Copyright 2000 The Washington Post
The Washington
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December 28, 2000, Thursday, Final Edition
SECTION: A SECTION; Pg. A01
LENGTH: 6117 words
HEADLINE: A
Turning Point That Left Millions Behind; Drug Discounts Benefit Few While
Protecting Pharmaceutical Companies' Profits
SERIES:
DEATH WATCH: AIDS, Drugs and Africa; Pg. 2/3
BYLINE: Barton Gellman , Washington Post Staff Writer
DATELINE: GENEVA
BODY:
Second of three articles
Raymond V. Gilmartin's
private jet touched down at Geneva-Cointrin airport near midnight on March 26.
Early next morning, on four hours' sleep, he sped to the hilltop headquarters of
the World Health Organization. His name appeared on no calendar, but he was
expected. He carried the brief of a $ 350 billion industry on the run.
Two years of public censure, with charges of profiteering on history's
worst pandemic, had brought the manufacturers of AIDS medicines
close to pariah status in U.N. forums. Declarations known as "soft law"
threatened the value of their patents. Their reputations as health-givers had
suffered as 35 million people with HIV--25 million in
Africa--faced death without the drugs that could prolong their
lives.
Merck, the New Jersey drug giant for which Gilmartin was chairman
and chief executive, had begun to compare the stakes with those faced by infant
formula makers accused of promoting breast milk substitutes in countries where
they did more harm than good. "No matter what Nestle could do or say, they never
really managed to get over that slogan that they killed babies," one manager
said.
Gilmartin had come to WHO Conference Room 7079 to reveal an
industry secret. Facing Director General Gro Harlem Brundtland and a panoramic
Alpine view, he said that five major pharmaceutical companies had committed in
principle to substantial discounts on their AIDS medicines in
poor countries. The conditions of their offer, broadly drafted, included
burden-sharing by governments and reinforced protection of the industry's
patents.
Now Gilmartin wanted to know: Would Brundtland care to sponsor
the initiative and take a leading role in its announcement?
Brundtland
and her colleagues in the U.N. system and at the World Bank confronted a dilemma
that would shadow them during six weeks of intense, confidential talks. The
companies made clear they intended to go public with the offer before the WHO's
World Health Assembly on May 15. The U.N. agencies could not afford to spurn a
proposal that appeared to be a historic advance against AIDS.
And yet they were loath to endorse an industry plan whose design and essential
details were beyond their control.
When a deal was finally announced on
May 11, it was heralded worldwide as a triumph for both sides, and a turning
point in the world's response to the poorest AIDS sufferers.
But behind the agreement was another story.
Interviews with most of the
participants, together with documents obtained by The Washington Post, show that
from the start, the potential partners--five companies and five international
agencies--were riven by doubts and disputes. Each side tried in some measure to
subvert the other's goals. The agencies had an unspoken aim to drive prices of
patented AIDS drugs down to the level of generics, and to make
those prices available as widely as possible. The drug firms sought to maintain
prices in most markets by offering selective discounts that would remain under
their control. In the long term, the structure of their offer primed new markets
by building demand while limiting the duration and scope of the discounts.
Most of all, the drug companies wanted to squelch an increasingly
damaging debate on prices and patents that the U.N. agencies had helped touch
off.
"The price issue was always discussed as preventing people from
being treated," said Boehringer Vice Chairman Rolf Krebs. "We took the price
away."
While the deal has quieted that debate, it has not abolished the
primacy of price in determining who gets the drugs. In the eight months since
the agreement, only one of the five companies, Glaxo Wellcome, has been willing
to disclose its AIDS medicine discounts. On the whole, the
companies are negotiating variable prices in strict confidence--drug by drug,
firm by firm, country by country. More important, perhaps, neither the companies
nor their partners--local governments, international donors and agencies--have
committed in practical terms to bring treatment to significant numbers of the
dying.
The only consummated arrangement thus far is in Senegal, though
Uganda is close behind. Ibra Ndoye, Senegal's AIDS coordinator,
said the discounts will enable his country to offer an unspecified "range of
therapeutic choices . . . at access costs ranging from about $ 1,000 to $ 1,800
a year," down from the $ 10,000 or more at previous market prices.
