Global ACT Subsidy

Role of RBM Partnership

Dr Awa Marie Coll-SeckExecutive Director, RBM Partnership

APPMG London July 2007

The Roll Back Malaria Partnership

Endemic countriesDonor countries

WHO

UNICEF

World Bank

NGOs

Private Sector

Foundations

Global Fund for AIDS, TB & and Malaria

Research & Academia

UNDP

Brought together around a shared vision – country level scale up resulting in 50% burden reduction by 2010

3

Patients suffering from fever seek medicine from both the public and private sectors

Public Health Clinic Drug shop

Licensed pharmacy

Public facilities are not always accessible

30-40% access

Public facilities are not always accessible

30-40% access

Formal private outlets are more widely accessible

40-50% access

Formal private outlets are more widely accessible

40-50% access

A range of informal outlets are nearly always available

80-95% access

A range of informal outlets are nearly always available

80-95% access

Licensed pharmacy

“In coastal Kenya, 87% of rural households live within 1km of a shop, but only 32% within 2 km of a government dispensary or private clinic”

“shops and vendors selling drugs are often a much more convenient source of drugs than public clinics” C. Goodman (2004) Drug seller

4

Note: Estimates of actual malaria treatments (vs. fever) are between 25%(BCG) and 40%(WHO). Other category includes MQ, AQ, etc.. P. Vivax treatment included (90M CQ treatments). ACT numbers updated after manufacturer interviews from 82M (WHO) to 90M public sector, and from 8M to 10M in private sector. Source: Biosynthetic Artemisinin Roll-Out Strategy, BCG/Institute for One World Health, Dalberg

The situation today- malaria treatments

CQ

SP

MonoACTs

Other

CQ

SP

ACTs

Private Public

406 140

Total = 546

0

20

40

60

80

100%

2006 Antimalarial Treatment volumes (M)

5

ACT prices are too high for most in the private sector – cheaper alternatives are ineffective

ACT Mono-Artemisinin SP (Generic) CQ (Generic)

8.0

6.5

0.5 0.30.0

2.0

4.0

6.0

8.0

10.0

Average Prices (USD)

Range(USD) 6-10 5-8 0.4-0.7 0.2-0.4

Note: Ranges indicate variance across countries and products excluding outliers; N (observations): (ACT, 222); (AMT, 227) ; (CQ, 37) ; (SP, 118). Source: Dalberg field research (Kenya, Uganda, BF, Cameroon), Observations by World Bank and Research International (Nigeria). Smaller pricing observations were also performed in Ghana, Rwanda, Burundi, Niger and Zambia), but due to low n not included. SP and CQ data complemented with HAI and IOM observations

OBJECTIVE of the Global ACT Subsidy: Increase overall uptake of ACTs

Promote the use of ACTs and drive mono-therapies and ineffective drugs from the market by:

• reducing end-user prices to an affordable level through a properly supported global subsidy of ex-manufacturer prices (CIF basis) - in line with IOM recommendation

• introducing supporting interventions including those for proper use of ACTs

7

Design of a Global ACT Subsidy

Global ACT Subsidy unit

Medicines

Money

Information

Multiple ACT Manufacturers

Public Channel Buyers

Private/ NGO

Channel Buyers

Retailers/Providers

(USD ~0.2 for majority of patients)

Co-payment

In-country supporting interventions

National distributors

(USD ~0.1)

Design principles

Consensus reached on 6 broad principles

1. Measurement of success2. Pricing & availability3. Management 4. Eligibility – products, supplier, buyers5. Importance of in-country supporting activities to ensure

success of subsidy6. Monitoring & evaluation

Note: These are broad guidelines for moving forward. The translation of these principles to operational considerations will be defined in the detailed technical plan

9

A Global ACT Subsidy will :

• Lower factory-gate price quickly to encourage uptake of ACTs

• Enable introduction into private sector market

• Delay resistance by undercutting the price of artemisinin monotherapies

• Undermine counterfeit market

• Improve predictability and sustainability for countries and for manufacturers

Public health clinic Pharmacy

More affordable prices would triple the uptake of ACTs

Other

CQ

SP

ACTs

Other

CQ

SP

Mono

ACTs

CQ

SP

ACTs

Treatmentdoses (2004)

Treatmentdoses (current)

Treatment doses(post-subsidy)

546 546 546

0

20

40

60

80

100%

Treatment coverage (doses)

• Available willingness-to-pay, demand curve and affordability studies have been used for penetration estimates

• Overall, a penetration of ~55% in the private sector and ~90% in the public sector is estimated

What has been the role of RBM Partnership ?

