Global Health Policy
April 24, 2008
AEI Takes on Demand Forecasting for Malaria
Posted by Jessica Pickett at 10:39 AM
In honor of World Malaria Day tomorrow, AEI research fellow Roger Bate has issued a new policy brief and related magazine feature decrying the state of global demand forecasting for artemisinin-based cominbation therapies (ACTs):
WHO estimates often rely on 'need,' a normative concept of how many people should be treated, rather than on demand, a positive concept of what can and will be bought. In 2004, the WHO projected that the global need for ACTs in 2005 would be over 130 million treatments. This projection proved to be way too high; in 2005, maximum demand was only 25 million treatments. Major suppliers such as Novartis and Sanofi-Aventis relied on WHO estimates and, as a result, were forced to either destroy unused products or declare substantial losses when the anticipated demand never materialized. In December 2006, Novartis temporarily shut down its production facility in Suffern, New York, to prevent the production of too much medicine with a short shelf life; Chinese farmers had begun to complain that they had no buyers for their Artemisia annua. With an excess of supply, prices of Artemisia annua have plummeted, and now the WHO fears that farmers and artemisinin producers may withdraw from the market, reducing the overall supply of drugs and creating a risk of future shortages.
In the short run, unrealistically high demand estimates are costly for companies. In the long run, they are costly for the millions of people afflicted by malaria. If drug companies must weather too many losses as a result of misjudging malaria demand, they may decide to invest in drug development for other diseases. The WHO argues that its forecasts are better today. But to be useful to companies, they have to be provided at least 12 months in advance, and the WHO forecasts are not.
This analysis underscores many of our own findings in the CGD working group report A Risky Business: Saving Money and Improving Global Health through Better Demand Forecasts, which looks beyond malaria to expore the full impact of demand forecasting across diseases and stakeholders. Our research points towards three mutually reinforcing solutions:
- Improving the capacity to develop credible forecasts by taking forecasting seriously
- Mobilizing and sharing information about product demand in a coordinated way through the establishment of an infomediary
- Adopting a broad range of contractual arrangements
AEI's recommendation that companies agree to supply a certain amount of drugs in exchange for a contractual commitment from donors to purchase them at an agreed price would be a big step in the right direction; another variant on this approach, known as a "rolling horizon forecast commitment," is detailed in a background paper by our colleague Prashant Yadav. As the price of Coartem continues to drop and new manufacturers enter the market, the stakes will only become higher. With AEI and others now lending their voice to the call, hopefully the global community will begin to take action.
July 02, 2007
IAVI Looks Ahead at India's Role in the Development and Use of an AIDS Vaccine
Posted by Ruth Levine at 10:10 AM
You can't understand immunization in the developing world if you don't understand what's happening in India. On the demand side, you've got a population of more than one billion and a vaccine market of more than $300 million sales each year. With its significant economic growth and continued population growth, the potential market will only grow. On the supply side, India is home to the Serum Institute, the fifth largest vaccine manufacturer in the world, with sales revenues that are now growing at 35 percent per year; it produces most of the vaccines used in the developing world, including nearly all the measles vaccine used in Africa. Increasingly, India's pharmaceutical industry is undertaking product development as well as large scale manufacture. In short, India's role in the future of immunization will be even greater than it is today.
So, the International AIDS Vaccine Initiative has made a wise choice to focus some recent forward-looking analytic work on AIDS vaccine policy issues in India. Three publications were just released including:
- Accelerating AIDS Vaccine R&D in India: An Assessment of Obstacles and Possible Solutions, which identifies possible ways to enhance the role and efficiency of the public and private sectors in vaccine development.
- Forecasting Demand for Preventive HIV Vaccines in India, assessing the demand for a first-generation HIV vaccine.
- The Introduction of New Health Technologies in India, which takes a close look at what it would take to adopt and implement AIDS vaccines in India.
Interesting reading for all those who are thinking about future health technologies.
June 29, 2007
Insuring the Flu: Vaccines for All?
Posted by Ruth Levine at 01:17 PM
* This post is co-authored by Jessica Pickett
Reuters recently reported that the global health community is beginning to explore potential insurance mechanisms and risk management products to finance pandemic flu vaccines for developing countries, in addition to a new vaccine stockpile supported by GSK and other manufacturers:
The World Health Organization made a unique proposition [at the Pacific Health Summit on June 13, 2007] - what if big donors pooled resources to take out private insurance to pay for vaccines in the case of a bird flu pandemic?
WHO Director-General Dr. Margaret Chan said the organization had been given more preparation time than it could have hoped for ahead of an influenza pandemic [and that] the WHO was using that time to study various financing options to allow poor developing nations to receive vaccines and prevent a pandemic catastrophe that could kill millions of people.
"I am sure the insurance industry can underwrite a policy for that," said Chan, speaking during a panel discussion at the Pacific Health Summit in Seattle. Taking donations to buy vaccines before an outbreak may not please cost-conscious donors, said Chan, but it may make more sense to have organizations donate money to pay for an insurance policy premium.
"Is the world prepared to buy an insurance for an event which is low probability and extremely high risk?" said Chan. "I am not sure it will work, but clearly we need to think outside the box."
Out-of-the-box thinking is certainly what we need, and it's very likely that we are not using possible risk-management methods to their best advantage, but it's not clear that the idea now being floated makes much sense. Aside from the fact that it must seem odd to potential insurers to hear that pandemic flu is a "low probability" from the head of an agency predicting public health doom, there are a few devilish details to think through. For example:
- If such an insurance mechanism were put into place, would we create a situation in which heavy demands would be placed on insurers if and when bird flu emerges, just at the time when a global economic downturn would be inevitable? Ideally, the risk management instrument would be structured so that the global wins and losses would balance; for instance, if donors are unwilling or unable to guarantee purchase of a certain number of units of vaccine, maybe an insurance instrument could be developed for manufacturers that would be provide a pay-out in the event that the demand is lower than anticipated. This would give manufacturers greater ability to invest in scale-up of manufacturing, and only kick-in in the happy eventuality that the vaccines are not required.
