Global HIV/AIDS Epidemic: Selection of Antiretroviral Medications Provided Under U.S. Emergency Plan Is Limited
Published: 2005-01-11T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In developing countries, only about 7 percent of people with HIV/AIDS receive treatment. In 2003, the Congress authorized the President's Emergency Plan for AIDS Relief, a 5-year, $15 billion initiative under the Office of the U.S. Global AIDS Coordinator. The Emergency Plan focuses on 15 developing countries, with a goal of supporting treatment for 2 million people. Treatment regimens use multiple antiretroviral medications (ARV), which can be original or generic. Fixed-dose combinations (FDC) combine two or three ARVs into one pill. Questions have been raised about whether the plan is providing ARVs preferred by the focus countries at reasonable prices. GAO compared the selection of ARVs provided under the plan with that provided under other major treatment initiatives, compared the prices of those selections, and determined what the Coordinator's Office is doing to expand the plan's selection of quality-assured lower-priced ARVs.
section_title: What GAO Found
paragraphs: The Emergency Plan provides a smaller selection of recommended first-line ARVs than other major HIV/AIDS treatment initiatives in developing countries. The plan's selection includes six original ARV products--the only ARVs that have met the plan's quality assurance requirement--and does not include some FDCs that are preferred by most of the focus countries because they can simplify treatment. In contrast, the other initiatives provide a selection that in addition to the six original ARVs includes generic ARVs and more of the preferred FDCs. The original ARVs provided under the plan are generally higher in price than the generic ARVs provided under the other initiatives. The differences in the prices, quoted to GAO during June and July 2004 by 13 manufacturers, ranged from $11 less to $328 more per person per year for original ARVs than for the lowest-priced corresponding generic ARVs provided under the other initiatives. At these prices, three of the four first-line regimens recommended by the World Health Organization could be built for less--from $40 to $368 less depending on the regimen--with the generic ARVs provided under the other initiatives than with the original ARVs provided under the plan. Such differences in price per person per year could translate into hundreds of millions of dollars of additional expense when considered on the scale of the plan's goal of treating 2 million people by the end of 2008. The Coordinator's Office has worked to expand the selection of quality-assured ARVs--including FDCs and lower-priced generics--that it provides to the focus countries under the plan. The selection of ARVs available under the plan is primarily limited by its quality assurance requirement. The Coordinator's Office is working with manufacturers to take the steps necessary for more ARVs to meet this requirement. However, if generic ARVs meet the plan's quality assurance requirement, a statutory prohibition on the purchase of any medication manufactured outside the United States if the manufacture of that medication in the United States would be covered by a valid U.S. patent could become a barrier to expansion because all ARVs are currently under U.S. patents. Unless the patent holders for ARVs that have met the plan's quality requirement give permission or the Coordinator's Office exercises its authority to purchase these products notwithstanding the patent requirement, the selection of ARVs provided under the Emergency Plan may not expand rapidly enough to address the AIDS emergency.

section_title: Letter
paragraphs: The Joint United Nations Programme on HIV/AIDS (UNAIDS) estimates  that 3 million people worldwide died from HIV/AIDS in 2003, and an  estimated 38 million or more people are currently living with HIV/AIDS.  Although there is no cure for the disease, there are treatments that can  slow its progression. Yet in developing countries only about 7 percent of  people living with HIV/AIDS receive treatment. Since the mid-1980s the  United States has supported HIV/AIDS initiatives in developing countries  directly and through its contributions to multinational organizations such  as agencies within the United Nations (UN) system—including the World  Bank and UNAIDS—and, more recently, the Global Fund to Fight AIDS,  Tuberculosis, and Malaria (Global Fund). In 2004, the President’s  Emergency Plan for AIDS Relief (Emergency Plan)—a 5-year initiative  under the Office of the U.S. Global AIDS Coordinator (the Coordinator’s  Office) within the Department of State—added over $9 billion of funding  for HIV/AIDS treatment, care, and prevention in certain developing  countries to its ongoing commitments, bringing the total U.S. commitment  to addressing the worldwide HIV/AIDS emergency to $15 billion through  2008.
The goals of the Emergency Plan, which focuses on 15 developing  countries with high rates of HIV/AIDS, are to support treatment to 2  million people living with HIV/AIDS, prevent 7 million new HIV infections,  and support care to 10 million people infected or affected by HIV/AIDS,  including orphans, by the end of fiscal year 2008. The plan allocates more  than half its budget to treatment, approximately $4 billion of which is  specifically for the purchase and distribution of antiretroviral medications  (ARV)—the standard treatment for HIV/AIDS—in the focus countries. An  HIV/AIDS treatment regimen includes multiple ARVs. ARVs are marketed  as either original versions—all of which are currently under U.S. patents— or as copies of the originals, that is, generic versions. In addition, some  manufacturers are marketing products that combine two or three ARVs  into one pill—known as a fixed-dose combination (FDC).
