business plan for who prequalification program: key findings for psm discussion document september...

Business Plan for WHO Prequalification Program:Key Findings for PSM

Discussion document

September 26, 2005

2

Summary

Why a collaboration with the Clinton Foundation?CHAI works with countries and suppliers to ensure access to affordable ARVs. The de-listings in 2004 spurred CHAI to focus on QA and ask the WHO if and how it could help. PSM/QSM identified the need for a business plan to ensure a strong platform for the future of the program.

Why are we concerned about 2006-07 needs of the Prequalification Program?The Prequalification Program offers distinctive value to WHO Member States, but its throughput is being challenged by limited resources and the quality of submissions. As demand increases, its ability to meet that demand will be based on its ability to define its needs now.

How do we estimate the program’s needs?Models that quantify demand and cost have been built based on data from 2004-2005 and assumptions made with the program team. The resulting projections suggest substantially increased needs but also emphasize the need to maximize resource utilization.

How can we contain costs and improve performance?The Prequalification Program can improve performance and reduce its resource needs by following through on non-technical recommendations to increase procedural efficiency and improve the quality of submissions.

What do we do now to meet the need?The program faces a need of $12 million in 2006-07, up from $5 million in 2004-05. While it should continue to refine these estimates and evaluate other revenue sources, it should be primarily focused on aggressively pursuing donor governments with internal WHO endorsement.

3

Summary






4

CHAI works with countries and suppliers to ensure access to affordable ARVs, and the de-listings spurred CHAI to focus on QA

Operations

Reaction After

De-Listings

Work with suppliers to

lower ARV prices

Work with purchasers to

access products

Prequalificationis critical to

ensurequality

• Conducted audit• Mobilize TA to

increase quality of production and submissions

• Communicate flexibilities from different policies and standards

• Initiate QC project

??

5

After CHAI approached PSM/QSM to seek if and how it can help the Prequalification Program, the need for a business plan was conveyed

Create a business plan for the WHO Prequalification Program which supports the ability of it and its partners to achieve the following critical near-term tasks:

• Recruit additional human resources

• Solicit additional financial resources

• Complete the 06-07 planning process

• Promote the program

6

A month of work between April and May produced the findings which were presented to WHO in June, as part of an ongoing collaboration

April - May June July +

Last progress review

• Three weeks of full-time work with the WHO

• Interviews and document research

• Developing and refining model of demand, cost

• Testing hypotheses with program team

• Present final conclusions internally

• Complete and hand over final products

• Agree on modalities of working together on an ongoing basis

• Program will incorporate needs and findings of plan into WHO competency review

• Program will pursue its fundraising needs externally

• CHAI will provide support as needed and as agreed with WHO

7

Summary






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The Prequalification Program adds distinctive value to WHO Member States and the global fight against the three diseases

Distinctive Value

• In addition to innovator products, program judges safety, efficacy and quality of products still on patents

• Few national regulatory authorities evaluate generics in this way

• Fewer still are endorsed by major donors, e.g. Global Fund

• WHO standard, in particular, has high visibility and is judged with trust by donors and recipients

• Saves money by making more affordable products eligible for purchase (or, increases purchasing power of a given set of resources)

• Ensures high quality of products being used by WHO Member States

• Improves clinical outcomes by making FDCs available

• Makes possible otherwise unavailable treatments (malaria) and diagnostics (CD4 for resource-poor settings) – regulatory standard reinforces market opportunity and encourages R&D and competition

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The financial value of the program – and its return on investment to donors – is substantial

Innovator Generic

$560

$190

Innovator Generic

$196 million

$67 million

Price difference Impact at scale ROI to donors

Average difference for most common ART first-line regimens*

Hypothetical cost for ART scale-up of 350,000 in Africa between 2004-2005

Assuming 80% use of generics, savings compared to cost of PQ

* AZT+3TC+NVP and d4T+3TC+NVP; difference between prices of generic FDCs and single pills is marginal

Savings of $100 million compares to cost of

prequalification for four drugs of $100-200k

Return on investment:$100-200 to $1

10

External and internal perception of the program is consistently strong; the principal concern is ensuring resources for more prequalifications

• Acknowledgement of critical role to treatment scale-up

• Technical competency and dedication of team

• Strong reflection of WHO value add to Member States

• Use of program – 500 dossiers, donor policies, and purchases by countries

Strengths

Weaknesses

• “Remarkable job on a shoe string budget”

• Common external perception that the process is slow

• Need for more dialogue with suppliers and stakeholders

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Resources to date have been adequate, but throughput is limited based on two factors, both external to the program

