Aaron Patillo was a key member of the Clinton Health Access Initiative's (CHAI) original drug access team. Based in Beijing, he brokered deals with pharmaceutical companies that helped slash the price of HIV/AIDS medicines and expand access to treatment for millions. Aaron sits down with host Inder Singh to talk about how CHAI got suppliers to cooperate by opening their books, how the team used cost-plus pricing negotiations to ensure sustainable access to medicines while dramatically reducing prices, and how CHAI pushed costs even lower by going upstream in the supply chain. Aaron and Inder also swap stories from the early days at CHAI, reflecting on how its culture enabled remarkable achievements— major price reductions in short periods of time—when market shaping was still an untested idea. The Market Shapers Podcast is a production of Inder Singh and is produced by University FM. This interview was recorded in April, 2025.
Aaron Patillo was a key member of the Clinton Health Access Initiative's (CHAI) original drug access team. Based in Beijing, he brokered deals with pharmaceutical companies that helped slash the price of HIV/AIDS medicines and expand access to treatment for millions.
Aaron sits down with host Inder Singh to talk about how CHAI got suppliers to cooperate by opening their books, how the team used cost-plus pricing negotiations to ensure sustainable access to medicines while dramatically reducing prices, and how CHAI pushed costs even lower by going upstream in the supply chain.
Aaron and Inder also swap stories from the early days at CHAI, reflecting on how its culture enabled remarkable achievements— major price reductions in short periods of time—when market shaping was still an untested idea.
The Market Shapers Podcast is a production of Inder Singh and is produced by University FM.
This interview was recorded in April, 2025.
Why the lowest price isn't always the best solution
12:33: [Inder Singh] Why did you not just take what you could get? Because I think people from the outside world looking in would be like, "Whoa, heck, get the lowest price you can," right? It's going to improve access. Why was that important?
12:44: [Aaron Patillo] It was really important because we were focused on the sort of long-term molding of the, of these markets, right? I mean, President Clinton very eloquently put multiple times, these were markets that looked like a jewelry store, with very low, low volumes and very high margins. And our goal was to try, try to push these into ones that looked much more like grocery stores, high volumes and, and low margins. And so to do that, even if we could get a big win on margin at zero or negative margin, that would be ultimately like a short-term win. And we're interested in having this really be a sustainable improvement to the marketplace that we were making.
Long-term solutions over short-term wins
12:02: This is not charity, and we want this to be like a long-term, viable, sustainable business decision, and very specifically, that has a profit margin for them. So, we weren't looking for handouts or these short-term results. Even if we could get what felt like, kind of, an easy win and they're willing to agree at any price, we actually said, "No, that's not how we're operating here. We need this to be, like, sustainable from a business point of view for you, the company."
The ground rules for market-shaping partnership
19:36: We didn't just go out and establish partnerships with whoever we could find. This was a very well-vetted process. But it was very clear these are the ground rules and you'll have these improvements in volume in a way that you could not bring to bear just yourselves with throwing added marketing dollars at this, for instance, right? These were unlocking components of this that wasn't just a dollar allocation game in any way. A lot of these suppliers found that hugely useful and information they wouldn't have otherwise.
(Transcripts may contain a few typographical errors due to audio quality during the podcast recording.)
[00:00:00] Inder Singh: Welcome to Market Shapers, a podcast about harnessing capitalism for good. I'm Inder Singh. Over the years, I've had the privilege of working with incredible people, building products, forging deals, and shaping markets that have impacted millions of lives.
On this show, I sit down with the leaders, innovators, and behind-the-scenes deal makers who've changed the way markets work, often in ways most people never see. We'll unpack how they did it, what they learned, and how those lessons can help tackle the big challenges ahead.
I'm really excited to be here with my friend Aaron Pattillo. Aaron was based in Beijing as part of the original CHAI, the Clinton Health Access Initiative's drug access team, and there he brokered deals with major pharmaceutical companies across Asia that helped to slash the price of HIV/AIDS meds and expand access to treatment for millions.
