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entitled 'Global HIV/AIDS Epidemic: Selection of Antiretroviral 
Medications Provided under U.S. Emergency Plan Is Limited' which was 
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Report to Congressional Requesters:

United States Government Accountability Office:

GAO:

January 2005:

Global HIV/AIDS Epidemic:

Selection of Antiretroviral Medications Provided under U.S. Emergency 
Plan Is Limited:

GAO-05-133:

GAO Highlights:

Highlights of GAO-05-133, a report to congressional requesters: 

Why GAO Did This Study:

In developing countries, only about 7 percent of people with HIV/AIDS 
receive treatment. In 2003, the Congress authorized the President’s 
Emergency Plan for AIDS Relief, a 5-year, $15 billion initiative under 
the Office of the U.S. Global AIDS Coordinator. The Emergency Plan 
focuses on 15 developing countries, with a goal of supporting treatment 
for 2 million people. Treatment regimens use multiple antiretroviral 
medications (ARV), which can be original or generic. Fixed-dose 
combinations (FDC) combine two or three ARVs into one pill. 

Questions have been raised about whether the plan is providing ARVs 
preferred by the focus countries at reasonable prices. GAO compared the 
selection of ARVs provided under the plan with that provided under 
other major treatment initiatives, compared the prices of those 
selections, and determined what the Coordinator’s Office is doing to 
expand the plan’s selection of quality-assured lower-priced ARVs. 

What GAO Found:

The Emergency Plan provides a smaller selection of recommended first-
line ARVs than other major HIV/AIDS treatment initiatives in developing 
countries. The plan’s selection includes six original ARV products—the 
only ARVs that have met the plan’s quality assurance requirement—and 
does not include some FDCs that are preferred by most of the focus 
countries because they can simplify treatment. In contrast, the other 
initiatives provide a selection that in addition to the six original 
ARVs includes generic ARVs and more of the preferred FDCs.

The original ARVs provided under the plan are generally higher in price 
than the generic ARVs provided under the other initiatives. The 
differences in the prices, quoted to GAO during June and July 2004 by 
13 manufacturers, ranged from $11 less to $328 more per person per year 
for original ARVs than for the lowest-priced corresponding generic ARVs 
provided under the other initiatives. At these prices, three of the 
four first-line regimens recommended by the World Health Organization 
could be built for less—from $40 to $368 less depending on the regimen—
with the generic ARVs provided under the other initiatives than with 
the original ARVs provided under the plan. Such differences in price 
per person per year could translate into hundreds of millions of 
dollars of additional expense when considered on the scale of the 
plan’s goal of treating 2 million people by the end of 2008. 

The Coordinator’s Office has worked to expand the selection of quality-
assured ARVs—including FDCs and lower-priced generics—that it provides 
to the focus countries under the plan. The selection of ARVs available 
under the plan is primarily limited by its quality assurance 
requirement. The Coordinator’s Office is working with manufacturers to 
take the steps necessary for more ARVs to meet this requirement. 
However, if generic ARVs meet the plan’s quality assurance requirement, 
a statutory prohibition on the purchase of any medication manufactured 
outside the United States if the manufacture of that medication in the 
United States would be covered by a valid U.S. patent could become a 
barrier to expansion because all ARVs are currently under U.S. patents. 
Unless the patent holders for ARVs that have met the plan’s quality 
requirement give permission or the Coordinator’s Office exercises its 
authority to purchase these products notwithstanding the patent 
requirement, the selection of ARVs provided under the Emergency Plan 
may not expand rapidly enough to address the AIDS emergency.

In commenting on a draft of this report, the Department of State, the 
Department of Health and Human Services, and the U.S. Agency for 
International Development expressed concern about how GAO addressed ARV 
quality. In the draft report GAO described the quality assurance 
requirements used by the Emergency Plan and the other initiatives and 
stated that quality is the primary factor determining the selection of 
products provided under each. However, evaluating the quality assurance 
processes used by each initiative was outside the scope of GAO’s work.

What GAO Recommends:

www.gao.gov/cgi-bin/getrpt?GAO-05-133.

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Janet Heinrich at (202) 
512-7119.

[End of section]

Contents:

Letter:

Results in Brief:

Background:

Emergency Plan Provides Smaller Selection of ARV Products Than Other 
Initiatives:

Emergency Plan's Selection of ARV Products Results in Higher Prices for 
Most First-Line Treatment Regimens:

Coordinator's Office Has Taken Steps to Expand Selection of ARV 
Products It Provides, but Patent Requirement Is Potential Barrier:

Concluding Observations:

Agency Comments and Our Evaluation:

Appendix I: Scope and Methodology:

Comparing Selection of ARV Products the Emergency Plan Provides to That 
Provided under Other Initiatives:

Determining Prices of ARVs for the Focus Countries:

Examining the Efforts of the Coordinator's Office to Expand the 
Selection of ARVs It Provides:

Appendix II: Price Information from Survey of ARV Manufacturers:

Appendix III: Comments from the Department of State:

Appendix IV: GAO Contact and Staff Acknowledgments:

GAO Contact:

Acknowledgments:

Related GAO Products:

Tables:

Table 1: Prices for the First-Line Regimens:

Table 2: Standard International Terms for the Shipping and Insurance 
Conditions of Purchase Agreements:

Figures:

Figure 1: WHO Recommendations for First-Line ARVs and Treatment 
Regimens for Resource-Limited Settings:

Figure 2: Selection of First-Line ARV Products Provided under the 
Emergency Plan and Selection Provided under Other Initiatives:

Figure 3: Manufacturers' Prices for First-Line ARV Products for the 
Focus Countries (prices per person per year in U.S. dollars):

Figure 4: Manufacturers' Prices for FDC ARV Products for the Focus 
Countries (prices per person per year in U.S. dollars):

Abbreviations:

ARV: antiretroviral medication: 
CDC: Centers for Disease Control and Prevention: 
d4T: stavudine:
EFV: efavirenz: 
FDA: Food and Drug Administration: 
FDC: fixed-dose combination: 
FHI: Family Health International: 
HHS: Department of Health and Human Services: 
HIV/AIDS: human immunodeficiency virus / acquired immune deficiency 
syndrome: 
JSI: John Snow Incorporated: 
MSH: Management Sciences for Health: 
NGO: nongovernmental organization: 
NVP: nevirapine: 
UN: United Nations: 
UNAIDS: Joint United Nations Programme on HIV/AIDS: 
UNICEF: United Nations Children's Fund: 
USAID: United States Agency for International Development: 
WHO: World Health Organization: 
ZDV: zidovudine:
3TC: lamivudine:

United States Government Accountability Office:

Washington, DC 20548:

January 11, 2005:

The Honorable Edward M. Kennedy: 
Ranking Minority Member: 
Committee on Health, Education, Labor, and Pensions:
United States Senate:

The Honorable Henry A. Waxman: 
Ranking Minority Member: 
Committee on Government Reform: 
House of Representatives:

The Honorable John McCain: 
United States Senate:

The Joint United Nations Programme on HIV/AIDS (UNAIDS) estimates that 
3 million people worldwide died from HIV/AIDS in 2003, and an estimated 
38 million or more people are currently living with HIV/AIDS. Although 
there is no cure for the disease, there are treatments that can slow 
its progression. Yet in developing countries only about 7 percent of 
people living with HIV/AIDS receive treatment. Since the mid-1980s the 
United States has supported HIV/AIDS initiatives in developing 
countries directly and through its contributions to multinational 
organizations such as agencies within the United Nations (UN) system--
including the World Bank and UNAIDS--and, more recently, the Global 
Fund to Fight AIDS, Tuberculosis, and Malaria (Global Fund).[Footnote 
1] In 2004, the President's Emergency Plan for AIDS Relief (Emergency 
Plan)[Footnote 2]--a 5-year initiative under the Office of the U.S. 
Global AIDS Coordinator (the Coordinator's Office) within the 
Department of State[Footnote 3]--added over $9 billion of funding for 
HIV/AIDS treatment, care, and prevention in certain developing 
countries to its ongoing commitments, bringing the total U.S. 
commitment to addressing the worldwide HIV/AIDS emergency to $15 
billion through 2008.

The goals of the Emergency Plan, which focuses on 15 developing 
countries with high rates of HIV/AIDS,[Footnote 4] are to support 
treatment to 2 million people living with HIV/AIDS, prevent 7 million 
new HIV infections, and support care to 10 million people infected or 
affected by HIV/AIDS, including orphans, by the end of fiscal year 
2008. The plan allocates more than half its budget to treatment, 
approximately $4 billion of which is specifically for the purchase and 
distribution of antiretroviral medications (ARV)--the standard 
treatment for HIV/AIDS--in the focus countries. An HIV/AIDS treatment 
regimen includes multiple ARVs. ARVs are marketed as either original 
versions--all of which are currently under U.S. patents--or as copies 
of the originals, that is, generic versions.[Footnote 5] In addition, 
some manufacturers are marketing products that combine two or three 
ARVs into one pill--known as a fixed-dose combination (FDC).

The World Health Organization (WHO) recommends five specific ARVs that 
are used to build four regimens as the first line for treatment 
programs in countries in which health care resources are limited, such 
as the focus countries. WHO recommends one of the four regimens as the 
first choice for rapid implementation of large-scale treatment programs 
in these countries. Most focus countries have indicated a preference 
for FDCs, which can simplify treatment and facilitate adherence to the 
recommended treatment regimens, and for lower-priced generics in their 
national treatment strategies.

