How to calculate fair ra

r
prices of
L i b
antimicrobials - e o r
I
methodologicalD and
u t h
C M
practical issues
y a Melissa Barber

S b
European Congress of Clinical Microbiology

E and Infectious Diseases

© 22 April 2017
 ar
Methods:
i b r

L
API  finished product price

e ho r
Algorithms developed to include all steps in


I D ut
manufacture
Algorithm development based on:

C M
 Contact

 Indian a
with large generic manufacturers
governmental regulations

y
S
 Review

E bof literature

©
 ar
Active
Pharmaceutical i b r
Ingredient L
e ho r
I D ut
C M
Raw drug substance
a
Database www.infodrivedrive.com shows
y
exports of API from India to other
S b
countries, with costs per kilogram of

E ©
API, for many drugs 3
 ar
i b r
L
e ho r
I D ut
C M y a
E S b
©
 ar
r
Linezolid cost per kilogram (USD) of active pharmaceutical ingredient
exported from India, 1 Jul 2014 to 1 Jul 2016

b
Australia and New
Bubble sizes reflect the size of individual shipments

i
Zealand
Carribean

$10,000

L r
Central America
ctive pharmaceutical ingredient price per kilogram (USD),

e ho
Central Asia

Eastern Africa

D ut
Eastern Asia
$1,000

M I Eastern Europe

Middle Africa

a
logarithmic

Northern Africa

C y
Northern America
$100
Northern Europe

E S
10 100
b 500
Small Islands

South America

$10

©
May 2014 Aug 2014 Nov 2014 Mar 2015 Jun 2015 Sep 2015 Jan 2016 Apr 2016
Date of shipment
Jul 2016
South-Eastern Asia

Southern Africa
 ar
1
i
• Dose per pill
r
Target price calculation algorithm

b
2 L
e ho r
• Cost of active pharmaceutical
ingredient (API) per pill
Per-kilogram cost of API
either from export data only,
or by combining info on
synthesis/yield with cost of

D ut
raw materials

I
• Add price of excipients and
3 tableting

C M y a 4 • Times number of pills

per period of time

S b 5
Number of • Add monthly cost of
pills/month packaging/shipping/duties

E © 6 • Add markup
 ar
i b r
Amoxicillin API exported from India, 1 Jul 2014 – 1 Jul 2016.
Bubbles scaled to size of individual shipments (linear
regression line, 95% confidence interval)

L
e ho r
I D ut
C M y a $25/kg

E S b
©
 ar
i b r
Example calculation of cost-based
generic price of amoxicillin tablets

Cost of API =
$25kg
L
e ho r
I D ut
API per 250mg tablet
= 0.625 cents
Formulation = 0.5 cents/tablet

C M y a
Formulated tablet =
1.125 cents
10% operating/profit margin

E S b Final estimated
(target) price = 1.24

©
cents/tablet
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i r
Price of active pharmaceutical ingredient (API), calculated target generic price,
and current lowest price in the UK, South Africa, and India.

b API Target South

L
Medicine Dose UK India

r
price/kg price Africa
abacavir (ABC)
aciclovir
amoxicillin e ho 300mg
200mg
250mg
$538
$81
$25
21¢
2¢
1¢
385¢
7¢
2¢
20¢
4¢
3¢
71¢
5¢
1¢
atazanavir
azithromycin
ciprofloxacin
I D ut 150mg
500mg
250mg
$1,189
$193
$27
23¢
11¢
1¢
657¢
118¢
2¢
33¢
48¢
4¢
63¢
1¢
1¢
clarithromycin
clindamycin
darunavir
C M y a 500mg
150mg
600mg
$249
$213
$1,588
14¢
4¢
105¢
15¢
7¢
968¢
36¢
24¢
117¢
3¢
23¢
119¢
doxycycline
efavirenz

E S b
efavirenz + emtricitabine +
100mg
200mg
$144
$109
2¢
3¢
5¢
289¢
2¢
5¢
1¢
39¢

tenofovir

ethambutol ©
emtricitabine + tenofovir
600/200/300mg
200/300mg
200mg
FDC
FDC
$42
16¢
13¢
2¢
2309¢
1541¢
16¢
34¢
20¢
2¢
190¢
70¢
1¢
 ar
i r
Price of active pharmaceutical ingredient (API), calculated target generic price,
and current lowest price in the UK, South Africa, and India.

b API Target South

L
Medicine Dose UK India

r
price/kg price Africa
abacavir (ABC)
aciclovir
amoxicillin e ho 300mg
200mg
250mg
$538
$81
$25
21¢
2¢
1¢
385¢
7¢
2¢
20¢
4¢
3¢
71¢
5¢
1¢
atazanavir
azithromycin
ciprofloxacin
I D ut 150mg
500mg
250mg
$1,189
$193
$27
23¢
11¢
1¢
657¢
118¢
2¢
33¢
48¢
4¢
63¢
1¢
1¢
clarithromycin
clindamycin
darunavir
C M y a 500mg
150mg
600mg
$249
$213
$1,588
14¢
4¢
105¢
15¢
7¢
968¢
36¢
24¢
117¢
3¢
23¢
119¢
doxycycline
efavirenz

