[Pharm-policy] Drug Industry Jolted by Cipla AIDS-Drug Offer

[James Love]

http://interactive.wsj.com/articles/SB981583719750566041.htm

February 8, 2001
 
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Drug Industry, AIDS Community
Is Jolted by Cipla AIDS-Drug Offer
By RACHEL ZIMMERMAN and JESSE PESTA 
Staff Reporters of THE WALL STREET JOURNAL

The sudden offer by an Indian drug manufacturer to sell lower-priced
AIDS drugs in Africa has sent a jolt through the drug industry and the
international AIDS community, but many questions remain about whether or
how poor countries could take advantage of it.

Dr. Y.K. Hamied, chairman and managing director of Cipla Ltd., Bombay,
India, the generic-drug maker, said he will sell a combination of three
AIDS drugs for $600 per patient per year to governments that want to buy
the therapy. Dr. Hamied said he would lower the annual price even more,
to $350 a patient, to Doctors Without Borders, an international
nonprofit organization that provides medical services in the developing
world. Both prices are much lower than the typical annual cost for the
AIDS-drug cocktails in the U.S. and Europe, where the average cost is
$10,000 to $12,000. The Cipla offer was first reported by The New York
Times this week.

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Dr. Hamied's offer is only a gesture at this time and in many ways is
limited by a number of political and logistical factors. It isn't clear
whether countries will accept the particular combination of drugs the
company is offering; whether the price is low enough; who will
distribute the drugs; who will provide support and testing that usually
accompany such complex treatment; and how difficult cultural and
political barriers to treatment will be overcome.

But Cipla's offer is still expected to shake up negotiations taking
place between some African countries and the group of five big
pharmaceutical companies. What is especially significant about Cipla's
action is that its price appears to be even lower than a
sharply-discounted price a group of drug makers is offering to nations
in Africa.

The Cipla offer "changes everything," said Toby Kaspar, based in South
Africa as an official of Doctors Without Borders. "Every one of those
countries should use the Cipla offer to help them make a better deal
with the big drug makers."

Last May, under intense pressure to lower their prices in Africa and
other developing nations, five drug companies, including Merck & Co.,
Bristol-Myers Squibb Co., New York, and Britain's GlaxoSmithKline PLC,
offered to sharply reduce the prices for their AIDS medicine to nations
in sub-Saharan Africa, where the epidemic has become a human
catastrophe. Negotiations with those nations have moved slowly, but
three nations, Senegal, Uganda and Rwanda, have agreed with the drug
makers on a set of prices for various combinations of the drugs. Only
Senegal has released the negotiated prices. It has said that people in
that nation can buy the drug combination for between $1,008 and $1,821
per patient per year.

The Cipla offer of $600 appears to involve a combination of drugs
resembling the one priced at about $1,008 in Senegal. The higher price
quoted to Senegal includes a powerful protease-inhibitor drug, such as
Crixivan, sold by Merck. Cipla's offer involves three anti-AIDS
medicines, but doesn't include a protease inhibitor.

Commenting on the Cipla price, Peter Mugyenyi, director of the Joint
Clinical Research Centre in Kampala, Uganda said, "It's a good offer but
it's still not good enough." Dr. Mugyenyi, a leading African AIDS
physician and researcher, said the price of the drugs "is finally coming
into the reach of top government salaries," noting that in Uganda there
is no health insurance or government drug-buying program. As a result,
even at $600 very few Ugandans will benefit from the offer, he said.

AIDS: The Global Picture
2000 figures, for adults and children

People living with AIDS: 36.1 million

New HIV infection: 5.3 million

Deaths due to HIV infection: 3.0 million

Cumulative number of deaths: 21.8 million

Source: UNAIDS
 
Moreover, the Cipla offer carries numerous qualifications. Cipla is
offering to sell just three of the roughly 10 drugs commonly combined to
form the so-called AIDS cocktail therapy. Those drugs are Zerit, from
Bristol-Myers; Glaxo's 3TC, and the German company Boehringer-Ingelheim
Gmbh's Viramune. Spokespersons at several of the large drug makers said
their offer of price discounts involves more drugs and therefore
provides doctors the ability to prescribe different combinations for
different patients.

Guy Macdonald, a vice president at Merck, Whitehouse Station, N.J., said
there remain too many variables in the Cipla offer to fully estimate its
impact. "Are they going to provide it to 20 or 30 countries in Africa?
Are they going to provide sustainable products? And what about quality?"
Mr. Macdonald asked.

Peter Dolan, president of Bristol-Myers and soon to become chief
executive, said that cutting prices isn't necessarily the answer to AIDS
treatment. He noted that India hasn't solved its own burgeoning AIDS
problem even though its generic-drug industry regularly ignores
intellectual-property rights.

The drug makers' coalition, which also includes the World Health
Organization and the United Nations AIDS program called Unaids, is
offering a program of reduced prices and a promise of other support
services, such as testing and counseling. The companies say negotiations
have gone slowly because the deals are being forged with one country at
a time. These talks, the companies said, involve sensitive political and
economic issues, as well as what the drug makers may provide in
financial assistance.

"We're concerned about long-term sustainability, about building an
infrastructure in which patients are managed appropriately," said Nancy
Pekarek, a spokeswoman for GlaxoSmithKline, which has offered to sell
its combination of two drugs, AZT and 3TC, for $2 a day.

Those two drugs alone, however, still cost more than the three drugs
being offered by Cipla.

The Cipla offer comes at a sensitive moment in international-trade
relations involving the major drug makers. In March, 40 international
drug companies are expected to go to court in South Africa to block that
country from importing or making generic drugs. South Africa had passed
a law several years ago to make such action legal. While major drug
makers have patents for their products in some African nations, such as
South Africa, in many countries the companies' products aren't
patent-protected.

Several nations, including South Africa, have said they are seriously
thinking about importing generic drugs by applying for a special waiver
from the World Trade Organization that allows the countries, in the case
of national emergencies, to bypass drug-company patents. Indeed, Mr.
Hamied of Cipla said he isn't worried about violating patent law or of
drawing a legal challenge from the companies. Instead, he said each
country must deal with the legality of importing his products.

"I'm not a salesman, I'm not a scientist," he said. "I've made an offer.
It's up to individual countries to decide, that's the way I look at it."

Ben Plumley, a Unaids staffer working on drug-access issues, said none
of the agreements between the drug makers and the countries prevents the
nations from exploring other options, such as buying generic versions of
the AIDS drugs. "Where the legal situation allows, competition does
bring down prices," Mr. Plumley said.

-- Robert Block in Johannesburg, South Africa, and Gardiner Harris in
New York contributed to this article.

Write to Rachel Zimmerman at rachel.zimmerman@wsj.com and Jesse Pesta at
jesse.pesta@wsj.com