While the Coordinator's Office has specified multiple objectives to 
achieve the Emergency Plan's goals, two are most relevant to the 
purchase of ARV products under the plan: first, coordination with the 
national treatment strategies of the focus countries, and, second, 
provision of ARV products of assured quality at the lowest possible 
price. Officials from organizations involved in treating HIV/AIDS in 
developing countries, such as Doctors Without Borders[Footnote 6] and 
Catholic Relief Services Consortium, have criticized the plan for not 
including the FDCs preferred by the focus countries in the selection of 
ARV products it provides. In addition, concerns have been raised about 
the plan's ability to provide ARV products at reasonable prices. You 
asked us to examine the provision of ARVs under the Emergency Plan, as 
compared with the provision of ARVs under the initiatives of major 
multinational organizations.

In this report, we determine (1) how the selection of ARV products 
provided under the Emergency Plan compares with the selection provided 
under the initiatives of the World Bank, the United Nations Children's 
Fund (UNICEF), and the Global Fund; (2) how the prices of the ARV 
products provided under the Emergency Plan compare with the prices of 
the ARV products provided under the other initiatives; and (3) what the 
Coordinator's Office is doing to expand the selection of quality-
assured ARV products at the lowest possible price under the Emergency 
Plan.

To compare the selection of ARV products provided under the Emergency 
Plan to that provided under the other initiatives, we reviewed the 
requirements that apply to the purchase of ARV products under the 
Emergency Plan, as well as the requirements that apply to the purchase 
of ARV products under the HIV/AIDS treatment initiatives funded by 
three multinational organizations--the World Bank, UNICEF, and the 
Global Fund. We interviewed officials from the Coordinator's Office and 
the U.S. agencies primarily responsible for implementing the Emergency 
Plan, such as the U.S. Agency for International Development (USAID), 
regarding how they oversee the purchase of ARV products consistent with 
applicable requirements. We also interviewed officials from the 
multinational organizations regarding their requirements and the ARV 
products they provide through their initiatives. In addition, we 
reviewed documentation from U.S. agencies, nongovernmental 
organizations (NGO) that are participating in the Emergency Plan, and 
the multinational organizations showing the ARV products that have been 
purchased under their initiatives. We focused specifically on the ARVs 
that are recommended by WHO for first-line treatment of HIV/AIDS in 
countries where health care resources are limited. We identified the 
quality assurance process applied to each product, but we did not 
evaluate the different quality assurance processes or independently 
determine the comparative quality of the products.

To compare the prices of different ARV products provided under the 
Emergency Plan and the other initiatives, we obtained price information 
from selected manufacturers of ARV products that are generally 
available to the focus countries.[Footnote 7] We report prices for the 
focus countries quoted to us during June and July 2004 by 13 
manufacturers. We asked ARV manufacturers to quote prices according to 
a standard set of terms. Because the price information we requested is 
proprietary to each manufacturer, we could not directly assess the 
reliability of the price data given to us. However, we checked the 
price data against several published sources and determined that they 
are sufficiently reliable.

To determine what the Coordinator's Office is doing to provide an 
expanded selection of ARV products at the lowest prices possible, we 
interviewed officials from the Coordinator's Office regarding their 
efforts to address potential barriers to providing additional ARV 
products under the Emergency Plan. Because the Coordinator's Office is 
working with the Department of Health and Human Services' (HHS) Food 
and Drug Administration (FDA) to support the ability of additional ARV 
manufacturers to meet the Emergency Plan's quality assurance 
requirement, we also interviewed officials from FDA regarding these 
efforts. Aspects of implementing treatment programs other than 
purchasing ARVs, such as human resources and supply chain management, 
and treatments other than ARVs, such as medications to treat 
opportunistic infections, are outside the scope of this report. We 
conducted our work from January 2004 through January 2005 in accordance 
with generally accepted government auditing standards. For more details 
on our scope and methodology, see appendix I.

Results in Brief:

The Emergency Plan provides a smaller selection of ARV products than 
the selection provided under the initiatives funded by the World Bank, 
UNICEF, and the Global Fund. Under the Coordinator's Office's 
application of the Emergency Plan's quality assurance requirement, the 
ARV products the plan provides must have approval from either FDA or 
another acceptable regulatory authority. Because six original ARV 
products have met this requirement, the plan provides these six in its 
selection. Although this selection includes one double-ARV FDC that can 
be used in two of the four regimens recommended by WHO as first-line 
treatments in countries with limited resources, it does not include the 
triple-ARV FDCs preferred by the majority of the focus countries. In 
contrast, the other initiatives provide a selection of ARV products 
that includes not only those that meet the plan's quality assurance 
requirement but also generic ARVs and one of the preferred triple-ARV 
FDCs that have met the quality assurance requirements of these 
initiatives.

The Emergency Plan's selection of ARV products results in higher prices 
for most of the first-line treatment regimens. At the prices quoted to 
us during June and July 2004, the differences in price between the 
original version of an ARV provided under the Emergency Plan and the 
lowest-priced generic version of the corresponding ARV provided under 
the other initiatives ranged from $11 less per person per year to $328 
more for the original version. At these prices, three of the four 
first-line regimens could be built for a lower price with the generic 
ARV products provided under the other initiatives than with the 
original ARV products provided under the Emergency Plan; there was no 
difference in price for the remaining regimen. For the three regimens 
that could be built for a lower price, which include WHO's first-choice 
for rapid implementation of large-scale treatment programs, the 
difference in the price of the regimens ranged from $40 to $368 less 
per person per year. Such differences in the price of a regimen per 
person per year could translate into millions of dollars of additional 
expense when considered on the scale of the Emergency Plan's goal of 
treating 2 million people by the end of 2008. For example, for every 
100,000 patients on WHO's first-choice regimen for 5 years, the plan 
could pay over $170 million more than the other initiatives to purchase 
the ARVs.

The Coordinator's Office has taken steps to expand the selection of 
quality-assured ARVs--including FDCs and lower-priced generics--that 
it provides to the focus countries under the Emergency Plan, but a 
statutory patent requirement may pose a barrier to expansion efforts. 
Currently, the selection of ARV products available under the plan is 
primarily limited by the quality assurance requirement. The 
Coordinator's Office has worked with FDA to expand the plan's selection 
of quality-assured ARV products, particularly FDCs. The Coordinator's 
Office has encouraged manufacturers to seek FDA approval for their ARV 
products--and thereby satisfy the plan's quality assurance requirement-
-and several manufacturers told us that they intended to do so. 
However, if generic ARVs receive FDA approval, the patent requirement-
-a statutory prohibition on the purchase of any medication manufactured 
outside the United States if the manufacture of that medication in the 
United States would be covered by a valid U.S. patent--could become a 
barrier to expansion. The Emergency Plan may not be able to provide 
lower-priced generic ARVs and FDCs unless the Coordinator's Office 
addresses this potential barrier. The Coordinator's Office has the 
authority to provide ARVs notwithstanding the patent requirement. If 
applications proceed as anticipated by ARV manufacturers and FDA, we 
expect that FDA-approved generic ARVs will be available early in 2005. 
However, unless the patent holders for these ARVs give permission or 
the Coordinator's Office exercises its authority to purchase these 
products notwithstanding the patent requirement, the selection of ARVs 
provided under the Emergency Plan may not expand rapidly enough to 
address the AIDS emergency.

In commenting on a draft of this report the Department of State, 
responding on behalf of itself, HHS, and USAID, expressed concern about 
how we addressed the issue of ARV quality. In the draft report we 
described the quality assurance processes used by the Emergency Plan 
and the other initiatives, specified which process applied to each ARV 
product, and stated that quality is the primary factor determining the 
selection of products provided under each. However, as the draft report 
stated, evaluating the quality assurance processes used by each 
initiative was beyond the scope of our work.

Background:

Although no cure exists for HIV/AIDS, the use of multiple ARVs in 
combination has been shown to suppress the virus and slow the 
progression of the disease. Twenty distinct ARV medications can be used 
to treat people living with HIV/AIDS. The standard treatment is a 
regimen that combines three or more ARVs. People receiving ARV 
treatment can develop strains of HIV that are resistant to some or all 
of their ARVs, and as a result their treatment regimens become 
ineffective and they must switch to a different regimen. The risk of 
developing resistance decreases when patients are able to adhere to 
their recommended treatment by taking the prescribed ARVs, the right 
number of times each day, and without missing doses.

Recommended ARV Treatment Regimens:

WHO has recommended certain regimens for settings in which resources 
are limited.[Footnote 8] For people receiving ARVs for the first time 
in such settings, WHO recommends one of four regimens, known as first-
line regimens. These regimens are built from combinations of the 
following five first-line ARVs: stavudine (d4T), zidovudine 
(ZDV),[Footnote 9] lamivudine (3TC), nevirapine (NVP), and efavirenz 
(EFV).[Footnote 10] (See fig. 1.) Of the four first-line regimens, WHO 
recommends d4T + 3TC + NVP as the first-choice regimen for rapid 
implementation of large-scale treatment programs in resource-limited 
settings because, for example, it is expected that most people will be 
able to tolerate it without developing side effects that would require 
switching to another regimen. Each of the focus countries highlighted 
in the Emergency Plan has selected one or more of these first-line 
regimens for its national treatment strategy, and most have selected 
d4T + 3TC + NVP as their first-choice regimen.

Figure 1: WHO Recommendations for First-Line ARVs and Treatment 
Regimens for Resource-Limited Settings:

[See PDF for image]

[A] WHO recommends d4T + 3TC + NVP as the first-choice regimen for 
rapid implementation of large-scale treatment programs in settings with 
limited health care resources.

[End of figure]

For people who have developed strains of HIV that are resistant to 
their initial treatment regimen, WHO recommends one of four second-line 
regimens. The second-line regimens use a different set of five ARVs. 
Second-line regimens can have disadvantages, which may be magnified in 
resource-limited settings. The disadvantages include the need to take 
more pills, the potential for additional side effects, the need for 
refrigeration during transportation and storage, and prices that are 
generally higher than those for first-line regimens. WHO emphasizes 
that promoting better adherence to a first-line regimen, thereby 
reducing the occurrence of resistance and delaying the need to shift to 
a second-line regimen, is particularly important in resource-limited 
settings because of these disadvantages.

