The make or buy debate: Considering the limitations of domestic production in Tanzania

Kinsley Rose Wilson,Jillian Clare Kohler,Natalia Ovtcharenko

doi:10.1186/1744-8603-8-20

Abstract

BackgroundIn order to ensure their population’s regular access to essential medicines, many least developed countries and developing countries are faced with the policy question of whether to import or manufacture drugs locally, in particular for life-saving antiretroviral medicines for HIV/AIDS patients. In order for domestic manufacturing to be viable and cost-effective, the local industry must be able to compete with international suppliers of medicines by producing sufficiently low cost ARVs.MethodsThis paper considers the ‘make-or-buy’ dilemma by using Tanzania as a case study. Key informant interviews, event-driven observation, and purposive sampling of documents were used to evaluate the case study. The case study focused on Tanzania’s imitation technology transfer agreement to locally manufacture a first-line ARV (3TC + d4T + NVP), reverse engineering the ARV.ResultsTanzania is limited by weak political support for the use of TRIPS flexibilities, limited production capacity for ARVs and limited competitiveness in both domestic and regional markets. The Ministry of Health and Social Welfare encourages the use of flexibilities while others push for increased IP protection. Insufficient production capacity and lack of access to donor-financed tenders make it difficult to obtain economies of scale and provide competitive prices.ConclusionsWithin the “make-or-buy” context, it was determined that there are significant limitations in domestic manufacturing for developing countries. The case study highlights the difficulty of governments to make use of economies of scale and produce low-cost medicines, attract technology transfer, and utilize the flexibilities of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The results demonstrate the importance of evaluating barriers to the use of TRIPS flexibilities and long-term planning across sectors in future technology transfer and manufacturing initiatives.

Highlights

Global efforts to lower ARV prices and scale-up treatment access in Sub-Saharan Africa have resulted in price decreases from approximately US $10,000 per person per year in 2000 to less than US$100 in 2007 [1]
One major concern related to ARV access in developing countries is the World Trade Organization’s (WTO) Agreement on the Trade-Related Aspects of Intellectual Property and the impact its patent terms have on ARV prices
We examine the “make or buy” dilemma and the critical limitations of domestic manufacturing through the case study of Tanzania’s attempt to domestically manufacture ARVs with an imitation technology transfer agreement

Summary

Introduction

Global efforts to lower ARV prices and scale-up treatment access in Sub-Saharan Africa have resulted in price decreases from approximately US $10,000 per person per year (pppy) in 2000 to less than US$100 in 2007 [1]. Treatment cost is not the only factor affecting access to medicines, it is obviously important. Treatment rates throughout Sub-Saharan Africa are still inadequate and, in 2007, 72% of HIV-infected individuals in need of treatment still remained without access to ARVs [3]. In order to ensure their population’s regular access to essential medicines, many least developed countries and developing countries are faced with the policy question of whether to import or manufacture drugs locally, in particular for life-saving antiretroviral medicines for HIV/AIDS patients. In order for domestic manufacturing to be viable and cost-effective, the local industry must be able to compete with international suppliers of medicines by producing sufficiently low cost ARVs

Methods

Results

Discussion

Conclusion