The
number of patients treated will increase eightfold, he said. That five-year goal
will add between 420 and 889 patients to the rolls of the privileged, depending
on whose figures are used. There are an estimated 79,000 Senegalese men, women
and children infected with the AIDS virus. Because that number
continues to grow, the target rate of coverage in 2006 is, at best, under 1
percent.
Other countries in sub-Saharan Africa, which
generally have a much higher prevalence of AIDS and less
effective efforts to fight it, are likely to fall short of that mark.
Setting Conditions
The pharmaceutical industry
began 2000 on the defensive. For a decade, makers of AIDS
medicines had rejected the idea of lowering prices in poor countries for fear of
eroding profits in rich ones. The position required a balancing act, because the
companies had to deflect attacks on the global reach of their patents, which
granted exclusive marketing rights for antiretroviral drugs.
The
industry argued that the real obstacles to AIDS treatment in
Africa and other poor regions were not drug prices but social,
managerial and political barriers, the absence of roads and records, shortages
of caregivers and "the lack of resources to provide even rudimentary health care
to many citizens," as the International Federation of Pharmaceutical
Manufacturers Associations put it this year.
At the same time, the drug
makers justified high profits as vital for underwriting the costs of research
and development--work that leads to most medical innovations. The return on
their investment did that and more. Even after plowing $ 21 billion back into
R&D, the 10 largest U.S. drug makers had $ 100 billion more in sales than
manufacturing costs over the 12 months ending in November, Forbes magazine
calculated. On June 22, the New England Journal of Medicine described the rate
of return on assets as the highest of any industry.
In the late 1990s,
an unexpected synergy between AIDS activists and critics of
globalization started eating away at the political framework that supported the
boom. AIDS organizers tormented Vice President Gore's
presidential campaign and chained themselves to desks in Trade Representative
Charlene Barshefsky's office, pressing the Clinton administration to stop
backing the industry against generic competitors. The slogans of the
activists--"Pfizer's Greed Kills," "Death Under Patent," "Medical
Apartheid"--sliced into the industry's long-standing efforts "to portray itself
as being driven by improving the human condition," said Michael Artinger of
Decision Resources, a pharmaceutical research firm.
On Dec. 1, 1999,
President Clinton announced a new trade and patent policy "flexible enough" that
"people in the poorest countries won't have to go without medicine they so
desperately need."
Pharmaceutical executives anticipated further
setbacks at a May 15 gathering of health ministers in Geneva, and at July's
international AIDS conference in Durban, South
Africa. As U.N. Deputy Secretary General Louise Frechette said
in an interview, AIDS had "gone up quite a bit in the cosmic
scale of priorities."
By Dec. 6, 1999, after an AIDS
summit in New York in which U.N. Secretary General Kofi Annan called for new
public-private partnerships, the industry decided to act. Vice Chairman Kenneth
E. Weg of Bristol-Myers Squibb and Glaxo Wellcome Chairman Richard Sykes pulled
Harvey E. Bale Jr. aside as they left U.N. headquarters. A former U.S. trade
official, Bale ran the global umbrella group of pharmaceutical lobbies.
The two executives asked: Would Bale make a few discreet calls and find
out which AIDS drug makers might be interested in joining a
counteroffensive?
Six companies took part in Bale's first conference
call six weeks later, on Jan. 20. Mid-level executives at Glaxo and
Bristol-Myers volunteered to draft a set of principles that could guide an
AIDS treatment initiative. One paper would set down the
rationale for intellectual property protections, while the other would lay out
conditions for price discounts.
For credibility, the so-called sherpas
preparing for meetings at the top levels of their companies agreed that any
industry plan would need to be embraced by international authorities. They
focused on two: Annan and Brundtland, each of whom had something to prove on the
issue. Annan's call to arms had come the previous month. It might be worth
suggesting, someone said, that Brundtland make an equally public request.