The Coordinator's Office, FDA, and the Institute of Medicine, as well 
as the Global Fund, the World Bank, UNAIDS, and WHO, have endorsed the 
use of FDCs, which combine two or more ARVs into one pill, as an 
important strategy to promote adherence to ARV regimens.[Footnote 11] 
These organizations have determined that the benefits of FDCs include 
promoting adherence, by reducing the number of pills a person has to 
take at one time, reducing the time and costs associated with 
procurement and distribution of ARVs, and simplifying the selection and 
prescribing of ARVs.

Funding for HIV/AIDS Treatment in the Focus Countries:

Both national initiatives--such as the Emergency Plan--and 
multinational initiatives provide funding for HIV/AIDS treatment in the 
focus countries. In general, these initiatives provide their funding 
through grants, cooperative agreements, and contracts with governments 
and NGOs. The NGOs provide technical assistance and support the 
implementation of treatment programs by, for example, purchasing 
medications. In recognition of the fact that several initiatives may be 
active in any one country, the U.S. government and the multinational 
initiatives have agreed to promote coordination across their 
initiatives in order to use resources efficiently and effectively and 
to ensure rapid expansion of treatment programs.

The Emergency Plan is the largest national initiative to combat the 
global HIV/AIDS epidemic. Through the Emergency Plan, the U.S. 
government both provides direct technical assistance through field 
offices and funds NGOs that support HIV/AIDS treatment programs in the 
focus countries. Under the direction of the Coordinator's Office, USAID 
and HHS's Centers for Disease Control and Prevention have primary 
responsibility for implementing the Emergency Plan, with USAID 
responsible for overseeing the purchase of medications.[Footnote 12]

Multinational organizations, including the Global Fund and agencies 
within the UN system, also provide funding to HIV/AIDS programs in the 
focus countries. The Global Fund, which was initiated in 2002, expects 
disbursements to total $1 billion by the end of 2004, over half of 
which are intended to fund HIV/AIDS programs. Within the UN system, the 
World Bank represents the largest source of funding for HIV/AIDS 
activities in developing countries. Since 1986, the World Bank reports 
that it has invested $2 billion in HIV/AIDS prevention, care, and 
treatment services in developing countries.

Requirements Related to the Purchase of ARV Products:

All HIV/AIDS treatment programs must comply with the laws--including 
patent and drug registration laws--that apply in the country for which 
they are purchasing ARV products, as well as the requirements that 
pertain to the source of funding they are using. The purchase of ARVs 
under the Emergency Plan is subject to USAID quality assurance 
requirements and a statutory patent requirement.[Footnote 13] To assure 
quality, USAID requires that ARV products purchased under the plan have 
either FDA approval or the approval of another acceptable regulatory 
authority.[Footnote 14] Because the Emergency Plan is largely funded 
under the Foreign Assistance Act of 1961, the purchase of ARVs with 
these funds is subject to a provision of the act that prohibits the 
purchase of any medication manufactured outside the United States if 
the manufacture of that medication in the United States would be 
covered by a valid U.S. patent, unless the patent owner gives its 
permission.[Footnote 15] The purchase of ARV products with funds from 
the other initiatives must meet the quality assurance requirements that 
the World Bank, UNICEF, and the Global Fund have in common. 
Specifically, these organizations require that all ARV products either 
be approved by an acceptable regulatory authority such as FDA or be 
prequalified through WHO's Prequalification Project. WHO's 
Prequalification Project includes a process for assessing the quality 
of products that have not been subject to review by an acceptable 
regulatory authority. Prequalification relies on review of product 
information and manufacturing site inspections to determine if the 
product meets WHO standards.

Emergency Plan Provides Smaller Selection of ARV Products Than Other 
Initiatives:

The Emergency Plan provides a smaller selection of ARV products than 
the other initiatives. Because the plan provides only ARV products that 
have been approved by FDA or another acceptable regulatory authority, 
it provides six ARV products, all of which are original versions. In 
addition to ARV products that have met the Emergency Plan's quality 
assurance requirement, other initiatives also provide generic ARVs that 
have been prequalified by WHO. While the plan does not provide the FDCs 
preferred by the focus countries, these products are available through 
the other initiatives.

Emergency Plan Provides One Version of Each First-Line ARV and a 
Double-ARV FDC:

As of December 2004, the Emergency Plan provides one version--the 
original version--of each of the five ARVs necessary to build all of 
the first-line regimens. The plan also provides a double-ARV FDC (ZDV + 
3TC) that can be used in half of those regimens, but not the regimen 
that is recommended by WHO as the first choice for rapid implementation 
of large-scale HIV/AIDS treatment programs in resource-limited settings 
(d4T + 3TC + NVP). These six products, flagged with filled diamonds in 
figure 2, are the only first-line ARVs that have been approved by FDA 
or another acceptable regulatory authority and thus comply with the 
plan's quality assurance requirement. Because no generic ARVs currently 
meet the plan's quality assurance requirement, the Emergency Plan does 
not provide generic versions of any of the first-line ARVs or the 
double-ARV FDC provided under the plan. In addition, the Emergency Plan 
does not provide any version of three other FDC products that are 
generally available to the focus countries, including the triple-ARV 
FDC (d4T + 3TC + NVP) that is preferred by the majority of the focus 
countries.

Figure 2: Selection of First-Line ARV Products Provided under the 
Emergency Plan and Selection Provided under Other Initiatives:

[See PDF for image]

Notes: Data from GAO survey of ARV manufacturers during June and July 
2004, the Coordinator's Office, USAID, WHO, the World Bank, UNICEF, and 
the Global Fund. As of December 2004, the ARV products flagged with a 
filled diamond have been approved by FDA or another acceptable 
regulatory authority; those flagged with an unfilled diamond have been 
prequalified by WHO; and those not flagged with a diamond have been 
neither approved by FDA or another acceptable regulatory authority nor 
prequalified by WHO. We did not determine whether the different quality 
assurance processes result in ARV products of differing quality. 
Because laws of a country may affect whether a particular ARV product 
is available there, not all ARV products are available in all of the 
focus countries.

[End of figure]

Other Initiatives Provide Generic as Well as Original ARVs:

The other initiatives provide not only the original versions of the 
first-line ARVs but also generic versions that meet their quality 
assurance requirements. In addition to ARVs that have been approved by 
FDA or another acceptable regulatory authority, the other initiatives 
also accept those that have been prequalified by WHO. Thus the other 
initiatives provide generic versions of most of the first-line single 
ARVs, as well as a double-ARV FDC (ZDV + 3TC) and a triple-ARV FDC (d4T 
+ 3TC + NVP), flagged with unfilled diamonds in figure 2, that are not 
provided under the plan. Other generic versions of all ARV products are 
available to the focus countries but are not provided under the 
Emergency Plan or under the other initiatives. The additional generic 
ARVs generally available to the focus countries, shown in figure 2 as 
vertical lines without diamonds, have been neither approved by FDA or 
another acceptable regulatory authority nor prequalified by WHO.

Emergency Plan's Selection of ARV Products Results in Higher Prices for 
Most First-Line Treatment Regimens:

At the prices quoted to us during June and July 2004, most first-line 
regimens could be built for a lower price with the generic ARV products 
provided under the other initiatives than with the original ARV 
products provided under the Emergency Plan. (See table 1.) The 
difference in price between the original ARVs provided under the 
Emergency Plan and the lowest-priced generic ARVs provided under the 
other initiatives ranged from $11 less per person per year for original 
3TC to $328 more for original NVP. (See fig. 2.) At these prices, three 
of the four first-line regimens could be built for a lower price with 
the generic ARV products provided under the other initiatives than with 
the original ARV products provided under the Emergency Plan. The 
difference in price for these three regimens when built with the 
lowest-priced ARVs provided under the other initiatives and when built 
with the lowest-priced ARVs provided under the Emergency Plan ranged 
from $40 less per person per year for the regimen ZDV + 3TC + EFV to 
$368 less for the regimen ZDV + 3TC + NVP. There was no difference in 
price for the regimen d4T + 3TC + EFV because the lowest-priced ARVs 
provided under the Emergency Plan and the other initiatives are the 
same. All of the first-line regimens could be built for a lower price 
using the lowest-priced generic ARVs that are generally available to 
the focus countries but not provided under either the Emergency Plan or 
the other initiatives.

Table 1: Prices for the First-Line Regimens:

Regimen: d4T + 3TC + NVP; 
Price in U.S. dollars per person per year (difference compared to the 
Emergency Plan): Using lowest-priced ARVs provided under the Emergency 
Plan: $562; 
Price in U.S. dollars per person per year (difference compared to the 
Emergency Plan): Using lowest-priced ARVs provided under the World 
Bank, UNICEF, and the Global Fund: $219 (-343); 
Price in U.S. dollars per person per year (difference compared to the 
Emergency Plan): Using lowest-priced ARVs generally available to focus 
countries: $150 (-412).

Regimen: ZDV + 3TC + NVP; 
Price in U.S. dollars per person per year (difference compared to the 
Emergency Plan): Using lowest-priced ARVs provided under the Emergency 
Plan: 675; 
Price in U.S. dollars per person per year (difference compared to the 
Emergency Plan): Using lowest-priced ARVs provided under the World 
Bank, UNICEF, and the Global Fund: 307 (-368); 
Price in U.S. dollars per person per year (difference compared to the 
Emergency Plan): Using lowest-priced ARVs generally available to focus 
countries: 225 (-450).

