SAVING LIVES, BUYING TIME
Economics of Malaria Drugs in an Age of Resistance
Kenneth J. Arrow, Claire B. Panosian, and Hellen Gelband, Editors
THE NATIONAL ACADEMIES PRESS
Washington, D.C. www.nap.edu
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NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance.
This study was supported by Contract No. HRN-A-00-00-00012-00 between the National Academy of Sciences and the U.S. Agency for International Development (USAID) and the Bill and Melinda Gates Foundation. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the authors and do not necessarily reflect the views of the organizations or agencies that provided support for this project.
Library of Congress Cataloging-in-Publication Data
Saving lives, buying time : economics of malaria drugs in an age of resistance / Committee on the Economics of Antimalarial Drugs, Board on Global Health ; Kenneth J. Arrow, Claire Panosian, and Hellen Gelband, editors.
p. ; cm.
Includes bibliographical references and index.
ISBN 0-309-09218-3 (hardcover)
1. Antimalarials—Economic aspects. 2. Pharmaceutical policy. 3. Drug resistance in microorganisms.
[DNLM: 1. Malaria—drug therapy. 2. Antimalarials—economics. 3. Antimalarials—therapeutic use. 4. Drug Costs. 5. Drug Resistance. WC 770 S267 2004] I. Arrow, Kenneth Joseph, 1921- II. Panosian, Claire. III. Gelband, Hellen. IV. Institute of Medicine (U.S.) Committee on the Economics of Antimalarial Drugs.
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The serpent has been a symbol of long life, healing, and knowledge among almost all cultures and religions since the beginning of recorded history. The serpent adopted as a logotype by the Institute of Medicine is a relief carving from ancient Greece, now held by the Staatliche Museen in Berlin.
Cover photograph by Claire B. Panosian. Mkuranga, Tanzania, November 2002. Family and neighbors of Amina Selemani, including her daughter and newborn grandchild. Another grandchild, Zulfa Mshamu (not shown) received ACT treatment for malaria through a clinical research trial co-sponsored by the Ifakara Health Research and Development Centre and the U.S. Centers for Disease Control and Prevention.
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COMMITTEE ON THE ECONOMICS OF ANTIMALARIAL DRUGS
KENNETH J. ARROW, (Chair), Professor Emeritus,
Department of Economics, Stanford University, Stanford, CA
PATRICIA M. DANZON, Professor,
Health Care Systems Department, The Wharton School, Philadelphia, PA
BRIAN M. GREENWOOD, Professor,
Department of Infectious and Tropical Diseases, London School of Hygiene and Tropical Medicine, London, UK
Médecins Sans Frontières, Brussels, Belgium
Fellow, Resources for the Future, Washington, DC
ANNE J. MILLS, Professor,
Health Policy Unit, Department of Public Health and Policy, London School of Hygiene and Tropical Medicine, London, UK
HASSAN MSHINDA, Director,
Ifakara Health Research and Development Centre, Ifakara, Tanzania
GERMANO MWABU, Associate Professor,
Department of Economics, University of Nairobi, Nairobi, Kenya
RICHARD PETO, Professor and Co-director,
Clinical Trial Service Unit, Oxford University, Oxford, UK
ROBERT G. RIDLEY, Coordinator,
Product Research and Development, Special Programme for Research and Training in Tropical Diseases, World Health Organization, Geneva, Switzerland
NICHOLAS J. WHITE, Professor,
Wellcome Trust Research Laboratories, Faculty of Tropical Medicine, Mahidol University, Bangkok, Thailand
PETER B. BLOLAND (Consultant), Chief,
Malaria Case Management Activity, Malaria Epidemiology Branch, Centers for Disease Control and Prevention, Atlanta, GA
DEAN T. JAMISON (Liaison from the Board on Global Health), Professor of Public Health and of Education,
University of California, Los Angeles, CA
PATRICK KELLEY, Board Director
HELLEN GELBAND, Study Director
CLAIRE B. PANOSIAN, Senior Consultant
HARRIET N. BANDA, Senior Project Assistant (from August 2003)