He also helped pioneer one of CHAI's boldest ideas, that market inefficiencies were the main reason people couldn't access life-saving medicines, and if you could fix the market, you could fix the crisis. Since then, Aaron's had a hand in some unconventional and bold efforts. He co-founded, built, and sold a clean energy company in Kenya that turns sugarcane waste into clean cooking fuel. He's also cornered the market — I love this story — on yak wool in Mongolia with a waste-to-value business model. These days, he's back from Kenya and based in Boulder, Colorado, primarily working with the Initiative for Medicines, Access, and Knowledge, a think tank working to make medicines more affordable by tackling the drug patent problem.
Aaron and I have shared fiery hot pot meals in Chengdu, bounced through rickshaw rides in Jaipur, and Aaron was the person who onboarded me at the Clinton Health Access Initiative years ago and taught me the way to do the work.
Aaron, welcome. Let's get into it.
[00:01:57] Aaron Pattillo: Oh, great. Well, thanks for having me on, Inder.
[00:02:00] Inder Singh: Aaron, you have a bunch of crazy stories. One day, there should be a book written. It should be called something like "The Mavericks of Global Health," because we were all very young, under the leadership of Ira Magaziner and President Clinton, like visionaries around trying to improve access to HIV/AIDS meds.
But the rest of the folks there were 25- to 29-year-olds running around the world trying to improve access to medicines, going after it with optimism. And there are some insane stories from back then. Are you open to sharing one or two of those stories?
[00:02:34] Aaron Pattillo: Ah, okay. I feel like this became my legacy story of sorts at CHAI. So, you know, I'd been living in Beijing for about a year at this point. And, you know, I'd gotten a feel for the city. I'd made some friends. I, kind of, like, fully embraced this anything goes in China ethos. And one night, this friend invites me to the opening of this… I think it was a Prada store at a fancy new mall that was opening.
So, I go, and it's like champagne in hand, and end up getting introduced to this woman who's the editor of a magazine there, and we're chatting for a bit. She says something effective like, "Yeah, I think you'd be a great fit for this piece that we're working on, and there's actually a gathering tomorrow that's happening and, like, talk to my assistant and we'll send a car."
And I, sort of, just nod and, like, not actually expecting anything to happen out of this. But, you know, sure enough, the next day, like, a car shows up, and I get picked up and driven way to the outskirts of Beijing. You know, I remember, kind of, half expecting some, like, intellectual roundtable or some kind of campus event or something.
And instead, I'm dropped off at this, like, half-built bathhouse. And I mean, there's literally, like, scaffolding, plastic sheets everywhere. But I step inside, and it's like this full-blown fashion shoot. I mean, it's like lights and makeup and wardrobe. And I just, kind of, have to roll with it, right?
So, I go, and I'm ushered in, I sit down, I'm getting my, like, hair teased up and makeup done, and you know, the next thing I know, I'm like posing in this, like, half-constructed spa. On the way out, somebody handed me this piece of paper, and it was just basic information, you know, name and email address and your job and some other silly questions about, like, your favorite foods in China. And I, kind of, like, scribble down something and then forget the whole thing ever happened. And it was one of those like, wow, that was bizarre, but this kind of thing happens a bit in China.
So, fast-forward a few months and I'm going into the office, a totally normal day. I open my email, and I find there are literally like hundreds of emails from women... Well, mostly from women. And I was, sort of, like, "Wow, what's going on here?" And I quickly pieced together, it turns out I was like featured in Cosmopolitan magazine. They did this like Valentine's Day special issue, the 100 Most Eligible Bachelors in China, and my full photo spread, and they published my email address, and in the article it said that I worked for the Clinton Foundation, right?
So, as a single guy in China, I mean, this was all pretty amazing, right? But on the work front, it was definitely not ideal because, as you well know, obviously at CHAI, the whole ethos was this, like, we keep a low profile, we work behind the scenes, we stay under the radar. Ira Magaziner, who ran CHAI, he was, like, very clear and very serious about that.
So, when this all unfolds, I, kind of, go into like damage control mode, and I remember telling colleagues like, “Hey, you know, I'll have a little laugh about this now, but like whatever you do, let's make sure this does not get back to Ira, right? Because if it does, I'm out of here. I'll be fired.”
