DEPARTMENT OF STATE CONGRESSIONAL CORRESPONDENCE TASKER IPS 1 I ACTION BUREAU: DATE: SUBSTANTIVE CONSTITUENT IPS: IMAGE ENTIRE DOCUMENT IMAGE ONLY FIRST PAGES BUREAU: BUR AU CTION REQUESTED: RESPOND TO CCU 2 DAYS I FOR SIGNATURE BY Joseph E. Macmanus, ACTING ASSISTANT SECRETARY, LEGISLATIVE AFFAIRS ADDRESS ENVELOPE TO DISTRICT OFFICE DIRECT REPLY TO CONSTITUENT BY OFFICE DIRECTOR WITH COPY TO CONGRESSIONAL OFFICE. PHONE 7-1608 WHEN COMPLETED FYI ONLYINO RESPONSE NECESSARY REPLY FOR SIGNATURE DIRECTLY BY BUREAU OTHER ACTION: FOR GUIDANACEIINFORMATION ON FORMATTING CONGRESSIONALS SEE: ?title=Bureau of Legislati Affairs Reference Docume-nts#Yellow Border Due Date 5/ MUST MAKE TRANSFERS OF ACTION DIRECTLY WITH RECEIVING FRONT OFFICE. The CCU has a listing of contacts. PLEASE NOTIFY CCU 7-1608? OF ALL TRANSFERS OF FROM: Joseph E. Macrnanus (H) APR 1 4 2011 Recommendation For the Seo1*eta1*y's signature to the bureau Tasked to the 6' bureau for signature by Joseph E. Macmanus Acting Assistant ecretary Provide copy of signed - response COMMENTS: nitrd ?%tatrs ante on FINANCE Wasnaaorori, DC April 13,2011 Secretary of State Hillary Rodham Clinton US. Department of State 2201 Street l\l.W. Washington, DC 20520 Dear Secretary Clinton: In has been brought to my attention that Global Fund dollars have been used to procure generic drugs at unnecessary costs in recipient countries while brand remain available at a lower cost. Furtlter, it appears that ollificials of the Global Fund are promoting compulsory licenses and verbally conditionitng these licenses for the Global Fund grants. Information related to the procurement of high cost generics is posted on the Global Funcl"'s website and I have attached a compilation of the data for your review. Slides used by the Global Fund to brief officials on how to promote compulsory licenses have also been attached. In a critical time for global health with caps placed on providing treatment to new patients in a number ofthe President's Plan for AIDS Relief (PEPFAR) countries it is extremely concerning that US. funded programs, such as the Global Fund, are making inefficient and unnecessarily costly procurement decisions that come with dire consequences. Unfortunately, offtcials of the Global Fund are promoting the use of generics without regard to the health and financiafl consequences it may have on the individuals beneliitriing frorn the program. It is unclear how often this has occurred, but these actions have likely cost millions of dollars ofeszcesstive waste and abuse of the program. The original PEPFAR legislation was carefully written to ensure access to inexpensive life saving medication for recipient Tlte purpose of the Food and Drug Administration (FDA) Tentative Approval process for Anti-retrovirals (ARV) was to allow the program to purchase generic drugs for use only in countries and has been a great success. It was assumed that access to generic versions of the innovator drugs that were still under patent would provide access to lower cost: medications, but the program does not require the purchase of generics. The statute is clear that treatment funds should he used in the most It is quite concerning that. the Global Fund determines procurement policies based on the producer olithe drug rather than the quality or price. In adclition, the FDA Tentative Approval process was establislted in partnership with innovator companies and should never be exploited. By advocating for developing countries to disregard the Agreement on' ratde-Related Aspects of Intellectual P1*ope1'ty Rights (TRIPS) through issuing compulsory licenses to gain access to Global Futtd grants, we are abusing the system. Access to these products is vital to our success in figltting the war on and actions inconsistent with patent law such as these will only hinder our ability to work in partnership with the companies that have provided the intellectual property rights to clevelop generic versions of their products. Tltis is a humanitariart effort that requires all parties -- goyernment, non-governmental organimtions, and industry to work together towards the same