Responding to market failures in tuberculosis control

This report evaluates the success of a programme to negotiate cost reductions in TB drugs

The specter of multidrug-resistant tuberculosis (MDR-TB) threatens the gains achieved by tuberculosis control through international recommendations currently accepted by 127 countries. The high cost of second-line drugs is a clear example of a market failure serving as a barrier to treatment of MDR-TB cases.

The report describes an approach which aimed to consolidate the market and to create a regulatory mechanism promoting access to concessionally priced drugs to projects with adequate technical capacity. The unified approach to both the monopoly and nonmonopoly producers combined with tailored negotiation strategies proved effective in reducing prices and reaching long-term sustainability in price reduction.

This involved a six part strategy:

• identifying key drusg and their market status
• appointinga single negotiator, Médecins Sans Frontières, to act for all parties, thereby consolidating the various sources of demand, and they also provided the technical support and financial capital in dvance.
• Identifying six categories of the most important second-line drugs, which were then submitted for inclusion on the WHO Model List of Essential Drugs (EDL). Two markets were offered tothe industry
  • one constituted countries and organizations that had made firm financial and programmatic commitments to establishing pilot projects (approximately 2000 patients initially constituting over three million doses of the various drugs in total)
  • The second, based on the estimated number of new MDR-TB cases globally (207,000 to 338,000 in 2000) included countries assessed by their need for TB drugs and their intention to join DOTS-Plus, together with an estimate of their consumption of second-line drugs. This second potential market is growing because of the decreasing cost of second-line drugs and the increasing number of cases.
    • A direct negotiation strategy was used to address the needs for the first market. This was based on quality criteria and price. A “tiered-tender” approach, which gives a large percentage to the quality-assured company with the lowest-priced drug and a proportional percentage to a select number of the remaining quality-assured manufacturers (or one other manufacturer), is also being used for the second market.
    • The advantages to the suppliers were highlighted. This included the pooled-procurement process, reflecting a single client for global demand; participation in a high-profile partnership; potential penetration to other markets; assurance that drugs would not be lost by further creation of resistance; and potential facilitation of drug registration when needed. establish a fair price for drugs required for public health emergencies.
    • Access to the concessionally priced second-line drugs is only given to projects deemed to adhere to the international recommendations for establishing DOTS-Plus pilot projects by a multi-institutional body known as the Green Light Committee (GLC)

    As a result,

    • prices decreased from 48-97% for a treatment regimen
    • competition was increased in monopoly markets
    • the cost of supply of quality-assured second-line drugs descreased

    If countries continue their spending trend on second-line drugs as they have done for 1998–2000, they could save as much as 93.6% of their expenditure on second-line drugs. Overall, this could produce a median savings of approximately US$454,000 for the countries surveyed.

    An independent scientific committee fosters access to the drugs under tightly monitored pilot projects to prevent the creation of resistance to second-line drugs.

    This strategy may be applicable to other infectious-disease treatment efforts.