So, thankfully, like months go by, the emails taper off, and I'm like, "Wow, all right. I've dodged the bullet. It's all good." And then in Toronto, at the International AIDS Conference, and President Clinton is there and he's giving the keynote address. And I'm backstage with a few other people from the foundation, and Clinton walks off the stage afterward and comes back. And Ira's doing the introductions and he says, "Yeah, this is Aaron. He's our guy in China working with the drug suppliers and he was just named one of Cosmo's 100 Most Eligible Bachelors."
I mean, I'm standing there shaking Clinton's hand, just completely stunned, right? And then in a split second, I just as I'm thinking like, "Oh, maybe I'll get some, kind of, nod or wink or a little sidebar chat." But Clinton, he just looks me up and down and says, "Really? Huh." And then he moves on, like, clearly very unimpressed. And that was it.
[00:06:43] Inder Singh: Oh, that's a funny story. I remember when I first joined CHAI, you told me that story. My first day was landing in China. I had a piece of paper that I was told to print out to tell the taxi driver where to go. The next day, we were in meetings. And I remember being handed a set of cards, saying, "The CEO of CHAI has left. He had to go to Geneva. You need to lead the meetings with the CEOs of these other companies for the rest of the week."
And I was so nervous. And the moment you told me that story, I, like, suddenly relaxed in my seat and, like… and was able to, like, "Okay, I can grind through this. I can figure it out."
So, let's talk a little bit about market shaping. Now, back when you and I were doing this work at CHAI, we didn't call it that. So, if you were to define what we did at CHAI, like, can you give a little bit of color to that and why it was important?
[00:07:36] Aaron Pattillo: At the time, we were doing what felt like and certainly was just, kind of, pioneering a what-if idea. And this was really an idea that was hatched by Ira. The fundamental premise of it was, let's go to these suppliers, work with them directly, demand that we have transparency around their actual costs, right? And we'll map this very detailed, right, to understand their, kind of, full cost structure, and understand how that may change with fixed costs and variable costs, and how demand might impact that, and then really use that as this basis upon which we would negotiate a final ceiling price for these on an individual drug basis.
So, I remember hearing that initially and thinking my first thought, coming from the private sector, and was like, there's no way anyone is going to be willing to do that. I mean, you're essentially saying, “Open the books, and we'll use that information and effectively negotiate with you on it.”
That was really the beginnings of like the playbook we started to put together on the supply side, which was where I was primarily focused. But there was a whole component to this on the demand side as well, the idea of, like, aggregating demand together and having some forward-based pricing and having payment commitments. A lot of the things I'd say that, you know, would be done in the private sector, but bringing these to bear on, kind of, public service goods in a marketplace where those kinds of things weren't happening.
[00:09:08] Inder Singh: Now, during the course of the work together, I mean, you were instrumental in cutting a couple of those early deals with suppliers that implemented ceiling prices at a lower price point than was traditionally available in the developing world, and that started this cycle of volumes going up and prices coming down.
And the whole idea of even starting this work, as you pointed out to me just now and at other times, was like, why? Why would a supplier open their books? Why would a supplier drop the price of a drug? Why would they do that? But can you give me a couple insights and a couple stories maybe from the work we've done of things that to many people would be like, "No, that's not possible," but were really important in helping bring the price of critical life-saving medicines down?
[00:09:58] Aaron Pattillo: Yeah. So, the first deal that I worked on with our first supply partner in China, this was a company called Mchem. And again, we, sort of, approached them with this playbook of full transparency, and we'll model all the costs and steps, and we'll use this to negotiate a price.
This wasn't a short process. I mean, we really got in, we rolled up our sleeves, we understood all of the data on this and mapped it all in a way that, frankly, some of these, especially some of the suppliers in China were not even doing at that level. So, you know, it was a months-long process. We were, like, knee-deep in data. We're building these complex models. We realized it also wasn't just technical, right? We're doing this in the backdrop of cultural and personal components to this. And I remember relying on one woman in particular who was the, kind of, the company representative and our real lifeline to Mchem, a wonderful woman named Jennifer Xiao.
