PEPFAR Secures Cost Savings and Low Prices on Lifesaving Medicines for Developing Countries

Washington, DC – In his submitted remarks to the House Committee on Foreign Affairs, Ambassador Mark Dybul, U.S. Global AIDS Coordinator, announced that President Bush’s Emergency Plan for AIDS Relief (PEPFAR) through its Supply Chain Management System (SCMS) project saved more than $30 million, or approximately 70 percent, between January and March 2007 by buying generics, comparing the SCMS purchase price to Accelerated Access Initiative (AAI) Unit Pricing.¹ Lowering the cost of antiretroviral medicines (ARVs) enables programs to extend life-saving treatment to more men, women and children.

“SCMS has achieved savings by purchasing generic medicines whenever possible, pooling procurement, such as consolidating multiple orders to buy in larger volumes, and establishing long-term, indefinite quantity contracts with manufacturers, thereby leveraging lower prices through bulk purchases,” noted Dybul.

The project secured better purchase prices on 72 percent of first-line ARVs and 40 percent of second-line ARVs compared with other selected benchmark pricing sources and buyers.² SCMS achieved exceptionally low prices on a number of ARVs with many of its prices as low as or lower than those obtained by any other buyer. (See Appendix for sample prices.) SCMS continues to improve its performance compared to its first year of operation in 2006, paying the same or less on all but one first-line ARV it purchased from January to March 2007.³

SCMS increased its purchasing of generic versus branded ARVs from 72 percent from April to September 2006 to 88 percent (by volume) from January to March 2007. The purchase of Didanosine 200 mg and Efavirenz 200mg, two generic drugs recently approved by the U.S. Department of Health and Human Services/Food and Drug Administration (HHS/FDA), resulted in cost savings of more than $46,000 (53 percent) and $116,000 (52 percent) respectively, compared with the AAI Unit Price.

SCMS signed indefinite quantity contracts with two producers of the same generic ARVs, bringing down prices through competition between the two and ensuring a reliable supply by having more than one supplier. During contract negotiations, the price of the drug reduced by seven percent with one supplier and by 23 percent with the other.

In order to leverage even greater price reductions, SCMS recommends countries and programs: increase long-term forecasting and supply planning of ARVs and other HIV/AIDS-related medicines and supplies; coordinate procurement activities of key stakeholders, including ministries of health, international partners and nongovernmental organizations; and increase transparency in reporting of transactions and prices paid to ensure global access to information on ARV prices.

The President’s Emergency Plan for AIDS Relief is the largest commitment ever by any nation for an international health initiative dedicated to a single disease – a five year, $15 billion, comprehensive approach to combating HIV/AIDS around the world. To access Ambassador Dybul’s testimony before the House Committee on Foreign Affairs, please visit http://www.pepfar.gov/press/83436.htm. For more information about PEPFAR, please visit www.PEPFAR.gov.

The Supply Chain Management System was established to collaborate with in-country and global partners to ensure a reliable, cost-effective and secure supply of high quality medicines and health products for HIV/AIDS prevention, care and treatment. SCMS is funded as part of the President’s Emergency Plan for AIDS Relief. For more information about SCMS, visit www.scms.pfscm.org.

Appendix: SCMS ARV Prices*

ARV	Pack Size	SCMS Average Pack Price $
Abacavir (as sulphate) 300mg	60TAB	35.06
Efavirenz 600mg	30TAB	15.15
Lamivudine 10mg/ml	240ML	2.17
Lamivudine 150mg	60TAB	3.17
Lamivudine/Stavudine/Nevirapine 150mg/30mg/200mg	60TAB	7.50
Lamivudine/Zidovudine 150mg/300mg	60TAB	9.96
Lopinavir/Ritonavir 200mg/50mg [Aluvia]	120TAB	41.10
Nelfinavir (as mesilate) 250mg [Viracept]	270TAB	78.30
Nevirapine 200mg	60TAB	3.50

(*) Prices are calculated using the SCMS average price per unit and the quantity contained in a pack. Reported prices do not include freight and insurance costs.