Frontiers of Financing for Access: An Interim Perspective on the

Affordable Medicines Facility-malaria (AMFm)

9 December 2011

Olusoji Adeyi, MD, DrPH, MBA Director, AMFm

The AMFm Coalition: Thank you •  AMFm Founders •  Implementing countries: Governments, Private Sector (for-profit:

manufacturers, importers, distributors, retailers), Private Sector (not-for-profit), Academia and Civil society

•  RBM Partnership: Leadership, Secretariat and Members, AMFm Workstream of the Harmonization Working Group (co-Chairs: CHAI and WHO), World Bank, Technical partners: MMV, CDDEP, think tanks, academia

•  Financiers of the Phase 1 Co-Payment Fund •  The Global Fund: Leadership and Secretariat staff, AMFm Unit,

AMFm Ad Hoc Committee, •  AMFm Expert Advisory Group •  Observers and critics •  Individual resource persons

http://www.theglobalfund.org/en/activities/amfm/

Highlights •  The proposition, revisited •  How well does the model work? •  Key challenges •  What lies ahead?

What was the rationale for the AMFm? •  Traditional approaches to improve access to malaria

treatment were useful, but they alone did not achieve universal access

•  In 2009, about 225 million people contracted malaria and about 0.8 million people died, mostly children

•  Artemisinin-based combination therapies (ACTs) were recommended by WHO but: –  Were unaffordable compared with chloroquine and sulfadoxine-

pyrimethamine –  Had very limited availability in the private sector –  And therefore only accounted for about 1 in 5 anti-malarial

treatments taken

•  Furthermore, artemisinin monotherapies (oAMTs) increase the risk of widespread resistance to artemisinin

AMFm: The proposition in 2004

Saving Lives, Buying Time: “a sustained global subsidy of [ACTs] in order to reduce malaria mortality (“saving lives”) and delay resistance (“buying time”)” until new categories of antimalarials could be developed.

Holy Grail of Access: Reach and Richness Inevitable trade-offs in the short-term?

.

Reach

Ri chness

Today’s reality

“Normative ideal”

Two major caveats

“We also know, however, that even chloroquine is still out of economic reach for many people, both because even the lowest price is unaffordable, but also because price competition does not function everywhere”

“Both an advantage and a disadvantage of a supranational subsidy is that it perpetuates both the best and worst elements of an existing distribution system”

Source: Saving Lives, Buying Time. 2004. Page 93.

Innovation and its discontents? •  Will subsidy be captured by middlemen? •  Will it benefit the poorest & most remote? •  Will restrictions on OTC status prevent

universal access for all who need ACTs? •  Will subsidized ACTs leak massively to non-

participating countries? •  Will….? •  Will …? •  Will….?

Operational Purpose of AMFm Phase 1

•  Reduce retail prices of ACTs

•  Increase availability of ACTs

•  “Crowd out” oral artemisinin monotherapies

•  Increase use of ACTs

Phase 1 is a “Test of Concept” •  Negotiations with ACT manufacturers

– Reduce the sales price of ACTs –  Same price to public and private sector first-line buyers

•  Co-payments to manufacturers to further reduce price of ACTs to first line buyers – Under-price AMTs – Over time, approach retail prices of CQ, SP, AQ

•  “Supporting interventions” to ensure safe and effective ACT scale-up

•  All sectors: public, private non-profit, private for-profit •  9 pilots: Cambodia, Ghana, Kenya, Madagascar,

Niger, Nigeria, Tanzania, Uganda, Zanzibar

Financing AMFm Phase 1 The AMFm Co-Payment Fund (for

the subsidy) –  US$ 216 million –  Financed by

•  UNITAID •  United Kingdom (DFID) •  Bill & Melinda Gates

Foundation Supporting Interventions

–  Up to US$ 127 million –  Financed by the Global Fund

Setting realistic expectations: How long is enough for what?