Regimen: d4T + 3TC + EFV; 
Price in U.S. dollars per person per year (difference compared to the 
Emergency Plan): Using lowest-priced ARVs provided under the Emergency 
Plan: 471; 
Price in U.S. dollars per person per year (difference compared to the 
Emergency Plan): Using lowest-priced ARVs provided under the World 
Bank, UNICEF, and the Global Fund: 471 (-0); 
Price in U.S. dollars per person per year (difference compared to the 
Emergency Plan): Using lowest-priced ARVs generally available to focus 
countries: 433 (-38).

Regimen: ZDV + 3TC + EFV; 
Price in U.S. dollars per person per year (difference compared to the 
Emergency Plan): Using lowest-priced ARVs provided under the Emergency 
Plan: 584; 
Price in U.S. dollars per person per year (difference compared to the 
Emergency Plan): Using lowest-priced ARVs provided under the World 
Bank, UNICEF, and the Global Fund: 544 (-40); 
Price in U.S. dollars per person per year (difference compared to the 
Emergency Plan): Using lowest-priced ARVs generally available to focus 
countries: 506 (-78). 

Source: GAO.

Notes: GAO calculations based on price survey of ARV manufacturers. 
Calculated using prices quoted during June and July 2004. The lowest 
price for each regimen could consist of three single ARVs, a double-ARV 
FDC plus a single ARV, or a triple-ARV FDC. See app. II for more 
detailed information on prices.

[End of table]

Differences in the price of a regimen per person per year can translate 
into millions of dollars of additional expense when considered on the 
scale of the Emergency Plan's goal of treating 2 million people by the 
end of 2008. For example, the price for the regimen that WHO recommends 
as the first choice for rapid scale-up in settings with limited health 
care resources (d4T + 3TC + NVP) is $343 more per person per year under 
the Emergency Plan. Thus for every 100,000 patients on this regimen for 
5 years, the plan could pay over $170 million more than the other 
initiatives for purchase of these ARVs. The overall impact of these 
price differences over the life of the plan and on the treatment goal 
is difficult to estimate precisely because, for example, the mix of 
ARVs and treatment regimens that will be used as the Emergency Plan 
expands is unknown and product prices may change.

Coordinator's Office Has Taken Steps to Expand Selection of ARV 
Products It Provides, but Patent Requirement Is Potential Barrier:

The Coordinator's Office has taken steps to expand the selection of 
quality-assured ARV products it provides to the focus countries to 
include the preferred FDCs and lower-priced generics. However, the 
patent requirement could present a barrier to expanding the selection.

Coordinator's Office Has Made Efforts to Expand the Selection of 
Quality-Assured ARV Products It Provides:

The Coordinator's Office has worked with FDA to expand the selection of 
quality-assured ARV products, particularly the preferred FDCs, that the 
Emergency Plan provides to the focus countries. The selection of ARV 
products provided is currently limited primarily by the plan's quality 
assurance requirement. The Coordinator's Office has been encouraging 
manufacturers to seek FDA approval for their ARV products, and thereby 
satisfy the plan's quality assurance requirement.[Footnote 16] FDA 
officials told us that the agency has been helping existing and 
potential manufacturers of ARV products, particularly FDCs, to prepare 
applications for submission to FDA. Several manufacturers told us that 
they have been working with FDA to develop applications. One of the 
manufacturers we spoke with announced in October 2004 that it had 
submitted an application, and the others told us that they intended to 
do so. FDA officials said that these applications would have priority 
for review and that they expect to be able to act on complete 
applications within several months of submission. In addition, the 
Coordinator's Office has worked with FDA to clarify that FDCs are 
eligible for expedited review and to assemble into a single guidance 
document several sets of regulations and guidelines that pertain to 
this expedited review.[Footnote 17] As part of this guidance, FDA has 
included a list of combinations of ARVs for which FDA believes there 
are sufficient publicly available safety and effectiveness data that an 
application would not need to include additional clinical studies.

Emergency Plan May Not Be Able to Provide Generic ARVs Unless Patent 
Barrier Is Addressed:

The Emergency Plan may not be able to expand the selection of ARV 
products it provides to include lower-priced generic ARVs unless the 
Coordinator's Office addresses a potential barrier presented by the 
applicable patent requirement in the Foreign Assistance Act of 1961. 
Although the selection of ARV products available under the plan is 
currently limited primarily by the quality assurance requirement, if 
generic ARVs receive FDA approval, the patent requirement could be a 
barrier to expansion. Because all five of the first-line ARVs are 
currently under U.S. patents,[Footnote 18] even if a generic ARV were 
to receive FDA approval, thus meeting the plan's quality assurance 
requirement, the patent requirement would prevent its purchase unless 
the patent holder had granted permission. If such permission is not 
granted, this requirement could prevent the purchase of generic ARVs, 
including generic FDCs, that have met the plan's quality assurance 
requirement.

The Coordinator's Office has the authority to provide ARV products 
notwithstanding the patent requirement.[Footnote 19] We asked officials 
from the Coordinator's Office whether the Coordinator would use this 
authority in order to purchase an FDA-approved generic ARV for which 
permission could not be obtained from the patent owner. Officials from 
the Coordinator's Office told us that they could not address 
hypothetical situations but that the Coordinator would consider using 
his authority to make funds available to purchase these products 
notwithstanding this requirement if the ARV in question is critical to 
the plan's treatment responsibilities and no readily available 
substitute exists. It may not be possible for most generic ARVs to meet 
these conditions because generics are by definition substitutes for 
existing products. In addition, a representative of one of the generic 
manufacturers we spoke with told us that the company is concerned and 
is hesitating to apply to FDA because it has sought, but not yet 
obtained, assurances from the Coordinator's Office that once its 
products have met the plan's quality assurance requirement these 
products will be eligible for purchase under the Emergency Plan.

Concluding Observations:

During its first year, the Emergency Plan has provided a limited 
selection of ARV products that does not fully support the treatment 
strategies of the focus countries and is not optimally coordinated with 
other multinational initiatives because it does not include the FDCs 
and lower-priced generics that the majority of these countries prefer. 
Better coordination with the focus countries and with other treatment 
initiatives could facilitate more rapid implementation of the Emergency 
Plan. Moreover, given the intended scale of the plan, lower prices for 
ARVs could result in savings of hundreds of millions of dollars, which 
could be used to treat additional patients or to support other aspects 
of the program. The Coordinator's Office has taken steps to expand the 
selection of ARV products that meet its quality assurance requirement-
-with special focus on FDCs--by working with manufacturers and FDA to 
increase the number of products that have FDA approval. If applications 
proceed as anticipated by ARV manufacturers and FDA, we expect that 
FDA-approved generic ARVs will be available early in 2005. However, 
unless the patent holders for these ARVs give permission or the 
Coordinator's Office exercises its authority to purchase these products 
notwithstanding the patent requirement, the selection of ARVs provided 
under the Emergency Plan may not expand rapidly enough to address the 
AIDS emergency.

Agency Comments and Our Evaluation:

We provided a draft of this report to the Department of State, HHS, and 
USAID. Written comments submitted by the Department of State on behalf 
of itself, HHS, and USAID are reprinted in appendix III. In its 
comments, the Department of State expressed concern about how our 
report addressed the issue of ARV quality and urged us to mention 
prominently in the report recent changes in the list of products that 
are prequalified by WHO. However, we stated in the draft report that 
concern about quality is the primary factor limiting the selection of 
ARVs provided under the Emergency Plan and the other initiatives. Our 
draft report recognized that quality assurance is a critical concern, 
and provided background information on the quality assurance 
requirements of the Emergency Plan and the other initiatives and 
specified the quality assurance processes applied to each ARV product. 
However, as the draft report stated, evaluating the quality assurance 
processes used by each initiative was beyond the scope of our work. We 
have updated the draft report to reflect all changes in the 
availability of ARV products, including those highlighted by the 
Department of State.

The Department of State also characterized figure 3 (see app. II) in 
the report as misleading because not all of the generic ARV products 
are sold on the market in all 15 focus countries. However, the draft 
report explained that the laws of individual countries may not allow 
for the purchase of some products. In response to the agency's 
concerns, we clarified this further in notes to figure 3.

In addition, the agency expressed confusion over our use of the term 
"generic" and offered the more formal term, "therapeutic equivalents," 
used by FDA. In the draft report, we used the word "generic" broadly to 
mean a copy of an original product, regardless of whether FDA or 
another national regulatory authority has determined the generic 
product to be a therapeutic equivalent to an original product. We have 
further clarified our use of the term in the report.

We agree with the agency's comment that it is important to distinguish 
between issues of quality assurance and intellectual property, and 
these issues were treated separately in the draft report. In addition, 
our concern about the patent requirement being a potential barrier to 
expanding the selection of ARV products provided under the Emergency 
Plan is only with respect to those generic products that have first met 
the plan's quality assurance requirement.

Lastly, the Department of State highlighted that the patent requirement 
is a statutory restriction under the Foreign Assistance Act of 1961, as 
we noted throughout the draft report. We revised the draft to further 
clarify the source of the patent requirement. The Department also said 
that the Coordinator's Office has decided to exercise its authority 
with respect to the patent requirement "as necessary." However, because 
the comments did not clarify when it might be necessary for the 
Coordinator's Office to use its authority to make funds available to 
purchase products notwithstanding the patent requirement, it remains 
unclear if all generic products that have met the quality assurance 
requirement will be eligible for purchase under the Emergency Plan.

In its comments, the agency also provided additional information on the 
Emergency Plan's outreach activities and plans for bulk purchasing of 
ARV products. The Department of State, HHS, and USAID individually 
submitted technical comments, which we incorporated where appropriate.