- Would we unintentionally undermine the much needed preparatory actions by creating a false sense of security that "we have insurance, it's taken care of"? The problem of moral hazard is a real one, and can act in subtle ways on decisionmaking at both global and national levels. We need to make sure that in redistributing risks we are strengthening the signals to do the right thing, not diluting a sense of responsibility.
- Is the core problem really about how to buy the vaccines, or about how to ensure that a portion of the (limited) manufacturing capacity is set aside for developing country needs, or about whether it's even possible to organize a mass vaccination program for adults in developing countries? The implementation issue is really quite critical because there is currently limited ability to detect early emergence of a problem, and weak infrastructure for vaccine delivery in the places where new strains are likely to emerge. The debates about how to scrape together the money to buy vaccines shouldn't distract from the bigger, more important and more costly challenges about how to build up delivery capacity.
If we're being asked to think "out of the box," maybe the box we should think out of is the "health box." As I wrote in "A Cure for the Asian Flu," we have to look for fundamentally new ways to think about the level and type of resources required to tackle global infectious disease outbreaks. We could think about pandemic flu as a natural disasters, for instance: predictable in that it will happen; unpredictable in that we don't know when or how severely; and when it happens the affected countries will be vulnerable to very bad consequences in part because of the wide ranging economic effects. If we start to think about funding the preparation for and mitigation of pandemic flu in the "disaster box," then we could get together with others who have been exploring revolving funds, insurance instruments and other ways to mobilize resources and distribute risks over time and between those at greater and lesser risk today.
See also: Owen Barder previously blogged about disaster insurance and failure of the public sector here.
June 07, 2007
Adopting ACTs for Malaria: Kenya's Experience
Posted by Jessica Pickett at 09:46 AM
Artemisinin-based combination therapies (ACTs) for malaria are the textbook case of demand forecasting gone wrong, in part because of wildly optimistic assumptions about uptake in developing countries. While the recent CGD report A Risky Business: Saving Money and Improving Global Health through Better Demand Forecasts discusses the underlying incentives - and the resulting health and financial consequences - it does not not explain why it took so long for countries to switch to Coartem in the first place. Now, a new article in the Malaria Journal addresses this critical question head-on by providing a detailed look at Kenya's experience changing and implementing their national malaria drug policy, which highlights the need for more and better evidence to inform decision-making at every level and draws out key lessons for the future.
I strongly recommend reading the paper in its entirety, as it makes far too many excellent points and historical facts to summarize here. But the big takeaway is that the poor availability and quality of data delayed a decision of which product to use in place of the former first-line drug treatment protocol, sulphadoxine/sulphalene-pyrimethamine, and that even after settling on artemether-lumefantrine (AL) - under the Coartem fixed dose brand - it took over two and half years before it was actually available to patients:
The factors that resulted in a paralysis from policy decision to policy implementation included: (1) concerns and government procurement difficulties with a single-sourced product; (2) timely access to external funds provided by the [Global Fund to Fight AIDS, Tuberculosis and Malaria]; (3) lack of agreement on whether there was a long-term, sustainable financing plan; and (4) competing local and international interests for alternatives to AL. The GFATM was in its nascent stages and experience needed to be built in putting up structures that would ensure its monies were spent in a transparent way. Nonetheless, alternative mechanisms of financing drug procurement require further attention and the issue of long-term financing remains unresolved.
The paper also addresses the opposition from local manufacturers, who were left holding huge stocks of the old products, and the legislative implications of allowing over-the-counter access in the future. Finally, the authors point towards the "complexities of harmonizing various national treatment guidelines, developing effective in-service training, ensuring adequate drug supply and educating the patient population" inherent in any change of national drug policies:
Each of these activities consume huge amounts of ministry staff time and demand inputs from many other partners [and] must be carefully managed to avoid health workers being confronted with new drugs without information on how to prescribe and dispense them, trained health workers without the resources to implement the new policy or a patient population told that old medicines don't work but who cannot access new medicines.
There are many more hurdles ahead, as Kenya seeks to sustain regular drug supplies and manage the new systems in place. While better demand forecasts will both contribute to and result from these ongoing efforts, there is much more that needs to be done, and like the authors, I hope that the government, donors and others will continue to support the uptake of ACTs - both in Kenya and elsewhere - as well as the credible operational research that should inform each of the steps along the way.
May 29, 2007
Report of the Global Health Forecasting Working Group Now Available
Posted by Jessica Pickett at 05:11 PM
CGD convened the Global Health Forecasting Working Group in 2006 to study the challenges surrounding demand forecasting. The group concluded that better forecasting requires wider sharing of the risks involved in producing drugs among those who influence market dynamics, and aligning incentives through three mutually reinforcing actions:
- Improve the capacity to develop credible forecasts by taking forecasting seriously.
- Mobilize and share information about product demand in a coordinated way through the establishment of an infomediary.
- Adopt a set of contractual arrangements.
These recommendations are presented in the Working Group’s final report, A Risky Business: Saving Money and Improving Global Health through Better Demand Forecasts (as well as an accompanying policy brief). The Working Group report was launched on May 29 before a standing-room only crowd at an auxiliary event of the Global Health Council’s 34th Annual International Conference. Several news organizations have picked up the findings, including the Financial Times (full text below) and Voice of America, demonstrating there is much interest in the demand forecasting challenge. Please let us know if you would like a complimentary copy of the Working Group report; additional copies will soon be available for purchase.
Plan to help drugs reach poorMany extra lives could be saved around the world by creating an intermediary agency to reduce waste in the distribution of drugs for killer diseases, a leading think-tank will say on Wednesday.
A neutral "infomediary" to collect information, improve forecasting and help co-ordinate risk between drug producers and purchasers would significantly bolster the delivery of medicines for infections such as malaria, says the US-based Centre for Global Development.
In a new report the centre calls for mechanisms to enhance the supply chain for medicines, which in its current state creates substantial waste for both governments and pharmaceutical manufacturers.