Four days later, Bruntland, the WHO director general, gave her second
annual speech to the policymaking executive board. Much of it centered on
AIDS. "Squarely put, the drugs are in the north and the disease
is in the south," Brundtland said. "I wish to invite the pharmaceutical industry
to join us in taking a fresh and constructive look at how we can considerably
increase access to relevant drugs."
A teleconference on Feb. 8 brought
high-ranking officers of the six companies into the talks for the first time.
Among them were Weg of Bristol-Myers; Glaxo Executive Director James Cochrane;
Per Wold-Olsen, Merck president for Europe, Middle East and
Africa; Pfizer Senior Vice President Ian C. Read; Boehringer
corporate marketing director Riku Rautsola; and Roche's global pharmaceutical
chief, William M. Burns.
To a man, they were frustrated.
"We've
got to get off the subject of prices!" Burns exploded, speaking from his
headquarters in Basel, Switzerland. "Prices are not the issue."
At the
first mention of prices, lawyers chimed in from speakerphones. They cautioned
the executives to steer clear of price-setting, for fear of antitrust
violations. But that was not where this conversation was going.
Some of
the participants, including Cochrane, wanted to take on the industry's
critics--above all Bernard Pecoul of the French medical aid
group Doctors Without Borders, and James Love of the Consumer Project on
Technology in Washington. According to participants, Jeffrey L. Sturchio of
Merck and Glaxo's Ben Plumley, public affairs specialists, said that would be a
losing battle. The only way to turn perceptions around, Sturchio said, was "to
make something affirmative happen," including substantial price cuts.
That view was not unanimous. Pfizer's Read registered strong dissent,
and Pfizer withdrew.
"He said, 'We're not interested,' " said
Wold-Olsen. A third participant in the call, speaking on condition of anonymity,
said Read "could not accept the concept that affordability was an issue. . . .
Pfizer felt it was simply not true. The philosophy here is that the U.S. price
of the medicine represents good value, and any discussion of preferential
pricing undermines that value in core markets."
Read did not return
telephone calls to his office and his home seeking comment. Andrew McCormick,
Pfizer's vice president for media relations, declined to detail Read's role in
the intercompany talks.
The company principals, now reduced to five, met
face to face for the first time on March 2 at the Radisson Heathrow Hotel near
London, not far from Glaxo's Middlesex headquarters. In the third-floor
Edwardian Suite, laid out as a mock boardroom, they reviewed the confidential
"merged drafts" of their initiative.
As planned, the preamble cited Kofi
Annan. It said the companies were "taking up his call to action" and would
"significantly expand our response to the HIV/AIDS pandemic."
The companies implied, but never stated directly, that they would cut
prices of their AIDS drugs steeply in the developing world. But
they had five conditions for such a move. These made up the core, nearly word
for word, of the "joint statement" that would be issued with the United Nations
two months later.
The five things the companies required before making
price cuts began with "unequivocal and ongoing political commitment" by the
recipient countries. International agencies would have to assume responsibility
for building up health care infrastructures capable of monitoring patients and
their compliance with dosing schedules. Drugs would be sent only into "an
efficient, reliable and secure distribution system" to prevent interruptions of
treatment and diversion of products to other markets.
If the U.N.
agencies agreed that AIDS drug treatment was "a shared
responsibility of all sectors of society," then companies were willing to
acknowledge that "affordability is an issue in developing countries." Finally,
the firms wanted support from all concerned for "adequate and enforced
intellectual property rights" to "provide the prospect of a satisfactory return
on investment in the high-risk search for new medicines."
How to frame
the last proviso became the most contentious dispute among the companies. Some
wanted the U.N. partners explicitly to renounce use of two mechanisms that
limited the industry's price-setting power. One was the "compulsory license,"
which gives a government legal power to permit manufacture of a drug without the
patent-holder's consent while paying "reasonable royalties." The other was
"parallel importing," in which a country purchases products at lower cost in
another market and resells them, without the manufacturer's consent, at home.
Pfizer, meanwhile, was not permitted to sit out the fight. An angry buzz
had built up in South Africa, demanding radical cuts in the
price of Diflucan, a leading antifungal agent used in combating secondary
infections in AIDS patients.