1Resources are limited…Limited number of assessors relative to submissions has resulted in the need for extraordinary sessions, limited number of inspectors often causes months of lag time between readiness for and conducting of inspection

2Quality of submissions is inconsistent…One-half to two-thirds of products are not prequalified (of 500 submissions since inception, 120 products are prequalified and ~60 dossiers are active), and the average prequalification time and cost varies widely from what would be a perfect submission (24 vs. 4-5 months and $87-128k vs. $40k per prequalification)

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The factors that limit throughput will be compounded by increasing demand on the program with new submissions across therapeutic areas

HIV/AIDS

• Expect increases in number of companies submitting and different variations on current products

• Estimate increases in submittals for second line products as countries scale up treatment plans

• Change in GFATM policy will lead to increased demand for prequalification due to elimination of “Option C”

TB

• Expect another 12 companies will be ready to submit within year

• Expect half of the 70 manufacturers who have expressed initial interest to become serious enough to submit over the next several years

MDR-TB

• Half of eligible formulations have been submitted; rest are expected soon

• Increase in overall demand of patients: MDR-TB patients approved for DOTS+ doubling every 18 months

• Are reaching out to manufacturers (in China, India and Russia) to encourage new submissions

Malaria

• Will have at least three additional FDCs on next EOI invitation

• Each formulation has at least two API suppliers, meaning higher demand per product than other therapeutic areas

• Also expect increases in submissions of dossiers as they encourage more companies to submit

Source: HTM Cluster; HIV/AIDS Department; STB Department; Stop TB Partnership; RBM Department; RBM Partnership

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The likelihood of continued increases in demand is reflected by the number of formulations that still have one or less prequalified generic

0 PQProducts

1 PQProduct

2+ PQProducts

0 PQProducts

1 PQProduct

2+ PQProducts

0 PQProducts

0 PQProducts

1 PQProduct

0 PQProducts

1 PQProduct

2+ PQProducts

HIV/AIDS OIs/Anti-Cancer MDR TB Malaria TB

56 38 12 12 10

0

20

40

60

80

100%

Formulations listed in the Invitation for EOIs

Note: Product refers to a unique formulation manufactured by a specific supplier; the number of total formulations reflects the current draft of the next EOI invitation and includes specific dosage forms when possible; prequalifications based on lists available on August 30, 2005

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Relative to these challenges, the business planning exercise serves two roles to support the future of the Prequalification Program

1To quantify resource requirements facing the program for 2H 2005 through 2007 based on likely demand

2To make recommendations on how to maximize resource utilization vis-à-vis the goals of the program

15

Summary






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Methodology for demand model

HIV/AIDS

Others

Works backward from assumption about number of products which will beprequalified for every HIV/AIDS formulation by roughly 2007

• Four for 1st line ARVs (25% of 56 formulations)• Two for 2nd line and pediatric ARVs and medicines to treat OIs• One for anti-cancer medicines and formulations with little therapeutic use

Assumes 1 in 3 submissions will be prequalified

Net demand is less existing prequalifications and existing dossiers under review which are likely to be prequalified

Direct assumptions about number of submissions based on inputs fromprogram teams and partnerships at WHO

• TB: 22 in 2005, 39 in 2006 and again in 2007• Malaria: 7 products, with 2.5 companies per product – 18 in 2005-2007• Reproductive Health: 7 products, 3 suppliers per product – 21 in 2006-2007

Note: Model also accounts for re-qualifications after three years and variations of products already prequalified by the program

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Output of demand estimate: Demand is projected to double in 2006

Malaria

TB

HIV/AIDS Malaria

TB

HIV/AIDS

Malaria

TB

HIV/AIDS

RHMalaria

TB

HIV/AIDS

RHMalaria

TB

HIV/AIDS

2003* 2004 2005E** 2006E 2007E

132

45

90

172158

0

50

100

150

200

Actual and Estimated New Product Submissions

* 2003 figures annualize data on submissions from April-December** 2005 figures include actual submissions made through March

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Methodology of costing model

UnitCosts

NumberOf Units

Known based on current expenses

• Salaries for P and G staff time needed for assessments and inspections• Travel for each assessment session ($37k) and inspection ($6k)• External compensation for each session ($34k) and inspection ($4k)

Assumed based on historical experience and guidance from program team

• Staff time: Based on allocation of time for March 2004 through February 2005 and volume of assessments and inspections conducted in that time

• Assessments: Assumes average prequalification requires 6 quality assessment reports and 3 efficacy assessment reports

• Inspections: Assumes any submission progressing to inspections requires 2 formulation, 1 CRO and 0.5 API (3 API for malaria) visits

Note: Model uses current prequalification process as a template, e.g. bi-monthly assessments, number of weeks assessors and inspectors have typically been available per year, current rates of compensation to external experts, etc.

