During my career
I have been involved in process simplification and cost reduction of different chemistries,
chemicals and processes. When I am discussing any process, my mind always races
to understand its chemistry, manufacturing process and how the cost lowered and
the profit improved. This blog is a follow up of an earlier blog (December 2011
Drugs
for Infectious Diseases, Funding and Opportunity).
I have used three
NTD (Neglected Tropical Diseases)/Infectious Disease drugs [Tenofovir
(Antiretroviral), Praziquantel (schistosomiasis) and Isoniazid (tuberculosis)] as an
example to see what cost reduction opportunities exist. Observations of the
analysis answer a question many of us have. “Can the new technologies be easily
introduced for the existing products.?”
My intent is not
to criticize practices of any profit making organizations, charitable
foundations or governments involved in caring and prevention of diseases. Along
with benefits of technology innovation (lower cost, higher profit, better
quality) companies will have to overcome regulatory re-approval hurdles. Lower
costs can extend the reach of donations to additional people or time. Donor
fatigue could be lowered. I am sure all of us want to help the needy.
Methodology used to calculate price of
API.
May 2011 The Wall
Street Journal (2) discussed lower cost of Tenofovir. Its chemistry
intrigued me. The article also suggested how the funding could run short for
the care of the needy. I have used the current selling price of the drugs to
reverse calculate the selling price of the active pharmaceutical ingredients. The
numbers are approximate. Chemistries in the public domain are used to make my
observations. These chemistries or manufacturing methods are not optimum, thus
suggest opportunities. If someone disagrees then I would like to discuss “the why
not”. However, I see regulatory hurdles.
Tenofovir:
Tenofovir is an
antiretroviral used for AIDS. Price of Tenofovir (May 2011) from (1).
Supplier
|
||
Cipla
|
||
Price, $/yr.
|
83.00
|
|
Tablet, mg
|
300
|
|
Price per
tablet per day
|
$0.227
|
|
Price,
$/milligram/day
|
=83/(365*300) =
0.0007579
|
|
Allowing for
formulation efficiency, profit margins at API level and dosage level, it is
assumed that API part of the tablet cost is about 40% of the tablet price.
|
||
API
manufacturing cost $/mg
|
=0.4*0.0007579
|
=0.0003031
|
API selling
price, $/kg
|
303.10
|
|
Table 1
API selling price
of $303.10 per kilo (Table 1) might not sound high or outrageous to pharmaceutical
company personnel but to a family (in the developing country) living on
$2.00-5.00 per day, 23 cents per day for a tablet can be a considerable burden.
It can be a matter of food for the family vs. medicine for an individual (3).
The Wall Street Journal
article and literature suggest that the yield of the Tenofovir process has been
improved from 13 to 24%. On percentage basis this is a significant improvement.
A review of the chemistry and the process suggests that the yield can be
improved further and the solvent consumption reduced i.e. the process could be
made more productive and sustainable. If the yield can be improved from 24% to a
much higher number e.g. 48%, the dollar savings for the governments and
charitable foundations would be in millions of dollars. Yield of 48% might be a
wonderful improvement but why not 66 or 75% would be my question.
If we can lower
the cost of the API through better manufacturing technologies and economies of
scale to $200.00 per kilo (which I think is still high) down from $303.00 per
kilo, the cost of each tablet would drop to about 15 cents per day. This would be
enormous relief for the needy and huge savings for the governments and
non-profit foundations.
Table 2
illustrates API need at different population levels. If only 50% of the
infected population was taking Tenofovir and the cost could be lowered by $100.00
per kilo (many will say it cannot be done and I would like say: let us figure
out how it can be done) the savings would be about $192 million dollars per
year.
Population with
AIDS (4)
|
35,000,000
|
||
Daily need
|
One tablet @ 300 milligram
|
||
Percentage
population using Tenofovir
|
Population
served
|
API Production
Kilo/yr.
|
Number of
companies for Tenofovir = 8, Kilo/plant
|
80%
|
28,000,000
|
=300*365*28,000,000=3,066,000
|
383,250
|
50%
|
17,500,000
|
=300*365*17,500,000=1,916,250
|
240,000
|
Table 2
Praziquantel (PQZ):
Praziquantel is
the preferred drug for Schistosomiasis. Analysis similar to Tenofovir suggests
the opportunities but there are hurdles also. I have used price of 10 cents (5)
per 600 mg for a tablet when purchased in bulk by WHO or similar organizations.
If the API cost is 40% of the selling price of the tablet, the API cost of about
$67.00 per kg. If we use 400 million tables (6) per year as the
need, the total need for humans would be about 240,000 kilos per year. Praziquantel is also
used for animals but their dosage is low compared to humans. I estimate PQZ
demand of about 300,000 – 400,000 kilos per year to cover most of the needs.
PQZ is being sold
at about 20 cents a tablet in Kenya. Compared to the bulk purchase this is a significant
markup to cover the cost of distribution and related profits.
Review of the
chemistry suggests that the yield and the manufacturing process can be improved.
Site consolidation and manufacturing innovations can also lower the API price by
20-25%. Savings of about $5.00 to 7.00 million per year could be expected. A
single plant can produce the global API need and be very profitable.
Isoniazid:
Isoniazid is one
of the drugs used for tuberculosis. Since patients can develop side effects, I
have assumed only one third of the global population can use the drug (7).
This pegs to about 3 million patients who will take 200 mg (adult/child
average) dose for 270 days. We will require about 165,000 kilos of the API to
serve the needs. Using API being 40% of the selling price of the API, the cost
of API (3) would be about $40.00 per kilo. Total API revenue would
be about $6.6 million per year.
Chemistry is
simple and a single plant can produce the product using a continuous process. Such
a process and plant can lower the tablet cost. Since the total API revenue is
not stellar, I have doubts if any one will make any effort to have an
innovative process. Even if there were 30% savings and since the drug is being
produced by many companies no one is going to make a change in their process as
re-approval costs are an unknown and could exceed the total savings.
Conclusions:
On a consolidated
site basis there are savings for PQZ and Isoniazid. However, no one would be
interested in consolidation. Cost reduction at each site due to technology
improvement may not be sufficient to overcome R&D, process modification and
regulatory re-approval costs. Improvements and changes at each producing site
will have to be evaluated on a case by case basis.
Incorporation of
better technology for Tenofovir is definitely a possibility and should be
explored. It is up to individual companies to decide their course. It might be
necessary for the foundations to get involved in technology innovation.
Above
observations can be extended to every existing API. For any new API, it is best
to incorporate every possible improvement in the process before any paper work
is filed for regulatory approval, has to be the motto. I expect that same will
be true for formulations. All this suggests that move from Quality by
Analysis "QbA" to Quality by Design "QbD" is going to be a
challenge especially for the existing products.
- Tenofovir Disoproxil Fumarate http://utw.msfaccess.org/drugs/,
accessed Feb 23, 2012
- Researchers Manipulate Drug's Chemistry in Bid to Lower Treatment Cost, The Wall Street Journal, May 13, 2011
- Malhotra, Girish Drug
Prices: Food vs. Medicine, A Difficult choice for Some or Many June
22, 2011
- www.avert.org/worldstats.html
accessed February 23, 2012
- Private communication with Charles
H. King MD, Professor
of International Health Center
for Global Health and Diseases,
Case Western Reserve University, February 26, 2012
- Hotez, P etal, Africa is
desperate for Praziquantel, The Lancet, Vol. 376, August 14, 2010 pg
496-498
- WHO Tuberculosis Facts http://www.who.int/tb/publications/2011/factsheet_tb_2011.pdf
accessed Feb 28, 2012
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