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Giuliano Russo 1,2 , Lícia de Oliveira 3 , Alex Shankland 2 , Tania Sitoie 4

Pharmaceuticals and Global Health:
Inequalities and Innovation in the 21st Century The Pharmaceutical Industry and Global Health: Emerging Models of Pharmaceutical Development and Production.

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Giuliano Russo 1,2 , Lícia de Oliveira 3 , Alex Shankland 2 , Tania Sitoie 4

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  1. Pharmaceuticals and Global Health:
Inequalities and Innovation in the 21st Century The Pharmaceutical Industry and Global Health: Emerging Models of Pharmaceutical Development and Production Brazil's ARV production technology transfer strategy: could it transform the AIDS treatment landscape in Sub Saharan Africa? Giuliano Russo 1,2, Lícia de Oliveira3, Alex Shankland2, Tania Sitoie4 1 Instituto de Higiene e Medicina Tropical (Portugal) 2 Institute of Development Studies (UK) 3 Farmanguinhos, Fundação Oswaldo Cruz (Brazil) 4 Direcção Nacional de Assistência Médica, MoH (Mozambique)

  2. Introduction • The Brazilian Government is helping the Government of Mozambique to set up an ARV factory in Maputo • Brazil’s recent experience in medicine manufacturing, HIV/AIDS fight and South-South cooperation • This particular experience provides an insight into local production of pharmaceuticals (LPP) in Africa

  3. Framing the issue Net trade flow (exports minus imports) by value of medicinal and pharmaceutical products, by groups of countries (USD million, at current prices) Source: UNCTAD 2013

  4. Local production of pharmaceuticals in LICs • Past consensus that LICs lack critical mass to produce quality medicines at competitive prices (Kaplan and Laing, 2005; Rovira, 2006) • However, 38 countries in Africa have now pharmaceutical factories (UNIDO 2011), especially in North Africa, South Africa, Uganda, Kenya (Ogunye et al, 2009) Zimbabwe and Nigeria (UNIDO 2010) • Recent research has shown prices for locally produced drugs not necessarily higher (Kuanpoth, 2007; Mackintosh and Mujinja, 2008, Kaplan, 2011) • New UN and AU initiatives to study and support local production of pharmaceuticals (WHO/PHI, EU, UNIDO and African Union) • Recent changes in demand, funding and patent rules for AIDS drugs (Anderson, 2010)

  5. The Brazilian experience with production of pharmaceuticals • Relevance of state-owned pharmaceutical industry in Brazil (eg. Farmanguinhos, although representing 5% of drugs) • Threat of compulsory licensing for ARVs helped bringing down prices in Brazil (Flynn 2008; Galvao 2002) • National pharmaceutical industry instrumental in rolling out the national AIDS policy of universal access to treatment (do Lago and Costa 2009)

  6. The Brazilian experience with South-South cooperation • Focussing on Portuguese-speaking African countries and Latin America to strengthen its international standing and access to markets (Russo and Shankland, 2013) • Aimed at reproducing domestic success stories (the ‘cerrado revolution’, SUS, AIDS, malaria and human milk banks) • Brazil’s notions of state-capitalism, health diplomacy (Kickbush et al, 2007), ‘industrial health complex’ (Gadelha, 2006) and ‘Structuring Cooperation in Health’ (Buss, 2011)

  7. The ARV factory project in Maputo • Born as an informal agreement between former presidents to reduce dependency (De Oliveira, 2013) • The factory, called SMM, will be owned 100% by the Mozambican Govt through its State Shareholding Management Institute (not MoH) • USD 34.6 million overall cost of the project so far, sponsored by Brazil, GoM and VALE (de Oliveira, 2012) • 21 generic drugs agreed with MoH to be produced for high-burden of disease conditions • Construction of a medicine quality control lab

  8. What has been achieved so far • Factory infrastructure has been completed and equipped – factory was inaugurated in July 2012 • Medicine quality control lab has been set up • 70 staff have been trained in Brazil and Moz in pharma production and management • Application for WHO quality certification (expected in 2014) • Donation of 8 medicine production files (technology transfer) • In Jan 2013 secondary and tertiary production was started for some of the 21 drugs planned (among which, 6 ARVs)

  9. Retail prices of selected locally produced and imported ARVs Source: 1 SMM Financial Department; 2 CMAM; 3 Management Science for Health International Price indicator guide.

