The Wall Street Journal - October 23, 2003
Mark Schoofs, Staff Reporter

The Clinton Foundation HIV/AIDS Initiative has clinched a deal with four generic-drug companies, including one in South Africa, to slash the price of antiretroviral AIDS medicine.

Engineered by longtime Clinton adviser Ira Magaziner, the agreement will cut the price of a commonly used triple-drug regimen by almost a third, to about 38 cents a day per patient from an already cut-rate generic price of about 55 cents. The lowest available price for the same regimen using patented versions of the drugs in developing nations is $1.54. For a key drug, nevirapine, the price will be cut by almost half.

The agreement also establishes a way of working that is rare in the secretive pharmaceutical industry. The companies involved -- Ranbaxy Laboratories Ltd., Cipla Ltd. and Matrix Laboratories Ltd., all of India, and the South African company Aspen Pharmacare Holdings Ltd. -- opened their books and manufacturing processes to a group of Clinton business advisers. Then the advisers and the companies hunted for ways to cut costs, starting with raw-material suppliers in China and ending with the products' packaging. Mr. Clinton's team plans to use this approach to try to lower the price of diagnostic tests, which are still very expensive.

Under the supervision of Mr. Magaziner, the Clinton Foundation HIV/AIDS Initiative also helped several Caribbean states and three African countries prepare detailed government-approved plans for rolling out the drugs nationwide, instead of just in selected regions. The plans aim to improve the entire health-care system by preparing budgets for hiring and training nurses and doctors, building and upgrading laboratories and clinics, developing patient-information systems, and improving drug warehousing and delivery. Only a handful of other sub-Saharan countries, such as Botswana and Senegal, have created similarly ambitious, government-approved plans.

The estimated number of people in 2002 who needed 'triple therapy' AIDS treatment, compared with the number who received treatment, in thousands.

In the past, South Africa, which has more HIV-infected people than any other country, resisted public pressure to roll out full AIDS treatment in public hospitals and clinics. But the South African government recently named Mr. Clinton's AIDS Initiative as its main advisory group on HIV treatment, and the Clinton team has helped draft a detailed operational plan for treating AIDS patients that the cabinet is expected to approve shortly.

To pay for the drugs, and for the necessary improvements in the countries' tattered health systems, Mr. Clinton has secured partial funding by personally lobbying leaders of rich nations, such as Ireland and Canada. Ireland has committed Ç50 million ($58.3 million) over five years, mainly to Mozambique. Canada hasn't yet finalized its donation, but it will be in the "tens of millions," according to a senior government official there.

The money will go directly to the governments of the countries that Mr. Clinton's team is assisting. "All I do is procure," Mr. Clinton said in an interview, "I don't receive." Mr. Clinton has also raised more than $1 million from private sources.

"Usually I just call the prime minister or the president," Mr. Clinton said, "and tell them what we're doing and ask them to have somebody look at it. And I always tell them that even though we're friends they don't have to do this for me -- don't do it unless they think it's a good thing. But I think it's the best thing going in the world in AIDS care."

To develop the programs, Mr. Magaziner has been working with a team of medical experts from such institutions as Harvard and Columbia universities, as well as business executives and consultants. All but one -- a Kenyan who can't afford to work free of charge -- volunteer their time or get support from their organizations.

It's unclear whether enough money can be raised to support millions of patients on lifelong AIDS therapy, and Mr. Clinton concedes his efforts don't always work out. In any case, he isn't expected to raise all of the money. Rwanda, Mozambique and Tanzania have each secured partial funding from other sources, such as the World Bank and the Global Fund to Fight AIDS, Tuberculosis and Malaria.

Mr. Clinton vehemently denies any partisan motivation, but his efforts threaten to steal some thunder from President Bush. Months after Mr. Clinton began working on his initiative, Mr. Bush called for $15 billion over five years to fight AIDS in poor nations. That proposal still hasn't cleared the congressional budget-authorization process.

Getting other governments to prepare and approve ambitious treatment plans was critical to securing the drugs deal, because the plans promised the drug makers large numbers of patients over time -- up to 1.5 million by 2008. Essentially, the Clinton Foundation is becoming a market maker. "This is the first time a group has come forward with predictable volumes," said Yusuf Hamied, chairman of Cipla.

Mr. Magaziner then approached drug companies and asked them to follow what he calls a total quality management approach: open up their cost structures to lock in prices that would give the companies a small profit but make the drug available at the lowest possible cost. He says he first approached the patent-holding pharmaceutical companies "because President Clinton believes in intellectual property." So far, though, none of the Western companies are involved.

Bristol-Myers Squibb Co. says it never received a Clinton proposal, and Merck & Co. says it is in early-stage discussions.

There is a chance that the Western companies will try to block the deal by charging patent infringement. But they have damaged their images when they have tried to do that with AIDS drugs in the past. In South Africa, which has the strongest patent protection in Africa, GlaxoSmithKline PLC and Boehringer Ingelheim GmbH have licensed some of their AIDS drugs to Aspen, one of the Clinton partner companies.

Write to Mark Schoofs at mark.schoofs@wsj.com

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