The Wall Street Journal - June 21, 2000
Michael Waldholz, Staff Reporter

"It looked at first to be a wonderful present," says Patricia Lambert, the legal counsel to South Africa's health minister. "But we are learning here that highly publicized drug donations aren't always like birthday presents, not at all."

Ms. Lambert says that although South Africa "greatly appreciates" the donation and is intensely negotiating terms of the gift, the government may decide in the next two weeks to reject Pfizer's offer. That's because the company is promising to provide the costly medicine for only two years. Pfizer is also placing several conditions on who can use the drug, where patients must be treated, how they are diagnosed and how the drug will be distributed and how its use will be monitored.

The Pfizer offer and the government's response to it reflect the growing tension in many parts of sub-Saharan Africa over access to costly drugs for treating HIV, the AIDS-causing virus that has infected more than 25 million people in the region and has become the single largest cause of death on the African continent. Just last month, in response to a chorus of appeals from governments and public health officials, five major pharmaceutical companies, not including Pfizer, offered to slash the prices of their AIDS drugs for countries that can provide proof the medicines will be used properly.

But as Pfizer's experience is showing, the Africans may be a lot less grateful than expected. "There is a feeling among some here that the drug companies are acting a bit like Big Brother," says Malegapuru Makgoba, director of South Africa's Medical Research Council, the government's medical science funding arm. "We want greater access to your drugs, but why must you dictate how we use them?"

In late March, Pfizer, the New York-based pharmaceutical giant, told South Africa's health minister, Manto Tshabalala-Msimang, that it would be willing to give away its antifungal drug Diflucan to treat a lethal form of meningitis that strikes many people in sub-Saharan Africa who are infected with HIV. Diflucan is the only medicine proven to treat cryptococcal meningitis, a brain disorder that can kill within months of infection. Since last year, AIDS activists have been demanding that Pfizer reduce the price of Diflucan in South Africa, where daily doses, which must be taken for life, were priced at $4.50 to $9, making it unaffordable by the government and most of the country's citizens.

The local activists, helped by the French-based nonprofit Doctors Without Borders, petitioned Pfizer in numerous letters and in public demonstrations to lower the price. They pointed out that several generic drug makers in Thailand, where Pfizer's Diflucan patent isn't being enforced, sell daily doses of their own versions of the drug for less than 60 cents a day.

"We asked Pfizer, given the health emergency here, to either reduce the price or, at the very least, allow South Africa to import the drug from generic drug makers," says Zackie Achmat, who heads the HIV & AIDS Treatment Action Campaign in Johannesburg. "We never asked them to give it away." Mr. Achmat says a price cut might spur the government to set up programs to diagnose and treat the meningitis as well as pay for the drug to treat less serious fungal infections that are even more common among the 3.6 million, or 10% of South Africans, infected with HIV.

But Pfizer instead surprised the South Africans by offering to give the drug away, albeit with restrictions. The company said it wanted the free supplies to be used to treat meningitis, which affects about 8% of infected people, and not for the other much more common fungal infections. In addition, the company said it wanted the free drug to be limited to patients treated in government hospitals who could verify they couldn't afford the drug's price. Pfizer also said the drug could be used only for patients diagnosed with cryptococcal meningitis by use of a diagnostic spinal tap, a procedure that draws fluid from the spine and would involve the use of special test kits and specialized physician training.

In April, Pfizer sent several officials from its New York headquarters and its local operations to meet with Dr. Tshabalala-Msimang, the health minister, and several of her aides to explain its requirements. The groups met again in May and last week. Although Pfizer officials say they are working with unusual speed to hammer out an accord, Dr. Tshabalala-Msimang has told the company that if no agreement is reached by the end of June, South Africa may end the discussions.

The following week, beginning July 8, global attention will be drawn to South Africa when more than 10,000 people from all around the world will gather at the 13th International AIDS Conference in Durban, on the country's east coast. South Africa itself is expected to be criticized at the meeting for responding too slowly to the AIDS crisis. The country's president, Thabo Mbeki, will also be the target of criticism for recent perplexing comments questioning whether HIV is even the cause of AIDS.

"The government would very much like to have an agreement with Pfizer that it could point to at Durban as being an active step forward," says Shaun Conway, director of the Southern African HIV Clinicians Society in Johannesburg. "But the government doesn't want to set a precedent with the drug companies that it is willing to accept an offer it finds burdensome or unfair."

The government is especially unhappy about Pfizer's time limit. People familiar with the talks say Pfizer upset the health minister because it first stated there would be no time limits on the offer and then, at a second meeting, said its offer was good only until the end of 2002. While Ms. Lambert says she doesn't want to provide details of the discussions, she does say the government is worried that a time limit means a government program for treating the disease won't be able to be sustained. "We don't want to go to the great effort and expense of setting something up that will only last two years," she says.

She also says the government is suspicious because the time limit coincides with the expiration of Pfizer's Diflucan patent. At that time, South Africa could buy generic versions of the drug, but doctors who had been using the free branded version by then might not want to switch. "The government is concerned that what Pfizer is doing amounts to giving away drug samples to get doctors to use the branded drug once the patent expires," says an AIDS physician familiar with the negotiations.

The government is also worried that Pfizer's requirement that South Africa set up a rigorous monitoring system to evaluate the drug's effectiveness "looks as if the company is using the donation as a way to conduct a clinical trial against meningitis here in Africa," Ms. Lambert says. "If we want to do a clinical trial we will. We don't want Pfizer telling us we have to do it and how we must carry it out."

Finally, Ms. Lambert says, the health minister is upset that Pfizer is offering the drug only to South Africa. "We are very close to our neighbors who wonder why we are getting this offer and they aren't," she says.

Jack Watters, Pfizer's director of medical operations in New York, who has participated in the talks, says he believes an agreement will be worked out by the minister's deadline. He says that the offer won't necessarily terminate in two years but that "we told the minister that at the end of two years we would evaluate if the program is working." He says the donation could be extended at that time.

Mr. Watters also says the restrictions are designed to ensure that the drug is used properly and isn't diverted to other markets. He says the monitoring system will help the company decide whether to expand the offer to other nations. He adds that Pfizer is so worried that the free drug will be sold elsewhere that it is planning to track the donated medicine by manufacturing it in tablets instead of the normal capsules. He says the company is limiting the offer to treating meningitis only because it is a life-threatening disease for which no other treatment exists, while other drugs are available to treat the other AIDS-related fungal infections.

And why won't the company simply agree to lower its price as the five other large drug makers have? Some critics say Pfizer worries that if it lowers the price, other countries will demand similar concessions. But Pfizer says that's not the reason. "We don't believe reducing the price will mean that medication will get to large numbers of people," Mr. Watters says. "We believe we will treat many more people with the kind of program we are hoping to develop with the government."

Write to Michael Waldholz at mike.waldholz@wsj.com1
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