"This is a chronic challenge which is getting worse," said Ruth Levine, the centre's programmes director, warning that new drugs and vaccines under development would prove useless if they could not be efficiently distributed to poor people around the world. "There is the risk of a technology pile-up."
The report was produced following growing concern over the supply bottlenecks for new drugs and frustration by drug companies including Novartis and Sanofi-Aventis, which have manufactured effective malaria medicines and then found countries are not ordering them in the quantities forecast.
Much of the shortfall below predicted order volumes is caused by reluctance in developing nations to commit to purchases when they are unsure they will have sustainable funding for a newer generation of more expensive drugs.
There are also blockages caused by inefficiency, corruption and regulatory hurdles which mean that even when drugs are available they are distributed slowly.
"We are trying to introduce some of the most sophisticated and complicated medical regimes on the planet into some of the most fragile systems," said Ms Levine.
The centre calls for an infomediary funded by subscriptions by all participants which would collect, analyse and distribute supply and demand data and forecasts for drugs.
It stresses the need for risk-sharing agreements, such as buyers committing to a minimum level of drug purchases, or flexible contracts requiring suppliers to make a specified quantity of drugs available beyond agreed levels at a premium price if demand rises.
Earlier this month the infomediary was endorsed in a separate study by the TB Alliance.
May 17, 2007
Pathway to Patients: Lessons from Today's Market for Tomorrow's TB Drugs
Posted by Ruth Levine at 11:12 PM
* This post is co-authored by Jessica Pickett
The TB Alliance has just released an analysis of the global market for TB drugs, finding that approximately $315 million is spent on first-line treatment worldwide each year; in-depth studies of 10 focus countries (Brazil, China, France, India, Indonesia, Japan, the Philippines, South Africa, the UK and the US) revealed that an additional $54 million is spent annually on expensive second-line treatments in those countries alone. The study, aptly titled Pathway to Patients, highlights the significant - but often overlooked - impact of private sector distribution channels and funding streams on the effectiveness of national TB programs, and the high degree of variability in supply chains by country. The market is further fragmented between more than four first-line drugs that are each produced by a multiplicity of suppliers, with domestic drug production facilities playing a key role. Taken as a whole, the findings implicitly underscore the need for public-private partnerships to facilitate the development of new products where industry alone lacks the necessary commercial incentives.
Importantly, this report goes beyond painting a picture of today's supply chain to begin mapping out the factors that will affect the introduction and uptake of new TB drug regimens in the coming years. New diagnostics will increase case findings, and hopefully demand for treatment; conversely, the development of a more effective preventative vaccine would reduce the number of infected patients. Policies that shift patients from the private to public sector for treatment may decrease the value of the private market while increasing public tenders. At the global level, new fundings schemes like the Global Fund and UNITAID are increasing access to second-line TB medications (which is good), but the resulting dependence on external donors - in stark contrast to the current predominance of domestic sources - could render TB programs susceptible to notoriously volatile aid flows (which is, uh, bad). And of course the profile of the new drugs themselves will influence the market dynamics: shortened treatment will help increase patient adherence, decrease default rates, curtail costs, and improve health outcomes - all of which are expected to increase product demand.
With this in mind, the authors endorse the creation of global health infomediary to improve demand forecasting and help contribute to a shared understanding of market dynamics, treatment benefits, manufacturing and supply chain issues, operational changes, donor policies, price elasticity of demand and other attributes that will influence decisions to develop, adopt and use new TB treatment regimens. With so many new products coming down the pipeline - not just for TB, but for AIDS, malaria, and other developing country diseases, too - the challenges of product introduction are rapidly becoming urgent and widespread: kudos to the TB Alliance for facing them head on, early on.
Update, 6/27/07: First The Lancet and now The Lancet Infectious Diseases (free registration required) have highlighted the TB Alliance study and its support for the global health infomediary in particular.
April 19, 2007
MeTA: Spotlight on the Supply Chain
Posted by Ruth Levine at 03:50 PM
As new funders, like UNITAID, buy more new drugs on behalf of the poorest countries, weak links in the supply chain are more visible than they have ever been - and the stakes are higher. Among the signs of a supply chain under pressure: procurement bottlenecks, high mark-ups by intermediaries, uninterpretable signals to suppliers about effective demand and stock-outs. And the result: reduced access to life-saving drugs, high out-of-pocket spending, rapid emergence of drug resistance and other negative consequences for individuals, families and communities.
Making the supply chain for essential medical technologies more efficient and transparent is rising on the donor agenda, and that's all for the good. Witness the UK's new Medicines Transparency Alliance (MeTA), which aims to "improve access to good medical care by sharing information among governments, non-profit organisations and pharmaceutical companies," according to Andrew Jack of the Financial Times. What will MeTA do? Details are still being worked out, but essential elements appear to include working within nine countries (including Ghana, Jordan, Kyrgyzstan, Peru and the Philippines) to collect and publicly share information about drug prices and mark-ups at different steps in the supply chain, on the theory that public awareness will make the market work more efficiently and reduce the prevalence of corrupt practices at each level, from national procurement through to retail pharmacies.
The UK Government has to be applauded for venturing into this vital and complex area. As it does so, MeTA designers might be well advised to consider three basic questions:
First, who's going to play, and why? To make an information sharing system work requires that the parties owning data - in this case, ranging from pharmaceutical companies to donor agencies to national government procurement agencies to wholesalers and more - have a genuine incentive to provide it in an accurate and timely way. As our work on improving the forecasting of demand for essential medical technologies has demonstrated, under the current arrangements, where the financial risks borne by different participants in the supply chain are not well distributed, some actors have incentives to keep key information to themselves, while others have incentives to systematically misreport. MeTA will need to analyze and understand these incentives, and think through the implications for obtaining quality data. MeTA designers might find it easier to engage key holders of information if the database that's developed helps good businesses (for example, by contributing to better demand forecasts and making the supply chain work more efficiently) rather than focusing on punishing the bad businesses that are trying to extract ill gotten gains from those who are sick.