I remember this moment after we'd had umpteen, like, requests for more data from her and clarifications and she would get frustrated with it. But one time she literally just, like, broke down in tears with us and said, like, "Oh, my boss just wants to meet President Clinton. We'll agree at any price."
And so, it was like, kind of, this aha moment for me and for us. It showed that we were, kind of, like, laser-focused on these cost structures and efficiencies, and their motivations were entirely different. And there was a bit of this lesson about like, hey, the market shaping, it's not really... Just about numbers and spreadsheets. There's this whole, sort of, human factor and cultural context of what's happening here, too.
That was the kind of thing that really taught us to look beyond the spreadsheets but we also used this to really underscore what was a very central tenet of the work we're doing, right? Which was this idea that this is not charity, and we want this to be like a long-term, viable, sustainable business decision, and very specifically, that has profit margin for them.
So, we weren't looking for handouts or these short-term results. Even if we could get what felt like, kind of, an easy win and they're willing to agree at any price, we actually said, "No, that's not how we're operating here. We need this to be, like, sustainable from a business point of view for you, the company."
[00:12:15] Inder Singh: And why, Aaron? Can you articulate why that was important? Why did you not just take what you could get? Because I think people from the outside world looking in would be like, "Whoa, heck, get the lowest price you can," right? It's going to im prove access. Why was that important?
[00:12:29] Aaron Pattillo: It was really important because we were focused on the, sort of, long-term molding of these markets, right? I mean, as President Clinton very eloquently put multiple times, these were markets that looked like a jewelry store with very low volumes and very high margins.
And our goal was to try to push these into ones that looked much more like grocery stores, high volumes and low margins. And so, to do that, even if we could get a big win on margin at zero or negative margin, that would be, ultimately, like a short-term win.
And we're interested in having this really be a sustainable improvement to the marketplace that we were making and ones that had profit margin built in for suppliers. Reasonable ones that would allow them to keep producing products, have incentive to do so, make money doing it.
And I think that was really a cornerstone about why and how these agreements that we put in place were so effective and stood that test of time.
[00:13:31] Inder Singh: Yeah, I mean, because the big problem, of course, is this CEO gets a photo op with President Clinton, he either leaves the business or he doesn't honor the agreement going forward. It's not sustainable.
Let's go back to the why. Why was the supplier willing to do that? And let's perhaps put this in language that Ira might have said. And Ira was one of the most brilliant people when it came to cost-plus negotiations and a deep understanding that even companies themselves may not fully appreciate how fixed and variable costs can evolve over time.
And there's numerous examples of this. Let's say that your factory is not fully utilized, right? If you're not fully utilized and you have to start and stop production, or you have to switch between different kinds of medicines or different kinds of widgets that you're creating, every time you start and stop, there's a cost associated with it. You've got to break it down, you've got to set it back up. Even when you set it back up, it may not be as efficient. You may not be producing at the high yields that you were last time. You have to get back up to that level. This is a very common phenomenon in manufacturing. So, instead, if you can continuously produce, well, you eliminate those costs. You can also retain all those knowledge effects of improving the process and even get them better, right?
But let's go back to that Mchem example. How did you guys get Mchem to agree to open their books in the first place? You mentioned that this was hard.
[00:15:01] Aaron Pattillo: Well, it really dovetails with exactly what you were just discussing in that it was really about volumes, right? We would lead with volumes and the potential to increase volumes that could be realized through, effectively, a buyer's club through the Clinton Foundation Purchasing Consortium.
And so, suppliers, especially in China, price would always be the very first place that companies would go when you're having prospective discussions. But of course, the other variable that, you know, it's price times volume that equals revenue.
And so, we would always steer a little bit more toward the volume component of this equation and start explaining the benefits that these suppliers could have in effectively joining this Clinton consortium buyer's club, where we're aggregating demand among a lot of these major purchasing countries.
And that we had some of these other caveats in there with, say, prepayment of terms or certainly payment on better terms, a lot of the, sort of, commercial things that would really matter to them, in addition to just what price is.