The World Health Organization (WHO) recommends five specific ARVs  that are used to build four regimens as the first line for treatment  programs in countries in which health care resources are limited, such as  the focus countries. WHO recommends one of the four regimens as the  first choice for rapid implementation of large-scale treatment programs in  these countries. Most focus countries have indicated a preference for  FDCs, which can simplify treatment and facilitate adherence to the  recommended treatment regimens, and for lower-priced generics in their  national treatment strategies.
While the Coordinator’s Office has specified multiple objectives to achieve  the Emergency Plan’s goals, two are most relevant to the purchase of ARV  products under the plan: first, coordination with the national treatment  strategies of the focus countries, and, second, provision of ARV products  of assured quality at the lowest possible price. Officials from organizations  involved in treating HIV/AIDS in developing countries, such as Doctors  Without Borders and Catholic Relief Services Consortium, have criticized  the plan for not including the FDCs preferred by the focus countries in the  selection of ARV products it provides. In addition, concerns have been  raised about the plan’s ability to provide ARV products at reasonable  prices. You asked us to examine the provision of ARVs under the  Emergency Plan, as compared with the provision of ARVs under the  initiatives of major multinational organizations.
In this report, we determine (1) how the selection of ARV products  provided under the Emergency Plan compares with the selection provided  under the initiatives of the World Bank, the United Nations Children’s  Fund (UNICEF), and the Global Fund; (2) how the prices of the ARV  products provided under the Emergency Plan compare with the prices of  the ARV products provided under the other initiatives; and (3) what the  Coordinator’s Office is doing to expand the selection of quality-assured  ARV products at the lowest possible price under the Emergency Plan.
To compare the selection of ARV products provided under the Emergency  Plan to that provided under the other initiatives, we reviewed the  requirements that apply to the purchase of ARV products under the  Emergency Plan, as well as the requirements that apply to the purchase of  ARV products under the HIV/AIDS treatment initiatives funded by three  multinational organizations—the World Bank, UNICEF, and the Global  Fund. We interviewed officials from the Coordinator’s Office and the U.S.  agencies primarily responsible for implementing the Emergency Plan, such  as the U.S. Agency for International Development (USAID), regarding how  they oversee the purchase of ARV products consistent with applicable  requirements. We also interviewed officials from the multinational  organizations regarding their requirements and the ARV products they  provide through their initiatives. In addition, we reviewed documentation  from U.S. agencies, nongovernmental organizations (NGO) that are  participating in the Emergency Plan, and the multinational organizations  showing the ARV products that have been purchased under their  initiatives. We focused specifically on the ARVs that are recommended by  WHO for first-line treatment of HIV/AIDS in countries where health care  resources are limited. We identified the quality assurance process applied  to each product, but we did not evaluate the different quality assurance  processes or independently determine the comparative quality of the  products.
To compare the prices of different ARV products provided under the  Emergency Plan and the other initiatives, we obtained price information  from selected manufacturers of ARV products that are generally available  to the focus countries. We report prices for the focus countries quoted to  us during June and July 2004 by 13 manufacturers. We asked ARV  manufacturers to quote prices according to a standard set of terms.  Because the price information we requested is proprietary to each  manufacturer, we could not directly assess the reliability of the price data  given to us. However, we checked the price data against several published  sources and determined that they are sufficiently reliable.
To determine what the Coordinator’s Office is doing to provide an  expanded selection of ARV products at the lowest prices possible, we  interviewed officials from the Coordinator’s Office regarding their efforts  to address potential barriers to providing additional ARV products under  the Emergency Plan. Because the Coordinator’s Office is working with the  Department of Health and Human Services’ (HHS) Food and Drug  Administration (FDA) to support the ability of additional ARV  manufacturers to meet the Emergency Plan’s quality assurance  requirement, we also interviewed officials from FDA regarding these  efforts. Aspects of implementing treatment programs other than  purchasing ARVs, such as human resources and supply chain  management, and treatments other than ARVs, such as medications to  treat opportunistic infections, are outside the scope of this report. We  conducted our work from January 2004 through January 2005 in  accordance with generally accepted government auditing standards. For  more details on our scope and methodology, see appendix I.
subsections: section_title: Background
paragraphs: Although no cure exists for HIV/AIDS, the use of multiple ARVs in  combination has been shown to suppress the virus and slow the  progression of the disease. Twenty distinct ARV medications can be used  to treat people living with HIV/AIDS. The standard treatment is a regimen  that combines three or more ARVs. People receiving ARV treatment can  develop strains of HIV that are resistant to some or all of their ARVs, and  as a result their treatment regimens become ineffective and they must  switch to a different regimen. The risk of developing resistance decreases  when patients are able to adhere to their recommended treatment by  taking the prescribed ARVs, the right number of times each day, and  without missing doses.
subsections: section_title: Recommended ARV Treatment Regimens
paragraphs: WHO has recommended certain regimens for settings in which resources  are limited. For people receiving ARVs for the first time in such settings,  WHO recommends one of four regimens, known as first-line regimens.  These regimens are built from combinations of the following five first-line  ARVs: stavudine (d4T), zidovudine (ZDV), lamivudine (3TC), nevirapine  (NVP), and efavirenz (EFV). (See fig. 1.) Of the four first-line regimens,  WHO recommends d4T + 3TC + NVP as the first-choice regimen for rapid  implementation of large-scale treatment programs in resource-limited  settings because, for example, it is expected that most people will be able  to tolerate it without developing side effects that would require switching  to another regimen. Each of the focus countries highlighted in the  Emergency Plan has selected one or more of these first-line regimens for  its national treatment strategy, and most have selected d4T + 3TC + NVP  as their first-choice regimen.