Second, what can the country-level activities of MeTA contribute to improving aggregate-level information? Currently, major players at the international level, including those in the pharmaceutical business and funders, face a paucity of information about national-level demand: how much of what, and when? Demand forecasts, which are vital inputs for key decisions throughout the value chain - at every stage from R&D through formulation and packing by manufacturers, and for medium-term budget requests through quarterly disbursements by donors - now are based on an unsatisfactory combination of hopes and fears. If it considers the information needs at the international level, MeTA could make a welcome contribution to filling this gap. (Specific recommendations about data collection and data sharing systems will be presented in the final report of the Global Health Forecasting Working Group, to be launched on May 29 at the Global Health Council's annual conference in Washington, DC.)
Third, what might the unintended consequences of MeTA be, and how can these risks be mitigated? One of the driving ambitions of MeTA is to reduce corruption, but any realistic look at the supply chain has to conclude that the opportunities for profiteering sometimes contribute, in paradoxical ways, to access. Some intermediaries may only stay in business if they are able to capture significant financial rewards. Obviously, it's a complicated picture: the high prices to patients that result from corrupt practices limit access, and corruption has multiple corrosive effects on the quality and responsiveness of the supply chain. But MeTA will need to make sure it finds ways to increase the attractiveness of doing business well, at the same time that it tries to squeeze the grease out of the system.
We'll be eagerly watching as MeTA develops, and look forward to a design process that is an exemplar of the sort of transparency and efficiency that MeTA seeks to foster.
February 20, 2007
Demand Forecasting Consultation Report Now Available for Feedback
Posted by Ruth Levine at 11:30 AM
I invite your feedback on the consultation draft (.pdf) of CGD's Global Health Forecasting Working Group report. The report describes the challenges of forecasting demand for critical medical technologies and focuses on near- and long-term solutions to the persistent problems in demand forecasting. We'd like to hear your comments on the Working Group's preliminary recommendations to: 1) improve the capacity to develop credible forecasts by taking forecasting seriously; 2) mobilize and share information in a coordinated way through the establishment of an infomediary; and 3) share risks through creative contractual arrangements. We'd particularly appreciate thoughts on the following questions:
- Is the demand forecasting problem well described, in the broader context of risks and incentives in the global health supply chain?
- How well do the findings of the risk and incentives audit for ACTs apply to your products? What are the key differences and similarities that you see by product type?
- Are the discussions of forecasting methods, information needs, and contracting options appropriate, at the right level of detail, and framed correctly within the context of the report?
- Are there Principles of Forecasting that you would like to see added?
- What are your views on the viability of the global health infomediary? What business model do you think should be developed for access to the infomediary? Do you think users should pay, or receive access free of charge? Do you think there are some categories of users that should have free access?
- Do you think contracting arrangements can be changed? What are some of the preconditions for this to happen?
- Would the proposed solutions benefit your own organization or similar stakeholder organizations?
- Do you see potential areas of overlap or opportunities for engagement with existing or planned activities being undertaken by other organizations (including your own)?
- What are the major political, institutional, funding or other barriers to implementation of the recommendations? Are there any specific actions that could encourage broader buy-in and support? What might be the sources of opposition?
- Does this report raise any questions for a future research or advocacy agenda?
Input received through March 23rd will help the Working Group finalize its recommendations for publication in late spring/early summer. So please read the report and share your thoughts in the comments below!
* For periodic updates on the progress of the Global Health Forecasting Working Group as well as other news and developments in demand forecasting for critical medical technologies, subscribe to CGD's new Demand Forecasting E-Update.
January 04, 2007
Demand Forecasting Featured in Scientific American
Posted by Jessica Pickett at 11:03 AM
The Scientific American features a new article on the challenges of demand forecasting for global health products:
Unpredictable demand creates a three-way catch-22 problem [...] Poor countries have to know the price of a vaccine to see if they can afford it. Manufacturers, however, are hesitant to set a price unless they know how many doses will be bought. And aid donors cannot be sure they can subsidize a purchase without knowing the price and quantity of the sale.The author, J.R. Minkel, goes on on to highlight many of the ongoing efforts in this area, including CGD's own Global Health Forecasting Working Group.
December 18, 2006
Flu Vaccine Woes
Posted by Ruth Levine at 11:19 AM
Once again, volatile demand for flu vaccine is giving everyone a headache. A mere two years ago supply fell badly short of demand, turning US seniors into "immunization tourists" to Canada, and putting President Bush on the defensive during the 2004 campaign. This year, demand is way off, and suppliers can barely give the vaccine away; they face the prospect of wasting valuable doses because the vaccine is developed specifically for this year's strain. Paradoxically, despite the aggregate surplus some geographic areas are experiencing a shortage. As the New York Times reports, "The situation underscores the fragile nature of the nation's supply system for flu vaccine, a risky and volatile business, in which the federal government has a limited role."
The consequences, aside from the immediate financial losses to suppliers and doctors who purchased in bulk, may be a decrease in future production and, yes, more shortages. "I'm concerned that we'll throw away 20 million doses," said Dr. L. J. Tan, the co- chairman of the National Influenza Vaccine Summit, a group of 140 companies, nonprofit groups and public agencies. "If we keep on doing that, I can guarantee that the following seasons we won't have 115 million doses anymore."
The mismatch between supply and demand is as predictable as the flu season itself: we know it's going to happen, we just don't know how bad it's going to be. So what to do? Prashant Yadav, a supply chain expert at the MIT Center for Transportation and Logistics in Zaragoza, Spain (and a consultant to our Global Health Forecasting Working Group), thinks the reason policymakers haven't yet come up with a workable solution is because they haven't thought about the poor flow of information and product in the complex supply chain, which includes a host of players from patients to physicians, hospitals, transportation providers, insurers and manufacturers. The approach that he and co-investigator David Williams have arrived at in a recent study include:
- creating an electronic clearinghouse for information on vaccine supply and demand
- improving forecasting and pre-booking, capturing local information about health conditions and demand
- establishing systems for redistribution from areas of surplus to areas of shortage
- reducing lead times through technological innovation in production and transportation
The challenge of dealing with volatility in demand in a complex supply chain is familiar to those who are trying to get live-saving drugs, diagnostics and vaccines into wider use in developing countries. It's worth thinking about whether there are ways to apply some of these ideas to a broad range of products - one of the angles the Forecasting Working Group is looking at closely.