JASON PELLMAR, Research Assistant (until August 2003)
BOARD ON GLOBAL HEALTH
DEAN T. JAMISON, (Chair), Professor of Public Health and of Education,
University of California, Los Angeles, CA
Department of Child and Adolescent Health, World Health Organization, Geneva, Switzerland
DONALD M. BERWICK, (IOM Council Liaison), Clinical Professor of Pediatrics and Health Care Policy,
Harvard Medical School, and
President and CEO,
Institute of Healthcare Improvement, Boston, MA
JO IVEY BUFFORD, Professor,
Robert F. Wagner Graduate School of Public Service, New York University, New York, NY
DAVID R. CHALLONER, (IOM Foreign Secretary), Vice President for Health Affairs,
Emeritus, University of Florida, Gainesville, FL
SUE GOLDIE, Associate Professor,
Harvard School of Public Health, Boston, MA
RICHARD GUERRANT, Professor,
Department of Infectious Diseases and
The Center for Global Health, University of Virginia School of Medicine, Charlotesville, VA
MARGARET HAMBURG, Vice President for Biological Programs,
Nuclear Threat Initiative, Washington, DC
GERALD KEUSCH, Assistant Provost for Global Health, Medical Center, and Associate Dean for Global Health,
Boston University School of Public Health, Boston, MA
JEFF KOPLAN, Vice President for Academic Health Affairs,
Emory University, Atlanta, GA
ADEL A. F. MAHMOUD, President,
Merck Vaccines, Whitehouse Station, NJ
MICHAEL MERSON, Professor and Dean,
School of Public Health, Yale University, New Haven, CT
MAMPHELA A. RAMPHELE, Managing Director,
The World Bank, Washington, DC
MARK L. ROSENBERG, Executive Director,
The Task Force for Child Survival and Development, Emory University, Atlanta, GA
PHILLIP RUSSELL, Professor Emeritus,
Johns Hopkins University, Bloomberg School of Public Health, Baltimore, MD
JAIME SEPÚLVEDA AMOR, Director,
Instituto Nacional de Salud Pública, Cuernavaca, Morelos, México
This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the NRC’s Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We wish to thank the following individuals for their review of this report:
Umberto d’Alessandro, Prince Leopold Institute of Tropical Medicine, Belgium
Scott Barrett, The Johns Hopkins University
Mohamud Daya, Oregon Health and Science University
Peter Heller, International Monetary Fund
Tran Tinh Hien, Hospital for Tropical Diseases, Ho Chi Minh City, Vietnam
Alison Keith, Consultant, Health Economist, Springdale, UT
T.K. Mutabingwa, Gates Malaria Partnership & National Institute for Medical Research, Muheza, Tanzania
François Nosten, Shoklo Malaria Research Unit Hospital for Tropical Diseases, Bangkok, Thailand
Jeffrey D. Sachs, Columbia University
Terrie E. Taylor, Michigan State University
Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommendations, nor did they see the final version of the report before its release. The review of this report was overseen by Robert E. Black, The Johns Hopkins University and Charles Phelps, University of Rochester. Appointed by the National Research Council and Institute of Medicine, they were responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures, and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the institution.
Let me use this preface to share some of my own learning experience over the course of this study. At first blush, recommending appropriate therapy for malaria, as for other diseases, might seem a matter for medicine, pharmacology, and other branches of biology. Indeed, as this report will show, while biological and pharmacological details are of utmost importance, malaria policy also requires the best economic understanding we can muster. Anyone conscientiously engaged in practical policy making is painfully aware of the limitations of our understanding of the economic system. In the course of developing this report, I also became increasingly aware of our limited understanding of natural systems, a fact of life that my biological and medical colleagues on our committee candidly acknowledged.