goal. I would appreciate a tltorougrh review of the attached 1 am requesting that you work in coordination with the Global Funcl to explain the decision to purcltase generic drugs at a higher cost, when brand drugs were at a lower price. Furtlter, the Department of State and the Global Fund should develop a specific plan of action to rectify this discrepancy t'or future procurement. I also request that you provide an immediate plan ofaction prohibiting any seminars or working groups by the Global Fund related to educating, training and aclyocating for countries to issue compulsory licenses. ARV treatment and other medical care are a critical component to our success in the war against both at home and globally. In these difficult budgetary times it is imperative that every dollar is spent in an effective and efficient manner and based on the quality and cost efficiencies of the product. Individuals around the world are depending on access to these treatments. must do everything in their power to maxintize the impact of the Global Fund grants, in order to treat the greatest number of inclividuals possible. I look forw::1rd to your timely and thorough response to tltese urgent matters. Orrin G. llatclt Ranking Member Senate Committee on Finance world Health Organization Global Price Reporting hie/a mds/pricefhdd/index.a5p1r L. Quantity Strength per Package Country Manufactu of Date of Manufac Order ture Annual Treatment Cost per Patient Total Number Smallest Units Source Name Grant Number Abbott Cost rer Therapeutic Category Total Price Paid Unit Price Dosage Country Form Drug Na me Burkina Faso Equatorial Guinea Lopinavir (LPV) Ritonavir (Rm Lopinavir (LPV) Ritonayir 1' RT-V I Lopinavir (LPV) Ritonavir (RTV) Lopinayir I Ritonavir Lopinavir Ritonayir 133.3 mg 33.3 mg 133.3 mg 33-3 mg 133.3 mg 33.3 mg '133.3'rn'g I 33.3 mg 133.3 mg 90 180 90 99,360 99,360 11,520 5,760 18,000 $0.25 $0.25 $0.23 $0.46 $0.92 $24,205 $24,206 $2,530 $2,530 $16,436 545 S47.-5 .. 500 2,006.00 Oral Solid (tablets/ca psules) Oral Solid (tablets/ca psules) Oral Solid (tablets/ca Antiretroviral Antiretroviral Antiretroviral $22,654-_ $1,313 Cipla Ltd. Abbott Cipla Ltd. Ab bott' Hetero Drugs Ltd. India South Africa India 09.12.20 05 22.05.20 07 22105-20 01.12.20 06 BUR-202- Global G02-H-00 Fund 09.12.20 U5 - GNQ-40 5- Global G01--H Fund ERT-304- Global G02-H Fund (SRTVI #131,000 $0.92 i0'$1621d36 Lopinavir (LPV) Ritonavir (RTV) 0 5 . ?352 psules) OralSolid GM B-304- Global (tablets/ca Antiretroviral G01-H Fund Hetero 02.08.20 Gambia Drugs Ltd. 06 90 45,000 $0.71 10,260 abbott Lao PDF No information on this purchase Lobfin'a'yi'r 25' 5- I -. 3.430 $1.29 Abbott 6 - 6 .0 I 1 Ora' 59"" 23.10.20 Global (tablets/ca Antlretrovlral O6 Fund psules) Lo pinavir (LPV) Ritonavir (RTV) Lo"-pinavir - - Ritonavir 0 RTV Loupinavir (LPV) Ritonavir (RTV) Lcapinavir (LPVI) Ritonavir RTV (LPV) Ritonavir (RTV) . Ritonavir (BW) Malawi 90 137,700 $0.46 $62,553 Cipla Ltd. India 05 0 137,700 $0.46 2 $52,553 21,007.40 3, $31,396 Abbott Oral Solid (tablets/ca Antiretroyiral psules) 10.10.20 MLW--102- Global 05 G01-H-00 Fund 90 291,600 $0.46 $133,164 1,001.00 Cipla India 10.1-0.20 Abbott 05 291,600 $0.46 $133,165 3 1,007.40 $161416 Oral Solid (tablets/ca Antiretroviral psules) Global Fund 31. 10.20 05 G02-H Sierra India Leone 100 72,000 $1.00 572,320 2,200.00 Cipla Ltd- 31.10.20 $15,515 05 72,000 $1.00 572,320 20,190.00 0 Abbott -- -. JII . . 3 - - 5 4: - 4.- 4-u- I . I.- 3 ':15 int in Flri"-II' If at -E "Hr; ifilr The Global Fund I I To Fig ht AIDS, Tuberculosis a nd Mala ia Global Fund Experience: access to patent information and impact on procurement of i i Dr. Sophie Logez Carmen Perez Casas Manager, OADM Team, Pharmaceutical Unit Senior TO, Pharmaceutical Management Unit El Fondo Mundlal 3 The Global Fund Le Fonds mondlal l'J1o6amHui'i ?oHp. Lgjaauall and . .- .-arm. lnrr-..a 1-i la L: rnal.rr:E.:tight Cue him: 'Elli;-A in 2 - gl.