November 30, 2006
Pediatric ARVs: Baby Steps Towards Better Child Health
Posted by Ruth Levine at 11:03 AM
Is the new "combination therapy" for countries heavily burdened by HIV/AIDS going to be the potent mix of one former US President + funding from a French-led airline levy + the high volume-low margin business model of Indian drug manufacturers? This morning's announcement by President Bill Clinton and French Foreign Minister Philippe Douste-Blazy in New Delhi of a new pricing deal for pediatric fixed-dose combinations of antiretroviral treatment, funded by UNITAID and supplied by Cipla and Ranbaxy, is certainly a welcome one. Through the agreement, the price of 19 drug formulations appropriate for children will fall by 45 percent, to less than $60 per year for 62 of the lowest-income countries. This important achievement will surely increase access to life-extending drugs for many children, hopefully reducing the approximately 400,000 child deaths from AIDS each year. It also reinforces the merits of the Clinton Foundation model, which pairs deep discounts with good demand forecasting , multi-year procurement arrangements, and a recognition that pharmaceutical companies will only continue to supply products if it is a profitable business model and not just charity. (For more details, see the CHAI press release and Q&A.)
The only thing not to like about the new deal is the painful reminder of all the missed opportunities to raise awareness, mobilize money and achieve results in the fight against other causes of infant and child illness and death. There are few celebrity galas for acute respiratory infection, which kills about 2 million children in the developing world each year; no dedicated funds providing an indefinite flow of hundreds of millions of dollars to combat malnutrition, a risk factor a large share of the 10 million child deaths annually; no summits of world leaders wringing their hands about the fact that the high child death rates have remained virtually unchanged in many sub-Saharan African countries for more than 10 years (see the Lancet Child Survival series for more details). The correspondence between the magnitude of health problems and the allocation of donor resources is weak indeed, as highlighted in a recent article by my colleague Jeremy Shiffman (.pdf). Donors and politicians seem to be busy overcorrecting for their shamefully slow action to prevent AIDS in the early days of the pandemic, but in the process they may be setting themselves up for even harsher judgment by future generations. So, while we take a moment to applaud the truly impressive achievements of CHAI in responding to the lack of good AIDS medicines for children, let's not fool ourselves into thinking that the hard work is done.
Update: Jeremy's editorial on how AIDS is crowding-out priority for other health causes came out in today's Bulletin of the World Health Organization
October 11, 2006
Novartis reduces the price of anti-malarials below costs
Posted by Jessica Pickett at 10:51 AM
Amid talk of a global subsidy for anti-malarials (proposed by the Institute of Medicine and under consideration by UNITAID), Novartis recently announced that it would reduce the price of its artemisinin combination therapy, Coartem, from $1.57 to just under $1 by subsidizing its production by more than $10 million per year in order to increase access within developing countries. While this sounds like good news -- and it is, in the very near term -- it should strike fear into the global health community when a pharmaceutical CEO decides to provide products "below our costs," especially coming on the heels of Sanofi-Aventis' tragic decision to trash 10 million doses of their own surplus ACTs.
I hope that this move is a strategic financial decision by Novartis to "prime the pump" by boosting demand and scaling up the supply chain for Coartem now in anticipation of a future global ACT subsidy; otherwise, it bears out the already deep-seated belief by pharmaceutical companies that the market for anti-malarials and other products for developing countries is not profitable enough to merit investment in R&D, and will deter them from doing so. But the sunny, charitable rhetoric of the press release was belied by CEO Daniel Vasella's blunt statements to the Wall Street Journal and Financial Times (subscriptions required):
"We have no model which would [meet] the need for new drugs in a sustainable way...You can't expect for-profit organisation to do this on a large scale. If you want to establish a system where companies systematically invest in this kind of area, you need a different system."
This is only the latest development in a two-year controversy around demand forecasting for Coartem:
The company was drawn into a dispute over production levels, accusing the World Health Organisation of exaggerated forecasts of 120m treatment courses a year and being accused by medical charities of failing to produce enough.While this is hardly the only example of the demand forecasting dilemma -- or even the most egregious -- it is certainly the most visible. To address this critical issue, CGD has convened the Global Health Forecasting Working Group to develop recommendations around specific actions and investments by international actors that could improve the global demand forecasting framework; the group's findings should be available by early 2007.Novartis said it had sufficient capacity for 100m treatments, but that orders had fallen far short at just 4m in 2004, triggered by lack of funding, uncertainty over supplies or long-term donor support and medical debate over the need to switch to artemisinin-based drugs.
With additional funding in place, orders were 40m last year and 50m in the first 10 months of this year, but Mr Vasella said that even after writing off several million dollars in development costs, he was unable to meet his target of at-cost production after royalty payments and investment in plant.
August 17, 2006
Challenges on the Road to Universal Access
Posted by Harsha Thirumurthy at 04:57 PM
At a satellite session on Sunday, a striking statistic was reported by the humanitarian organization Medecins Sans Frontieres: in one of its ARV treatment programs, 60 percent of project costs are going toward the treatment of 10 percent of patients. Why? After several years on standard ARV treatment regminens, many patients will inevitably develop resistance to the drugs and require newer ones. But newer second-line regimens are up to ten times more expensive than first-line regimens, in large part because generic forms of the former are not available from suppliers in India and elsewhere. The need for affordable and widely available second-line regimens has been echoed by countless speakers in Toronto, including Bill Clinton, Bill Gates, and most recently in an informative speech by Dr. Julio Montaner during yesterday's plenary session.