Economics is the study of the allocation of scarce resources among competing ends. It is not surprising, therefore, that economic considerations should loom large in health policy, including the provision of effective pharmaceuticals. Today, the richer countries of the world are devoting an ever-growing proportion of resources to health care. In the United States, how to finance therapeutic drugs for the elderly is an ongoing political debate. If countries in which scarcity is least felt must still devote major attention to medical economics, how much more is this likely to be true of those countries, especially in Africa, where per capita incomes are 5 percent or less of the U.S. level?
It was clear before this IOM Committee met that the existing antimalarial drug supply was starting to fail. For more than 40 years, the system
had been largely based on a single agent—chloroquine—which was at one time very effective and remarkably cheap. Even in the poorest countries, at 10 cents per retail course, most people can still afford it. Moreover, the drug is familiar to the populace, and has been used—both within and outside of organized health care systems—well enough to prevent many malaria deaths and suppress (if not completely cure) acute attacks of the disease. For lack of an affordable alternative, chloroquine remains the most frequently used antimalarial in Africa. Chloroquine is distributed mainly through private economic channels, eventually reaching consumers via the local stores and drug sellers that are ubiquitous in poor countries. The private sector has, in this case, filled a niche left open by public and private health care systems that are neither sufficiently accessible nor affordable to serve much of the population—particularly, the rural poor.
Over time, however, resistance to chloroquine emerged worldwide, first leading to treatment failures in Southeast Asia, then to treatment failures in large parts of east Africa. It is now believed that chloroquine will be useless against most life-threatening falciparum malaria infections in fairly short order. In the meantime, replacement drugs have been introduced, but they too have quickly lost ground. The main exception is a family of antimalarials derived from sweet wormwood (Artemisia annua). Over the last 25 years, artemisinin derivatives have proved highly effective in Thailand, Vietnam, and other Asian countries while no artemisinin resistance has surfaced. Partnering artemisinins with a second drug confers even greater protection against the development of drug-resistant mutants. Two-or three-drug treatments—now commonly called artemisinin combination therapy, or ACT—also offer therapeutic advantages over single antimalarial drugs.
In short, the occurrence of a medical difficulty is offset by an opportunity. An economist does not expect a free lunch, as the cliché goes, and this lunch is not free. In fact, it is relatively, though not absolutely, expensive. At present, ACTs cost about US$2 a treatment, roughly twenty times the price of chloroquine. By any reasonable standards, their cost per individual course is not large and will decline even further with competition and economies of scale. As best we can estimate, the total drug cost of ACTs for worldwide treatment of falciparum malaria is likely to be about $500 million a year—barely noticeable on the scale of the budget of any major developed country. Nevertheless, this is an unmanageable cost for countries with per capita incomes of $2,000 a year or less. Subsidies are needed.
Having said this, multiple economic issues arise. What is the justification for subsidies targeted to specific kinds of expenditures? Why is there not a whole series of new antimalarial drugs coming on line (as there is, for example, for HIV/AIDS or depression)? How do we measure the benefits of curing a case of malaria against the increased costs of treatment? If we
agree on the necessity of subsidies, how can we maintain an efficient system of distribution?
We discuss all of these issues in one way or another in the report, but I will make a few brief comments here. ACTs (compared with monotherapies) serve to avoid the emergence of resistance worldwide. This equals, in economists’ jargon, the avoidance of negative externalities, or the creation of global and intertemporal public goods. Preventing or delaying the emergence of resistance will save lives in future generations. Even if artemisinin resistance eventually emerges, slowing down its appearance increases the chance that high-risk individuals will have access to new and improved drugs when that time arrives.
The historical slowness in producing new antimalarials reflects the way in which new drugs are developed in a market system. Research, development, and testing of drugs engender a large upfront cost. In a private enterprise system, the incentive to make this expenditure is the monopoly mark-up over the relatively low manufacturing costs, a monopoly conferred by intellectual property rights. This incentive, however, depends on the economic strength of the market. When a large market exists in rich countries, drugs are developed. When the market mainly consists of poor people, however, the incentive is weak and drug development usually founders.