For people who have developed strains of HIV that are resistant to their  initial treatment regimen, WHO recommends one of four second-line  regimens. The second-line regimens use a different set of five ARVs.  Second-line regimens can have disadvantages, which may be magnified in  resource-limited settings. The disadvantages include the need to take more  pills, the potential for additional side effects, the need for refrigeration  during transportation and storage, and prices that are generally higher  than those for first-line regimens. WHO emphasizes that promoting better  adherence to a first-line regimen, thereby reducing the occurrence of  resistance and delaying the need to shift to a second-line regimen, is  particularly important in resource-limited settings because of these  disadvantages.
The Coordinator’s Office, FDA, and the Institute of Medicine, as well as  the Global Fund, the World Bank, UNAIDS, and WHO, have endorsed the  use of FDCs, which combine two or more ARVs into one pill, as an  important strategy to promote adherence to ARV regimens. These  organizations have determined that the benefits of FDCs include  promoting adherence, by reducing the number of pills a person has to take  at one time, reducing the time and costs associated with procurement and  distribution of ARVs, and simplifying the selection and prescribing of  ARVs.
section_title: Funding for HIV/AIDS Treatment in the Focus Countries
paragraphs: Both national initiatives—such as the Emergency Plan—and multinational  initiatives provide funding for HIV/AIDS treatment in the focus countries.  In general, these initiatives provide their funding through grants,  cooperative agreements, and contracts with governments and NGOs. The  NGOs provide technical assistance and support the implementation of  treatment programs by, for example, purchasing medications. In  recognition of the fact that several initiatives may be active in any one  country, the U.S. government and the multinational initiatives have agreed  to promote coordination across their initiatives in order to use resources  efficiently and effectively and to ensure rapid expansion of treatment  programs.
The Emergency Plan is the largest national initiative to combat the global  HIV/AIDS epidemic. Through the Emergency Plan, the U.S. government  both provides direct technical assistance through field offices and funds  NGOs that support HIV/AIDS treatment programs in the focus countries.  Under the direction of the Coordinator’s Office, USAID and HHS’s Centers  for Disease Control and Prevention have primary responsibility for  implementing the Emergency Plan, with USAID responsible for overseeing  the purchase of medications.
Multinational organizations, including the Global Fund and agencies  within the UN system, also provide funding to HIV/AIDS programs in the  focus countries. The Global Fund, which was initiated in 2002, expects  disbursements to total $1 billion by the end of 2004, over half of which are  intended to fund HIV/AIDS programs. Within the UN system, the World  Bank represents the largest source of funding for HIV/AIDS activities in  developing countries. Since 1986, the World Bank reports that it has  invested $2 billion in HIV/AIDS prevention, care, and treatment services in  developing countries.
section_title: Requirements Related to the Purchase of ARV Products
paragraphs: All HIV/AIDS treatment programs must comply with the laws—including  patent and drug registration laws—that apply in the country for which  they are purchasing ARV products, as well as the requirements that pertain  to the source of funding they are using. The purchase of ARVs under the  Emergency Plan is subject to USAID quality assurance requirements and a  statutory patent requirement. To assure quality, USAID requires that ARV  products purchased under the plan have either FDA approval or the  approval of another acceptable regulatory authority. Because the  Emergency Plan is largely funded under the Foreign Assistance Act of  1961, the purchase of ARVs with these funds is subject to a provision of  the act that prohibits the purchase of any medication manufactured  outside the United States if the manufacture of that medication in the  United States would be covered by a valid U.S. patent, unless the patent  owner gives its permission. The purchase of ARV products with funds  from the other initiatives must meet the quality assurance requirements  that the World Bank, UNICEF, and the Global Fund have in common.  Specifically, these organizations require that all ARV products either be  approved by an acceptable regulatory authority such as FDA or be  prequalified through WHO’s Prequalification Project. WHO’s  Prequalification Project includes a process for assessing the quality of  products that have not been subject to review by an acceptable regulatory  authority. Prequalification relies on review of product information and  manufacturing site inspections to determine if the product meets WHO  standards.
section_title: Emergency Plan Provides Smaller Selection of ARV Products Than Other Initiatives
paragraphs: The Emergency Plan provides a smaller selection of ARV products than  the other initiatives. Because the plan provides only ARV products that  have been approved by FDA or another acceptable regulatory authority, it  provides six ARV products, all of which are original versions. In addition  to ARV products that have met the Emergency Plan’s quality assurance  requirement, other initiatives also provide generic ARVs that have been  prequalified by WHO. While the plan does not provide the FDCs preferred  by the focus countries, these products are available through the other  initiatives.
