[Ip-health] Merck lowers price on efavirenz to meet generic price

[B.Baker@neu.edu]

Merck has verbally offered to meet the generic price for efavirenz, plus 5%
(equivalent to a royalty), and in addition has offered access to a
pediatric formulation and assistance in diagnosing HIV+ children.

In doing so, Merck is making a shrewd calculation that staying ahead of
generic prices on second-line medicines is the best way to go to forestal
generic competition.  For this strategy to work, however, Merck will also
need to respond to Brazil's compulsory license, which will be harder for
Merck because Brazil has a lower prevalence than Thailand and a richer
economy.  Since Merck's access policies for middle-income countries has
been based in part on prevalence, it may have to totally rework its
mid-tier pricing to offer Brazil the same price as Thailand.

On one hand, if confirmed, this price reduction is a victory for Thailand's
compulsory licensing initiative and for AIDS activists.  Once again, we
have proven that generic competition results in lower prices and increased
access.

However, on the other hand, Big Pharma will continue to have the upper-hand
over the long term if its price-matching strategy discourages generic
producers from developing generic equivalents.  To the extent that
developing countries like Thailand do not actually continue to purchase
generic products, even when price match offers are made by patent holders,
generic companies may be unwilling to invest in product development,
compulsory license applications, and product registration.

To counteract this risk, Thailand should not revoke its compulsory license
on efavirenz.  Instead, it should continue to procure at least part of its
requirements from generic producers. In this way, there will be a truly
competitive market where a dominant company canot inhibit longer term
competition through the temporary expedient of lower prices.

Professor Brook K. Baker
Health GAP, USA
Northeastern U. School of Law, Program on Human Rights and the Global
Economy


The Nation (Thailand)

Merck lowers price of patented Aids medicine

Company will also offer free drug package for 2,500 children

After months of negotiations, the Public Health Minis-try has finally
succeeded in making the giant drug firm Merck lower the prices of its
patented HIV/AIDS drug efavirenz.

The company will also offer a special package to provide free Aids drugs to
2,500 children, said the chairman of the ministry's committee on compulsory
licensing.


Dr Vichai Chokewiwat, also chairman of the Government Pharmaceutical
Organisation (GPO) board, said yesterday that Merck's Thai subsidiary, MSD
Thailand, had agreed to cut the price of efavirenz to Bt767 per patient per
month, almost half its original price of Bt1,400. The new price includes
value added tax.

Vichai said the new price had been "offered verbally" yesterday by MSD
Thailand to Dr Siriwat Thiptaradol, secretary-general of the GPO,
yesterday.

Besides slashing the price, Merck offered a special package to give the
liquid version of efavirenz free to 2,500 children infected with HIV, and
to sponsor a programme to diagnose children as HIV positive and provide
other treatment to children with HIV.

Vichai said that although the latest price offered by MSD Thailand was
still 5 per cent higher than the generic version it was likely the ministry
would buy the Aids drug, which has been put under compulsory licence, from
MSD Thailand as the special package offered by the company was so
"interesting".

However, he said, Merck still has to officially submit its offer in writing
by June 12 to the ministry's committee on price negotiation for patented
essential drugs.

Efavirenz was the first drug patent that Thailand decided to ignore by
allowing a cheaper generic version to be imported for patients under three
government programmes: the universal health scheme, the social-security
fund and medical-welfare benefit for state officials.

The process, called compulsory licensing, is allowed by the World Trade
Organisation's agreement on intellectual property rights.

Around 20,000 Thais, including some 13,000 on the government programmes,
take efavirenz.

Early this year, the first lot of 16,000 doses of generic efavirenz were
imported from India at Bt670 a dose, including tax and transportation and
other related expenses.

The decision of MSD Thailand to halve the cost of its efavirenz was
welcomed by Aids activists and those who advocate drug access.

Jiraporn Limpananont, a lecturer from Chulalongkorn university's Faculty of
Pharmacy, said this proved the original price of the drug was set at
whatever the company liked.

"It is clear evidence that the original drug price does not reflect the
real cost of drug development and investment," she said.

MSD Thailand became the first drug firm among the three companies that hold
patents for the three drugs put under compulsory licence to lower its price
to compete with the generic version.

The other two companies, Abbott Laboratories, which holds the patent for
Lopinavir/Ritonavir, and Sanofi-Aventis, the patent-holder of Clopidogrel,
are still negotiating with the health ministry.

Duangkamon


 Sajirawattanakul,


 Pennapa Hongthong


 The Nation