-KI' -- Procurement and Supply Management Policies -- Price differences among grantees -- Management of patent issues in procurement cycle -- Availability and quality of information -- What inrmation could be useful -- Sustainable and simplified approaches fa El Fondo Mundial -Ww --. tfifiiflfi. matureaa wfi .45: ti Elflh, ta gr in rm: The Global Fund gay Le Fonds mondial gs rno6aJ1bHus'i ?o|m iajj)/3' To Fight hifJ'E._ Tubcftuifiiti and Malaria pfiudfinmg D-alum :ur'rtrtE1-SHEA. Use of the Global Fund Grant Funding Expenditure by cost category :Jimfl 17.Fnofianbuufi is Pharmaceuticai Products, 19.7% ii. . 14.6% Le Fonds mondial i U-....flI .I.I.Iffi-.I. Tm Lg .t and htaiarla Au .m T.. 4511.0% .. my Monitoring and Evaluation, 4.4% Planning and Administration, 5.8 Infrastructure and Other Equipment, 9.6% Training, en? $5 tat:-ma gem Fondo Undlal gm h.n:h.I IH gr La The Global Fund PSM Policy and Principles .. .. . . up ..H.H. . r. . .I.L(FDCs, uate torrnulatlon ostaoe mp alt at am Transparent, fair and oompeti ive procurement Value for money Review of PSM plan and Price Quality Reporting system -I l'no6a.nbHuFi Z33 rt-7"' Tn l~'igh1: and malaria The Global Fund WE Rflm.E$mmfi El Fondo Mundial {kw -- fir In-aha mantra ti 515%' gr at theiy ma- am ir1teI'mtic:r1ai The Cami;-3% F'ajr"1 mzeen my-* the fie:-::i t%3%litie:? witiw in r1at in Trade OrgmiL2ati0r*1 Ag; xjufl Ai~Z<<1~l- gaevzta mtelfiectuai Prmjegfyfi Ffigiwia imergarate i in the on the z::1r':d ti} aCfWie'xs*'E: it::we$t fog" |r'1 5-1 HOT. to tha;-3 gm in tfweir" it exgrge HE i 323 mg fu ad i}u::igate::J far" thiiza Fondo Mundual wk 3 gm The Global Fund Le Fonds mondtal '1-353 15% #31 Tr: "Qh: and Liainrta Fno6a.I1m-nun ?oI-uJ. 1 11:' 32' Global Fund IV Financing El . 2,500 . 1.. Kilometers 5,000 El Fondo Mundial lull U-rt Inch.-.-. l"140 countries 10.8 billion (A is proved Grant Amount) us$ 17.4 billion (Total Lifetime Budget) '1 .3. The Global Fund Fight Tiihi:-rcuil:-5:5 and il.1.al:irla I Ii': Le Fonds mondial 533 - . . . . . . . 1- 'uiI'lno6o:l5Hul'i tboruzl. .-. 1- [3 5 .rn|r|r Global Fund Financing Wide spectrum of countries among grantees: Unequal access to differential price programs of pharmaceutical companies; Different level of patent protection and TRIPS implementation; Bilateral and regional trade agreements; Unequal level of knowledge Fondo Mundial Qaw The Global Fund Le Fonds mondial rnofianwuu d>oHn. ma>>-all ff-r! luau mm: 5: nmlanan FL "33 To Fight Tuhcrculflitiand Malaria h..l'rte as la tit:-rizul-use at It pasludisrn-E _g . 3' as 5- rice differences across grantees: examples Lopinavir (LPV /Ritonavir (RTV), 200/50mg 3 I Prices paid per year/patient in countries>> since July 2009 3 -I. I 'Fl. '1 I: I er: as rjfizgii flit rzi i-Ll . nae 11:; #343 :35 if *2 figs: Ir -. .. fig 1 {ii .23- as 2 1 .4.--.-S .. flfi 55:. as asrrze-.11 :2 . '1 .25.. #3 'ii; 113sears 31?3.39 if": 2' ii.-3% L: ass"? i Lia-E34": .. h= 345% fie .- . it-in--In-' i" if E. 3' .:if' -I.- :21! 77% 55 -: - .-..-. 3' .-- i--1.r :2 4.: mm'? 3 3. fit LE: Tiifiji . H: in L35 3 fir? .-.-- - 3; ..I 3 E. -: . -..- -'In --.- 'Efl'* Hi 1' -II. an-.iE-. . II: In Price differences across grantees/2 - Patent barriers affect some countries' capacity to -- Procure lower priced versions of ARVs Procure improved formulations (FDCs or children solid formulations) when they only exist as generics - eg.3TC in China - Among Global Fund grants, affected countries are middle-income countries outside Sub-saharan Africa -- Where patents for pharmaceutical products exist for key products -- Excluded from discounts from patent holders or eligible only to second level of discount if in .- I faa; El Fondo Mundial The Global Fund at tantra cl til:-Hniirrm-5 1.r :a 'Eu; 3% . Tn and hfalarie: EU in tut:-arm-:-are in he Le Fonds ond ial ?aa BH ?oi-in [32 er 5 A .4. .--.- M13 Price differences among grantees/3 - Some of these countries are making substantial savings in rant budget by shifting to generic products 2009/2010 -- In some cases after implementation of TRIPS flexibilities governmental use-type licenses float" Ftrit:-as fitrffififtir tat: =s rt 3:1: fir-E23rrl: Fr r'r -2 1 :54" . - 1'2 '5-'r:'tr-=r . I ".1111 "rp- Le Fonds mondial Fnofian but-m cbolm i -.1. - a--'3-Elm43?