subsections: section_title: Emergency Plan Provides One Version of Each First- Line ARV and a Double- ARV FDC
paragraphs: As of December 2004, the Emergency Plan provides one version—the  original version—of each of the five ARVs necessary to build all of the  first-line regimens. The plan also provides a double-ARV FDC (ZDV + 3TC)  that can be used in half of those regimens, but not the regimen that is  recommended by WHO as the first choice for rapid implementation of  large-scale HIV/AIDS treatment programs in resource-limited settings (d4T  + 3TC + NVP). These six products, flagged with filled diamonds in figure 2,  are the only first-line ARVs that have been approved by FDA or another  acceptable regulatory authority and thus comply with the plan’s quality  assurance requirement. Because no generic ARVs currently meet the plan’s  quality assurance requirement, the Emergency Plan does not provide  generic versions of any of the first-line ARVs or the double-ARV FDC  provided under the plan. In addition, the Emergency Plan does not provide  any version of three other FDC products that are generally available to the  focus countries, including the triple-ARV FDC (d4T + 3TC + NVP) that is  preferred by the majority of the focus countries.
section_title: Other Initiatives Provide Generic as Well as Original ARVs
paragraphs: The other initiatives provide not only the original versions of the first-line  ARVs but also generic versions that meet their quality assurance  requirements. In addition to ARVs that have been approved by FDA or  another acceptable regulatory authority, the other initiatives also accept  those that have been prequalified by WHO. Thus the other initiatives  provide generic versions of most of the first-line single ARVs, as well as a  double-ARV FDC (ZDV + 3TC) and a triple-ARV FDC (d4T + 3TC + NVP),  flagged with unfilled diamonds in figure 2, that are not provided under the  plan. Other generic versions of all ARV products are available to the focus  countries but are not provided under the Emergency Plan or under the  other initiatives. The additional generic ARVs generally available to the  focus countries, shown in figure 2 as vertical lines without diamonds, have  been neither approved by FDA or another acceptable regulatory authority  nor prequalified by WHO.
section_title: Emergency Plan’s Selection of ARV Products Results in Higher Prices for Most First-Line Treatment Regimens
paragraphs: At the prices quoted to us during June and July 2004, most first-line  regimens could be built for a lower price with the generic ARV products  provided under the other initiatives than with the original ARV products  provided under the Emergency Plan. (See table 1.) The difference in price  between the original ARVs provided under the Emergency Plan and the  lowest-priced generic ARVs provided under the other initiatives ranged  from $11 less per person per year for original 3TC to $328 more for  original NVP. (See fig. 2.) At these prices, three of the four first-line  regimens could be built for a lower price with the generic ARV products  provided under the other initiatives than with the original ARV products  provided under the Emergency Plan. The difference in price for these  three regimens when built with the lowest-priced ARVs provided under the  other initiatives and when built with the lowest-priced ARVs provided  under the Emergency Plan ranged from $40 less per person per year for  the regimen ZDV + 3TC + EFV to $368 less for the regimen ZDV + 3TC +  NVP. There was no difference in price for the regimen d4T + 3TC + EFV  because the lowest-priced ARVs provided under the Emergency Plan and  the other initiatives are the same. All of the first-line regimens could be  built for a lower price using the lowest-priced generic ARVs that are  generally available to the focus countries but not provided under either the  Emergency Plan or the other initiatives.
Differences in the price of a regimen per person per year can translate into  millions of dollars of additional expense when considered on the scale of  the Emergency Plan’s goal of treating 2 million people by the end of 2008.  For example, the price for the regimen that WHO recommends as the first  choice for rapid scale-up in settings with limited health care resources  (d4T + 3TC + NVP) is $343 more per person per year under the Emergency  Plan. Thus for every 100,000 patients on this regimen for 5 years, the plan  could pay over $170 million more than the other initiatives for purchase of  these ARVs. The overall impact of these price differences over the life of  the plan and on the treatment goal is difficult to estimate precisely  because, for example, the mix of ARVs and treatment regimens that will be  used as the Emergency Plan expands is unknown and product prices may  change.
section_title: Coordinator’s Office Has Taken Steps to Expand Selection of ARV Products It Provides, but Patent Requirement Is Potential Barrier
paragraphs: The Coordinator’s Office has taken steps to expand the selection of  quality-assured ARV products it provides to the focus countries to include  the preferred FDCs and lower-priced generics. However, the patent  requirement could present a barrier to expanding the selection.
subsections: section_title: Coordinator’s Office Has Made Efforts to Expand the Selection of Quality- Assured ARV Products It Provides
paragraphs: The Coordinator’s Office has worked with FDA to expand the selection of  quality-assured ARV products, particularly the preferred FDCs, that the  Emergency Plan provides to the focus countries. The selection of ARV  products provided is currently limited primarily by the plan’s quality  assurance requirement. The Coordinator’s Office has been encouraging  manufacturers to seek FDA approval for their ARV products, and thereby  satisfy the plan’s quality assurance requirement. FDA officials told us that  the agency has been helping existing and potential manufacturers of ARV  products, particularly FDCs, to prepare applications for submission to  FDA. Several manufacturers told us that they have been working with FDA  to develop applications. One of the manufacturers we spoke with  announced in October 2004 that it had submitted an application, and the  others told us that they intended to do so. FDA officials said that these  applications would have priority for review and that they expect to be able  to act on complete applications within several months of submission. In  addition, the Coordinator’s Office has worked with FDA to clarify that  FDCs are eligible for expedited review and to assemble into a single  guidance document several sets of regulations and guidelines that pertain  to this expedited review. As part of this guidance, FDA has included a list  of combinations of ARVs for which FDA believes there are sufficient  publicly available safety and effectiveness data that an application would  not need to include additional clinical studies.
