Companies to Cut Cost of AIDS Drugs for Poor Nations By DONALD G. McNEIL Jr.
PARIS, May 11 -- Five pharmaceutical companies offered today to negotiate steep cuts in the price of AIDS drugs for Africa and other poor regions afflicted by the disease.
The announcement of negotiations, to be held with the World Health Organization and other international aid groups, was made in Geneva. It followed mounting pressures on the companies -- including a personal appeal from the United Nations Secretary General, Kofi Annan, at a special session on AIDS in December -- to make their therapies more accessible in regions worst hit by the epidemic.
Dr. Peter Piot, the executive director of Unaids, a joint United Nations agency, said, "This is a promising step in a long-term process." He added, "Lowering the price of medicines, however, is only one critical factor in what must become a much broader and more urgent effort."
Some 50 million poor people in developing nations are infected with the virus that causes AIDS, and the disease is spreading in Asia, too.
The participants in today's accord emphasized that they were at the beginning of a process, and did not speculate about how many people might be helped soon.
In many parts of Africa, for instance, government health budgets can be as little as $10 a person a year, and treatment programs are hard to carry out, even among people who acknowledge having the disease.
Though only one company, Glaxo Wellcome, spoke of any specific prices, the companies were expected to agree to cuts of 80 percent and more below their American prices.
Drug treatments used in the United States, most commonly the triple-therapy "cocktails" that suppress the replication of the H.I.V. virus, can cost up to $15,000 a year.
Dr. Rolf Krebs, vice chairman of one of the five companies, Boehringer Ingelheim, which is based in Germany, said, "This is the first time that both the public and private sector are joining forces to implement a major change in the care of H.I.V./AIDS in the developing world."
Besides Boehringer, the other companies in today's agreement are
Bristol-Myers Squibb and Merck & Company, both of the United States; Glaxo Wellcome of Britain, and Hoffmann-La Roche of Switzerland.
Ben Plumley, an official of Glaxo Wellcome, said the company would sell its Combivir, a blend of AZT and 3TC that sells at a global average price of $16, for $2 in poor countries.
The announcement of the agreements, first reported in The Wall Street Journal, followed several weeks of negotiations. Officials said the companies negotiated separately to avoid falling afoul of American price-fixing laws.
The five companies will work with five international agencies, the World Health Organization, the World Bank, Unaids, the United Nations Children's Fund and the United Nations Population Fund.
At world trade conferences like the one in Seattle in December that attracted many protesters, drug companies have been portrayed as racking up record profits by concentrating on drugs to cure relatively minor problems like obesity, baldness and impotence among rich Americans, Western Europeans and Japanese, who make up 80 percent of the world drug market, while ignoring dire suffering in places like Africa, which buys 1 percent of the world's drugs.
Gro Harlem Brundtland, the W.H.O. director general, said in an interview today that big pharmaceutical companies had "analyzed their roles more broadly recently."
"The reality of poverty and the affordability of medical technology has led companies to think about their policies and postures," she said.
But officials in Geneva and elsewhere cautioned that cheaper drugs would not provide a quick fix for the epidemic. They stressed that controlling AIDS also required a developed health-care system, which many third world countries lack, and that even slashed prices might be too high for many patients. They also said they feared that the cheap drugs could find their way into black markets in richer countries.
By some estimates, sub-Saharan Africa has 80 percent of the world population of people infected by H.I.V., the virus that causes AIDS, though few of those people have ever had an AIDS test. In much of Africa, the disease is treated as a badge of shame.
And the anti-retrovirals, protease inhibitors and other drugs involved are toxic and difficult to monitor even in patients in Manhattan.
In many poor countries, distributing the drugs, teaching people to take them and monitoring levels of virus, T-cells and drug residues in the blood amount to a mammoth task.
"To be realistic, this is not going to fix the problem, but I'm cautiously optimistic," said Dr. Piot of Unaids.
While the agencies involved in today's accord emphasized the hope of lower prices, the drug companies focused on joint principles for tackling the epidemic.
These include stronger government efforts, better drug-distribution systems, and more financing from donors, all matters outside the corporate world. Who would pay to create such standards remains unclear.
Most of the drugs scheduled to come under discussion are those used to to control replication of H.I.V. But the poor also need other medicines like strong antibiotic and anti-fungal drugs for the infections that arise with AIDS.
Cutting prices is in some ways a risky concession by the companies. Soaring prescription prices in the United States have led some lawmakers to call for European-style price controls. If the drug companies in effect admit that they can sell a drug at a 80 percent discount, they risk Congressional pressure to lower Medicare prices. But over time, the industry argues, skimpy prices would strangle their immense research budgets, and the flow of valuable new drugs would stop.
Some AIDS activists argue that the companies are lowering prices simply to forestall the seizure of their patents by third world nations desperate for the drugs.
Thailand and South Africa have recently passed laws allowing such seizure; India, Bangladesh and Brazil have drug industries that ignore patent treaties.
On Wednesday, the Clinton administration angered the industry by issuing an executive order saying the government would not interfere with African countries that violate American patent law to obtain cheaper AIDS drugs.
The companies denied that they had asked for any quid pro quo, like demanding that countries pass tough patent laws or that the United Nations agencies endorse them.
"No, we're not asking for a ban on parallel imports or compulsory licensing," said Jacqueline Wallace, a Roche press spokeswoman. "That would be illegal."
The fear of all five companies is that corruption in poor countries is so rampant that millions of their cut-rate pills will disappear and be sent to rich countries to cannibalize their full-price sales.
"That's precisely one of the things that's worried us," said Jeffrey Sturchio of Merck & Company.
"That's something we hope this initiative will be able to address."
Today's announcement was greeted with skepticism by Doctors Without Borders, the Nobel Prize-winning medical agency.
The opening of discussions "is a victory, but a small one, much like an elephant giving birth to a mouse," said Dr. Bernard Pécoul, who cited the lack of any concrete commitments.
A Clinton administration official said the administration had not played much of a role in events that led to the agreement.
Poor people in the United States, unlike those in poor countries, have several ways of obtaining AIDS drugs.
Medicaid generally covers the costs of such drugs. Low-income people who do not qualify for Medicaid may be able to obtain drug therapy through AIDS drug assistance programs run by the states with substantial federal money.
In addition, drug manufacturers have programs to provide drugs free, as a last resort, to patients who have no health insurance.
But Daniel Zingale, former executive director of AIDS Action, a lobby for people affected by the disease, said: "There are still some people in the United States who cannot get the drugs they need because the price is prohibitive. It costs $15,000 to $17,000 a year just for H.I.V. drugs."
Glaxo's Combivir, a combination of retrovir and epivir anti-viral drugs, generated $454 million in 1999 sales, but only 10 percent came from outside the United States and Europe.
"They don't have a great deal to lose," said James Culverwell, an analyst at Merrill Lynch in London, told Reuters. "I don't imagine the financial effect is that significant."