As we agreed with your offices, unless you publicly announce the 
contents of this report earlier, we plan no further distribution of it 
until 30 days from the date of this letter. We will then send copies to 
the Secretary of State, the Secretary of Health and Human Services, and 
the Administrator of the U.S. Agency for International Development and 
make copies available to others who request them. In addition, the 
report will be available at no charge on GAO's Web site at http://
www.gao.gov.

If you or your staffs have any questions about this report, please call 
me at (202) 512-7119. Another contact and key contributors are listed 
in appendix IV.

Signed by: 

Janet Heinrich: 
Director, Health Care--Public Health Issues:

[End of section]

Appendix I: Scope and Methodology:

This report compares the selection of antiretroviral medication (ARV) 
products that are being provided under the President's Emergency Plan 
for AIDS Relief (Emergency Plan) with that provided under other 
initiatives that also fund HIV/AIDS treatment programs in the focus 
countries, as of December 2004.[Footnote 20] Our discussion is focused 
specifically on the ARVs that are recommended by the World Health 
Organization (WHO) for first-line treatment of HIV/AIDS in countries 
where health care resources are limited. Our report also provides price 
information for the ARV products provided under the Emergency Plan and 
under the other initiatives. We report prices quoted, during June and 
July 2004, by 13 selected manufacturers of ARV products that are 
generally available to the focus countries. Lastly, we examine the 
efforts of the Office of the U.S. Global AIDS Coordinator 
(Coordinator's Office) within the Department of State to expand the 
selection of quality-assured ARV products provided at the lowest 
possible price to the focus countries. Aspects of implementing HIV/AIDS 
treatment programs other than the selection and price of medications, 
such as human resources and supply chain management, and treatments 
other than ARVs, such as medications to treat opportunistic infections, 
are outside the scope of this report. Similarly, the HIV/AIDS 
prevention and care objectives of the Emergency Plan are outside the 
scope of this report. We conducted our review from January 2004 through 
January 2005 in accordance with generally accepted government auditing 
standards.

Comparing Selection of ARV Products the Emergency Plan Provides to That 
Provided under Other Initiatives:

To compare the selection of ARV products provided under the Emergency 
Plan to that provided under the other initiatives, we reviewed the 
requirements that apply to the purchase of ARV products under the 
Emergency Plan. Specifically, we reviewed relevant laws, regulations, 
and guidance from which the plan's requirements arise. We also reviewed 
documentation from the Coordinator's Office and the U.S. Agency for 
International Development (USAID) to determine which products had been 
provided under the plan as of December 2004. In addition, we 
interviewed officials from the Coordinator's Office, USAID, and the 
Department of Health and Human Services' (HHS) Office of Global Health 
Affairs, Centers for Disease Control and Prevention (CDC), and Food and 
Drug Administration (FDA) about experience within federal programs with 
purchasing ARVs for developing countries. Lastly, we interviewed 
officials at the nongovernmental organizations (NGO) that have received 
funding under the Emergency Plan to purchase ARVs in the focus 
countries. These NGOs include Catholic Relief Services Consortium, 
Columbia University Mailman School of Public Health, Elizabeth Glaser 
Pediatric AIDS Foundation, and Harvard University School of Public 
Health.[Footnote 21]

To determine the selection of ARV products provided under the other 
initiatives, we reviewed the requirements that apply to the purchase of 
ARV products under the HIV/AIDS treatment initiatives funded by the 
World Bank, the United Nations Children's Fund (UNICEF), and the Global 
Fund to Fight AIDS, Tuberculosis, and Malaria (Global Fund). 
Specifically, we reviewed guidance documents from the Global Fund, the 
World Bank, UNICEF, and WHO related to the purchase of ARVs under these 
initiatives. We also interviewed officials from these organizations 
regarding the requirements that apply to the provision of ARVs under 
their treatment initiatives and to confirm the accuracy of information 
obtained from their Web sites. In our comparison we determined the 
quality assurance process applied to each product, but we did not 
evaluate the different quality assurance processes required under the 
Emergency Plan as compared with those required under the other 
initiatives or determine the comparative quality of the products.

Our review of the ARV products provided under the Emergency Plan and 
the other initiatives focuses specifically on the ARVs that are 
recommended by WHO for treatment of HIV/AIDS in countries with limited 
health care resources. In order to determine the appropriate treatment 
recommendations to focus on in this report, we reviewed literature on 
the use of ARVs in general and in countries with limited health care 
resources in particular. Our literature review included searches of 
scientific publications using electronic databases, including the 
National Library of Medicine's PubMed, as well as the Web sites of the 
New England Journal of Medicine, the Journal of the American Medical 
Association, and The Lancet. We reviewed literature on ARV treatment 
available from the Coordinator's Office, USAID, HHS, FDA, CDC, the HHS 
Office of the Inspector General, the Congressional Research Service, 
the Congressional Budget Office, and the Institute of Medicine. We also 
reviewed treatment guidelines and related documentation from WHO, the 
Global Fund, the World Bank, the Joint United Nations Programme on HIV/
AIDS, UNICEF, and the United Kingdom's Department for International 
Development. We also interviewed officials from several of these 
organizations. To understand the issues involved in providing ARVs in 
countries with limited health care resources, we interviewed officials 
from several NGOs that are working in these settings--including Doctors 
Without Borders, the William Jefferson Clinton Foundation (Clinton 
Foundation), the Bill and Melinda Gates Foundation, John Snow 
Incorporated (JSI), Family Health International (FHI), and Management 
Sciences for Health (MSH). We also reviewed documentation on the focus 
countries' national HIV/AIDS strategies and treatment guidelines, 
including information that we obtained from the Coordinator's Office 
and NGOs.[Footnote 22]

Determining Prices of ARVs for the Focus Countries:

The prices we report are prices that 13 selected manufacturers quoted 
to us during June and July 2004 for the focus countries. We surveyed 
the manufacturers from which the major organizations that support 
treatment programs in the focus countries have considered purchasing 
their ARVs. These organizations include JSI, FHI, MSH, the Clinton 
Foundation, the Global Fund, the World Bank, WHO, UNICEF, Doctors 
Without Borders, the International Dispensary Association, and 
MissionPharma. We selected a manufacturer for inclusion in our report 
if it makes at least one of the ARVs included in the WHO-recommended 
first-line regimens and was selling or willing to sell its ARV product 
to at least one of the focus countries. Thirteen of the 15 
manufacturers that we considered met these criteria and were willing to 
quote their prices for the first-line ARVs for the focus countries. We 
did not select products based on registration with the focus countries' 
national drug regulatory authorities because information on country-
level registration was incomplete or not available.

Because some of the manufacturers we surveyed offer their products at 
significantly lower prices to developing countries than to developed 
countries,[Footnote 23] we requested price quotes specifically for the 
focus countries. We did not attempt to determine the prices that 
specific purchasers are paying for these products because at the time 
we conducted our analysis there was limited experience in the focus 
countries with using the funding sources discussed in this report for 
large-scale purchase of ARVs.[Footnote 24] Because different 
manufacturers offer their reduced prices according to differing 
criteria,[Footnote 25] in some cases the lowest price offers are not 
available to all of the focus countries. Specifically, Guyana and 
Vietnam are not eligible to purchase ARVs at some manufacturers' lowest 
price. In addition to these two focus countries, other developing 
countries outside the scope of this report may not be eligible for the 
prices we present.

To help ensure that the manufacturers' prices we present are as 
comparable as possible across different manufacturers of the same ARV, 
we surveyed manufacturers using a standard set of questions. We 
developed our questions on the basis of our literature review and 
discussions with various officials from U.S. government agencies, 
officials from other initiatives, representatives from NGOs, and 
representatives from pharmaceutical manufacturers. These questions 
took into account differences in purchasing agreements, including price 
negotiation based on volume and length of contract, inclusion of 
shipping and insurance, and financing guarantees. Some of the 
manufacturers we spoke with told us that they offer prices that are 
negotiable depending on the volume of the purchase, the length of the 
contract for purchase, and the degree to which financing can be 
guaranteed. Therefore we requested prices based on the following 
purchase scenarios, all of which assume financing has been guaranteed: 
(1) purchase of enough medication to treat 500 patients for 1 year, (2) 
purchase of enough medication to treat 10,000 patients for 1 year, and 
(3) purchase of enough medication to treat 10,000 patients for 3 years. 
All manufacturers were given the opportunity to provide prices 
according to these scenarios, although some told us that their prices 
were not negotiable. We developed the scenarios based on estimates of 
the scale of existing treatment programs in the focus countries, and 
the potential scale of programs over the next 3 years. We verified, 
with officials from USAID and other experts in ARV procurement, that 
these scenarios represented plausible purchasing arrangements both now 
and over the next 3 years as treatment programs expand in developing 
countries. Because the price information we requested is considered 
proprietary by the manufacturer, we could not directly assess the 
reliability of the price data given to us. However, we checked the 
prices quoted to us against other published sources from our literature 
search and manufacturers' Web sites and determined they were reliable 
for our purposes.

In some cases a manufacturer's prices include costs that other 
manufacturers do not include--such as shipping and insurance charges. 
We note where these differences exist, and have determined that they do 
not undermine the essential comparability of the prices presented in 
our report. In making this determination, we first requested specific 
information from each manufacturer about what is included in its price 
and the terms of the purchase agreements it uses. The manufacturers we 
surveyed for this report used one of six standard agreements to cover 
shipping and insurance (see table 2). We also asked multiple purchasers 
about the shipping and insurance costs they have incurred when 
purchasing ARVs. While systematic evidence was not available, the 
organizations we spoke with provided estimates ranging from 3 to 15 
percent additional cost for shipping and insurance for large-scale ARV 
purchases. One NGO that was purchasing ARVs under the Emergency Plan 
told us that purchasing the same ARV product through two different 
distribution channels--one directly from the manufacturer with shipping 
and insurance costs included in the price and one through a distributor 
that added those costs to its price--made no appreciable difference in 
the final cost of the product. We also found, after reviewing responses 
to our survey, that manufacturers of both original and generic products 
used a range of purchase agreements, both more and less inclusive of 
shipping and insurance costs. Other factors that may contribute to the 
total cost of ARVs to a specific treatment program, such as taxes and 
distribution surcharges, are beyond the scope of this report.