section_title: Emergency Plan May Not Be Able to Provide Generic ARVs Unless Patent Barrier Is Addressed
paragraphs: The Emergency Plan may not be able to expand the selection of ARV  products it provides to include lower-priced generic ARVs unless the  Coordinator’s Office addresses a potential barrier presented by the  applicable patent requirement in the Foreign Assistance Act of 1961.  Although the selection of ARV products available under the plan is  currently limited primarily by the quality assurance requirement, if generic  ARVs receive FDA approval, the patent requirement could be a barrier to  expansion. Because all five of the first-line ARVs are currently under U.S.  patents, even if a generic ARV were to receive FDA approval, thus  meeting the plan’s quality assurance requirement, the patent requirement  would prevent its purchase unless the patent holder had granted  permission. If such permission is not granted, this requirement could  prevent the purchase of generic ARVs, including generic FDCs, that have  met the plan’s quality assurance requirement.
The Coordinator’s Office has the authority to provide ARV products  notwithstanding the patent requirement. We asked officials from the  Coordinator’s Office whether the Coordinator would use this authority in  order to purchase an FDA-approved generic ARV for which permission  could not be obtained from the patent owner. Officials from the  Coordinator’s Office told us that they could not address hypothetical  situations but that the Coordinator would consider using his authority to  make funds available to purchase these products notwithstanding this  requirement if the ARV in question is critical to the plan’s treatment  responsibilities and no readily available substitute exists. It may not be  possible for most generic ARVs to meet these conditions because generics  are by definition substitutes for existing products. In addition, a  representative of one of the generic manufacturers we spoke with told us  that the company is concerned and is hesitating to apply to FDA because it  has sought, but not yet obtained, assurances from the Coordinator’s Office  that once its products have met the plan’s quality assurance requirement  these products will be eligible for purchase under the Emergency Plan.
section_title: Concluding Observations
paragraphs: During its first year, the Emergency Plan has provided a limited selection  of ARV products that does not fully support the treatment strategies of the  focus countries and is not optimally coordinated with other multinational  initiatives because it does not include the FDCs and lower-priced generics  that the majority of these countries prefer. Better coordination with the  focus countries and with other treatment initiatives could facilitate more  rapid implementation of the Emergency Plan. Moreover, given the  intended scale of the plan, lower prices for ARVs could result in savings of  hundreds of millions of dollars, which could be used to treat additional  patients or to support other aspects of the program. The Coordinator’s  Office has taken steps to expand the selection of ARV products that meet  its quality assurance requirement—with special focus on FDCs—by  working with manufacturers and FDA to increase the number of products  that have FDA approval. If applications proceed as anticipated by ARV  manufacturers and FDA, we expect that FDA-approved generic ARVs will  be available early in 2005. However, unless the patent holders for these  ARVs give permission or the Coordinator’s Office exercises its authority to  purchase these products notwithstanding the patent requirement, the  selection of ARVs provided under the Emergency Plan may not expand  rapidly enough to address the AIDS emergency.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to the Department of State, HHS, and  USAID. Written comments submitted by the Department of State on behalf  of itself, HHS, and USAID are reprinted in appendix III. In its comments,  the Department of State expressed concern about how our report  addressed the issue of ARV quality and urged us to mention prominently in  the report recent changes in the list of products that are prequalified by  WHO. However, we stated in the draft report that concern about quality is  the primary factor limiting the selection of ARVs provided under the  Emergency Plan and the other initiatives. Our draft report recognized that  quality assurance is a critical concern, and provided background  information on the quality assurance requirements of the Emergency Plan  and the other initiatives and specified the quality assurance processes  applied to each ARV product. However, as the draft report stated,  evaluating the quality assurance processes used by each initiative was  beyond the scope of our work. We have updated the draft report to reflect  all changes in the availability of ARV products, including those highlighted  by the Department of State.
The Department of State also characterized figure 3 (see app. II) in the  report as misleading because not all of the generic ARV products are sold  on the market in all 15 focus countries. However, the draft report  explained that the laws of individual countries may not allow for the  purchase of some products. In response to the agency’s concerns, we  clarified this further in notes to figure 3.
In addition, the agency expressed confusion over our use of the term  “generic” and offered the more formal term, “therapeutic equivalents,”  used by FDA. In the draft report, we used the word “generic” broadly to  mean a copy of an original product, regardless of whether FDA or another  national regulatory authority has determined the generic product to be a  therapeutic equivalent to an original product. We have further clarified our  use of the term in the report.
