Pressure Points: Impacting the future of ARV pricing and availability

The US Food and Drug Administration (FDA), the Clinton Health Access Initiative, Supply Chain Management System (SCMS) and other stakeholders have achieved significant ARV price reductions; at $100 to $200 for 1st line generics, ARV pricing may be bottoming out. Tight profit margins, increasing demand for health commodities, limited competition among ARV manufacturers, global economic tensions and raw material costs (particularly fuel) continue to impact ARV pricing and availability. This is compounded by: -Shortages of active pharmaceutical ingredients (API) impacting production capacity of generics. -WHO's recent recommendation to use Tenofovir and Zidovudine regimens has caused a rise in demand that manufactures are finding difficult to meet. -Recent tender awards by the Government of South Africa and SCMS will account for approximately 20-25% of the global demand for ARVs and have significant market impact. -Many needed pediatric ARVs are requested in small quantities that are not economically viable for manufacturers.

SCMS is applying the following commercial best practices to address these challenges: -Pooling procurement within and between countries to generate savings -Consolidating demand for new products to generate savings and a predictable supply -Employing strong advance planning, especially forecasts of need, to reduce costs through price negotiation and freight planning -Maximizing the flexibility provided by the FDA approval to purchase generics -Helping vendors identify additional API sources -Using regional distribution centers to eliminate stockouts and reduce costs by make critical ARVs available close to sites for emergency needs -Working with partners to address challenges in the pediatric ARV market