Even the $130 annual per-patient cost of first-line regimens is now in jeopardy. The WHO has issued revised guidelines (.pdf) for first-line regimens -- for example, they should contain tenofovir rather than stavudine to minimize long-term side-effects to patients. These new guidelines mean that current resources for treatment programs are likely to reach fewer people than before. Looking ahead, as patients develop toxicity or resistance, programs such as the Global Fund and PEPFAR will have to devote even more resources to keep millions of people on treatment.
What are the solutions being proposed in Toronto? Generic manufacturers are reluctant to cheaply produce some of the second-line drugs because, almost by definition, the demand for these medications is relatively small right now. The scale of production could be increased -- and prices therefore decreased -- if there were good demand forecasts of how many patients will use these drugs in the future. This will be difficult until there is agreement among clinicians on when to switch patients to second-line drugs and what second-line drugs to use, although organizations such as the Clinton Foundation are currently working with manufacturers to organize the market and facilitate low-cost production.
Another part of the solution would require developing countries to take advantage of flexibilities within the TRIPS agreement, such as the denial of patents or issuance of compulsory licenses. In some cases, patents and related intellectual property laws can be a real barrier to access, and civil society groups are working to address this aspect of the problem (for background, a good session on trade policy was held yesterday, and another is scheduled for this afternoon).
The treatment of 3 million by 2005 was the goal during AIDS 2004 in Bangkok, and universal access by 2010 is the goal during AIDS 2006. Important progress was made toward the 3-by-5 goal, but achieving universal access will be extremely difficult if the prices of first-line and second-line medicines do not decline substantially.
July 26, 2006
The importance of improving demand forecasting
Posted by Owen Barder at 07:07 PM
IAVIReportOnline.org reports on new efforts to improve demand forecasting
To help with the task of creating these forecasts, PPPs and NGOs are seeking the advice of economists, industry forecasters, and consulting groups. IAVI, the Accelerated Development and Introduction Plans (ADIPs) for pneumococcal and rotavirus vaccines (PneumoADIP and RotaADIP, respectively) coordinated by the Global Alliance for Vaccines and Immunization, and the Program for Appropriate Technology in Health's (PATH's) Malaria Vaccine Initiative are each currently developing (or have recently conducted) strategic demand assessment research. And the Center for Global Development (CGD) is in the process of holding a series of stakeholder workshops over the course of this year to gain consensus on how best to share data, techniques, and principles for demand assessments of vaccines and other medicines.These are crucial issues: we have reported here about the possibility of the UN having a role in demand forecasting, and here about the huge human costs of failure to forecast demand accurately.
The need (as distinct from demand) for vaccines and drugs for most infectious diseases is predictable - the burden of disease does not vary much from one year to another. So if demand is volatile, this is mainly a man-made problem: demand volatility must be largely due to erratic behaviour by donors and (probably to a lesser extent) regulators and developing country partners. The costs of this unpredictability are borne by suppliers and, ultimately, by the world's poor whose access to affordable and reliable supplies of essential medicines is jeopardized by this unpredictability.
There is a clear win for everyone if we can increase the predictability of demand. Suppliers will get the certainty they need to invest in large-scale production; donors will get more bang for their buck; and developing countries will get more stable and lower cost supplies of the medicines they need.
UN & pharma agree to more of the same on AIDS
Posted by Jessica Pickett at 11:30 AM
On Monday, top United Nations officials met with nine pharmaceutical executives and agreed to continue doing exactly what they're already doing to combat HIV/AIDS. While Reuters chose to focus on the commitments made by industry, I personally found the discussion of the UN's role much more interesting:
We agreed on the role of the UN system in a number of areas, including in devising, promoting and updating guidelines on diagnosis, treatment and product quality for adults and children. WHO and UNICEF will also step up efforts to expand the prequalification programme of urgently needed medicines and diagnostics.
The UN will continue to work with Governments, donors and, where appropriate, research-and-development as well as generic pharmaceutical companies, in developing forecasting models to predict demand and supply of HIV medications and diagnostics in developing countries.
I completely agree that these are critical, underserved functions. But I think it is an open question whether the UN is best placed to perform them, given its current record on forecasting.
July 25, 2006
Costs of poor forecasting = 10 million antimalarials
Posted by Ruth Levine at 05:34 PM
Like the boy who cried wolf, the international public health community has a serious credibility problem: estimates of demand for antimalarial drugs have once again proven to be wildly optimistic, leaving the manufacturer, Sanofi-Aventis, holding 10 million tablets of artesunate that were produced but not purchased within the "sell by" date. Now, Sanofi has two bad options: throw them away or give them away - if they can find any takers. For those working for greater engagement by commercial pharmaceutical firms in developing country markets, this is not the stuff of which good business cases are made.
As Andrew Jack reports in the Financial Times (subscription required), this is not the first false alarm. Over the past two years, official forecasts of demand for the Novartis antimalarial, Coartem, have been off by orders of magnitude: "Demand remains half of what was projected," says Novartis CEO Dan Vasella. For products that have long lead times and short shelf lives, weak forecasting wastes money and erodes good will.
Admittedly, the difficulties of forecasting demand are significant: poor information, uncertain donor and domestic financing, and unpredictable in-country decisions about introduction and product choices. But these challenges are not insurmountable and merit specific attention and collective efforts to create the credible, useful forecasts and risk sharing that will reinforce, rather than undermine, progress toward better medicine for more people.
Update: Further discussion regarding the issue can be found here.
July 24, 2006
Health Technologies Require Policy Innovations
Posted by Ruth Levine at 09:00 AM
Health technologies have value if and only if they are used -- or, as we wrote in Millions Saved after reviewing 17 large-scale successes in global health, what's needed is "innovation within an effective delivery system, at a sustainable price." That simple observation bears repeating as a caravan of new drugs, diagnostic products and vaccines for diseases that predominantly affect poor countries move through the R&D pathway, and yet face speed bumps when it's time for scaled-up manufacture and delivery to those in need.