On March 21, the protest
group ACT UP New York performed a classic of the gonzo confrontations it had
been staging since 1987. Two members in ragged clothing walked into Pfizer's
42nd Street lobby and scuffled loudly, diverting security. Eight more, dressed
in conservative suits, slipped into the express elevator for the 23rd-floor
executive suites.
"You can't just barge in here!" blurted a receptionist
as they raced out of the elevator. ACT UP leader Eric Sawyer headed for Chairman
William C. Steere Jr.'s southeast corner office with a letter he intended to
deliver personally. Alerted by the commotion, someone began closing the outer
doors. Sawyer ended up in a footrace with Steere to the inner door. "He
literally slammed it in my face, just as I got there," Sawyer said.
As
they waited for security to drag them away, Sawyer and his comrades gleefully
telephoned reporters to say where they were and why. They also notified Pfizer
managers that they had scheduled a meeting to enlist the support of New York
City Comptroller Alan G. Hevesi, who manages $ 100 billion in pension funds that
now hold nearly 24 million shares of Pfizer stock. The city, they noted, had a
history of socially conscious investment in Africa. Soon after,
Hevesi sought out Pfizer executives and asked them to include Sawyer in
follow-up meetings.
Ten days later, Pfizer delivered a letter to
activist Mark Heywood in South Africa. Signed by country
director George Flouty, it said the company would "deliver Diflucan free of
charge through appropriate medical specialists for South African
HIV/AIDS patients suffering from cryptococcal meningitis who
cannot afford this treatment."
According to Jack Watters, Pfizer's
medical director for Europe, Asia and Africa, the company had
been planning just such a donation since the previous December. Asked by a
reporter for documentation of that planning, he replied: "I'm not going to spend
a lot of energy trying to disabuse [activists] of their notions because,
frankly, I think I should put my energy into making the program work."
U.N. 'Cannot Afford Not To'
In the six weeks
after Gilmartin's March 26 call on Brundtland at WHO headquarters, the companies
dispatched executives in careful sequence to secure advance support. The "prior
to launch" rollout schedule, a copy of which was obtained by The Washington
Post, assigned emissaries, dates and a priority of First, Second or Third to 209
individual contacts in government and public health.
In Brundtland, a
former Norwegian prime minister, pharmaceutical firms saw a likely ally.
Gilmartin had cultivated her for more than a year. He took Brundtland's counsel
at gatherings of the global government and business elite in Davos, Switzerland,
and he helped her round up $ 1 million in private funds for her signature
campaign against tobacco deaths. That cast another industry, as it happened, as
the pariah.
Playing on old rivalries between the WHO and the Joint U.N.
Program on AIDS, or UNAIDS, Bristol-Myers' Weg waited a week
after Brundtland heard from Gilmartin to brief Peter Piot, the head of UNAIDS.
When Weg walked into Piot's office on April 3, Piot suspected some kind
of offer was brewing, but he had no idea what it would be. And when Weg
departed, Piot still lacked vital elements: price, quantity and the meaning of
the industry's broadly stated prerequisites.
Like Brundtland, Piot saw
that the companies wanted his endorsement before they supplied those details.
Julia Cleves, Piot's chief of staff, recorded in her personal note of the visit
that Weg emphasized the industry's wish to make "a major announcement of this
effort prior to the World Health Assembly in May."
Glaxo's Cochrane flew
from London to Washington to see World Bank President James D. Wolfensohn the
next day. Bristol-Myers Chairman Charles A. Heimbold Jr., a social acquaintance
of Kofi Annan by way of their Swedish-born wives, called on the U.N. secretary
general. He told Annan, according to notes made at the meeting, "that collective
action could only succeed if channeled through U.N. organizations, in response
to [Annan's] call for closer cooperation."
In the second week of April,
Annan's advisers drafted a briefing memo full of disquiet. The industry's offer
"leaves far more questions than it answers," the memo said, adding that any
announcement in that form would raise expectations that could not possibly be
fulfilled. "Even if they reduced prices by 90 percent and made ART
[antiretroviral therapy] available to patients for $ 1,000 a year, this would
still put it out of reach for the vast majority of people in
Africa." The United Nations might be pushed into the role of
apportioning life-and-death benefits among its sovereign constituents, which was
untenable.
