California State Controller urges Merck, Tibotec and ViiV to reduce AIDS drug prices

AIDS Healthcare FoundationApr 1 2011

Today AIDS Healthcare Foundation (AHF) announced that California State Controller John Chiang has sent letters to the CEOs of Merck & Co., Tibotec Therapeutics and ViiV Healthcare, asking the companies to reduce the price of their HIV/AIDS medications for California and its AIDS Drug Assistance Program (ADAP). State ADAPs provide lifesaving HIV/AIDS medications to low-income patients. In addition to his role as State Controller, Chiang is also a Board Member for CalSTRS and CalPERS, the two largest public pension funds, both of which are substantial Merck and Tibotec shareholders.

“AHF would like to thank Controller Chiang for expressing his concerns over the pricing of key HIV/AIDS medications manufactured by Merck, Tibotec and ViiV, and for urging the companies to do their part to ensure that patients in need of lifesaving medicines are being served”

In the letter, dated March 22, 2011 and addressed to Merck CEO Richard T. Clark, Tibotec CEO Glenn Mattes, and ViiV CEO Dr. Dominique Limet, Controller Chiang states: "I urge you to extend the supplemental agreement you already have in place with the state and provide additional pricing considerations that will translate into a cost savings for the program. Only by a shared responsibility to sustain this program can we ensure ADAP will serve all the people who rely on it."

With state budgets stretched thin and increasing numbers of unemployed workers without health insurance, many states have been forced to cap enrollment in their AIDS Drug Assistance Programs. Currently, there are 7,261 individuals on waiting lists to receive lifesaving AIDS medications in eleven states. In addition, thousands more Americans living with HIV/AIDS have been dropped from the program or made ineligible to receive medications through ADAP due to stricter eligibility requirements. With California's budget crisis worsening, last year the state considered potentially devastating cuts that would have resulted in Californians with HIV/AIDS losing access to lifesaving drugs.

In the letter, Chiang explains how high drug costs for key AIDS drugs—such as Merck's Isentress, Tibotec's Prezista and ViiV's Selzentry—are contributing to the current ADAP crisis:

Year in and year out, the increasing cost of AIDS drugs has limited the number of people who can be served using existing ADAP funds. For example, California's ADAP program (the largest in the nation) has experienced a 257% increase in AIDS drug spending since 2000, more than three times the rate of client growth over this same period. This sharp increase is a result of higher prices for newer AIDS drugs…

These increases not only place an undue burden on people seeking treatment, but place an unsustainable burden on states. California cannot afford to increase the budget for ADAP indefinitely in order to pay for higher drug prices. Nor can the state be put in the position of denying other essential health services in order to pay increasing drug costs. This tension must be resolved and in a manner that first serves Californians in need of health care.

"AHF would like to thank Controller Chiang for expressing his concerns over the pricing of key HIV/AIDS medications manufactured by Merck, Tibotec and ViiV, and for urging the companies to do their part to ensure that patients in need of lifesaving medicines are being served," said Michael Weinstein, President of AIDS Healthcare Foundation. "AHF believes there is simply no justification for the high prices of drugs such as Isentress, Prezista and Selzentry. Such prices are putting an unbearable strain on taxpayer-funded, cash-strapped State AIDS Drug Assistance Programs in California and around the country, ultimately limiting access to lifesaving HIV/AIDS treatment to those most in need."

Last year, AIDS drug manufacturers agreed to reductions in the price of their lifesaving AIDS medications to ADAPs. However, since then the number of people waiting to access medicines has continued to balloon. Referring to price reductions made to state ADAPs last year, in the letter Chiang discusses the state's continuing financial woes and the need for further price cuts:

Unfortunately, as you are aware, the state's fiscal situation has gotten worse, with new financial demands on ADAP beneficiaries proposed as part of the solution to the state's budget woes. State general fund dollars continue to shrink and California is faced with either ratcheting down access to ADAP or cutting other vital health services to offset the cost of ADAP. The state cannot keep up with both the increasing demand and rising drug costs in the ADAP program. Moreover, supplemental agreements by several drug companies are set to expire this year and next year, putting greater financial pressure on ADAP.

Each of Chiang's letters concludes with the Controller expressing his hope that the companies "…will continue to strive to assist ADAPs in California and elsewhere as they struggle to provide the means to keep people with HIV/AIDS alive and as healthy as possible."