The Wall Street Journal, Friday, May 12, 2000
Michael Waldholz and Gardiner Harris, Staff Reporters

The announcement Thursday sparked calls for a similar program to help the poor throughout the developing world. It also added to the increasingly strident debate over whether drug prices in the U.S. -- which are typically higher than those in Canada and Europe -- need to be reined in. Indeed, some people insisted that the drug makers could actually cut AIDS-drug prices even further.

"Political pressure and bad p.r. have an impact," said the Kaiser Family Foundation, a health-policy research group. The announcement will encourage major purchasers in the U.S. to push harder on price, added Drew Altman, the foundation's president. Specifically, he said, HMOs, hospitals and federal and state governments may feel emboldened to demand similar price cuts from the drug industry.

Eula Hall, founder of the Mud Creek Clinic in Floyd County, Ky., questioned why pharmaceutical companies aren't expanding their programs to help poor people in the U.S. At the moment, her clinic doesn't have any HIV-infected patients. But, she said, many of the people treated at Mud Creek can't afford high-priced drugs of any kind, and their health suffers as a result. "I'm not against helping people anywhere in the world that are in need," said Ms. Hall. "But people are suffering and dying in our country, too, because they can't afford these medications."

Democratic Rep. Tom Allen of Maine, who has proposed legislation to reduce pharmaceutical prices in the U.S., noted that pharmaceutical manufacturers are offering the discounts in Africa partly out of fear that those countries will begin manufacturing the drugs themselves, which is permitted by international law in a health crisis. "It's an act of self-preservation," Mr. Allen said.

Under the plan negotiated with the United Nations, Bristol-Myers Squibb Co., Glaxo Wellcome PLC, Merck & Co., Roche Holding AG and Boehringer Ingelheim GmbH will slash their AIDS drug prices -- in some cases to as little as 10% to 15% of U.S. prices. Glaxo Wellcome, for example, said it will sell its drug Combovir, a combination of AZT and 3TC, for about $2 a day, well below the U.S. price of $15. The goal is to try to significantly increase health-care services in sub-Saharan Africa and other areas where the AIDS epidemic is reaching crisis levels.

Abbott Laboratories, which makes Norvir, an HIV protease inhibitor, said it's looking into joining the five-company group. At Pfizer Inc., a spokesman said the company isn't part of the group because it has already decided to give away its drug Diflucan -- which many AIDS patients need to fight fungal infections -- to South Africans with cryptococcal meningitis.

The drug makers plan to offer the sharply discounted prices to countries that show a commitment to battling AIDS, abide by the companies' drug-patent rights and demonstrate the ability to monitor the drugs' use.

"The companies' offer provides an opportunity to do something very significant about the spreading AIDS problem in the developing world," said Daniel Tarantola, a senior policy adviser to the World Health Organization in Geneva.

Though widely embraced as a welcome step, the price-cutting move was also greeted cautiously by some who questioned whether it will actually make a dent in the HIV catastrophe in sub-Saharan Africa. About 23 million people are infected there, compared with a total of 10 million elsewhere.

Toby Kasper, a member of Doctors Without Borders, South Africa, said the companies' proposal is a significant advance, "but we're concerned about its vagueness and we're worried about the fine print."

The patent issue also looms as a potential threat to the program's success. In South Africa, where about 10% of the population is infected with HIV or AIDS, officials cautioned that the government wants the flexibility to seek out cheaper, generic alternatives. "If this offer is attached to a condition that governments like South Africa should not pursue generic substitution, parallel importing and compulsory licensing, then it is not genuine and unacceptable," said Health Ministry spokeswoman Patricia Lambert.

Other concerns: how to get the low-priced drugs to patients in Africa who desperately need them, given the fragile health systems there, and how to make sure patients take the combination drug therapy properly so that drug-resistant strains of HIV don't develop and spread.

"This is a step in the right direction, but the devil's in the details," said Seth Berkley, president of the International AIDS Vaccine Initiative.

The African initiative also helps penetrate one of the darkest secrets of the pharmaceutical industry: how they set prices, said David Paltiel, an associate professor of health policy and administration at the Yale Medical School. The fact that prices for AIDS drugs can be reduced 90% without producing losses for the companies shows that drug prices are largely set by determining what the market will bear, not what the price of the product is, he said.

Sidney Wolfe, director of Public Citizen, an advocacy group in Washington, D.C., said that drug makers' contention that they are selling their drugs at near-cost when they slash the price by 85% to 90% simply isn't accurate. The cost of producing the drugs, Dr. Wolfe said, is far less than 10% of their American prices.

The drug companies respond that they price their drugs to recoup huge research costs and to make a profit large enough to allow them to take the high risks that drug discovery entails. U.S. prices are often high because the companies' prices are controlled overseas where some government health plans set the prices they will pay.

The move by the drug makers puts pressure on African governments to take aggressive steps to address the AIDS problem, including targeting behavior patterns that put people at risk of HIV infection. African governments have done little to prevent the transmission of the disease, said Jose Torres, president of the Anti-AIDS Foundation of Spain, and in countries rife with political corruption, it's possible that the low- cost medicines will never reach their destinations. Instead, the risk exists that black markets will develop around the drug business.

Some AIDS activists in the U.S. reacted enthusiastically to the price cuts for patients in Africa. "I have AIDS and I am willing to pay higher prices to subsidize poorer nations," said Eric Sawyer, a co-founder of Act Up New York and the Health Gap Coalition. He added that a major in the Ugandan military told him: "If AIDS were an invading army, invading every country in the world, we would have a major coordinated counterassault to combat it."

-- Mark Long contributed to this article.

Write to Michael Waldholz and Gardiner Harris at mike.waldholz@wsj.com and gardiner.harris@wsj.com
000512
WJ000502

Copyright © 2000 - The Wall Street Journal. Reproduction of this article (other than one copy for personal reference) must be cleared through the WSJ Permissions Desk.

Always watch for outdated information. This article first appeared in 2000. 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, 2000. 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. .