As a Medium Human Development Country, Guatemala has not been eligible for most differential price offers by originator companies. Negotiations with five originator companies in 2003 established some reductions. MSF imports generics from India and also buys from originators.

4.3.1 Overview

¹ UN: World Population Prospects: The 2002 Revision. (www.un.org/esa/population/publications/wpp2002)

² UNAIDS/WHO 2002 Report on the global HIV/AIDS epidemic.

* FDC

4.3.2 Details of procurement

Context

Availability at country level: In 2001, generic ARVs were not available locally, and originator companies did not have local agents, with the exception of Abbott. Merck & Co and Roche have offices in Costa Rica and GSK has a presence in El Salvador. In mid-2003, Ranbaxy's ARVs are expected to be marketed in Guatemala.

Registration: In 2001, few originator and no generic ARVs were registered in Guatemala, but there is no regulation against importing medicines with authorization from the Ministry of Health. By the end of 2002, most originator products still needed to be imported from other countries in the region, although Ranbaxy ARVs had been registered. In addition, in April 2003 the Guatemalan Congress passed a decree that gives originator manufacturers exclusive marketing rights for five years starting from the registration of the product. In practice, this seriously limits access to equivalent generic drugs in the country. MSF has been urging the Congress to repeal the decree.

Patents: Guatemala did not grant patent protection for pharmaceuticals until 2000, so that drugs that came on the market before then cannot be patented. Consequently there is no patent barrier to importing generics (see Registration above for other barriers).

Prices at country level: The Guatemalan government accessed originator price discounts through the Accelerating Access Initiative (AAI) beginning in January 2003. Before that, since Guatemala is classified as a Medium Human Development country, it only benefited from Merck & Co preferential prices as Merck & Co is one of the few companies that consistently offers differential prices to Medium Human Development countries. As a result, prices have often been similar to or higher than those in developed countries. For instance Zerit® (d4T 40 mg) from BMS cost 40% more in Guatemala than in the USA, and Viracept® (NFV) from Roche was more expensive than it is in Switzerland.

Although prices of originator drugs have finally come down after negotiations between Latin American governments and five companies participating in the AAI in early 2003, they are still considerably more expensive than generic equivalents that have been pre-qualified by WHO (e.g. Combivir® 3TC/ZDV) from GSK costs US$0.85/tablet compared to the equivalent fixed-dose produced by Ranbaxy available at US$0.40).

Importing drugs leads to higher prices because there are added fees amounting to 17% of the value (taxes, clearance fees). These fees are also levied on donations. Civil society along with NGOs are advocating for a change of this policy.

MSF procurement strategy

Since there were no patent barriers to importing generic drugs and since they were not available locally, MSF decided to import generics from India. An authorization to do this was obtained from the NDRA, as the generic medicines were not registered.

MSF imported generic ARVs from Cipla at their internationally publicized price for developing countries. Customs costs and taxes had to be added to this base price.

Medicines for which no generics were available, or which had not been validated by either WHO pre-qualification or through MSF's own validation process, were bought from originator companies. Negotiating with both local branches and headquarters of originator and generic companies was time-consuming and often it did not result in affordable prices.

4.3.3 Comments/analysis

Because most ARVs are not patented in Guatemala as the patent law only took effect in 2000, MSF was able to purchase generic drugs by working directly with suppliers. However, national regulations regarding ARV imports led to inflated drug costs (Value Added Tax VAT and importation taxes).

Attempting to negotiate prices with originator companies was difficult because most do not have a public policy for Medium Human Development Countries. While most companies have been willing to lower prices for LDCs and sub-Saharan Africa, this has not been the case for other developing countries. In the absence of generic competition, originator companies have usually been unwilling to offer affordable ARV prices in Central America. Intense negotiations between BMS and MSF for reduced prices of Videx® (ddI) and Zerit® (d4T) in Guatemala failed completely. However, recently, subsequent to the start of generic competition in the region and negotiations including the government and both originator and generic companies, originator companies are finally reducing their prices.

Ranbaxy, one of the generic producers whose ARVs have been pre-qualified by WHO, has recently registered ARVs locally. Buyers can now access lower-priced generics through the distributor without incurring the logistical complications and taxes caused by importing.

Summary of ARV supply in Guatemala in March 2003

* FDC