Important note: Information in this article was accurate in 2002. The state of the art may have changed since the publication date.
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Wall Street Journal - October 23, 2002
Rachel Zimmerman and Mark Schoofs, Staff Reporters of The Wall Street Journal
Merck & Co., trying to remain one step ahead of AIDS activists and generic-drug competition, said it will cut the price of its new once-a-day pill Stocrin to less than $1 a day in the poorest and hardest-hit countries, a more than 30% reduction from the current price.
The price reduction appears to make Stocrin the least expensive version of the medicine in developing countries, according to activists and Merck, even counting several generic versions.
Known generically as efavirenz, the medicine is used frequently in triple combination "cocktail" therapy for people infected with HIV, the virus that causes AIDS.
While activists welcomed the price cut, they questioned the timing of the announcement and suggested it is linked to a public-relations campaign surrounding Merck's launch of the new one-pill dose in 52 nations.
"It's always good to see the prices falling," said Rachel Cohen, a spokeswoman with the humanitarian, nonprofit Doctors Without Borders.
"It's a shame that it has to be timed with the product launch, which makes it seem like an effort to diffuse potential pressure."
Price Reductions
Ms. Cohen pointed out the big drug companies only began significantly slashing the price of AIDS medicines two years ago, after generic competition arose and activists began clamoring for price cuts. On Sept. 5, United Kingdom drug-maker GlaxoSmithKline PLC announced price reductions of as much as 33% on several AIDS medicines in the developing world. "This is part of a larger puzzle, Merck and others reacting to international public pressure and generic competition," Ms. Cohen said.
But Jeffrey Sturchio, a Merck spokesman, says the recent reductions, which would bring the cost of the new Stocrin down to $346.75 per patient a year, show "it isn't simply a case of generics leading the price decreases." Indeed, four Indian generic companies make Stocrin for between $438 and $658 a year, according to Doctors Without Borders.
At 95 cents a day, Mr. Sturchio says Merck won't make a profit in poor countries. New manufacturing procedures and the single large-dose pill allowed for savings that can be passed along to consumers. He stressed that the company's ability to offer lower prices depends on its drugs remaining profitable in major markets such as the U.S.
He said safeguards prevent the cheap drugs from being diverted to other countries. Merck requires proof of delivery when it distributes the drugs directly to customers in poor countries. Also, Crixivan and Stocrin destined for developing countries have distinctive green labels.
No Approval in Poorest Nations
Stocrin is taken by about 67,000 people in the developing world, more than 16,000 of them in sub-Saharan Africa. The drug was produced in a 200-milligram capsule that was taken as three pills. In poor countries, the price was $1.37 a day. The new 600-milligram Stocrin tablet has been approved in 17 middle-income and rich countries, but it hasn't won regulatory approval in the poorest nations, notably sub-Saharan Africa, where five million people are infected with HIV.
Merck says it expects approval in the poor countries early next year. Mr. Sturchio says the "catalog" price of the new Stocrin in rich nations is $8.55 a day and in middle-income nations, such as Brazil, Mexico, Jamaica and China, Merck is offering the medicine at $2.10 a day.
Under an agreement, Bristol-Myers Squibb Co. sells the same drug under the name Sustiva in the U.S., Canada, Italy, France, Germany, Spain and the U.K. In the U.S., where the 600-milligram version has been available since February, the price of Sustiva is $12 a day. In 4 p.m. composite trading Tuesday on the New York Stock Exchange, Merck was at $50.65, off 50 cents.
Write to Rachel Zimmerman at rachel.zimmerman@wsj.com and Mark Schoofs at mark.schoofs@wsj.com
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