Table 2: Standard International Terms for the Shipping and Insurance 
Conditions of Purchase Agreements:

International commercial term[A]: Ex-Works (EXW); 
Shipping and insurance conditions: The seller transfers the goods to 
the buyer at the seller's named place of business (the factory, 
warehouse, etc.). The buyer is responsible for the full risk of loss of 
or damage to the goods, clearing the goods for export, and any costs 
related to transport. EXW places the minimum obligation on the seller.

International commercial term[A]: Free on Board (FOB); 
Shipping and insurance conditions: The seller clears the goods for 
export and is responsible for the risks and costs of delivering the 
goods past the "ship's rail" (that is, off the dock onto the ship) at 
the domestic port of shipment. The risks and costs related to transport 
are transferred to the buyer when the goods pass the ship's rail. This 
term is exclusively for maritime transport.

International commercial term[A]: Free Carrier (FCA); 
Shipping and insurance conditions: The seller clears the goods for 
export and delivers them to a carrier selected by the buyer (at the 
domestic port, terminal, etc.). The buyer is responsible for the full 
risks and costs related to transport.

International commercial term[A]: Cost, Insurance, and Freight (CIF); 
Shipping and insurance conditions: The seller clears the goods for 
export and is responsible for the risks and costs of delivering the 
goods past the "ship's rail" at the domestic port of shipment. The 
seller is also responsible for paying the costs of transport and 
insurance of the goods to the port of destination. Any additional risks 
or costs related to transport, including applicable import tariffs, are 
transferred to the buyer when the goods pass the ship's rail. This term 
is exclusively for maritime transport.

International commercial term[A]: Carriage Paid To (CPT); 
Shipping and insurance conditions: The seller clears the goods for 
export and is responsible for paying for carriage through to the named 
port of destination, including applicable import tariffs. The buyer 
assumes all risks once the seller has delivered the goods to the 
carrier at the port of shipment.

International commercial term[A]: Carriage and Insurance Paid To (CIP); 
Shipping and insurance conditions: The seller clears the goods for 
export and is responsible for paying for carriage and insurance through 
to the named port of destination, including applicable import tariffs. 
The buyer assumes all risks once the seller has delivered the goods to 
the carrier at the port of shipment.

Source: International Chamber of Commerce.

[A] Manufacturers offer prices for their medications in accordance with 
an international system of shipping and handling terms--known as 
international commercial terms, or incoterms--that describe various 
possible purchase agreements. These incoterms are published by the 
International Chamber of Commerce.

[End of table]

Examining the Efforts of the Coordinator's Office to Expand the 
Selection of ARVs It Provides:

To examine the efforts of the Coordinator's Office to expand the 
selection of quality-assured ARV products provided under the Emergency 
Plan to the focus countries, we reviewed relevant laws, regulations, 
and guidance from which the plan's quality assurance and patent 
requirements arise. We interviewed officials from the Coordinator's 
Office and USAID regarding how they interpret these laws, regulations, 
and guidance and how they apply these requirements to the provision of 
ARVs under the plan. We also interviewed officials from the 
Coordinator's Office regarding their efforts to address potential 
barriers to expansion. Lastly, because the Coordinator's Office is 
working with FDA to support the ability of additional ARV manufacturers 
to meet the Emergency Plan's quality assurance requirement, we 
interviewed officials from FDA regarding these efforts.

[End of section]

Appendix II: Price Information from Survey of ARV Manufacturers:

We surveyed the following 13 manufacturers during June and July 2004 to 
obtain price quotes for the focus countries for the ARVs used to build 
the WHO-recommended first-line regimens:

* Aurobindo Pharma Limited (Aurobindo):

* Boehringer Ingelheim (BI):

* Bristol-Myers Squibb Company (BMS):

* Cipla Limited (Cipla):

* Combino Pharm:

* Cristalia Produtos Quimicos Farmaceuticos LTDA (Cristalia):

* Far-Manguinhos FIOCRUZ Ministry of Health (Far-Manguinhos):

* GlaxoSmithKline (GSK):

* Government Pharmaceutical Organization Thailand (GPO):

* Hetero Drugs Limited (Hetero):

* Merck & Co., Inc. (Merck):

* Ranbaxy Laboratories Limited (Ranbaxy):

* Strides Arcolab Limited (Strides):

The price per person per year for each ARV product--stavudine (d4T), 
zidovudine (ZDV), lamivudine (3TC), nevirapine (NVP), and efavirenz 
(EFV)--is shown in figures 3 and 4. Figure 3 shows prices quoted for 
single-ARV products, and figure 4 shows prices quoted for fixed-dose 
combination (FDC) ARV products. For each product we indicate the type 
of standard agreement used to cover shipping and insurance charges and 
whether the manufacturer indicated that the price quoted was negotiable 
or based on a specific purchase scenario (see figure notes a, b, and 
c). Both figures also show which ARV products are provided under the 
Emergency Plan, which additional products are provided under the other 
initiatives, and which products are generally available to the focus 
countries but not provided under either the Emergency Plan or the other 
initiatives, as of December 2004.

Figure 3: Manufacturers' Prices for First-Line ARV Products for the 
Focus Countries (prices per person per year in U.S. dollars):

[See PDF for image]

Notes: Data from GAO survey of ARV manufacturers during June and July 
of 2004, the Coordinator's Office, USAID, WHO, the World Bank, UNICEF, 
and the Global Fund. Numbers in this figure may not sum to numbers 
shown in table 1 due to rounding. As of December 2004, the ARV products 
shaded in black have been approved by FDA or another acceptable 
regulatory authority; those shaded in gray have been prequalified by 
WHO; and those without shading have been neither approved by FDA or 
another acceptable regulatory authority nor prequalified by WHO. We did 
not determine whether the different quality assurance processes result 
in medications of differing quality. Because laws of a country may 
affect whether a particular ARV product is available there, not all ARV 
products are available in all of the focus countries. Guyana and 
Vietnam are not eligible to receive the prices shown for some of the 
products shaded in black. Information about the 100-mg dose of ZDV and 
the 200-mg dose of EFV is provided in fig. 3 but not included in fig. 2 
and table 1.

[A] Manufacturer indicated that price quoted was nonnegotiable.

[B] Manufacturer indicated that price quoted was based on a 1 year / 
10,000 patients per year purchase scenario.

[C] Manufacturer indicated that price quoted was negotiable, but not 
based on any specific purchase scenario.

[End of figure]

Figure 4: Manufacturers' Prices for FDC ARV Products for the Focus 
Countries (prices per person per year in U.S. dollars):

[See PDF for image]

Notes: Data from GAO survey of ARV manufacturers during June and July 
of 2004, the Coordinator's Office, USAID, WHO, the World Bank, UNICEF, 
and the Global Fund. Numbers in this figure may not sum to numbers 
shown in table 1 due to rounding. As of December 2004, the ARV product 
shaded in black has been approved by FDA or another acceptable 
regulatory authority; those shaded in gray have been prequalified by 
WHO; and those without shading have been neither approved by FDA or 
another acceptable regulatory authority nor prequalified by WHO. We did 
not determine whether the different quality assurance processes result 
in medications of differing quality. Because laws of a country may 
affect whether a particular ARV product is available there, not all ARV 
products are available in all of the focus countries. Guyana and 
Vietnam are not eligible to receive the price shown for the product 
shaded in black.

[A] Manufacturer indicated that price quoted was negotiable, but not 
based on any specific purchase scenario.

[B] Manufacturer indicated that price quoted was nonnegotiable.

[C] Manufacturer indicated that price quoted was based on a 1 year / 
10,000 patients per year purchase scenario.

[End of figure]

[End of section]

Appendix III: Comments from the Department of State:

United States Department of State: 
Assistant Secretary and Chief Financial Officer: 
Washington, D.C. 20520:

Ms. Jacquelyn Williams-Bridgers: 
Managing Director:
International Affairs and Trade: 
Government Accountability Office: 
441 G Street, N.W.
Washington, D.C. 20548-0001:

DEC 6 2004:

Dear Ms. Williams-Bridgers:

We appreciate the opportunity to review your draft report, "GLOBAL HIV/
AIDS EPIDEMIC: Selection of Antiretroviral Medications Provided under 
U.S. Emergency Plan Is Limited," GAO Job Code 290336.

The enclosed Department of State comments are provided for 
incorporation with this letter as an appendix to the final report.

If you have any questions concerning this response, please contact 
Myron Meche, Director, Office of the Global AIDS Coordinator, at (202) 
663-2727.

Sincerely,

Signed by: 

Christopher B. Burnham: 

cc: GAO - Chad Davenport: 
S/GAC - Randall Tobias: 
State/OIG - Mark Duda:

Department of State Comments on GAO Draft Report GLOBAL HIV/AIDS 
EPIDEMIC: Selection of Antiretroviral Medications Provided under U.S. 
Emergency Plan Is Limited (GAO-05-133):

On behalf of the United States Departments of State, Health and Human 
Services (HHS) and the United States Agency for International 
Development (USAID), we appreciate the opportunity to comment on the 
draft Government Accountability Office (GAO) report entitled GLOBAL 
HIV/AIDS EPIDEMIC: Selection of Antiretroviral Medications Provided 
under the U.S. Emergency Plan Is Limited (GAO-05-133).