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Outputs of costing model… lead to conclusion that to contain costs and improve performance, the program should maximize resource utilization

Resource needs…

Total 2006-07 budget

P staff members in 2006

Assessors in 2006

Inspectors in 2006

$15.1m

14

82

78

…vs. baseline

$4.7m

3

20

15

(04-05)

(2005)

(2005)

(2005)

Resource utilization can be increased by:• Higher quality of submissions• More efficient review procedures

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Summary






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Three non-technical changes to review procedures are recommended to reduce cost and decrease average time to prequalification

1Hold monthly rather than bi-monthly assessments, and schedule assessor capacity based on demand through the presence of a staff person in Copenhagen

2Increase inspector availability, and reorient inspection scheduling to pre-set inspector availability (rather than seeking out inspectors based on need for inspection)

3Begin scheduling inspections earlier in the review process, based on factors like previous experience with the supplier, stage of assessments, etc.

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Changes – and investment – to improve the quality of submissions under review by the program are recommended to improve capacity building and reduce time to prequalification

1Hire staff to focus on supplier relations…1-2 staff members, independent of review process, can hold supplier workshops, conduct trainings, and proactively engage suppliers to improve quality of production and submission to WHO – provides capacity-building support and leads to higher throughput

2Create a minimum standard for initial dossier review…Rather than begin review of any dossier with complete documentation, create consistent and transparent criteria that filter out dossiers that do not meet a minimum standard of quality and invite applicants submitting these dossiers to re-submit

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The result of these recommendations are refined projections of resource requirements that reflect more manageable needs

Resource needs…

Total 2006-07 budget

P staff members in 2006

Assessors in 2006

Inspectors in 2006

Months to prequalification

Assuming no changes to the current process

$15.1m

14

82

78

22

Accepting recs to increase efficiency of process

$11.3m

10

63

20

13

+ Accepting recs to increase quality of submissions

$11.7m

11

45

20

11

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In addition, the following potential technical changes in review procedures are noted as areas which may justify further consideration

1Prioritize the products program is reviewing (including which dossiers are reviewed and which inspections are scheduled first) based on programmatic needs

2Introduce a separate approval standard for APIs and CROs to accelerate the review of multiple formulations which rely on identical APIs and CROs

3Consider adopting an expedited process for generic products that have received regulatory approval by the FDA or other stringent regulatory authorities

25

Summary






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Ongoing and systematic data collection will help refine the program’s resource requirement projections over time – and better report to donors

Oriented to donors

• Percentage of dossiers requiring review that get reviewed

• Average time from submission to prequalification for a prequalified product

For external consumption

• Total number of assessments

• Total number of inspections

• Number of dossiers received

• Number of prequalified products

These metrics should be calculated regularly as a means to manage performance and

allocate resources accordingly

Internal metrics

• Length of time between different points in the process

• Number of assessments for a prequalified product

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An initial evaluation of alternative fundraising options suggests that donor governments should remain the source of ongoing financial support

Option Practicality? Revenues? Benchmarks? Sustainable? Conclusion

Diversify donor base Medium Medium N/A Low Short-term solution to meet resource gap but not sustainable

Charge per initial submission Medium High Low Medium No others charge generic suppliers of essential medicines

Charge per re-qualification

Medium Low Low Medium See above, also low potential for revenues

Fee per year charged to suppliers

Low High Low Medium No other benchmarks and would likely not be regarded as acceptable

Fee per year charged to “users” – formally, procuring UN agencies

Low High Low Low Would not be regarded as acceptable

Charge per initial submission, with recovery if prequalified

Low Medium Low Medium Administration may not be practical, and rxn of suppliers is unclear

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Following internal endorsement of future role and needs of the Prequalification Program, it faces three short-term needs

Maximize use of existing resources by implementing management improvements

Milestone: Hire non-technical manager

Confirm financial resources required for 2006-2007 by successfully applying for new grants

Milestone: More than 50% 2006-07 need confirmed by end of Q4

Confirm human resources required for 2006-2007 through confirmed secondees and assessors/inspectors from NDRAs

Milestone: 3-4 technical officers hired and 50% of 2006-07 need for assessors and inspectors confirmed by end of Q4

business plan for who prequalification program: key findings for psm discussion document september...

Documents

prequalification program

program team

resource needs

quality of submissions

demand increases

business plan

spurred chai

resource utilization