In fact, the original development of artemisinins did exemplify an alternative path to pharmaceutical innovation. The first artemisinins were developed by Chinese medical researchers who claimed no intellectual property rights. Not even fame, the scientist’s alternative motivation to money, was involved; the original paper was published under the name of a collective. However, today, if artemisinin production is to expand and ACTs are to become the global norm, the international community must take the initiative and fuel a series of actions to ensure this outcome.
Economic evaluation of a new antimalarial treatment requires an analysis of its respective costs and benefits, or at least a comparison of its reduction of malaria morbidity and mortality vis-à-vis other therapies. In the case of ACTs, the costs were so low and the relative efficacy so high that inquiring into the benefits in greater detail was hardly worthwhile.
Perhaps the knottiest issue we faced was how an ACT subsidy might be administered. It was hard to conceive that subsidizing ACTs at a local level, say through vouchers, would be compatible with a market-driven distribution system. Although public health systems have succeeded in distributing antimalarials in Thailand and Vietnam, the consensus of our experts was that such systems would not work equally well in Africa. We want to disturb the existing market system as little as possible. Therefore, we urge that the subsidies enter at a high international level.
Another lesson of medical economics is the importance of recognizing
the specific character of the disease under consideration. The policy challenges that arise in treating malaria are simply very different from those attached to other major infectious scourges. For example, speed of treatment is much more important in malaria than in TB or HIV/AIDS, and reliance on sophisticated diagnosis necessarily reduced. Malaria’s distinctive mode of transmission (via mosquitoes) suggests additional environmental control measures. High mosquito breeding rates and the special “homophilia” of the major vector species in Africa also carry important policy implications.
In the course of the study, I learned that the challenge of controlling malaria involves far more than identifying and treating individual victims one at a time. Malaria exists as an entire ecology for which real control requires a complement of measures, chief among them, effective antimalarial drugs. Our charge was the study of the economics of drugs; we could not have done justice to other antimalarial measures. But I came away with the clear understanding that interventions such as insecticide-treated bednets and other, broad environmental strategies offer great potential for synergy when effective drug therapies are available.
Finally, this report consciously refrains from the frequent recommendation by committees such as ours for more research. Nonetheless, it must be said that resources devoted to gathering malaria data are grossly inadequate. For one thing, we were not able to determine clearly the number of malaria deaths worldwide, where the error may be 25 percent either way. Such an elementary fact as the current number of treatments taken per year (a very important figure when estimating the cost of changing the drug of choice) seems not to be known within a factor of three. One could go on, but these examples are illustrative. The information gaps and vast uncertainties made this committee’s task more difficult, but not impossible. The scientists, physicians, and economists who compose the committee are unanimous about the correctness of the solutions proposed in our recommendations. We need not—and cannot—wait for better information to meet the current crisis.
Kenneth J. Arrow, Ph.D., Chairman
Professor Emeritus, Department of Economics, Stanford University
The committee gratefully acknowledges the contributions of many individuals who provided information and insights for the study. Those listed below assisted in particular ways—participating in workshops, helping to arrange field visits, providing unpublished materials or data, or simply being available for consultations on salient topics.
Salim Abdulla, Ifakara Health Research and Development Centre
Irene Agyepong, Ghana Health Service
David Alnwick, Roll Back Malaria, WHO
Lawrence Barat, The World Bank
Joel Breman, U.S. National Institutes of Health
Denis Broun, Management Sciences for Health
Dennis Carroll, USAID
Yann Derriennic, Abt Associates
Mary Ettling, USAID
David Evans, WHO
Catherine Goodman, London School of Hygiene and Tropical Medicine
William Haddad, Biogenerics, Inc.