So, that notion of volume, and particularly at that time when the market was quite fragmented and especially the, sort of, international low-income country market. You know, you've got, frankly, a fairly unsophisticated company in China that's able to make these products and make them well but they're not understanding all the through components to who's actually buying these products and how, in the international context, right? That these are often, you know, donor dollars that are purchasing them. There's a regulatory component to this.
And so, the idea that we could bring value on that end of things and we could really, in a way, uplevel the marketing and the sales of products to companies like Mchem and others that weren't already really plugged into these markets was a huge benefit.
Once we could explain that, and they saw and would understand that that would come along with these negotiating of cost and understanding cost basis, they really came around to appreciating how volumes could be a big driver.
[00:17:11] Inder Singh: Let me play that back to you. I mean, you're talking about a world in which there's different programs within countries buying products. They're not always the same products. They don't always have the same labeling requirements, like packaging. They're highly fragmented. And they're small volumes.
So, the idea is, let's consolidate demand. Let's make sure that we're going to represent demand across multiple countries. Let's make sure that there's some level of harmonization in what products they're actually buying, which drugs, which packaging is required.
To be clear, this is really hard work. You're talking about different programs, different doctors, different thought leaders in different countries saying, "No, no, no, I want this drug, and I want it in this format."
And the regulatory agency in those countries are saying, "Well, but it has to be labeled with an approval from us," and in another country, they're saying the same thing. So, the idea here is we're going to harmonize. We're going to do the hard work, like creating some sort of consensus or at least coalition. We have a buyer's club who's willing to agree to buy similar products in similar formats, and then we, as the Clinton Foundation, now we're talking about bringing that information that suppliers may not be aware of, to them. We're going to put together some volume forecasts. We're going to say, “We have the credibility. We've got President Clinton behind us. Here are the conversations we've had with the local agencies. Here's documentation showing that volumes are going to go up because there's investment in the area, and they want these products. We're representing that, but in order for you to play with us, in order for you to be part of the buying game, you need to give us transparent views into your cost structure. And oh, by the way, no skin off your shoulder because this isn't a high-volume product for you in the first place. We're going to help get you high volumes and make it a meaningful part of your business only if you give us transparent access.” Is that a good playback?
[00:19:05] Aaron Pattillo: That's exactly right. And that was very much like the thrust of those conversations that we had in the early days with these prospective suppliers, right? I mean, we didn't just go out and establish partnerships with whoever we could find. This was very well-vetted process.
But it was very clear. These are the ground rules, and you'll have these improvements in volume in a way that you could not bring to bear just yourselves with throwing added marketing dollars at this, for instance, right? These were unlocking components of this that wasn't just a dollar allocation game in any way.
A lot of these suppliers found that hugely, hugely useful and information they wouldn't have otherwise. And then I think, especially when we started doing the work, which was, all right, we now understand your, kind of, total cost basis, and we started saying, "We're going to go even further upstream here, and we're going to go not just to you, say, the maker of the active pharmaceutical ingredient. We now understand what your major costs are. Let's look at the components of those costs, and let's identify some of the highest total cost components there, and let's go to those suppliers directly, understand their cost basis, have similar kinds of conversations. And ideally, we could be able to link together cost savings way upstream with those being passed along to the drug maker, and ultimately to the final price that we would negotiate.”
You know, I, kind of, can think of a few instances where, wow, we had some surprising wins there and, you know, one where we definitely didn't, and it wasn't a one-size-fits-all approach. But there were some really good lessons in, like, you know, how and where you could actually shape a market with this sort of upstream approach.
[00:20:53] Inder Singh: Can you give me an example of where it was successful, and where it wasn't, where it failed?
[00:20:57] Aaron Pattillo: Yeah, definitely. One that comes to mind on where it worked, remember we were focused on this particular second-line drug, lopinavir/ritonavir. So, these are two active ingredients together.
[00:21:07] Inder Singh: Two separate drugs in one pill.
[00:21:10] Aaron Pattillo: Right. And it was also multiples more expensive in the market and on a cost basis than those first-line treatments were. And so, we'd worked and we'd mapped some of the major cost drivers around both of these drug products and it turned out that one of them was this, like, very specific catalyst, right?
