San Francisco Chronicle - Sunday, March 25, 2001
Tom Abate, Chronicle Staff Writer

In recent weeks, Bristol-Myers Squibb said it would sell its Zerit and Videx for $1 a day; Merck & Co. announced a $600 per year price for Crixivan; and GlaxoSmithKline has previously offered to sell Combivir for $2 a day.

The multinationals hope to head off international action that might undermine the patents that make these same drugs so costly - and profitable - in the developed world.

Yet critics are still pushing the big drugmakers to drop prices to the $350- a-year range that one generic drugmaker, Cipla Ltd. of India, has offered for a three-drug AIDS "cocktail" - the mix of remedies that prolongs lives of AIDS patients.

"At a dollar a day, it becomes possible for some of the better-off people in African countries to start paying for these medications out of their own pockets," said Jamie Love, with the Consumer Project on Technology, a Ralph Nader group in Washington, D.C., that has been critical of international drug pricing policies.

International law allows countries to set aside patents in a crisis and issue compulsory licenses, authorizing the manufacture of generic drugs.

Until recently, such moves would have been pointless because African nations had no local firms capable of copying or making drugs. The appearance of Cipla as an outside supplier has made compulsory licensing a threat to patent holders.

"We want to avoid a precedent in which nations say the price is too high and we need compulsory licensing," said Jeff Trewhitt, a spokesman for the Pharmaceutical Research and Manufacturers of America.

Drugmakers say they depend on patents to recoup the $500 million it can cost to develop a new medicine and provide incentives to keep inventing new drugs.

"The next round of treatments for AIDS, or cancer for that matter, will come from the pharmaceutical industry," said Bob Huber, a spokesman for Pfizer, which recently announced plans to donate $50 million worth of its AIDS medicine to South Africa.

The economic stakes are huge. Decision Resources Inc., a market research firm in Massachusetts, has estimated the developed world spent $3.4 billion on AIDS drugs in 1999. That figure is projected to grow to $7.1 billion by 2009.

The same report also estimated the market for AIDS drugs in five emerging markets: Brazil, China, India, South Africa and Thailand. By 2004, Decision Resources projects that sales in these five nations could reach $11 billion, "depend(ing) primarily on the degree to which these governments respond to the HIV crisis and the means by which they obtain anti-HIV therapy." Richard Feachem, director of the Institute for Global Health, a San Francisco nonprofit group, said a meeting in December of drug industry representatives, AIDS activists, international charities and African nations reached a rough consensus on a possible compromise - tiered pricing.

Feachem said this would leave patent laws and drug prices as they are in the developed world, while creating a cost-plus price for essential medicines in the Third World. That tiered price would be based on the actual costs of making a pill.

The World Trade Organization and World Health Organization have scheduled a meeting on the African AIDS crisis next month in Norway, where tiered pricing will be on the agenda.

Drugmakers have two main concerns about tiered pricing. The first is that medicines destined for the Third World might be diverted to developed countries, where unscrupulous middlemen could sell them at a huge profit. Pfizer, for instance, which is donating AIDS drugs to South Africa, has reformulated its capsule into a tablet. "If it is diverted, it will be easy to spot," said Huber, the Pfizer spokesman.

The second concern is that U.S. consumers, politicians and HMOs would use cost-plus prices paid by African nations to demand concessions for the same medicines. In the last presidential election, for instance, drug companies were attacked because Canada's price controls make many medicines cheaper there. Activists counter that Americans would recognize the justice of making AIDS therapies more widely available in Africa.

"There are 25 million infected people in Africa, and we cannot ignore them, " said Anne-Valeria Kaninda, a New York-based physician with Doctors Without Borders, which has worked with Cipla to bring down AIDS drug prices. "The only way to strengthen the medical community (in Africa) is to have the medicines available."

Pharmaceutical Glossary

Patent: Governments grant patents to inventors who create something novel and useful. By winning a patent, the inventor gets a 20-year monopoly over the use or sale of an invention. No one else is supposed to use or manufacture the invention without a license from the patent holder. Different nations have variations in their patent laws, but current trade agreements are trying to create a legal framework in which patents would be respected and enforced worldwide. .

Compulsory licensing: Under certain conditions, international law allows nations to get around the legal monopoly granted to patent holders. If a government determines that a patent holder is preventing the nation from getting access to a critical technology, usually a medicine, the country can issue a compulsory license that authorizes some manufacturer to make and supply the invention. .

Generic drug: When patents expire, any manufacturer can produce a drug that works like the patented medicine. These are called generics.

AIDS cocktail: The favored AIDS treatment in the developed world is a combination of medicines that attack HIV at different points during its cycle of replication and infection. This array of medicines is often referred to as the AIDS cocktail, and costs between $10,000 and $15,000 a year in the United States.

E-mail Tom Abate at tabate@sfchronicle.com.

010325
SC010309

Always watch for outdated information. This article first appeared in 2001. This material is designed to support, not replace, the relationship that exists between you and your doctor.

AEGiS presents published material, reprinted with permission and neither endorses nor opposes any material. All information contained on this website, including information relating to health conditions, products, and treatments, is for informational purposes only. It is often presented in summary or aggregate form. It is not meant to be a substitute for the advice provided by your own physician or other medical professionals. Always discuss treatment options with a doctor who specializes in treating HIV.

Copyright ©1980, 2001. AEGiS. All materials appearing on AEGiS are protected by copyright as a collective work or compilation under U.S. copyright and other laws and are the property of AEGiS, or the party credited as the provider of the content. .