Modeling HIV/AIDS Drug Price Determinants in Brazil: Is Generic Competition a Myth?

Abstract

BackgroundBrazil became the first developing country to guarantee free and universal access to HIV/AIDS treatment, with antiretroviral drugs (ARVs) being delivered to nearly 190,000 patients. The analysis of ARV price evolution and market dynamics in Brazil can help anticipate issues soon to afflict other developing countries, as the 2010 revision of the World Health Organization guidelines shifts demand towards more expensive treatments, and, at the same time, current evolution of international legislation and trade agreements on intellectual property rights may reduce availability of generic drugs for HIV care.Methods and FindingsOur analyses are based on effective prices paid for ARV procurement in Brazil between 1996 and 2009. Data panel structure was exploited to gather ex-ante and ex-post information and address various sources of statistical bias. In-difference estimation offered in-depth information on ARV market characteristics which significantly influence prices. Although overall ARV prices follow a declining trend, changing characteristics in the generic segment help explain recent increase in generic ARV prices. Our results show that generic suppliers are more likely to respond to factors influencing demand size and market competition, while originator suppliers tend to set prices strategically to offset compulsory licensing threats and generic competition.SignificanceIn order to guarantee the long term sustainability of access to antiretroviral treatment, our findings highlight the importance of preserving and stimulating generic market dynamics to sustain developing countries' bargaining power in price negotiations undertaken with originator companies.

Trends in medicines procurement by the Brazilian federal government from 2006 to 2013

“…Other factors may also be involved, from lack of the necessary purchaser’s power in price negotiations [1, 30–32], as befalls many other financially constrained middle-income countries, to inadequate revision and faulty adherence to therapeutic guidelines [1]. …”

Affordability of adult HIV/AIDS treatment in developing countries: modelling price determinants for a better insight of the market functioning

“…This would not be so striking if we take into account the findings of Meiners et al . [12], who suggested that the Brazilian generic segment is not as competitive as it was thought. Transaction costs could be a second explanation for the generic price patterns across geographic regions, indicating the different payment capabilities of countries: payment delays could imply additional credit costs [14,15].…”

“…[10] and Meiners et al . [12] that monopsony (the presence of a single purchaser in a market) is able to compensate for monopoly power only when alternative suppliers are available.…”

What Reverses Decentralization? Failed Policy Implementation, Civic Supporters, or Central Bureaucrats’ Expertise? The Case of Brazil’s AIDS Program

“…In addition, through SUS, municipal primary health care programs, such as the Family Health Program, which conducts routine house visits, have been responsible for disseminating information, condoms, and HIV screening (Le Loup et al, 2009). And with regard to treatment, while retaining the responsibility of purchasing all ARV medications, in 2002, the national program decentralized the responsibility of distributing them through SUS (Meiners, Sagaon-Tessier, Hasenclever, & Moatti, 2011). State and municipal health departments also assumed the responsibility of funding NGOs to administer ARV treatment as well as syringe exchange (Massard da Fonseca et al, 2007).…”