originator companies share the responsibility of the fight against AIDS in developing countries. In the absence of significant generic competition for nelfinavir, we think Roche has a moral obligation to lower its price. During our april meeting in Basel with Roche's representatives, several arguments were mentioned for the high price of Viracept.: *"Production costs for protease inhibitors are high. We can't be expected to offer the drugs below marginal costs" Viracept. is 5 times more expensive than other protease inhibitors. E.g., Merck's Crixivan. is offered at US$ 600 per patient per year. Kaletra. (Abbott) is offered for the same type of countries at US$ 500 per patient per year. One of Roche/Agouron's suppliers has been selling raw material at approximately US$ 850 per kg, or US$ 700 per patient per year. Generic producers have calculated that they could produce this drug at no more than US$ 1350 per patient per year, including their usual profit margin. * " We can't offer nelfinavir for less because we have to pay royalties to Pfizer/ Aguron" (Roche) Pfizer's reply to MSF, dated 4th of November 2002 regarding the Viracept agreement with Roche states: ". the royalty licensing agreement is based on a percentage of sales, and (that) Roche has the flexibility to price Viracept (R) (nelfinavir mesylate) as they determine on a country by country basis. Our royalty would be reduced proportionately with any price reductions, and should Roche want to donate Viracept (R) (nelfinavir mesylate), there would be no royalty due Pfizer." Thus, the royalties Roche has to pay to Pfizer do not constitute a sufficient reason for maintaining high prices.