} 1-52'. El Fondo Mundial The Global Fund In Tuberculosis and i.1.:l.1nManagement of patent issues in procurement cycle/1 - Procurement bottlenecks are common among grantees -- weakness in forecasting, lack of capacity in PSM, problems on storage and distribution, etc - Management of intellectual property issues is also a procurement bottleneck, further delaying the process PSM plans (including estimated prices) are usually prepared without taking into account patent issues -- Problems arise only late in the cycle, when procurement should actually start Searching information, clarifications, etc. creates long delays -- This leads to emergency procurement to avoid treatment disruption/stocks outs ?a fg; El Fondo Mundial -'55- The Global Fund CW Le Fonds mondial 2% l'no6aJ1u-nun daonp. gm Tn and -'Malaria mm-,s-ff' aw'? r-ti *--Jirrh >1 mnm-,- sazm. Ea at it pmludisafle .J.J Management of patent issues in procurement cycle/2 - Information about patents (and patent law) is not readily available. - Delays on clarifying situation and potential options for the countries due to: -- Disconnection between Ministry of Health and other authorities (trade, industry. .) Lack expertise of Procurement offices in countries - Technical assistance possible with Global Fund grants but not very often requested 6' ET. I:-pmlu-rtivsrm-: . El Fondo Mundial gm The Global Fund Le Fonds mondtal feraa lnzna nil:-at-rruimrs 1.: 5.: {ft #4 53 fit" . ?35 ii #11 Tn .nrrJ5_ Tub:-rcuinaia and lrlalaria - is . . In 3 Management of patent issues in procurement cycle/3 - Procurement agents used by grantees: -- In some cases, responsibility placed at country level for compliance with national law - acceptance of governmental use licenses -- Or, request for patent status for all products in the order -- Generally, limited patent search: - difficulties faced on doing patent search and very resource demanding - responsibility for verifying information placed at country level In any case, time limit assessment to avoid stocks outs Fondo Mundial rm ?ifi 3 ?aa The Global Fund Le Fonds mondial 'Cm d>oHn :55" gt I1. mt 1 ,1 'in Tuhcrculngti and [lg - n- m; 5' -.H-r-r.I.il-mi-; la ma an '35ccuwtre at |-epaludisrnt Availability and quality of information - Information about patent status often available only from the originator company (letters) - If no information, or when information available from originator and other available information are not coincident -) Chilling effect - procurement agent unwilling to take risks China lamivudine) - generic companies refusal to quote Guatemala) - Pressure of time - And eventually procurement of higher priced products I-II 053.11 (bOH?fl.' I Hr.' "Ian: A -1. Iflrfii - 3 I Availability and quality of information - Validity of searches conducted at country level? -- In many cases, search in local patent office done only using product name (INN) and formulation details. -- With secondary patents, on new forms, combinations, .. How to ensure all possible patents are covered in search? syrups -- Need for further guidance to patent offices on moving forward (new ARVs, increase in secondary patent applicationsmuwtra it-l Elflh, ta .a I'll-'I El Fondo Mundial 3 The"GJc:ba| Find Fonds mondial flak ha Fl _Tu crcu mus an aarra 1* -1 I '3 3 . fifi umIuI..ufl._. Irr. .32Ir. .-.4. .. um 2' afi:33per year/patient iihfi Li 3: ii!" .H. II. A Darunav 2: If More recent ARVS What patent information could be useful for facilitating procurement process? . . flaw eff Fnofian bnuii tbomzlLu. 135: . important now for middle income i ically ies WIPO Public list of basic and secondary patents of key products and formulations date and numbers E.g. 2004 On line data base or consultation service Spec countr E.g. El rondo Mundial is Guidance and simplified tools - Guidance for developing capacity at country level: E.g. WHO 2010, UNDP - Once patent status known, in some cases -) will need Technical Assistance to determine options for procurement of lower-priced generics - Need for simplified solutions for managing IP rights upfront -) Medicines Patent Pool goat El Fondo Mundlal aa The Global Fund Qua Le Fonds mondlal am Fnofianbuuii thou-m qalkzil f?ifiiflfiifi? and hiaiarta up as [ii I i h.