•  “Most importantly, five years is an extraordinarily limited amount of time over which to measure global level outcomes and impact, especially in a new program with a new model. Investments of both new resources and new approaches require time to take root and bear fruit”

•  [Source: The Five-Year Evaluation of the Global Fund to Fight AIDS, Tuberculosis and Malaria. Synthesis of Study Areas 1, 2 and 3. March 2009].

Estimating Benchmarks of Success [Source: E2Pi. January 2011]

After 12 months’ implementation: •  Availability: Increase of 20 % from baseline •  Price: QAACT < 300% of the price of the

dominant non-QAACT, and less than price of oAMT

•  Market share: Increase in ACT market share of 10-15% from baseline and decrease in market share of oAMT

•  Use: Increase 5-10 % from baseline

Comparing Financing Mechanisms

Approved ACT orders by sector [As of 25 Nov 2011]

At global level: •  Public = 62.5 million •  Private for-profit = 121.5 million •  Private not-for-profit = 1.6 million •  Total = 185.6 million Within countries: public sector buys from the private sector First Line Buyers •  To avoid stock-outs from delays in public sector/CMS

procurement through imports Examples: Ghana, Niger, Nigeria and Tanzania

Levers for managing orders •  Ratio of cumulative approved orders to estimated

demand (using 2011 Quarter 1 estimates) •  Manufacturer performance (in terms of ratio of

actual to planned deliveries by a particular date) •  Delivery date •  Formulation/pack size •  Mode of transport •  Sector •  Fixed-dose combinations preferred to co-

blistered forms

A/L - Relative Percentage of Pack Sizes, pre- and post-revision of co-payment structure and introduction of levers

6x1; 29%

6x2; 26%

6x3; 13% 6x4, 68%

6x4, 51%

6x4, 32%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

July 2010-Feb 2011 March 2011-July 2011 Aug 2011-present July 2010-Feb 2011

36.0 million A/L Treatments

March 2011-July 2011: Revision of co-

payment structure to favor pediatric packs

87.1 million A/L Treatments

Aug 2011-present: Levers to prioritize pediatric packs +

revised co-payment structure

33.5 million A/L Treatments

As at 25 Nov 2011

AMFm early results: Reducing prices, increasing affordability

Median prices of AL 20/120mg (pack size 6x4) by country: AMFm vs. non-AMFm, Sept 2011

OB = Originator Brand; LPG = Lowest-Price Generic Source: Health Action International. Retail Prices of ACTs co-paid by the AMFm and other antimalarial medicines: report of price-tracking surveys. Sept/Oct 2011

0.98 0.98 0.43 0.43

1.30 1.30 0.63 0.63 0.54 0.52

1.08 1.79

7.87

11.59

6.96 5.83

6.88

10.25

8.96 8.96

3.05 3.28 3.22 2.68

3.89 3.56

12.42

2.24 2.87

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

FORMAL INFORMAL FORMAL INFORMAL FORMAL INFORMAL FORMAL INFORMAL FORMAL INFORMAL FORMAL INFORMAL

GHANA KENYA NIGERIA TANZANIA MADAGASCAR UGANDA

Pric

e (U

S $)

AMFm Non-AMFm(OB) Non-AMFm(LPG)

Leveraging existing infrastructure

•  By combining price negotiations with an average co-payment of about US$1.05 per treatment, the AMFm has reduced the median retail prices of quality-assured ACTs from US$4.66-12.55 to US$0.44-1.31 for an adult equivalent treatment pack.