In Sunday's Washington Post, Mary Moran, author of a study describing the multiple products whose development in commercial or non-profit pharmaceutical firms is primarily being funded by the Bill & Melinda Gates Foundation, highlights a disconnect between product development and product deployment. While some of the R&D efforts are making headway -- Moran predicts that by 2010, we'll see six or seven major new drugs for malaria and tuberculosis -- she criticizes a narrow focus on technology: "That's the problem with a technology-led solution. There's a lot of medicines out there that aren't used."
Roger Glass and co-authors, in this week's Lancet (subscription required), similarly bring attention to the potential health benefits of two recently licensed vaccines, GSK's Rotarix and Merck's RotaTeq, and then go on to fret about the practicalities of buying and using the products. If these products are suitable for developing country conditions, and if they can be introduced and delivered broadly, these oral vaccines could prevent a large share of the estimated 600,000 child deaths due to diarrheal disease associated with rotavirus. But, as Glass and colleagues point out, the vaccines have not yet been subjected to efficacy testing in Asia and Africa, so the health benefits have not been confirmed. Beyond the science and the epidemiology lie the financial and organizational challenges of introducing and sustaining the use of these new products in poor countries: how will firms be convinced to produce them in large quantity, how will countries faced with multiple competing priorities decide which ones to use, what will be the role of the private distribution channels, and how will product purchase be financed over the medium-term?
In some ways, this is a set of problems we should be happy to have. Better to have the challenge of paying for drugs for major killer diseases than not to have the drugs ready to go. Better for countries to face lots of choices about which drugs and vaccines to use than to have no options at all. But surely there are still improvements to make on our way of doing business. One improvement might be to make sure that a strategy for purchasing the products at an affordable price over the long-term is part and parcel of way R&D is funded -- as, for instance, has been proposed with an Advance Market Commitment. Another would be a more rational means of determining which product or set of products donors subsidize, to avoid the near-chaos of the current advocacy-driven financing priorities. And still a third would be a set of actions to improve the ability of both developing countries and donors to provide credible demand estimates to pharmaceutical companies, so they can build and produce with confidence that products will be used (see the description of our Forecasting Working Group). Like drugs themselves, each of these policy innovations merits focused and accelerated R&D.
July 13, 2006
A Tale of Two Bills
Posted by Jessica Pickett at 06:10 PM
According to the Wall Street Journal, Bill Clinton is on his way to joining Bill Gates as a global health powerhouse. The two men are currently traveling together in Africa and will jointly address both the XVI International AIDS Conference in Toronto next month and the Clinton Global Initiative in September. However, they bring very different styles to their common interest, as described by Ira Magaziner (Executive Director of the Clinton Foundation):
"The Gates Foundation is doing good work but doesn't have a direct agreement with government," he says. "He is private-sector and NGO-oriented. We're providing a small amount of money but that's not our main activity. We're not going to compete with Gates or the U.S. government at handing out money. We mostly provide technical assistance."
Richard Holbrooke of the Global Business Coalition on HIV/AIDS puts it a bit more bluntly:
"Gates doesn't work as well with governments because he doesn't have the skills or political acquaintances," says Mr. Holbrooke. "Clinton doesn't have the resources. But Clinton is the most important public figure and Gates the most important financial figure." And while differences between the two are "true," says Mr. Holbrooke, they are "of low-level importance." He adds: "What's important is there's a marriage of many organizations of which Clinton's and Gates's are the most powerful."
The Financial Times summarizes the extent of their current collaboration below:
[The Gates Foundation] has already provided some funding for operational research on improving healthcare staffing in Africa to Mr. Clinton's Foundation on HIV/AIDS, and is believed to be finalizing grants to help assist Mr. Clinton's work on forecasting and pricing of medicines in the developing world. One of the aspects of the work involves developing software to process patient information and manage demand for medicine and healthcare in the developing world.
The Clinton Foundation has demonstrated enormous leadership in addressing the problems related to poor demand forecasting for global health products, and it will be great if the Gates Foundation and other partners can now contribute to - and learn from - their efforts.
May 15, 2006
Open-Source Modeling for Health
Posted by Jessica Pickett at 11:49 AM
Christine Gorman at Time has posted a fascinating analysis of the new Global Pandemic Initiative, which is a collaborative effort between IBM and over twenty major worldwide public health institutions, including the World Health Organization and the Centers for Disease Control and Prevention, to help stem the spread of infectious diseases with the goal of identifying and mapping pandemic outbreaks to better target vaccines. The centerpiece of this effort is an open-source information database and epidemiological modeling effort to bring together the various people and organizations tackling the problem of avian flu.
This is great news, not just for bird flu but for the broader field of global health. This effort is built on an emerging international consensus about the value of information sharing and harnesses the innovative technologies that can facilitate that exchange of data, ideas, and methodologies for predicting future health needs and quantifying the necessary interventions. Hopefully these open-source values and the solutions they inspire will extend to the rest of the health community as it faces more 'routine' challenges like resource tracking and demand forecasting, where information transparency is a critical component of any true solution.
April 27, 2006
International Drug Purchase Facility: Taxing the Rich to Treat the Poor
Posted by Jessica Pickett at 11:15 AM
In recent months, the French proposal for an airline solidarity tax has been a source of contention in the global aid community. However, most of this debate has focused on the financing mechanism itself, with relatively little attention to the new International Drug Purchase Facility (.pdf) that its revenues will support in order to lower the cost of drugs for HIV/AIDS, tuberculosis and malaria and improve the availability of these drugs. The FT reported on the recent progress on this front at a weekend meeting of a pilot group consisting of 43 countries led by France and Brazil, who announced their intentions to operationalize the IDPF by September with $300 million in annual funds from the airline tax (which will be introduced in France on July 1st). In his closing remarks, WHO Director General J.W. Lee enthusiastically endorsed the proposal and promised to discuss it at future discussions of the G8, saying:
This proposed facility is an important step forward in securing predictable and sustainable supplies of drugs and diagnostics. These are critical elements in scaling up HIV, tuberculosis and malaria programmes. The drugs people use must be safe, affordable and available. Medicines are not everything, but without them, little can be done.
