Business Plan for WHO
Prequalification Program:
Key Findings for PSM
Discussion document
September 26, 2005
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.
1
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.
2
CHAI works with countries and suppliers to ensure access to affordable
ARVs, and the de-listings spurred CHAI to focus on QA
Operations
Work with
suppliers to
lower ARV prices
Reaction
After
De-Listings
• Conducted audit
• Mobilize TA to
increase quality
of production and
submissions
Prequalification
is critical to
ensure
quality
??
Work with
purchasers to
access products
• Communicate
flexibilities from
different policies
and standards
• Initiate QC project
3
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
4
A month of work between April and May produced the findings which were
presented to WHO in June, as part of an ongoing collaboration
Last progress review
April - May
• 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
June
• Present final
conclusions internally
• Complete and hand
over final products
• Agree on modalities of
working together on an
ongoing basis
July +
• 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
5
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.
6
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
• Saves money by making more
affordable products eligible for
purchase (or, increases purchasing
power of a given set of resources)
• 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
• 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
7
The financial value of the program – and its return on
investment to donors – is substantial
Price difference
Impact at scale
ROI to donors
Average difference for
most common ART firstline 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
$560
$196 million
Savings of $100 million
compares to cost of
prequalification for four
drugs of $100-200k
$190
Innovator
Generic
$67 million
Innovator
Return on investment:
$100-200 to $1
Generic
* AZT+3TC+NVP and d4T+3TC+NVP; difference between prices of generic FDCs and single pills is marginal
8
External and internal perception of the program is consistently strong; the
principal concern is ensuring resources for more prequalifications
Strengths
• 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
Weaknesses
• “Remarkable job on a shoe
string budget”
• Common external perception
that the process is slow
• Need for more dialogue with
suppliers and stakeholders
9
Resources to date have been adequate, but throughput is limited based
on two factors, both external to the program
1
2
Resources 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
Quality 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)
10
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
MDR-TB
• Half of eligible
formulations have
been submitted; rest
are expected soon
• Expect half of the 70 • Increase in overall
manufacturers who
have expressed initial
interest to become
serious enough to
submit over the next
several years
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
11
The likelihood of continued increases in demand is reflected by the
number of formulations that still have one or less prequalified generic
Formulations listed in the Invitation for EOIs
100%
56
38
12
12
10
80
60
0 PQ
Products
0 PQ
Products
0 PQ
Products
0 PQ
Products
40
20
0
0 PQ
Products
1 PQ
Product
1 PQ
Product
1 PQ
Product
2+ PQ
Products
HIV/AIDS
2+ PQ
Products
OIs/Anti-Cancer
MDR TB
1 PQ
Product
2+ PQ
Products
Malaria
TB
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
12
Relative to these challenges, the business planning exercise serves two
roles to support the future of the Prequalification Program
1
To quantify resource requirements facing the
program for 2H 2005 through 2007 based on
likely demand
2
To make recommendations on how to
maximize resource utilization vis-à-vis the
goals of the program
13
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.
14
Methodology for demand model
HIV/AIDS
Works backward from assumption about number of products which will be
prequalified 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
Others
Direct assumptions about number of submissions based on inputs from
program 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
15
Output of demand estimate: Demand is projected to double in 2006
Actual and Estimated New Product Submissions
200
172
RH
150
Malaria
TB
132
RH
Malaria
TB
Malaria
100
158
TB
90
Malaria
TB
HIV/AIDS
50
HIV/AIDS
45
Malaria
TB
0
HIV/AIDS
HIV/AIDS
HIV/AIDS
2003*
2004
2005E**
2006E
2007E
* 2003 figures annualize data on submissions from April-December
** 2005 figures include actual submissions made through March
16
Methodology of costing model
Unit
Costs
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)
Number
Of Units
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.
17
Outputs of costing model… lead to conclusion that to contain costs and
improve performance, the program should maximize resource utilization
…vs. baseline
Resource needs…
Total 2006-07 budget
$15.1m
$4.7m
(04-05)
P staff members in 2006
14
3
(2005)
Assessors in 2006
82
20
(2005)
Inspectors in 2006
78
15
(2005)
Resource utilization can be increased by:
• Higher quality of submissions
• More efficient review procedures
18
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.
19
Three non-technical changes to review procedures are recommended to
reduce cost and decrease average time to prequalification
1
Hold monthly rather than bi-monthly assessments, and
schedule assessor capacity based on demand through
the presence of a staff person in Copenhagen
2
Increase inspector availability, and reorient inspection
scheduling to pre-set inspector availability (rather than
seeking out inspectors based on need for inspection)
3
Begin scheduling inspections earlier in the review
process, based on factors like previous experience with
the supplier, stage of assessments, etc.
20
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
1
2
Hire 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 capacitybuilding support and leads to higher throughput
Create 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
21
The result of these recommendations are refined projections of resource
requirements that reflect more manageable needs
Resource needs…
Assuming no
changes to the
current process
Accepting recs to + Accepting recs
increase efficiency to increase quality
of process
of submissions
Total 2006-07 budget
$15.1m
$11.3m
$11.7m
P staff members in 2006
14
10
11
Assessors in 2006
82
63
45
Inspectors in 2006
78
20
20
Months to prequalification
22
13
11
22
In addition, the following potential technical changes in review procedures
are noted as areas which may justify further consideration
1
Prioritize the products program is reviewing (including
which dossiers are reviewed and which inspections are
scheduled first) based on programmatic needs
2
Introduce a separate approval standard for APIs and
CROs to accelerate the review of multiple formulations
which rely on identical APIs and CROs
3
Consider adopting an expedited process for generic
products that have received regulatory approval by the
FDA or other stringent regulatory authorities
23
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.
24
Ongoing and systematic data collection will help refine the program’s
resource requirement projections over time – and better report to donors
Internal metrics
Oriented to donors
• Length of time between • Percentage of dossiers
different points in the
process
requiring review that get
reviewed
• Number of assessments • Average time from
for a prequalified
product
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
25
An initial evaluation of alternative fundraising options suggests that donor
governments should remain the source of ongoing financial support
Option
Conclusion
Practicality?
Revenues?
Benchmarks?
Sustainable?
Diversify donor base
Medium
Medium
N/A
Low
Charge per initial
submission
Medium
High
Low
Medium No others charge
generic suppliers of
essential medicines
Low
Medium
Low
Medium Administration may not
be practical, and rxn of
suppliers is unclear
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
Charge per initial
submission, with
recovery if prequalified
Charge per
re-qualification
Low
Short-term solution to
meet resource gap but
not sustainable
Would not be regarded
as acceptable
26
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
27