The President's Emergency Plan for AIDS Relief (PEPFAR) has been 
committed from the beginning to providing treatment at the most cost-
effective prices that can be found - but only drugs that are proved 
safe and effective. The Emergency Plan has moved forward with urgency 
to help build the human and physical capacity needed to deliver 
treatment, and to fund the purchase of HIV/AIDS drugs. The 
Administration strongly believes that persons served by the President's 
Emergency Plan deserve the same assurances of safety and efficacy that 
we expect for our own families. There should not be any double 
standard.

There is economic, human and ethical value in drug quality, which the 
draft report completely overlooks, and the significant health risks 
posed by poor quality anti-retrovirals (ARVs). Some drugs approved for 
the World Health Organization (WHO) pre-qualification list may not be 
equivalent to drugs approved by the Food and Drug Administration (FDA) 
within HHS, as they cannot be guaranteed to have undergone quality-
assurance tests of the same rigor. Significantly, several generic drug 
manufacturers have voluntarily withdrawn their ARVs from the WHO pre-
qualification list because of concerns over quality and potential risk 
to patients.

In early November, the Indian company Ranbaxy announced that it was 
withdrawing all of its generic versions of ARVs from the WHO pre-
qualification list because of the company's uncertainty that their copy 
drugs were not bio-equivalent to the patented versions. On November 19, 
Hetero Drugs Limited, also of India, announced that it was withdrawing 
six ARVs from the WHO pre-qualification list to review data on their 
bioequivalence.

Though the events are recent, we have urged the GAO to mention these 
de-listings prominently in the report, because they go to the heart of 
the definition of what is "available" in these countries. Many nations 
make purchasing or procurement or even licensure/registration decisions 
on the basis of the WHO pre-qualification list: the WHO de-listings 
plus the voluntary withdrawal from the market and the list means that a 
number of products from several manufacturers in the GAO's charts are 
no longer "available" in the same way as before. It should be noted 
that the manufacturers and the WHO Secretariat are both recommending 
that no new patients be placed on these drugs until the manufacturers 
clear up the quality-assurance problems.

In addition, the chart provided on page 29 of the report is misleading, 
because not all of the generic ARV products listed are sold on the 
market in all of the 15 focus countries of the Emergency Plan. (Some, 
like those produced in Brazil and Thailand, might not be regularly 
available in any of the 15 focus countries.) The chart therefore gives 
a distorted impression that the possible selection of ARVs in the 15 
focus countries is wider than it actually is.

Poor quality drugs can add substantial cost in terms of adverse drug 
effects and lack of efficacy in treating HIV/AIDS. When appropriate 
concentrations of active drugs are not reached in the body, the human 
immunodeficiency virus is able more rapidly to mutate such that it 
becomes resistant to the drugs. This allows the virus to resume its 
devastation of the body's immune system more quickly. The only recourse 
in this situation is another combination of three or more drugs. Such 
"second-line" drugs, if available at all, are often several times the 
cost of the "first-line" drugs, which leads to a significant escalation 
in the cost of treatment.

It is also important to distinguish the issues of intellectual property 
and quality assurance. These issues are separate, but the draft report 
obscures the distinction between the two, and suggests that they arise 
in a sequential manner, which is not necessarily so. The Emergency Plan 
maintains that it will only use the highest-quality, safest drugs 
available, but that issue is separate from patent and intellectual 
property issues.

Clarification about Generics:

The draft report uses the term "generic" throughout without defining 
it, and appears in certain cases to refer to drug products that are 
other than those manufactured by the innovator or brand-name company, 
and that are approved in some manner by non-U.S. regulatory bodies. At 
other points, the document uses the term to refer to products other 
than those manufactured by the innovator that HHS/FDA has approved or 
might approve. As this issue and the term "generics" are at the center 
of major controversy surrounding the fight against HIV/AIDS, it is 
worth spending some time to clarify the term as used in the United 
States compared to how it is used elsewhere in the international 
community.

The federal Food, Drug, and Cosmetic Act or HHS/FDA regulations do not 
define the term "generic drug." It is generally used informally to 
refer to drugs that 1) are not marketed by the brand-name company and 
2) are substitutable for the brand-name product. HHS/FDA's more formal 
term to denote substitutable products is "therapeutic equivalents."

Therapeutic equivalents are drug products approved by HHS/FDA as safe 
and effective; contain identical amounts of the same active drug 
ingredient in the same dosage form and route of administration; meet 
applicable standards of strength, quality, purity, and identity; are 
bioequivalent; are adequately labeled; and are manufactured in 
compliance with Current Good Manufacturing Practice. Therapeutic 
equivalents can be expected to have the same clinical effect and safety 
profile when administered to patients under the conditions specified in 
the labeling.

Because of the varying standards used to classify drugs as "generics" 
by regulatory authorities other then HHS/FDA, we do not know whether 
these drugs should be considered to be generic drugs (i.e., therapeutic 
equivalents) within the general meaning of the term as used in the 
United States.

To add even more complexity to the situation, many of the drug products 
HHS/FDA expects to approve or tentatively approve, and which will be 
subsequently acquired for use in the Emergency Plan, will not be drugs 
that are generic versions (i.e., therapeutic equivalents) of innovator 
products. Rather, a number of these drugs under consideration will be 
new fixed-dose combinations of previously approved single-entity drug 
products, or they will be new co-packaged products of drugs previously 
available only separately. These products would not be considered 
substitutable "generics" in the United States because they are not 
therapeutic equivalents to an approved brand-name product.

Outreach Under the Emergency Plan:

The United States Government (USG) is reaching out to national drug 
regulatory agencies in the 15 Emergency Plan focus countries and 
providing training and technical assistance in the process of 
certifying the quality of ARVs. In the long run, this should increase 
the capabilities of these countries to manage the pharmaceutical supply 
chain and thereby help to reduce attendant costs.

To ensure the availability of high-quality pharmaceuticals under the 
Emergency Plan, HHS/FDA is reaching out to companies in the 15 focus 
countries as well as in other developing countries to facilitate their 
applications to the expedited review process. At least two generic drug 
companies have released press announcements that they have entered the 
expedited review process and are working with HHS/FDA to receive 
tentative approval for anti-retroviral drugs in support of the 
Emergency Plan.

This outreach effort will have tangible and rapid results because of 
procedures already in place in the Office of the Global AIDS 
Coordinator (OGAC). When a new combination drug for HIV/AIDS treatment 
receives a positive outcome (approval or tentative approval) under the 
expedited HHS/FDA review, OGAC will recognize that result as evidence 
of the safety and efficacy of that drug. Thus, the drug will be 
eligible to be a candidate for funding by the Emergency Plan for AIDS 
Relief, so long as international patent agreements and local government 
policies allow their purchase.

And we are already building momentum in reaching the President's 
treatment goals. As of July 31, 2004, the Emergency Plan is supporting 
ARVs for, at minimum, 24,900 HIV-infected men, women, and children in 
nine countries. Of this number, the Emergency Plan is directly funding 
ARV therapy for approximately 18,800 HIV-infected individuals at the 
point of service delivery. At least an additional 6,100 persons are 
receiving indirect treatment support through U.S. Government 
contributions to national, regional, or local activities, such as 
laboratory support, training, logistical systems strengthening, and 
treatment policy and protocol development. Over the next few months, 
numerous sites in all 15 focus countries have begun to provide ARV 
therapy with the goal of reaching at least 200,000 by June 2005. The 
Emergency Plan is well on its way to meeting that goal. By meeting this 
goal, the Emergency Plan will approximately double the number of 
persons receiving ARV therapy in sub-Saharan Africa. Outreach to 
national drug regulatory agencies in Emergency Plan focus countries is 
a key component of meeting treatment goals set by the President.

Bulk Purchasing:

USG bulk purchasing will be made available in calendar year 2005 
through the Emergency Plan Supply Chain Management System (SCMS) 
contract. The purpose of this project is to establish and operate a 
safe, secure, reliable, and sustainable SCMS to procure pharmaceuticals 
and other products needed to provide care and treatment of persons with 
HIV/AIDS and related infections. As described in "The President's 
Emergency Plan for AIDS Relief: U.S. Five-Year Global HIV/AIDS 
Strategy", an important focus of the Plan and a necessary tool for 
ensuring sustainability, is building the capacity of local providers to 
implement effective programs. In this regard, this project will have as 
a priority capacity building of essential supply chain management 
personnel to strengthen the quality and expand the reach of effective 
HIV/AIDS interventions. Emergency Plan focus countries will be able to 
voluntarily buy into this contract. This mechanism is expected to 
reduce costs significantly.

The United States Government supports several other activities as key 
parts of its treatment initiative. As the price of drugs continues to 
decrease, and individual governments and international donors purchase 
an increasing share of ARVs, the Emergency Plan support will:

shift to those elements that are supportive and necessary for effective 
treatment of patients: 

*  Clinical guidelines and selection of ARV products;
* Laboratory; 
* Training; 
* Counseling; 
*  Adherence interventions; and:
*  Supportive care, including palliative care.

Within the category of direct procurement and distribution of drugs, 
the Emergency Plan is also supporting an increasing array of 
interventions that increase the efficiency and lower the total cost of 
ARV distribution:

*  Shipping and attendant costs;
*  Storage and product maintenance; 
* Distribution;
*  Rational Use; and:
*  Post-marketing surveillance for product defects or adverse reactions 
among patients.