We agree with the agency’s comment that it is important to distinguish  between issues of quality assurance and intellectual property, and these  issues were treated separately in the draft report. In addition, our concern  about the patent requirement being a potential barrier to expanding the  selection of ARV products provided under the Emergency Plan is only with  respect to those generic products that have first met the plan’s quality  assurance requirement.
Lastly, the Department of State highlighted that the patent requirement is a  statutory restriction under the Foreign Assistance Act of 1961, as we noted  throughout the draft report. We revised the draft to further clarify the  source of the patent requirement. The Department also said that the  Coordinator’s Office has decided to exercise its authority with respect to  the patent requirement “as necessary.” However, because the comments  did not clarify when it might be necessary for the Coordinator’s Office to  use its authority to make funds available to purchase products  notwithstanding the patent requirement, it remains unclear if all generic  products that have met the quality assurance requirement will be eligible  for purchase under the Emergency Plan.
In its comments, the agency also provided additional information on the  Emergency Plan’s outreach activities and plans for bulk purchasing of  ARV products. The Department of State, HHS, and USAID individually  submitted technical comments, which we incorporated where appropriate.
As we agreed with your offices, unless you publicly announce the contents  of this report earlier, we plan no further distribution of it until 30 days  from the date of this letter. We will then send copies to the Secretary of  State, the Secretary of Health and Human Services, and the Administrator  of the U.S. Agency for International Development and make copies  available to others who request them. In addition, the report will be  available at no charge on GAO’s Web site at http://www.gao.gov.
If you or your staffs have any questions about this report, please call me at  (202) 512-7119. Another contact and key contributors are listed in  appendix IV.
section_title: Appendix I: Scope and Methodology
paragraphs: This report compares the selection of antiretroviral medication (ARV)  products that are being provided under the President’s Emergency Plan  for AIDS Relief (Emergency Plan) with that provided under other  initiatives that also fund HIV/AIDS treatment programs in the focus  countries, as of December 2004. Our discussion is focused specifically on  the ARVs that are recommended by the World Health Organization (WHO)  for first-line treatment of HIV/AIDS in countries where health care  resources are limited. Our report also provides price information for the  ARV products provided under the Emergency Plan and under the other  initiatives. We report prices quoted, during June and July 2004, by 13  selected manufacturers of ARV products that are generally available to the  focus countries. Lastly, we examine the efforts of the Office of the U.S.  Global AIDS Coordinator (Coordinator’s Office) within the Department of  State to expand the selection of quality-assured ARV products provided at  the lowest possible price to the focus countries. Aspects of implementing  HIV/AIDS treatment programs other than the selection and price of  medications, such as human resources and supply chain management, and  treatments other than ARVs, such as medications to treat opportunistic  infections, are outside the scope of this report. Similarly, the HIV/AIDS  prevention and care objectives of the Emergency Plan are outside the  scope of this report. We conducted our review from January 2004 through  January 2005 in accordance with generally accepted government auditing  standards.
subsections: section_title: Comparing Selection of ARV Products the Emergency Plan Provides to That Provided under Other Initiatives
paragraphs: To compare the selection of ARV products provided under the Emergency  Plan to that provided under the other initiatives, we reviewed the  requirements that apply to the purchase of ARV products under the  Emergency Plan. Specifically, we reviewed relevant laws, regulations, and  guidance from which the plan’s requirements arise. We also reviewed  documentation from the Coordinator’s Office and the U.S. Agency for  International Development (USAID) to determine which products had  been provided under the plan as of December 2004. In addition, we  interviewed officials from the Coordinator’s Office, USAID, and the  Department of Health and Human Services’ (HHS) Office of Global Health  Affairs, Centers for Disease Control and Prevention (CDC), and Food and  Drug Administration (FDA) about experience within federal programs  with purchasing ARVs for developing countries. Lastly, we interviewed  officials at the nongovernmental organizations (NGO) that have received  funding under the Emergency Plan to purchase ARVs in the focus  countries. These NGOs include Catholic Relief Services Consortium,  Columbia University Mailman School of Public Health, Elizabeth Glaser  Pediatric AIDS Foundation, and Harvard University School of Public  Health.
To determine the selection of ARV products provided under the other  initiatives, we reviewed the requirements that apply to the purchase of  ARV products under the HIV/AIDS treatment initiatives funded by the  World Bank, the United Nations Children’s Fund (UNICEF), and the  Global Fund to Fight AIDS, Tuberculosis, and Malaria (Global Fund).  Specifically, we reviewed guidance documents from the Global Fund, the  World Bank, UNICEF, and WHO related to the purchase of ARVs under  these initiatives. We also interviewed officials from these organizations  regarding the requirements that apply to the provision of ARVs under their  treatment initiatives and to confirm the accuracy of information obtained  from their Web sites. In our comparison we determined the quality  assurance process applied to each product, but we did not evaluate the  different quality assurance processes required under the Emergency Plan  as compared with those required under the other initiatives or determine  the comparative quality of the products.
