# Presentation: 436464

## The Cost of Treating Chronically Ill AIDS Patients Prepared for the Presidential Advisory Council on HIV/AIDS 

- by
- Jeremiah Norris, Senior Fellow
- Center for Science in Public Policy
- Hudson Institute
- November 9, 2004
- Jnorris289@aol.com

## Transaction Costs

| Total budget | $7.0  billion |
| --- | --- |
| Less 10% for conveyance, insurance, freight                                 |   $.700 billion |
| Sub-total                                                                                     | $6.3  billion |
| Less 24% for import duties/taxes/customs                                 | $1.5 billion |
| Sub-total                                                                                      | $4.8  billion |
| Less 2% for procurement agency fees, i country transport, storage, distribution, wastage/pilferage, etc.              |   $.960 billion |
| Grand total for AIDS drugs to patients                                     | $3.840 billion                           |

## lst Line ARV Treatment Costs for 3 Million in 2005 (WHO 3x5 plan)

| Number of HIV/AIDS victims (est.)                                                              | 49 million |
| --- | --- |
| Number under lst line treatment                                                                      |   3 million |
| ARV drug price per person per year                                                               | $389 |
| Add on transport costs of 10%                                                                         |   $39 |
| Add on import duties and taxes, transfer fees (est. 15%)                                  |   $58 |
| Add on storage & distribution fees (est. 10%)                                                  |   $39 |
| Product price                                                                                                     | $525 |
| ARV 1st line price  ($525 pp/py x 3 million)                                           | $1.6  billion                              |
| Medical infrastructure costs at a factor of 3 over price                                    | $4.8  billion |

- lst Line ARV Treatment Costs for 3 Million in 2005 (WHO 3x5 plan)

## lst Line ARV Treatment Costs for 8 Million in 2010 

| Number of HIV/AIDS victims (est.)                                                                | 100 million                                                              |
| --- | --- |
| Number under lst line treatment                                                                          |     8 million |
| ARV drug price per person per year (10% inflation)                                        | $428 |
| Add on transport costs of 10%                                                                           |   $43 |
| Add on import duties and taxes, transfer fees (est. 15%)                                    |   $64 |
| Add on storage & distribution fees (est. 10%)                                                    |   $43 |
| Product price                                                                                                      | $578 |
| ARV 1st line price ($578 pp/py x 8 million)                                                                  |   $4.6 billion |
|  Medical infrastructure costs at a factor of 3 over price                                     | $13.8 billion |

## Combined 1st Line and 2nd Line Treatment Costs 2004-2010 

| Number of HIV/AIDS victims (est.)                                                                 | 100 million |
| --- | --- |
| Number under lst line treatment                                                                          |     8 million |
| Number of drug-resistant patients estimated at 10% of annual HIV/AIDS treatment population since 2004                             |     3.5 million                          |
| Price pp/py for 2nd line therapies @ 10 x price of lst line at $578                          | $5,780                                                                                 |
| ARV 2nd line drug prices pp/py (3.5 million persons x $5,780)                                                   | $20.2 billion |
| Medical infrastructure at a factor of 4 
(increased due to higher level of medical staff and services required by drug-resistant patients)  | $80.8 billion |
| Total cost (1st treatment cost at $13.8 billion + 2nd line treatment cost at $80.8 billion)                          | $94.6 billion |

## WHO Biannual Budget (in billions) 

|  | 2002-2003 | 2004-2005 | Percent Change (2002-2003) |
| --- | --- | --- | --- |
| Regular Budget |   $.857 |   $.901 |   5.35% |
| Other Sources | $1.381 | $1.898 | 37.48% |
| Total | $2.237 | $2.799 |  |
| Percent Regular vs. Other           | 38%                                      | 32% |  |

## Biannual Budget Office of Essential Drugs and Medicines Policy 2004-2005(in millions)

| Regular Budget | $19.4                     | $19.7 |
| --- | --- | --- |
| Other Sources | $31.0                      | $34.0 |

## “These funds are usually earmarked , the choice of activities is determined by the donor and not by the community of Member States comprising the Organization, management of these funds generally escapes the jurisdiction of the Executive Board and Health Assembly.” 

- Hiroshi Nakajima, Director General, WHO (1988-1998)

- - Hiroshi Nakajima, Director General, WHO (1988-1998)