E S b
efavirenz + emtricitabine +
100mg
200mg
$144
$109
2¢
3¢
5¢
289¢
2¢
5¢
1¢
39¢

tenofovir

ethambutol ©
emtricitabine + tenofovir
600/200/300mg
200/300mg
200mg
FDC
FDC
$42
16¢
13¢
2¢
2309¢
1541¢
16¢
34¢
20¢
2¢
190¢
70¢
1¢
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Medicine

ethambutol + isoniazid +
pyrazinamide + rifampicin
i b r Dose

275/75/400/
150mg
API
price/kg

FDC
Target
price

5¢
UK

86¢
South
Africa

10¢
India

5¢
fluconazole
isoniazid
isoniazid + rifampicin
lamivudine (3TC)
L
e ho r 50mg
100mg
150/300mg
150mg
$142
$16
FDC
$241
1¢
1¢
4¢
5¢
4¢
89¢
59¢
31¢
5¢
2¢
8¢
2¢
1¢
0.1¢
6¢
12¢

levofloxacin
linezolid
I D ut
lamivudine + zidovudine 150/300mg
250mg
600mg
FDC
$142
$690
13¢
4¢
46¢
53¢
16¢
2975¢
13¢
15¢
741¢
30¢
1¢
45¢

metronidazole

C
nevirapine (NVP)M y a
lopinavir + ritonavir (LPV/r) 200/50mg
400mg
200mg
FDC
$12
$165
22¢
1¢
4¢
309¢
2¢
32¢
14¢
1¢
4¢
72¢
1¢
21¢

S b
ribavirin 200mg $122 3¢ 95¢ 27¢ 14¢
rifampicin 150mg $112 2¢ 9¢ 8¢ 2¢

E
stavudine (d4T)

valganciclovir
zidovudine ©
tenofovir disoproxil fumarate (TDF)
30mg
300mg
450mg
100mg
$193
$182
$2,391
$252
7¢
119¢
3¢
1¢ 340¢
886¢
2343¢
69¢
3¢
9¢
1285¢
5¢
6¢
18¢
220¢
9¢
 ar
Medicine

ethambutol + isoniazid +
pyrazinamide + rifampicin
i b r Dose

275/75/400/
150mg
API
price/kg

FDC
Target
price

5¢
UK

86¢
South
Africa

10¢
India

5¢
fluconazole
isoniazid
isoniazid + rifampicin
lamivudine (3TC)
L
e ho r 50mg
100mg
150/300mg
150mg
$142
$16
FDC
$241
1¢
1¢
4¢
5¢
4¢
89¢
59¢
31¢
5¢
2¢
8¢
2¢
1¢
0.1¢
6¢
12¢

levofloxacin
linezolid
I D ut
lamivudine + zidovudine 150/300mg
250mg
600mg
FDC
$142
$690
13¢
4¢
46¢
53¢
16¢
2975¢
13¢
15¢
741¢
30¢
1¢
45¢

metronidazole

C
nevirapine (NVP)M y a
lopinavir + ritonavir (LPV/r) 200/50mg
400mg
200mg
FDC
$12
$165
22¢
1¢
4¢
309¢
2¢
32¢
14¢
1¢
4¢
72¢
1¢
21¢

S b
ribavirin 200mg $122 3¢ 95¢ 27¢ 14¢
rifampicin 150mg $112 2¢ 9¢ 8¢ 2¢

E
stavudine (d4T)

valganciclovir
zidovudine ©
tenofovir disoproxil fumarate (TDF)
30mg
300mg
450mg
100mg
$193
$182
$2,391
$252
7¢
119¢
3¢
1¢ 340¢
886¢
2343¢
69¢
3¢
9¢
1285¢
5¢
6¢
18¢
220¢
9¢
 ar
i b r
L
e ho r
I D ut
C M y a
E S b
©
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i b r
Target versus Global lowest prices:
HIV, TB and Hepatitis

L
e ho r
I D ut
C M y a
E S b
©
 ar
b r
Methodological challenges to developing
i
cost-based generic estimates
 L
e ho r
New or patented compounds require chemical cost
estimates rather than analyses of existing API data


I D ut
Limited data on costs for environmental protection,
conducting bioequivalence studies, and registration


costs

C M y a
Stringent regulatory authority (SRA) costs
Differences in demand volume- scaling factors?

S b


 Profit margin– what is a “fair” return?

E ©
 ar
Bedaquiline
i b r
Incidence
Indication
/Coverage
Estimated vol demand (tons)
100% 50% 25%

L
e ho r
9,000,000 All TB

480,000 MDR
432,000 MDR (pulmonary)
43,200 XDR
255.6
13.6
12.3
127.8
6.8
6.1
63.9
3.4
3.1

D ut
1.2 0.6 0.3

I
34,560 XDR (pulmonary) 1.0 0.5 0.2
All data from WHO 2013.
Course assumed: STREAM arm C (284x 100mg).