Our review of the ARV products provided under the Emergency Plan and  the other initiatives focuses specifically on the ARVs that are  recommended by WHO for treatment of HIV/AIDS in countries with  limited health care resources. In order to determine the appropriate  treatment recommendations to focus on in this report, we reviewed  literature on the use of ARVs in general and in countries with limited  health care resources in particular. Our literature review included  searches of scientific publications using electronic databases, including  the National Library of Medicine’s PubMed, as well as the Web sites of the  New England Journal of Medicine, the Journal of the American Medical  Association, and The Lancet. We reviewed literature on ARV treatment  available from the Coordinator’s Office, USAID, HHS, FDA, CDC, the HHS  Office of the Inspector General, the Congressional Research Service, the  Congressional Budget Office, and the Institute of Medicine. We also  reviewed treatment guidelines and related documentation from WHO, the  Global Fund, the World Bank, the Joint United Nations Programme on  HIV/AIDS, UNICEF, and the United Kingdom’s Department for  International Development. We also interviewed officials from several of  these organizations. To understand the issues involved in providing ARVs  in countries with limited health care resources, we interviewed officials  from several NGOs that are working in these settings—including Doctors  Without Borders, the William Jefferson Clinton Foundation (Clinton  Foundation), the Bill and Melinda Gates Foundation, John Snow  Incorporated (JSI), Family Health International (FHI), and Management  Sciences for Health (MSH). We also reviewed documentation on the focus  countries’ national HIV/AIDS strategies and treatment guidelines, including  information that we obtained from the Coordinator’s Office and NGOs.
section_title: Determining Prices of ARVs for the Focus Countries
paragraphs: The prices we report are prices that 13 selected manufacturers quoted to  us during June and July 2004 for the focus countries. We surveyed the  manufacturers from which the major organizations that support treatment  programs in the focus countries have considered purchasing their ARVs.  These organizations include JSI, FHI, MSH, the Clinton Foundation, the  Global Fund, the World Bank, WHO, UNICEF, Doctors Without Borders,  the International Dispensary Association, and MissionPharma. We selected  a manufacturer for inclusion in our report if it makes at least one of the  ARVs included in the WHO-recommended first-line regimens and was  selling or willing to sell its ARV product to at least one of the focus  countries. Thirteen of the 15 manufacturers that we considered met these  criteria and were willing to quote their prices for the first-line ARVs for the  focus countries. We did not select products based on registration with the  focus countries’ national drug regulatory authorities because information  on country-level registration was incomplete or not available.
Because some of the manufacturers we surveyed offer their products at  significantly lower prices to developing countries than to developed  countries, we requested price quotes specifically for the focus countries.  We did not attempt to determine the prices that specific purchasers are  paying for these products because at the time we conducted our analysis  there was limited experience in the focus countries with using the funding  sources discussed in this report for large-scale purchase of ARVs. Because  different manufacturers offer their reduced prices according to differing  criteria, in some cases the lowest price offers are not available to all of the  focus countries. Specifically, Guyana and Vietnam are not eligible to  purchase ARVs at some manufacturers’ lowest price. In addition to these  two focus countries, other developing countries outside the scope of this  report may not be eligible for the prices we present.
To help ensure that the manufacturers’ prices we present are as  comparable as possible across different manufacturers of the same ARV,  we surveyed manufacturers using a standard set of questions. We  developed our questions on the basis of our literature review and  discussions with various officials from U.S. government agencies, officials  from other initiatives, representatives from NGOs, and representatives  from pharmaceutical manufacturers. These questions took into account  differences in purchasing agreements, including price negotiation based  on volume and length of contract, inclusion of shipping and insurance, and  financing guarantees. Some of the manufacturers we spoke with told us  that they offer prices that are negotiable depending on the volume of the  purchase, the length of the contract for purchase, and the degree to which  financing can be guaranteed. Therefore we requested prices based on the  following purchase scenarios, all of which assume financing has been  guaranteed: (1) purchase of enough medication to treat 500 patients for 1  year, (2) purchase of enough medication to treat 10,000 patients for 1 year,  and (3) purchase of enough medication to treat 10,000 patients for 3 years.  All manufacturers were given the opportunity to provide prices according  to these scenarios, although some told us that their prices were not  negotiable. We developed the scenarios based on estimates of the scale of  existing treatment programs in the focus countries, and the potential scale  of programs over the next 3 years. We verified, with officials from USAID  and other experts in ARV procurement, that these scenarios represented  plausible purchasing arrangements both now and over the next 3 years as  treatment programs expand in developing countries. Because the price  information we requested is considered proprietary by the manufacturer,  we could not directly assess the reliability of the price data given to us.  However, we checked the prices quoted to us against other published  sources from our literature search and manufacturers’ Web sites and  determined they were reliable for our purposes.