Consensus building DesignFund raising Launch preparation

Build consensus on concept

IOM rationale for ACT IOM rationale for ACT subsidy (2004)subsidy (2004)

AmsterdamAmsterdamPartnershipPartnership

Meeting Meeting

RBM Board endorses RBM Board endorses Global ACT Subsidy Task Global ACT Subsidy Task

Force Force

Consult Consult Countries Countries & Donors& Donors

Consensus Consensus on design on design

RBM Working RBM Working Group submits Group submits LOI to Gates for LOI to Gates for

feasibilityfeasibility

Identify Identify suitable suitable hosts for hosts for Subsidy Subsidy

Technical Technical Proposal Proposal July 07July 07

Thank you !

BACK-UP

The success of the global subsidy will be measured to the extent that it contributes to RBM Partnership’s Strategic Targets for 2015, through:

•Lowering the consumer price towards the current chloroquine and SP levels (USD 0.20 / treatment)

•Increasing access to effective treatment in all market sectors (public and private)

•Driving mono-therapies out of the market focusing in particular on the private sector

•Ensuring that the effective lifespan of ACTs is maximized through responsible introduction and use

Principle: Measurement of success

The subsidized ACTs would be available:

•To the buyers of the private, public and NGO sectors

•At a CIF (landed) cost that makes them competitive to chloroquine and SP, i.e. less than USD ~0.10

•To malaria-endemic countries, as reasonably possible in view of global production capacity

Principle: Pricing & Availability

The partners do not want to see another costly bureaucracy built up to manage the subsidy. The ACT subsidizing process would be managed by a small Subsidy Secretariat, hosted by an existing organization or organizations, that:

•Runs the product and supplier selection mechanisms

•Informs and registers the buyer accreditation mechanisms

•Manages the payment of the subsidy to the suppliers in line with the principles of the subsidy and in a timely fashion

Principle: Management

Product, supplier and buyer eligibility would be guided by clear quality and price standards:

•Only ACTs recommended in WHO treatment guidelines – as well as new WHO-approved non-ACT combination classes – will be eligible

•Only fixed-dose combination products will eventually be eligible. However, for the first 2 years of the subsidy, co-blistered products will also be eligible

•Products meeting internationally recognized product quality standards

•The price setting mechanism of the CIF price will be as open and competitive as possible in each submarket and in a way that encourages price reduction, pre-qualification and innovation efforts

•Buyer eligibility will be guided by transparent country-led accreditation mechanisms

•Order eligibility will be defined by a clear set of rules established in collaboration with the countries

Principle: Eligibility – products, suppliers, buyers

Principle: Importance of in-country activities to ensure success of subsidy

Core in-country activities linked to subsidy

• Regulatory preparedness (drug status, retailer status)

• Alignment of national malaria programs

• Public-focused media campaigns to promote ACTs

• Mechanism to control markups in local supply chain

• Subsidy-specific M&E (incl price) and pharmaco-vigilance

• Provider training re prescribing and dispensing ACTs

Additional activities linked to subsidy

• Promotion of supply chain discipline e.g. : Sell-through systems; Incentive schemes for wholesalers; Social marketing programs; Community-based programs

• Promotion of more appropriate use of ACTs; e.g. proved diagnostic tools

External to ACT subsidy

• Malaria interventions distinct from subsidy scope• General malaria programme M&E

The roles and responsibilities of endemic country governments, supported by partners, in the subsidy process and use of subsidized ACTs are significant and include:

For a responsible introduction the subsidy roll-out will be informed and monitored by concomitant subsidy-specific and subsidy co-paid operational research and M&E of:

•Retailer prices

•Access

•Drug quality

•Drug resistance

•Market dynamics

In at least 6 sentinel countries in Africa (4), Asia (1) and Latin America (1)

Principle: Monitoring & Evaluation

Risks identified

• Failure to sustain competition & price reductions• Failure to maintain innovation• Insufficient scale-up of manufacturer capacity• Subsidy not passed on to patient• Slow consumer uptake• Fraud or over-ordering• Failure to implement supporting interventions• Insufficient funding• Scope creep

•Hosting arrangements – identify suitable organization willing to host the subsidy and able to deliver on management performance measures to be agreed as part of the detailed proposal

•Governance arrangements – define form and structure of the subsidy oversight arrangements

•Funding – identify the amount of funds necessary for the subsidy; establish a sustainable and reliable long-term source; define an exit strategy

Outstanding design components