C M y a e.g. treating 25% of MDR-TB cases

would require 3.4 tons of bedaquiline
API per year

E S b
©
 ar
b r
Synthesis of bedaquiline
i
L
e ho r
I D ut
C M y a
E S b
©
(Process disclosed in original patent)
Overall yield = 0.2%
Branco FSC, Pinto AC, Boechat N. An update on the chemistry and medicinal chemistry of novel antimycobacterial compounds.
Curr Top Med Chem [Internet]. 2013;13:2808–49. Available from: http://www.ncbi.nlm.nih.gov/pubmed/24111907
 ar
i b r
Assuming low demand volumes and
L
e ho r
lack of opportunity to optimize
synthesis, estimated that from the this

I D ut
route of synthesis the bedaquiline API
currently costs about $2,600-
M a
$3,250/kg to produce
C y
E S b
-(Prof Joseph Fortunak, Howard
©
University)
 ar
i b r
Price overview: Bedaquiline

L
e ho r
I D ut
C M y a
E S b
©
 ar
Delamanid
i b r
Incidence
Indication
/Coverage
Estimated vol demand (tons)
100% 50% 25%

L
480,000 MDR

r
9,000,000 All TB

e ho
432,000 MDR (pulmonary)
43,200 XDR
324.0
17.3
15.6
1.6
162.0
8.6
7.8
0.8
81.0
4.3
3.9
0.4

I D ut 34,560 XDR (pulmonary)

All data from WHO 2013.
1.2

Course assumed: 200mg QD for 6 months.

0.6 0.3

C M y a e.g. treating 25% of MDR-TB cases

would require 4.3 tons of delamanid
API per year

E S b
©
 ar
Synthesis of delamanid

i b r
L
e ho r
I D ut
C M y a
E S b
©
(Newer process patented by original development team)
Overall yield = 42%
Branco FSC, Pinto AC, Boechat N. An update on the chemistry and medicinal chemistry of novel antimycobacterial compounds.
Curr Top Med Chem [Internet]. 2013;13:2808–49. Available from: http://www.ncbi.nlm.nih.gov/pubmed/24111907
 ar
i b r
L r
API cost could be $250/kg with
e ho
substantial demand (>10

I D ut
MT/annum) and adequate route
development

C M y a
S b
-(Prof Joseph Fortunak, Howard

E
University)
©
 ar
i b r
Price overview: Delamanid

L
e ho r
I D ut
C M y a
E S b
©
 ar
i b r
L
e ho r
I D ut
Patents, profits, and access: what is a
fair price?

C M y a
E S b
©
 ar
i b r
Price overview: Linezolid

L
e ho r
I D ut
C M y a
E S b
©
 ar
b r
Linezolid went off patent in South Africa
i
in 2014
$70
L
e ho
$65 r
D ut
$60

$50

M I
a
$40

$30 $27

$20

$10

SC b y $8

E
$0
South Africa private sector South Africa National Department of Generic import

©
Health
 ar
i b r
L
e ho r
I D ut
C M y a
E S b
©
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i b r
Pharma profits and tax avoidance
Main tax havens: Bermuda, Cayman Islands, BVI, Bahamas, Luxembourg, Ireland

Company

Pfizer
L
e ho r
Profits held
offshore
$69 billion
US Taxes
Avoided
$20 billion

Merck

I D ut $57 billion $16 billion

M a
Johnson & Johnson $51 billion $14 billion

C
Amgen $26 billion $9 billion

Abbott

S b y $24 billion $7 billion

BMS

E ©
$24 billion $7 billion
28
Source: Citizens for Tax Justice, 2016. http://gormanandjoneslaw.com/offshore-tax-havens/
http://america.aljazeera.com/articles/2015/3/12/obama-gambit-for-corporate-cayman-cash.html
 ar
i b r
L
e ho r
I D ut
C M y a
Universal access to HIV treatment is one of the

S b
greatest success stories in medicine (>17 million treated).

E ©
This should not stand alone, but be repeated for mass treatment
of tuberculosis, cancer, viral hepatitis and other diseases
29

– this time, more quickly

 ar
Selected publications
i b r
L
e ho r
Hepatitis B: Hill, A. et al. Analysis of minimum target prices for production
of entecavir to treat hepatitis B in high- and low-income countries. J. Virus
Erad. 1, 103–110 (2015).

I D ut
Hepatitis C: Hill, A., Simmons, B., Gotham, D. & Fortunak, J. Rapid
reductions in prices for generic sofosbuvir and daclatasvir to treat hepatitis
C. J. Virus Erad. 2, 28–31 (2016).

C M y a
MDR-TB: Gotham, D. et al. Estimated generic prices for novel treatments
for drug-resistant tuberculosis. J. Antimicrob. Chemother. dkw522 (2017).
doi:10.1093/jac/dkw522

S b
Cancer: Hill, A. et al. Estimated generic prices of cancer medicines deemed

E
cost-ineffective in England: a cost estimation analysis. BMJ Open 7, e011965
(2017).

©
Hill, A. et al. Target prices for mass production of tyrosine kinase inhibitors
for global cancer treatment. BMJ Open 6, e009586 (2016).