In some cases a manufacturer’s prices include costs that other  manufacturers do not include—such as shipping and insurance charges.  We note where these differences exist, and have determined that they do  not undermine the essential comparability of the prices presented in our  report. In making this determination, we first requested specific  information from each manufacturer about what is included in its price  and the terms of the purchase agreements it uses. The manufacturers we  surveyed for this report used one of six standard agreements to cover  shipping and insurance (see table 2). We also asked multiple purchasers  about the shipping and insurance costs they have incurred when  purchasing ARVs. While systematic evidence was not available, the  organizations we spoke with provided estimates ranging from 3 to 15  percent additional cost for shipping and insurance for large-scale ARV  purchases. One NGO that was purchasing ARVs under the Emergency Plan  told us that purchasing the same ARV product through two different  distribution channels—one directly from the manufacturer with shipping  and insurance costs included in the price and one through a distributor  that added those costs to its price—made no appreciable difference in the  final cost of the product. We also found, after reviewing responses to our  survey, that manufacturers of both original and generic products used a  range of purchase agreements, both more and less inclusive of shipping  and insurance costs. Other factors that may contribute to the total cost of  ARVs to a specific treatment program, such as taxes and distribution  surcharges, are beyond the scope of this report.
section_title: Examining the Efforts of the Coordinator’s Office to Expand the Selection of ARVs It Provides
paragraphs: To examine the efforts of the Coordinator’s Office to expand the selection  of quality-assured ARV products provided under the Emergency Plan to  the focus countries, we reviewed relevant laws, regulations, and guidance  from which the plan’s quality assurance and patent requirements arise. We  interviewed officials from the Coordinator’s Office and USAID regarding  how they interpret these laws, regulations, and guidance and how they  apply these requirements to the provision of ARVs under the plan. We also  interviewed officials from the Coordinator’s Office regarding their efforts  to address potential barriers to expansion. Lastly, because the  Coordinator’s Office is working with FDA to support the ability of  additional ARV manufacturers to meet the Emergency Plan’s quality  assurance requirement, we interviewed officials from FDA regarding these  efforts.
section_title: Appendix II: Price Information from Survey of ARV Manufacturers
paragraphs: We surveyed the following 13 manufacturers during June and July 2004 to  obtain price quotes for the focus countries for the ARVs used to build the  WHO-recommended first-line regimens:    Aurobindo Pharma Limited (Aurobindo)    Boehringer Ingelheim (BI)    Bristol-Myers Squibb Company (BMS)    Cipla Limited (Cipla)    Combino Pharm    Cristalia Produtos Quimicos Farmaceuticos LTDA (Cristalia)    Far-Manguinhos FIOCRUZ Ministry of Health (Far-Manguinhos)    GlaxoSmithKline (GSK)    Government Pharmaceutical Organization Thailand (GPO)    Hetero Drugs Limited (Hetero)    Merck & Co., Inc. (Merck)    Ranbaxy Laboratories Limited (Ranbaxy)    Strides Arcolab Limited (Strides)
The price per person per year for each ARV product—stavudine (d4T),  zidovudine (ZDV), lamivudine (3TC), nevirapine (NVP), and efavirenz  (EFV)—is shown in figures 3 and 4. Figure 3 shows prices quoted for  single-ARV products, and figure 4 shows prices quoted for fixed-dose  combination (FDC) ARV products. For each product we indicate the type  of standard agreement used to cover shipping and insurance charges and  whether the manufacturer indicated that the price quoted was negotiable  or based on a specific purchase scenario (see figure notes a, b, and c).  Both figures also show which ARV products are provided under the  Emergency Plan, which additional products are provided under the other  initiatives, and which products are generally available to the focus  countries but not provided under either the Emergency Plan or the other  initiatives, as of December 2004.
section_title: Appendix III: Comments from the Department of State
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Acknowledgments
paragraphs: Other key contributors to this report are George Bogart, Chad Davenport,  J. Alice Nixon, Nkeruka Okonmah, and Roseanne Price.
section_title: Related GAO Products
paragraphs: Global Health: U.S. AIDS Coordinator Addressing Some Key Challenges  to Expanding Treatment but Others Remain. GAO-04-784. Washington,  D.C.: July 12, 2004.
United Nations: Reforms Progressing, but Comprehensive Assessments  Needed to Measure Impact. GAO-04-339. Washington, D.C.: February 13,  2004.
Global Health: Global Fund to Fight AIDS, TB and Malaria Has  Advanced in Key Areas, but Difficult Challenges Remain. GAO-03-601.  Washington, D.C.: May 7, 2003.
Global Health: Assessment of First Year Efforts of the Global Fund to  Fight AIDS, TB and Malaria. GAO-03-755T. Washington, D.C.: May 7,  2003.
The Global Fund to Fight AIDS, Tuberculosis, and Malaria Has Been  Established but It Is Premature to Evaluate Its Effectiveness. GAO-02- 819R. Washington, D.C.: June 7, 2002.
Foreign Assistance: USAID Relies Heavily on Nongovernmental  Organizations, but Better Data Needed to Evaluate Approaches. GAO-02- 471. Washington, D.C.: April 25, 2002.
Global Health: Joint U.N. Programme on HIV/AIDS Needs to Strengthen  Country-Level Efforts and Measure Results. GAO-01-625. Washington,  D.C.: May 25, 2001.
Global Health: U.S. Agency for International Development Fights AIDS  in Africa, but Better Data Needed to Measure Impact. GAO-01-449.  Washington, D.C.: March 23, 2001.
Global Health: The U.S. and U.N. Response to the AIDS Crisis in Africa.  GAO/T-NSIAD-00-99. Washington, D.C.: February 24, 2000.