It's like this palladium over carbon catalyst. And we had pulled in, thankfully, this incredible, like, brilliant medicinal chemist who used to work in industry and launched multiple drugs. Joe Fortunak is his name. And we tracked down one of the few suppliers of this catalyst that was, like, in the middle of nowhere in China.
And our team, there were three or four of us that went to pay a visit here and to just see what the facility was like, similar things, understand their cost structure, look at optimization, but really leveraging Joe's deep chemistry technical expertise around this.
The upshot was we ended up, kind of, identifying... It was a more efficient way to use this catalyst that ultimately reduced the quantity needed without compromising the quality that would be there.
And so, we were able to basically have this insight that, hey, market shaping isn't just about negotiating these final product prices, it's also about, let's optimize this entire, sort of, supply chain, and these high-cost inputs can lead to string together to lower the overall drug cost.
And so, this really was the lesson that some of these biggest gains could come from unexpected places and especially when you combine that with real technical expertise… I recall it was, like, you know, a 10% amount of cost reduction on the final API that this accounted for. This one particular super specialty catalyst and this, sort of, hidden efficiency we were able to uncover.
[00:23:00] Inder Singh: And why weren't the suppliers motivated to find this? Or how did you and the team find this when even the suppliers of the materials weren't able to?
[00:23:10] Aaron Pattillo: It's a great question, and I think it really amounts to just an asymmetry of technical expertise, right? I mean, we were bringing in an absolute top-tier production chemist who understands things at a level that frankly this supplier making the actual product is... Even though they know, as best they can, how to do it, they didn't know certain optimizations or certain tricks around it, or the ways that you could do things in a slightly different way. But it was fundamentally driven by this technical expertise that they just didn't have.
And so, this became a huge value add and part of, I'd say, you know, our overall offering is being able to effectively offer up technical expertise to situations like this.
[00:23:55] Inder Singh: You talked about earlier a place that you couldn't make an impact, an example of a failure. Can you talk about that?
[00:24:03] Aaron Pattillo: Yes. So, in this same vein of looking at these inputs that went in and looking at just the total percent of the cost that they made up, we identified ethanol. Ethanol was this, like, total high-cost component here.
We thought, “Well, let's not be too presumptive here, but let's take the same upstream approach. Let's go see if there's any scope to be able to reduce costs there as well.” And so, you know, I tracked down these major suppliers in China. We do the same thing. We go visit them. I remember clearly showing up to one of these factories. I mean, it is the size of, like, a major city block, right? I mean, this place was absolutely massive. And our goal was the same. We wanted to understand their process, explore any efficiencies that could be gained.
They were very gracious and understood it was the idea of, kind of, linking this through to a supply chain. But the strategy just had no leverage in this case, right?
I mean, ethanol was already, like, highly, highly optimized. It's fairly straightforward and simple to make. And the scale of their operations was enormous, right? I mean, there was no amount of volume that we could bring to bear that would nudge anything. And so, there just wasn't room in there to negotiate.
And I think the central insight in this is it may seem a little obvious in hindsight, right? Like, of course, ethanol is a commodity product. But the insight was, like, hey, not all of these inputs are equal. Some are already highly efficient and commoditized and there's no space for reduction.
But the same takeaway of, well, there's not a one-size-fits-all approach even for doing this, like, upstream work. You can succeed with things like these specialty catalysts, but for these big commodity products, there just wasn't scope to do that. But a super important lesson in just, like, where you can make impact and where you can't.
[00:25:46] Inder Singh: Aaron, that's super insightful. What a great conversation. It's so fun to catch up. Thanks for joining.
[00:25:52] Aaron Pattillo: Yeah. Thank you, Inder. This has been fun to reminisce on some of those early days.
[00:25:59] Inder Singh: Thanks for listening to the Market Shapers Podcast. I'm Inder Singh. If you enjoyed the show, please like it, or leave us a review, and subscribe in your favorite app so you don't miss the next episode. Market Shapers is produced by me with help from University FM.
Special thanks to Renaissance Philanthropy, Griffin Catalyst, and the Digital Harbor Foundation for their support.