It is perhaps telling that this meeting took place in Geneva while the world's economists gathered in far-off Washington for the IMF/World Bank meetings, despite the many economic ramifications of this new funding mechanism. The IDPF seeks to ensure an efficient market with many suppliers of affordable products, but it remains unclear whether the designers recognize that the dual aims of stimulating competition and lowering prices are fundamentally in conflict, given the following excerpt from a February Reuters article:
Officials said details of how the system would work remain to be thrashed out but they hope that it will eventually encourage pharmaceutical firms and makers of generic drugs to increase production, stimulate competition and so lower prices.Econ 101 is pretty clear on the point that increasing demand drives prices up, which is what leads to greater supply and competition - not the other way around. There is an explicit tradeoff between price and number of suppliers that the IDPF will need to balance.
That said, the IDPF holds a great deal of potential to increase access to medicine by increasing the efficiency and predictability of the supply chain. There are massive economies of scale to be exploited through global pooled procurement compared to the current system of many small purchases disaggregated across different country-level procurement systems. The IDPF will also represent a predictable source of financing to suppliers; donors should take advantage of this predictability to issue binding long term contracts that share some of the risks to industry (creating an incentive to improve demand forecasts). After all, increasing efficiency and reducing risk is one key way to lower drug prices. But the IDPF must resist the temptation to succumb to the more popular tactic of driving down prices by eliminating industry's profit margin, which will eventually force manufactureres out of the market entirely. Creating a stronger monopsony to push down the price of ARVs through bulk procurement may be an attractive short-term solution to the problem of access to medicines, but it will choke off the supply of medicines for developing countries in the medium term. Instead, the IDPF should pay more, not less, which will increase competition (and price) but will ensure a sustainable supply going forward.
April 12, 2006
Access to ARVs: Need, Targets & Markets
Posted by Jessica Pickett at 04:59 PM
UNAIDS prevalence estimates formed the basis of the missed "3 by 5" target, and so the news that they were so highly inflated is particularly timely coming on the heels of the WHO report on the initiative, which (among other things) illustrates the perverse relationship between disease estimates, advocacy targets and pharmaceutical markets. The "3 by 5" strategy was based on an analysis of resource needs which determined that "with optimal funding and technical capacity, access to lifesaving antiretroviral therapy could be expanded to reach 3 million people globally - half of those estimated to need it - by the end of 2005" (emphasis mine). It was explicitly designed as an ambitious advocacy target to mobilize resources, based almost entirely on the artificially high disease-burden estimates and constrained only by the absorptive capacity of recipient countries. It emphatically was not a realistic forecast of demand for antiretrovirals that could effectively inform the pharmaceutical industry's investment and manufacturing decisions. In fact, the WHO report implicitly defines "demand" as the number of people seeking treatment, completely divorced from their (or donors') willingness and ability to pay:
Most countries with a generalized epidemic have linear growth in the number of people seeking antiretroviral therapy. This indicates that, although stigma and lack of perceived benefits of treatment may slow down the uptake of antiretroviral therapy, especially in the early stages of scale-up, demand is not the limiting factor in scale up. Instead, the rate of increase is determined primarily by supply-side factors such as drug supply, funding, identifying HIV status and human resource capacity.
This definitional misunderstanding blurs the distinction between need and demand and indirectly contributes to pharmaceutical shortages and price constraints; it also represents a conflict of interest between the WHO's promotion of the advocacy targets and its provision of credible demand forecasting data for suppliers. The international community ultimately fell far short of the "3 by 5" target partly because of this disconnect between the campaign goals and the market realities, with the side effect of damaging prospects for future advocacy efforts.
With 1.3 million people now receiving treatment up from just 400,000 two years ago, the "3 by 5" initiative should not be regarded as a complete failure. It does, however, highlight some of the problems stemming from the use of 'outcome' targets as the centerpiece of resource mobilization campaigns, and points to some lessons about what to do differently in the future (although it is not yet clear if WHO itself has learned them). Going forward, the international community should take several steps if it is truly serious about increasing access to ARVs and other pharmaceutical products:
- Improve 'needs' estimates related to the disease burden and affected population, both by carefully selecting proxies and improving the 'measurability' of those indicators through better data collection at the country level. This area has already received increased attention with the recent establishment of the Health Metrics Network, and is likely to receive even more in light of the UNAIDS overestimates.
- Improve resource tracking of financial flows for different health priorities to inform both resource allocations and advocacy efforts, and increase the predictability of that funding where possible.
- Develop a framework to forecast global demand for health products based on information-sharing, accountability and improved methodologies, allowing suppliers to make informed investment and manufacturing decisions and to share the risk of those uncertainties with the purchasers.
The upshot of these policy actions would be greater efficiency in the supply chain, less risk and uncertainty, and ultimately lower prices. In combination with reliable estimates of donor support, this would enable the development of realistic and achievable treatment targets. Although these numbers may not be quite as 'sexy' for campaigning, they are far less likely to fail.
The WHO recognizes some of these pitfalls in its retrospective analysis of the "3 by 5" strategy, while still endorsing the use of future targets:
National targets have been shown to play a valuable role in mobilizing action and increasing accountability among stakeholders, including international technical agencies, donors and governments. Nevertheless, it is clear that treating half of those in need by the end of 2005 was not realistic for all countries, particularly those with very weak health infrastructure and a very high burden of disease. Future country level targets will need to be sufficiently ambitious to mobilize action, will need to be country-driven and should take into account factors other than burden of disease, such as local capacity. Targets for treatment need to be complemented by achievable targets for the other elements of a comprehensive response to HIV/AIDS, including prevention and impact mitigation.
Others don't seem to have taken even those lessons to heart. In his response to the report, Paul Zeitz, director of the Global AIDS Alliance, said:
Now the world needs to focus on a clear, numerical goal once again, which is clearly linked to people's lives. This goal should be 10 million people on treatment by 2010, or "10 by 10."
My point is not that outcome targets are always or necessarily bad, but rather that there are significant downsides which must be weighed against the potential benefits of additional resources in each case. Personally, I think that the Economist said it best: "give 'em a number or a date, but not both."