•  In the private sector, all direct costs of in-country distribution and storage are borne by the private sector distributors, not by the government

AMFm early results: Increased availability of ACTs

Percent of facilities having any AMFm ACT available, Sept 2011

Source: Health Action International. Retail Prices of ACTs co-paid by the AMFm and other antimalarial medicines: report of price-tracking surveys. Sept/Oct 2011

100%

45%

100%

72%

100% 97% 93% 93% 97%

40%

78%

54%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FOR

MA

L(n=

31)

INFO

RM

AL(

n=29

)

FOR

MA

L (n

=31)

INFO

RM

AL(

n=29

)

FOR

MA

L(n=

30)

INFO

RM

AL(

n=30

)

FOR

MA

L(n=

30)

INFO

RM

AL(

n=30

)

FOR

MA

L(n=

30)

INFO

RM

AL(

n=30

)

FOR

MA

L(n=

67)

INFO

RM

AL(

n=48

)

GHANA KENYA NIGERIA TANZANIA MADAGASCAR UGANDA

Perc

ent (

%)

Early indications of displacement?

“I receive customers on a daily basis who seek to buy Fansidar [SP] because they know it is cheaper than the [unsubsidised] ACTs. But upon realisation of the availability of the subsidised ACTs, they usually change their options and go for the highly effective alternative."

-  Willis Otieno, pharmacist (Kisumu, Kenya) -  All Africa News, June 2011

AMFm  ACTs:  Available  (almost)  everywhere  in  Western  Kenya

Facility Count 508 Facilities have AMFm Co-Paid ACT 89 Facilities have Non Co-Paid ACT 82 Facilities have Other Antimalarials 49 Facilities have No Antimalarials 51 Facilities were Closed Total 778 Facilities

The Eagle has landed; what is the next frontier?

•  The basic AMFm model works in practice

•  What are we learning?

•  What are some major challenges?

Learning & Challenges: Highlights •  What are the determinants of price in the AMFm?

Simple supply vs demand ? IEC campaigns? CSR? •  To what extent is the public sector relying on the

private sector for supply of ACTs? •  Operational Research:

–  RDTs? Opportunities and Constraints –  Reaching the poor? What works where and how?

•  Overcoming the constraints on artemisinin supply •  Funding the entire duration of Phase 1 •  How to manage risk of price arbitrage across

borders arising from non-global rollout of AMFm?

.108  

.446  

.138  .062  

.380  .438  

.076   .050  

.325  

.447  

.115  .058  

Took    ACT  

Took  Other  An7malarial  or  An7pyre7c  

Took    An7bio7c  

Took  No  Medicine  

Illiterate  Households  Only    

.365  

.531  

.219  

.042  

.446   .439  

.130  .030  

.483  .424  

.144  .035  

.000  

.100  

.200  

.300  

.400  

.500  

.600  

Took    ACT  

Took  Other  An7malarial  or  An7pyre7c  

Took    An7bio7c  

Took  No  Medicine  

Literate  Households  Only    

Increases  in  Access  to  ACTs  by  Literacy  Status:  ACT  Subsidy  Greatly  Increases  Equity  in  ACT  Access  (Cohen  et  al,  2011)  

Assessing the sustainability [Brenzel and Young, 2011]

The ability of the 8 pilot country governments to finance the unsubsidized or partially subsidized costs of ACTs, supporting interventions and RDTs, measured by: •  Share of Government Health Expenditures required to

cover the costs of ACTs, RDTs and supporting interventions

•  Share of costs relative to GDP •  Share of costs relative to malaria expenditures or budget •  Size of funding gap and assessment of the availability of

other sources of financing to fill those gaps

Future of AMFm (1/2) •  Independent Evaluation: Report in 2012 •  Global Fund: Board Decision in Q4 of 2012:

Continue, Expand/Accelerate, Modify, Suspend/Terminate? •  AMFm Founders:

–  Met in October 2011 –  2013 as a “transition year”?: To allow time to plan for expansion,

or for consolidation in same countries, or for responsible termination of AMFm Phase 1 pilot

•  Global Fund has requested RBM to convene work to plan for the transition

Future of AMFm (2/2) •  Country realities

– What are their experiences and preferences? – How would they like to see the AMFm evolve?

•  What might AMFm look like after Phase 1? – Scale and Contents? – Financing? – Management and Technical Assistance?

•  Who will take responsibility for what?

Thank you