  10. Outstanding issues • Financial sustainability (100% of ARVs are paid and procured by international agencies) • Ownership of the factory and GoM’s willingness to lead (what institution will be responsible for managing the factory within the GoM?) • Access to markets (local private market is crowded out by donations, and there is a lot of competition in the rest of Southern Africa)

  11. Insights on LPP in LMICfrom the Maputo factory’s experience • Production costs may be overcome by tinkering with the cost structure (tax breaks, investment subsidies and profit) • Lack of flexibility of current drugs financing arrangements may be the key hurdle for local production of pharmaceuticals • The ARV market is too narrow a niche for local producers, as it is marred by decreasing margins (Nakakeeto et al, 2013) and distorted by external funds (Izazola-Licea et al, 2009) • The info benefits from local production may be further reaching than expected for local govts (Flynn, 2008)

  12. References Anderson, Tatum. 2010. “Tide Turns for Drug Manufacturing in Africa.”The Lancet 375 (9726) (May): 1597–1598. doi:10.1016/S0140-6736(10)60687-3. Buss, Paulo. 2011. “Brazil: Structuring Cooperation for Health.”The Lancet 377 (9779) (May): 1722–1723. doi:10.1016/S0140-6736(11)60354-1. De Oliveira, Lícia. 2012. “Nota Informativa Sobre a Iniciativa De Instaliação Da Fábrica De Antiretrovirrais e Outrs Medicamentos Em Moçambique”. Farmanguinhos, Fundação Oswaldo Cruz. ———. 2013. “Inicitativa De Instalação Da Fábrica De Antiretrovirrais e Outros Medicamentos Em Moçambique; Avaliação Do Projecto”. Farmanguinhos, Fundação Oswaldo Cruz. Flynn, Matthew. 2008. “Public Production of Anti-Retroviral Medicines in Brazil, 1990–2007.”Development and Change 39 (4): 513–536. doi:10.1111/j.1467-7660.2008.00494.x. Gadelha, Carlos Augusto Grabois. 2006. “[Development, Health-industrial Complex and Industrial Policy].”Revista De Saúde Pública 40 Spec no. (August): 11–23. Izazola-Licea, José Antonio, Jan Wiegelmann, Christian Arán, Teresa Guthrie, Paul De Lay, and Carlos Avila-Figueroa. 2009. “Financing the Response to HIV in Low-income and Middle-income Countries.”Journal of Acquired Immune Deficiency Syndromes (1999) 52 Suppl 2 (December): S119–126. doi:10.1097/QAI.0b013e3181baeeda. Kaplan, A. Warren. 2011. “Local Production and Access to Medicines in Low- and Middle.income Countries: a Literature Review and Critical Analysis”. WHO Department of Public Health, Innovation and Intellectual Property. Kaplan, A. Warren, and Richard Laing. 2005. “Local Production of Pharamceuticals: Industrial Policy and Access to Medicines. an Overview of Key Concepts, Issues and Opportunities for Future Research”. International Bank for Reconstruction and Development/The World Bank. Kuanpoth, Jakkrit. 2007. “Patents and Access to Antiretroviral Medicines in Vietnam After World Trade Organization Accession.”The Journal of World Intellectual Property 10 (3-4): 201–224. doi:10.1111/j.1747-1796.2007.00321.x. Mackintosh, Maureen, and Phares GM Mujinja. 2008. “Pricing and Competition in Essential Medicines Markets: The Supply Chain to Tanzania and the Role of NGOs.”IKD Th Open University Workimng Paper (32). Ogunye, Olulomire, Will Smith, Natalie Hays-Stewart, and Kuna Malik Hamad. 2009. “AIDS, Africa and ARVs: Domestic Production as a Solution to the Treatmetn Gap.” Global Challenges: Science and Society. Georgetown University. Pinheiro, Eloan, Ashwin Vasan, Jim Yong Kim, Evan Lee, Jean Marc Guimier, and Joseph Perriens. 2006. “Examining the Production Costs of Antiretroviral Drugs.”AIDS 20 (13) (August): 1745–1752. doi:10.1097/01.aids.0000242821.67001.65. Rovira. 2006. “Creating and Promoting Doemstic Drug Manufacturing Capacities: a Solution for Developing Countries?” In Negotiating Health: Intellectual Property and Access to Mediciens, International Centre for Trade and Sustainable Development. Sterling, VA: Earthscan. Russo, Giuliano, Lídia Vilela Cabral, and Paulo Ferrinho. 2013. “Brazil-Africa Technical Cooperation in Health: What’s Its Relevance to the post-Busan Debate on ’Aid Effectiveness.”Globalization and Health 9 (1) (January 22): 2. doi:10.1186/1744-8603-9-2. Russo, Giuliano, and Alex Shankland. 2013. “Brazil’s Engagement in Health Co-operation: What Can It Contribute to the Global Health Debate?”Health Policy and Planning (March 27). doi:10.1093/heapol/czt014. http://heapol.oxfordjournals.org/content/early/2013/03/22/heapol.czt014. WHO. 2011. “Local Production for Access to Medical Products: Developing a Framework to Improve Public Health”. Policy Brief. Geneva: Public Health Innovation and Intellectual Property Department.

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