Important note: Information in this article was accurate in 2008. The state of the art may have changed since the publication date.
Wall Street Journal - July 31, 2008
Sarah Lueck, sarah.lueck@wsj.com
Generic drugs, copies or combinations of brand-name products, accounted for 57% of the $131 million the U.S. spent on the program in fiscal 2007, according to the Office of the U.S. Global AIDS Coordinator. In 2005, generics accounted for 11% of the program's funding. At that time, the U.S. had approved few generics for the anti-AIDS initiative, so most of the money went to buy brand-name drugs that are often more expensive.
Aurobindo Pharma Ltd., a generic-drug maker in India, was the biggest player in fiscal 2007, which ended Sept. 30. The President's Emergency Plan for AIDS Relief, or Pepfar, spent more than $39 million on Aurobindo Pharma products to fight HIV and AIDS. India's Cipla Ltd. received more than $15 million, and Ranbaxy Laboratories, also in India, received nearly $9 million.
South Africa's Aspen Pharmacare Holdings Ltd. received nearly $13 million from Pepfar. It sells generic AIDS drugs and, in some countries, produces brand-name products in partnership with Gilead Sciences Inc. of Foster City, Calif.
Pepfar's shift to generics in the past two years followed a Bush administration decision to set up a special approval at the Food and Drug Administration for the drugs, which cannot be marketed in the U.S. because of patent and exclusivity laws that protect the brand-name versions.
Pepfar provides treatment to patients in 15 poor countries, mostly in sub-Saharan Africa. Bush officials came under fire when the program began five years ago; activists and some in the generics industry complained that the requirement for FDA approval skewed purchases toward more-expensive brand-name products, meaning fewer people would be treated.
Wednesday, Mr. Bush signed a $48 billion, five-year expansion of the program, which now draws widespread praise and is viewed as a major part of his legacy. Congress must appropriate the funds, which also will go toward treatment and prevention of malaria and tuberculosis.
"It's pretty clear that the system is working well, and it protects African families just like American families are protected," said Ambassador Mark Dybul, the U.S. global AIDS coordinator. "We pretty methodically did what we said we were going to do."
Pepfar's spending on brand-name drugs totaled about $56 million in fiscal year 2007, down from $106 million in 2005. Merck & Co. appeared to be the biggest recipient of funds in 2007, with nearly $16 million going to the Whitehouse Station, N.J.-based company. GlaxoSmithKline PLC of the U.K. received about $12 million from Pepfar, including through licensing agreements it has with makers of generics. Abbott Laboratories of Abbott Park, Ill., received nearly $9 million in 2007.
The generics companies have been pleased with the changes over the past two years.
"Earlier, it did not work well because none of our products were approved," said Yusuf Hamied, Cipla's chairman and managing director. "Now, there is competition, and the money will be put to better use." He said the funds Cipla receives from Pepfar aren't significant from a business perspective, but the company participates for humanitarian reasons and has helped build pressure for brand-name-drug companies to lower their prices for poor countries.
"The key is having affordable and accessible medicines, and I think the generic industry has made a contribution in a very positive way to Pepfar," said Chuck Caprariello, a Ranbaxy spokesman.
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