To: Mr. John L. Bishop, Chief Executive Officer, Cepheid

Cc: Philippe Jacon, Senior Vice President, Global Access, Cepheid
Board of Directors, Cepheid:
Cristina H. Kepner
Thomas D. Brown
Robert J. Easton
Thomas L. Gutshall
Wayne G. Paterson
David H. Persing, M.D., Ph.D.
Hollings C. Renton
Glenn D. Steele Jr., M.D., Ph.D.

Open Letter: Time to Lower the Price of Xpert Cartridges to US$ 5

21 October 2019

Dear Mr. Bishop,

The GeneXpert system has revolutionized rapid, accurate testing for the diagnosis of tuberculosis (TB) since entering the market in 2010, and the World Health Organization (WHO) recommends Xpert MTB/RIF and Xpert MTB/RIF Ultra as the initial test for diagnosing TB. Yet in large part due to the high price of Xpert cartridges, most high TB-burden countries have not sufficiently scaled up their procurement and use of Xpert as the initial TB diagnostic test. Instead, they continue to rely on the significantly less accurate, but more affordable method of sputum smear microscopy, leading to gaps in TB diagnosis and rapid linkage to effective treatment. In order to improve the scale-up of Xpert tests to help close these gaps, Cepheid must reduce the price of Xpert MTB/RIF and Xpert MTB/RIF Ultra cartridges to US$ 5, inclusive of service and maintenance.

The undersigned civil society organizations and individuals working to end the neglect of people with TB request that Cepheid reduce the price of Xpert cartridges to US$ 5 per test for the public sector. This price reduction would fairly reflect both the volume-based cost of manufacturing, and the significant public and philanthropic investments behind Xpert’s development and dissemination. Furthermore, it is essential that this price is inclusive of a comprehensive service and maintenance plan, as many high TB-burden countries cannot afford to purchase the extended warranties currently required for the service and maintenance of their GeneXpert systems.

This US$ 5 price point should also be available in the private sector, especially in high TB-burden countries, where a majority of TB patients seek care and shoulder costs personally. According to a 2017-2018 survey, people in several high TB-burden countries were being charged US$ 100 or more for an Xpert test. Making the US$ 5 price per test available to private sector purchasers will increase scale-up, further expand the already high volumes of sales, and bring Cepheid closer to fulfilling its stated mission to “improve patient outcomes by enabling access to molecular diagnostic testing everywhere.”

The current public-sector price of US$ 9.98 per Xpert cartridge for high TB-burden countries was set in 2012, as a result of a buy-down agreement in which Unitaid, the US government and the Bill and Melinda Gates Foundation paid Cepheid US$ 11.1 million to reduce the price of Xpert cartridges from US$ 16.86. Since 2012, the volumes of sales of Xpert tests increased dramatically from 1.3 million to nearly 12 million cartridges sold in 2018 to the public sector alone, which is expected to have resulted in significant manufacturing efficiencies and cost savings. According to an independent cost-of-goods analysis commissioned by Médecins Sans Frontières (MSF), at annual volumes of 10 million, Cepheid’s manufacturing cost per cartridge is estimated to be as low as US$ 3. Therefore, the US$ 5 price point would enable Cepheid to include a comprehensive service and maintenance plan as well as a reasonable margin of profit within the price per cartridge, while also meeting the WHO target product profile price of under US$ 6 for rapid molecular TB diagnostic tests. In light of the volumes of sales and the resulting efficiencies that can be expected with regard to the cost of goods, it is time for Cepheid to reduce the price of Xpert MTB/RIF and Xpert MTB/RIF Ultra tests to US$ 5.

Cepheid developed GeneXpert and its assays over the past two decades largely through public and philanthropic funding, which included an estimated US$ 120 million from the US Department of Defense, US$ 45 million from the US National Institutes of Health (NIH), and over US$ 20 million via the Foundation for Innovative New Diagnostics (FIND), with funding largely from the Bill & Melinda Gates Foundation. In 2010, Cepheid stated: “the Xpert MTB/RIF test truly represents what can be accomplished in a successful academic-public-private partnership.” It is now time for the public to receive a larger return on this investment. Xpert tests must be affordable and accessible to high TB-burden countries, to enable them to implement WHO recommendations and fully scale up the use of Xpert as the initial TB diagnostic test.

We request Cepheid immediately reduce the price of Xpert tests to US$ 5, inclusive of service and maintenance. Before October 28th, we look forward to your response, which should articulate a plan for how Cepheid intends to lower the price of all Xpert cartridges to reflect the cost-of-goods efficiencies generated from the increased volumes of sales, as well as the public and philanthropic investments that supplemented the development of GeneXpert and the Xpert MTB/RIF and MTB/RIF Ultra assays. Please direct your response to David Branigan, David.Branigan@treatmentactiongroup.org.

Sincerely,