Ian Hastings, Liverpool School of Tropical Medicine and Hygiene
Carolyn Hicks, University of Oxford
Gerald Keusch, Boston University School of Public Health
Rashid Khatib, Ifakara Health Research and Development Centre
Patience Kuruneri, Roll Back Malaria Partnership
Jo Lines, London School of Hygiene and Tropical Medicine
Francesca Little, University of Capetown
Ellis McKenzie, U.S. National Institutes of Health
Kamini Mendis, Roll Back Malaria, WHO
Wilbur K. Milhous, WRAIR
Dr. Abdulnoor Mulokozi, Ifakara Health Research and Development Centre
Vinand Nantulya, The Global Fund to Fight AIDS, Tuberculosis and Malaria
Ok Pannenborg, The World Bank
Christopher Plowe, University of Maryland School of Medicine
Wirichada Pongtavornpinyo, Mahidol University
Magda Robalo, WHO-AFRO
A. Ebrahim Samba, WHO-Afro
Allan Saul, U.S. National Institutes of Health
Thomas E. Wellems, U.S. National Institutes of Health
Shunmay Yeung, Mahidol University
PROJECT CONSULTANTS AND COMMISSIONED AUTHORS
Karen Barnes, Division of Pharmacology, University of Cape Town, South Africa
Paul Coleman, London School of Hygiene and Tropical Medicine, London, England
Don De Savigny, Swiss Tropical Institute, Basel, Switzerland; Tanzania Essential Health Interventions Project (TEHIP), and International Development Research Centre (IDRC), Canada
David Durrheim, James Cook University, Australia
Edward Elmendorf, The World Bank, Washington, DC
Catherine Goodman, London School of Hygiene and Tropical Medicine, London, England
Patricia Graves, Independent Consultant in International Health, Fort Collins, Colorado
Jean-Marc Guimier, Management Sciences for Health, Arlington, Virginia
Steven Hoffman, Sanaria, Gaithersburg, Maryland
John Horton, Department of Pharmacology and Therapeutics, Liverpool University, England, and WHO/TDR, Geneva, Switzerland
Barbara Jemelkova, Resources for the Future, Inc., Washington, DC
Harun Kasale, International Development Research Centre (IDRC), Canada, and Ministry of Health, Tanzania
Ramadhan Madabida, Tanzania Pharmaceuticals Industries Limited
Honrati Masanja, International Development Research Centre (IDRC), Canada, and Ifakara Health Research and Development Centre, Tanzania
Charles Mayombana, Ifakara Health Research and Development Centre, Tanzania
Conrad Mbuya, International Development Research Centre (IDRC), Canada, and Ministry of Health, Tanzania
Di McIntyre, Health Economics Unit, University of Cape Town, Cape Town, South Africa
Abdulatif Minhaj, Rufiji Demographic Surveillance System, Tanzania
Yahya Mkilindi, Rufiji Demographic Surveillance System, Tanzania
Devota Momburi, Rufiji Demographic Surveillance System, Tanzania
Chantal Morel, London School of Hygiene and Tropical Medicine, England
Charlotte Muheki, Health Economics Unit, University of Cape Town, Cape Town, South Africa
Eleuther Mwangeni, Rufiji Demographic Surveillance System, Tanzania
Clive Ondari, World Health Organization, Geneva, Switzerland
Graham Reid, Tanzania Essential Health Interventions Project (TEHIP), and International Development Research Centre (IDRC), Canada
Sam Shillcutt, Health Economics Research Centre, University of Oxford, Oxford, England
Rima Shretta, Management Sciences for Health, Arlington, Virginia
Robert Snow, The Wellcome Trust / KEMRI Collaborative Programme, Nairobi, Kenya, and Centre for Tropical Medicine, University of Oxford, John Radcliffe Hospital, Oxford, England
Alan Tait, Consultant, Sandwich, Kent, England
Jean-Francois Trape, IRD, Dakar, Senegal
David Ubben, Medicines for Malaria Venture, Geneva, Switzerland
Holly Anne Williams, Malaria Epidemiology Branch, Centers for Disease Control and Prevention, Atlanta, Georgia
Virginia Wiseman, London School of Hygiene and Tropical Medicine, London, England