[Ip-health] WSJ: HIV-Test Makers Agree To Discounts for Poorer Nations

[Mike Palmedo]

http://online.wsj.com/article/0,,SB107403572024724700-search,00.html?collec=
tion=3Dautowire%2F30day&vql_string=3Dhiv+test%3Cin%3E%28article%2Dbody%29

HIV-Test Makers Agree
To Discounts for Poorer Nations


Mark Schoofs
Wall Street Journal
January 14, 2004

Former President Bill Clinton's Foundation plans to announce Wednesday a
deal with five of the world's leading medical companies to slash the
price of two critical HIV diagnostic tests in developing nations.

The agreement comes on the heels of a landmark deal the Clinton
Foundation and several generic-drugs companies signed last fall: That
pact sharply lowered the price of AIDS drugs from already cut-rate prices.

Former U.S. President Bill Clinton's foundation, which launched its
HIV/AIDS Initiative little more than 18 months ago, has quickly become a
major force in fighting the pandemic.

Doctors and activists applauded the new price cuts. "Most people have
been so focused on drug prices that they haven't really been looking at
the price of diagnostics, so this is very welcome," said Jim Kim,
adviser to the Director General of the World Health Organization and a
pioneer in treating AIDS and other diseases in poor countries.

But some activists warned that currently available diagnostic tests are
too complicated to administer in impoverished conditions, where factors
such as a stable electrical current may not be available. A long-term
solution, say these activists, will require not just lower prices but
new tests that are low-tech and simple to use.

While the price of these tests hasn't drawn the intense media attention
given to AIDS drugs, they are a big part of the cost of AIDS treatment.
Indeed, the tests are so expensive that some doctors in developing
nations stopped using the more costly viral load testing in some clinics
and limited use of CD4 tests in others. Both tests are standard-of-care
in the U.S., given to many patients two or more times a year because
they help doctors decide when to administer the AIDS drugs and help
evaluate how well the drugs are working. Used correctly, many doctors
believe these tests can sound an early warning on the emergence of drug
resistance and allow them to switch the patient to another, more
effective regimen.

Wednesday's deal includes patent-holding companies that are heavyweights
in medical devices: Beckman Coulter, Inc. and Becton, Dickinson & Co.,
makers of the CD4 test, which measures how far the disease has weakened
the immune system, and Roche Diagnostics, a unit of F. Hoffmann-La Roche
Ltd., and Bayer HealthCare, a unit of Germany's Bayer AG, and bioM=E9rieux
of France, makers of the viral load test, which shows how active HIV is
in the body. These tests aren't used to diagnose a person as
HIV-positive. They are used to guide treatment of patients already known
to be infected.

The companies have agreed to offer more than just the basic test kits by
offering a package deal that includes the machines for running the
tests, training on how to run the tests properly, maintenance and repair
of the machines, the chemical reagents to conduct the tests and
supplies. But countries don't have to pay a large down payment, even for
the machines. Instead, they get the equipment without paying any money
upfront, and then pay as they go in the form of a per-test fee back to
the company.

That charge will range roughly from $3 to $5 each for the CD4 tests.
That is down from an average price in Africa of about $8 to $10, and
even $15 according to a pharmacist serving a large AIDS clinic in South
Africa. The companies stress it is hard to make an apple-to-apple
comparison because of the nature of the package deal. For example,
Becton Dickinson says the vast majority of its African customers buy the
test kits separately from the machines. The lowest price for just the
test, when sold to high-volume users in Africa, is about $4.50,
according to the company. Under the Clinton deal, high-volume users
purchasing only the tests would pay $2.80. Adding in the machines,
technical support and training, the per-test price for high-volume users
would be just under $3.50. Beckman Coulter declined to provide specific
prices, but said the prices in the Clinton deal would be 40% to 80%
lower than comparable packages offered in elsewhere in the world.

The viral-load tests are much more expensive than the CD4 tests. While
prices are confidential under the agreement the tests could cost less
than $20 each at high volumes. Roche, which supplies most of the viral
load tests used world-wide, says the Clinton Foundation price is about
20% lower than its previous developing-world discount price but won't
disclose actual figures. Bayer declined to comment on the pricing
because they were still finalizing the details of their agreement.
BioM=E9rieux declined to comment but issued a written statement
acknowledging it had been approached by the Clinton Foundation.

In Africa and other poor countries, the service component of the deal is
particularly important. Many well-intentioned programs to provide
technology founder because the country can't afford to maintain the
equipment or lacks trained people to service the equipment.

The Clinton Foundation was determined to ensure a sustainable program,
by pricing the tests at a level that would guarantee the test makers a
modest profit. "This is not a philanthropic effort," said Lynn
Margherio, executive vice president of the Clinton Foundation AIDS
Initiative and one of the main negotiators of the deal. "This is a
humanitarian effort, in that we are providing the most affordable
prices, but companies need to be able to offer this on a multiyear
basis." From the companies' point of view, the Clinton Foundation is a
market maker, offering large and predictable demand.

There are even cheaper CD4 tests on the market, but because the Clinton
Foundation generally focuses on licensed treatments and diagnostic
tools, it didn't consider some unapproved tests. Some organizations,
such as the Nobel-Prize winning Doctors Without Borders, are working in
some clinics in developing countries with CD4 tests that aren't licensed
by the U.S. Food and Drug Administration. One such test such is made by
the German firm Partec GmbH. That assay can cost as little as $2 per
test, according to Daniel Berman of Doctors Without Borders.

While the current testing technology is still complicated, AIDS experts
hope ultimately that test makers will come up with a tool as simple as a
strip of paper that would change color to indicate different
measurements, says Gregg Gonsalves, director of Treatment and Prevention
Advocacy at Gay Men's Health Crisis in New York, who has been
researching HIV test options in developing nations. While the Clinton
Foundation's Ira Magaziner supports cheaper, simpler technology for HIV
testing, he says, "Bottom line: this is what is available today."

Negotiating the deal took several months. Mr. Magaziner, Mr. Clinton's
longtime friend and head of the AIDS Initiative, and a team of
management consultants and AIDS experts visited manufacturing plants and
worked extensively with the companies to find ways to lower costs. To
avoid violating antitrust laws, each deal had to be negotiated
separately. In an e-mail, Mr. Magaziner said, "I can tell you that
negotiating these agreements ... with five U.S. and European companies
and their lawyers has not been a trivial matter."

Wednesday's deal is available immediately to the countries that the
Clinton Foundation is assisting, which include South Africa, Tanzania,
Mozambique, Rwanda, Haiti, the Dominican Republic, and several other
Caribbean nations. The nations represent about 30% of people with HIV in
sub-Saharan Africa and about 90% of people with the virus in the
Caribbean. Mr. Magaziner said the Foundation intends to expand the deal
to as many countries as possible.

The Clinton Foundation also has helped governments develop national AIDS
plans, and Mr. Clinton has secured partial funding for these governments
by personally lobbying leaders of rich nations, such as Norway, Sweden,
Canada and Ireland. To date, Mr. Clinton has secured at least $185
million in donor-nation funding, plus an additional $4 million in
private donations.