Patent Requirement:

The report repeatedly raises what it refers to as the Emergency Plan's 
"patent requirement." To be sure, the Emergency Plan's "patent 
requirement" is not a requirement that OGAC imposed upon itself. 
Rather, it is a statutory restriction that applies to the use of any 
funds subject to the Foreign Assistance Act of 1961, as amended. This 
section, Section 606, states the following:

Funds appropriated pursuant to this Act shall not be expended by the 
United States Government for the acquisition of any drug product or 
pharmaceutical product manufactured outside of the United States if the 
manufacturer of such drug product or pharmaceutical product in the 
United States would involve the use of, or be covered by, an unexpired 
patent of the United States which has not previously been held invalid 
by an unappealed or unappealable judgement or decree of a court of 
competent jurisdiction, unless such manufacture is expressly authorized 
by the owner of such patent.

Because the Emergency Plans' funds are subject to the Foreign 
Assistance Act of 1961, as amended, the Global AIDS Coordinator must 
carry out the Emergency Plan consistent with Section 606. As set forth 
in the GAO Report, it is the case that the Foreign Operations, Export 
Financing Act and Related Programs Appropriations Act of 2004 provides 
"notwithstanding" authority that the Coordinator may use to overcome 
the statutory prohibition of Section 606. After careful consideration, 
the Office of the Global AIDS Coordinator has decided to exercise this 
available notwithstanding authority with respect to Section 606, as 
necessary.

We appreciate the opportunity to respond to this report, and we hope 
that this information is useful to you. Please do not hesitate to 
contact us if we can be further assistance. 

[End of section]

Appendix IV: GAO Contact and Staff Acknowledgments:

GAO Contact:

Michele Orza, (202) 512-7119:

Acknowledgments:

Other key contributors to this report are George Bogart, Chad 
Davenport, J. Alice Nixon, Nkeruka Okonmah, and Roseanne Price.

[End of section]

Related GAO Products:

Global Health: U.S. AIDS Coordinator Addressing Some Key Challenges to 
Expanding Treatment but Others Remain. GAO-04-784. Washington, D.C.: 
July 12, 2004.

United Nations: Reforms Progressing, but Comprehensive Assessments 
Needed to Measure Impact. GAO-04-339. Washington, D.C.: February 13, 
2004.

Global Health: Global Fund to Fight AIDS, TB and Malaria Has Advanced 
in Key Areas, but Difficult Challenges Remain. GAO-03-601. Washington, 
D.C.: May 7, 2003.

Global Health: Assessment of First Year Efforts of the Global Fund to 
Fight AIDS, TB and Malaria. GAO-03-755T. Washington, D.C.: May 7, 2003.

The Global Fund to Fight AIDS, Tuberculosis, and Malaria Has Been 
Established but It Is Premature to Evaluate Its Effectiveness. GAO-02-
819R. Washington, D.C.: June 7, 2002.

Foreign Assistance: USAID Relies Heavily on Nongovernmental 
Organizations, but Better Data Needed to Evaluate Approaches. GAO-02-
471. Washington, D.C.: April 25, 2002.

Global Health: Joint U.N. Programme on HIV/AIDS Needs to Strengthen 
Country-Level Efforts and Measure Results. GAO-01-625. Washington, 
D.C.: May 25, 2001.

Global Health: U.S. Agency for International Development Fights AIDS in 
Africa, but Better Data Needed to Measure Impact. GAO-01-449. 
Washington, D.C.: March 23, 2001.

Global Health: The U.S. and U.N. Response to the AIDS Crisis in Africa. 
GAO/T-NSIAD-00-99. Washington, D.C.: February 24, 2000.

FOOTNOTES

[1] The Global Fund was established in January 2002 as a mechanism for 
attracting and distributing resources to programs targeting AIDS, 
tuberculosis, and malaria in developing countries. It is an independent 
private foundation under Swiss law and is governed by an international 
board that includes recipient and donor countries, including the United 
States.

[2] As authorized by the United States Leadership Against HIV/AIDS, 
Tuberculosis, and Malaria Act of 2003 (U.S. Leadership Act). Pub. L. 
No. 108-25, § 301, 117 Stat. 711, 728 (adding section 104A to the 
Foreign Assistance Act of 1961, as amended, classified to 22 U.S.C. § 
2151b-2) (for fiscal years 2004 through 2008, authorizes a total of $15 
billion to carry out the purpose of the U.S. Leadership Act to combat 
HIV/AIDS, tuberculosis, and malaria and authorizes such sums as may be 
necessary to prevent, treat, and monitor HIV/AIDS and carry out related 
activities). 

[3] The U.S. Leadership Act established the position of the Coordinator 
within the Office of the Secretary of the Department of State. § 102, 
117 Stat. 721.

[4] The focus countries are Botswana, Cote d'Ivoire, Ethiopia, Guyana, 
Haiti, Kenya, Mozambique, Namibia, Nigeria, Rwanda, South Africa, 
Tanzania, Uganda, Vietnam, and Zambia. 

[5] The original version of an ARV is the first version brought to 
market. In this report, any copy of the original is considered a 
generic regardless of whether it fits any particular national 
regulatory authority's definition of generic. 

[6] Doctors Without Borders is the English translation for Médecins 
Sans Frontières.

[7] We selected the manufacturers from which major organizations that 
support treatment initiatives in the focus countries told us they 
consider purchasing ARVs. 

[8] WHO states that its recommendations are based on considerations 
including a regimen's potency, potential side effects, the need for 
laboratory monitoring, anticipated patient adherence, treatment of 
coexisting conditions, treatment of pregnant women, and the 
availability and cost of the medications. 

[9] Also commonly known as azidothymidine (AZT).

[10] These five ARVs are produced in multiple forms--such as capsule, 
tablet, or liquid--and in several different doses (for example, 100 mg 
and 300 mg). The pill form is generally used for adolescents and 
adults, and liquid forms are primarily used for children.

[11] See, for example, Institute of Medicine, Scaling Up Treatment for 
the Global AIDS Pandemic: Challenges and Opportunities (Washington, 
D.C.: 2004).

[12] Several other federal entities--including the Departments of 
Commerce, Defense, and Labor and the Peace Corps--also have 
responsibilities under the program. For additional information on the 
structure and operation of the Coordinator's Office, see GAO, Global 
Health: U.S. AIDS Coordinator Addressing Some Key Challenges to 
Expanding Treatment but Others Remain, GAO-04-784 (Washington, D.C.: 
July 12, 2004).

[13] Medications purchased under the Emergency Plan are also subject to 
rules pertaining to source, origin, and nationality for commodities 
that USAID finances, unless USAID issues a waiver to allow otherwise. 
See, 22 C.F.R. Part 228. These include a requirement that 
pharmaceutical products must be manufactured in the United States in 
order to be eligible for USAID financing. 22 C.F.R. § 228.13(c). The 
Coordinator's Office confirmed that USAID can issue a specific waiver 
of these rules, has already done so for ARVs purchased under the 
Emergency Plan, and will continue to issue waivers for the purchase of 
ARVs to carry out the plan.

[14] The Coordinator's Office defined "acceptable regulatory authority" 
in guidance issued to field staff on March 24, 2004. See also, USAID 
Automated Directives System, § 312.5.3c, for USAID's internal 
regulations and guidance regarding the purchase of pharmaceutical 
products. 

[15] Foreign Assistance Act of 1961, Pub. L. No. 87-195, § 606, 75 
Stat. 424, 440 (1961) (codified, as amended, at 22 U.S.C. § 2356 
(2000)).

[16] A generic manufacturer may seek FDA approval for a U.S. patented 
medication if marketing of the generic version in the United States 
would occur after expiration of that patent. See, 35 U.S.C. 271(e)(1). 
FDA may issue tentative approval for such a product that is shown to be 
safe and effective for its intended use but may not yet be marketed in 
the United States due to the unexpired patent. 

[17] Regulations that give FDA greater flexibility to rapidly review 
and approve medications intended to treat certain severe diseases are 
contained in 21 C.F.R. Part 312 and 21 C.F.R. Part 314. 

[18] The patent on ZDV is due to expire on September 17, 2005. The 
patents on the remaining first-line ARVs are scheduled to expire 
between December 2008 and May 2013. 

[19] This authority is provided in the foreign operations 
appropriation, which largely funds the Emergency Plan. For each of the 
last 3 years, the foreign operations appropriation has made funds 
available for the prevention, treatment, and control of HIV/AIDS 
"notwithstanding any other provision of law." Consolidated 
Appropriations Act, 2004, Pub. L. No. 108-199, 118 Stat. 3, 175 
(appropriation for fiscal year 2004) (specifies exemptions unrelated to 
the patent requirement); Consolidated Appropriations Resolution, 2003, 
Pub. L. No. 108-7, 117 Stat. 11, 187 (appropriation for fiscal year 
2003); and Foreign Operations Export Financing, and Related Programs 
Appropriations Act, 2002, Pub. L. No. 107-115, 115 Stat. 2118, 2146 
(appropriation for fiscal year 2002). 

[20] The focus countries are Botswana, Cote d'Ivoire, Ethiopia, Guyana, 
Haiti, Kenya, Mozambique, Namibia, Nigeria, Rwanda, South Africa, 
Tanzania, Uganda, Vietnam, and Zambia. 

[21] As of August 2004, the Harvard program had not finalized any ARV 
purchases under the Emergency Plan. 

[22] Some of the focus countries were modifying their treatment 
guidelines at the time of our analysis.

[23] This practice is known as differential pricing, sometimes also 
called "tiered pricing."

[24] The three NGOs that have completed purchases of ARVs under the 
Emergency Plan reported that as of September 2004 they have received 
prices that were either similar to or higher than the prices presented 
in our report. 

[25] Some manufacturers offer their lowest prices to Least Developed 
Countries, or to countries in Sub-Saharan Africa, while others base 
their discounted offers on the Human Development Index or the World 
Bank's rankings of country income levels, sometimes in combination with 
estimates of the prevalence of HIV infection among a country's adult 
population. 

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