Real obstacles to drug access in developing world are poverty, government-imposed taxes — not “high” brand prices
May 11, 2004
by Hudson Institute
WASHINGTON - Brand drugs are less expensive than generics in the developing world the majority of the time - in some cases by almost as much as 80 percent for single dose and fixed-dose combination (FDC) drugs - according to a comparative examination of AIDS drug prices released today by Hudson Institute.
The authors of "Myths and Realities on Prices of AIDS Drugs" (available at www.hudson.org), Dr. Carol Adelman and Mr. Jeremiah Norris, surveyed the data listed in the latest price guide published by relief agency Medicines Sans Frontieres (MSF).
When looking at the 13 most commonly used single-dose antiretroviral drugs (ARVs), brand versions are cheaper in 8 cases, the study finds. The total average price (per person, per year), including transportation, is $494 for copy drugs and $404 for patented drugs, a difference of 18 percent. Of the three fixed-dose combination drugs made by both innovator and non-innovator companies, all branded versions are less expensive than copy drugs. The total average price, including transportation, is $1,296 for copy drugs and $659 for patented drugs.
The study also finds that FDCs are not available at the $140 price as claimed by the Clinton Foundation and, in fact, are more than double that price. In Thailand and Mozambique, the cost is almost 200 percent higher.
"The purpose of this paper is to separate myths from realities in the global debate over ARV pricing," write the authors. "The majority of patented ARV drugs - either administered separately as single doses in a 'cocktail' or combined into one tablet as a fixed dose combination (FDC) - are less expensive than copy drugs." Only 4 of 13 patented single-dose ARVs were found to be more expensive, by a range of 6 to 10 percent. The exception is Nevirapine, which is triple the cost of the copy drug.
The study surveyed prices that are available in countries eligible for discount pricing, 85 of the world's poorest countries, as listed in the MSF guide.
There are "highly-questionable" and considerable add-on costs to the price of all drugs, according to the study. "There are import taxes, tariffs, customs, and value added taxes (VAT) that vary from country to country, and are applied to both patented and copy drugs. For instance in Malawi, there is a 15 percent duty plus 20 percent surtax on AIDS drugs. In South Africa, pharmacists apply a VAT of 15 percent before releasing a prescription to a customer."
Adelman, Norris and Weicher write, "When considering the dire health emergency HIV/AIDS poses in the developing world, it is highly questionable why developing countries are imposing government taxes on these life-saving medicines… By focusing on just the price of drugs, media and health activists perpetuate the misunderstanding that this is the largest obstacle to effectively treating AIDS patients."
The authors conclude that "The singular focus on ARV drug prices, as seen in the U.S. national media and NGOs, shifts the attention from the real obstacles in treating AIDS globally - high import taxes as well as lack of doctors and nurses, clinics, supplies, storage, distribution systems, and honest government in so many of the countries most afflicted by this disease."
Dr. Adelman was former assistant administrator at the U.S. Agency for International Development (USAID) and Mr. Norris was former director of international affairs at the non-governmental organization, Project Hope.
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