HIV drug prices cut for poorer countries

17 April 2001. Related: Treatment access.

Merck & Co., the pharmaceutical giant, said yesterday that it is cutting the price for its anti-AIDS drugs in developing countries to the point where it won’t make a profit on sales there, and other major drug firms appear poised to follow suit amid a mounting controversy over the cost of medicine for the world’s poorest AIDS victims.

The development was hailed by public health officials as a step that could improve the prospects for broader international efforts to treat the millions infected with HIV, the virus that causes AIDS, in Africa and other impoverished regions. Although even the newly slashed prices leave sophisticated medicines well beyond the means of ordinary people in poor lands, lower drug costs make it less daunting for the world’s rich countries and aid agencies to organize and finance major public health initiatives to increase the availability of effective treatment.

Merck’s new prices in developing countries are $600 per patient per year for its potent protease inhibitor, indinavir (Crixivan™), and $500 per patient per year for another crucial AIDS drug, efavirenz (Stocrin™). That’s a sharp cut from already-discounted levels that brings the price to about one-tenth the amount charged in the United States and other industrialized countries. Moreover, Merck announced it would no longer restrict its discounts to Africa and would offer the lower prices in many other developing countries, provided it could be assured that the cheap drugs wouldn’t be reexported. Merck declined to say which countries would benefit, saying it will decide on a case-by-case basis.

Merck’s move, and others expected shortly from its major rivals, reflect the enormous political and legal pressure that has thrown the $350 billion pharmaceutical industry on the defensive. The industry has become a target of militant activists and other critics who contend that by zealously protecting their valuable patents, the drug companies are earning exorbitant profits on medicine that could help save the 25 million Africans, and millions of others elsewhere, with HIV.

Merck emphasized a point repeated tirelessly by industry officials – that even very cheap drug prices, by themselves, will do little to help HIV sufferers. That’s partly because effective treatment, which involves “cocktails” of several drugs, typically requires patients to receive close monitoring by trained medical personnel – and in places such as sub-Saharan Africa, even the most rudimentary health care is in lamentably short supply.

“Even at these new lower prices, the issue of access is not solved,” Per Wold-Olsen, president of Merck’s human health business in Europe, the Middle East and Africa, said in Merck’s news release. “Antiretroviral therapy will remain out of reach for millions of people in poor countries where the epidemic’s ravages are worst. In the long run, the only sustainable way to provide care and treatment for the millions of people living with HIV/AIDS in these settings is through public/private partnerships – involving governments, [nongovernmental organizations], multilateral organizations like . . . the World Bank – to address all the barriers to care.”

Still, Jon Liden, a spokesman for the World Health Organization, called Merck’s move “terrific news.” That is so, he said, even though the prices Merck and other companies are charging are too high for most poor-country governments to buy in large quantities.

“We are starting to reach levels where it can become realistic to raise substantial international resources to finance purchases of these drugs, as part of a wider effort to provide care and prevent infections in developing countries,” Liden said. “So in that sense, it’s very significant that these prices are coming down.” But he acknowledged that the cost of a major international initiative has been estimated at $5 billion to $10 billion a year, which appears unlikely to be forthcoming at a time of declining foreign aid budgets.

Many AIDS activists were unimpressed by Merck’s news, which was first reported yesterday in the Wall Street Journal. Some voiced skepticism about the company’s claim that it was cutting its prices to the cost of manufacturing. Others complained about Merck’s participation in a lawsuit against a South African law that would allow the importation of even cheaper generic drugs manufactured in other countries.

“It looks to me like you are announcing an inaccessible price drop that will keep your drugs out of reach in countries with the most giant epidemics, and at the same time you’re filing a lawsuit against a law that will increase access,” Kate Krauss, a member of Act Up Philadelphia, said in a telephone conference call held by Merck yesterday.

Until yesterday, Merck was the most secretive of the pharmaceutical companies in describing its concessionary offers to poor nations. Those offers were made behind closed doors, with no more said in public than that they reflected “deep discounts.”

Public disclosure carries political risk. Like most of the industry, Merck earns more than half its profits in the United States alone, and it fears a consumer rebellion in wealthy nations as buyers learn that they are paying nearly 10 times the rock-bottom price.

Drug companies, backed by public health agencies, argue that the wealthy nations should willingly tolerate that price spread because AIDS is pandemic overseas. “We should tell the American consumer, ‘You can have the same deal when you are living on a dollar a day,’ ” said WHO official Michael Stoltz, referring to the per capita income in much of Africa.

Merck’s announcement marked a notable retreat from another important element in the industry’s strategy for protecting its patents and profits. Under the terms of a highly touted initiative last May, linking five pharmaceutical companies and five United Nations agencies, AIDS drug discounts were offered only after company-by-company, country-by-country negotiations in which the industry required assurances of secure distribution, medical support systems and other conditions.

That structure enabled the five companies – GlaxoSmithKline, F. Hoffman La Roche & Co., Bristol-Myers Squibb Co. and Boehringer Ingelheim, along with Merck – to control the pace of negotiations and the flow of drugs. Nearly a year after its announcement, the effort had resulted in deals with only three countries – Uganda, Senegal and Rwanda – and promised to cover only a few thousand Africans.

As it nears its one-year anniversary, the five-company plan appears to be unravelling. Glaxo, Bristol-Myers and Boehringer have been negotiating separately, and secretly, over comparably unconditional price cuts for poor nations hit heavily by AIDS.

Their conversations have involved Peter Piot, director of the Joint U.N. Program on AIDS, or UNAIDS, and Gro Harlem Brundtland, director-general of WHO.

In an interview last week, Piot said he had realistic hopes that the patent holders would slash prices in the developing world to the levels of their most aggressive generic rivals. The Indian companies Cipla Ltd. and Hetero Drugs Ltd. are offering three-drug AIDS combination therapies under some conditions for as little as $350 a year.

Reference:

Paul Blustein and Barton Gellman Washington Post Staff Writers Thursday, March 8, 2001; Page A01