And yet, with all this, the report concluded with a statement
of institutional imperative: "The U.N. cannot afford not to become involved in
some way."
Leon Fuerth, national security adviser to Vice President
Gore, expressed private skepticism at the industry's hurry. It sounded, he told
one U.N. official, like one of those stock pitches that is good only for a day.
He urged another official to make sure that countries were not required to rule
out compulsory licensing or parallel imports to take part in
the deal. And he advised the agencies to press for inclusion of drugs other than
antiretrovirals. Few if any of those goals were reached.
Leaders of the
five companies and five agencies--UNAIDS, WHO, UNICEF, the World Bank and the
U.N. Development Program--gathered for the first time on April 14, in Manhattan.
Cramped into an undersize, overheated conference room at UNICEF's Third Avenue
Annex, they experienced several hours of mutual culture shock.
Weg and
some of his fellow executives, eager for an early display of results, wanted to
begin choosing countries to receive the first drugs. Others, including Merck's
Wold-Olsen and Boehringer's Rautsola, thought it might be better to record the
room's consensus around the company principles. Virtually all the agency
officials were far from ready to do either.
After Michael Quinlan from
Merck's office of general counsel gave what one participant called "the
commercial from the lawyers" forbidding talk of price, a palpable unhappiness
coursed through the room.
"They didn't even want to mention the p-word,"
David Alnwick, the chief of UNICEF's health section, recalled. "Some of us were
left wondering why all of these good people had flown across the Atlantic or
halfway across the United States."
Alnwick wanted to know where the
money would come from. Even if treatment got down to $ 1,000 a year, it would
still be "wildly out of range" for the Third World. "The whole of a country's
health budget could go down an AIDS procurement hole," he said.
Daniel Tarantola, Brundtland's special adviser on AIDS,
passed around a set of draft principles to guide the initiative. It drew heavily
on the industry papers, but left out the paragraph on protection of intellectual
property, which Brundtland thought impolitic to link with the plan.
Some
of the company representatives were livid. Weg quickly called for a break.
"There were some on the industry side," Sturchio said, "who were saying it's a
deal-breaker if we can't have this language in there."
The issue was not
resolved two weeks later when a reporter from the Wall Street Journal, Michael
Waldholz, phoned Piot and said he knew about the talks. Piot stalled and
complained to Weg, whom he suspected of leaking the story. In fact, industry
sources had kept the reporter apprised of the initiative for months, long before
Piot learned of it.
The newspaper wanted to publish. Piot and Brundtland
held a tense meeting, looking for room to maneuver, and found none. They had to
sign on or walk away.
Marta Mauras, chief of staff to U.N. Deputy
Secretary General Frechette, sent a quick briefing note to Annan on May 10. Piot
would launch the initiative the next day. "The announcement was forced by the
fact that The Wall Street Journal [tomorrow] plans to uncover . . . these
conversations," she wrote.
'There Was No Substance'
Ebullient renditions of the story sped around the world, despite
the cautious tone of the U.N. agencies. "In a landmark response to the
AIDS crisis in Africa, five of the world's
largest pharmaceutical companies offered to slash the prices of HIV drugs for
people living in poor nations," Waldholz wrote.
"We were massively
unprepared," Cleves said. "There was no substance. We knew this was going to
raise quite awesome expectations, and we could see from the start that managing
expectations would be critical."
Among the first orders of business was
renaming the plan. The parties gathered on June 12, a month after the launch, in
Geneva. Piot, according to notes of the meeting, persuaded the group to abandon
its working name, Fast Access, because it made an impossible promise. He also
urged the companies to come up with "specific price commitments. . . . Any
further announcements cannot afford to have any vagueness."
Merck's Per
Wold-Olsen took a step in the opposite direction, asking that the words "
'including pricing' be removed" from the draft implementing plan, "as it is
encompassed in 'affordability.' " He also raised the issue of generic
manufacturers, noting that his company "would not want to participate if there
were breaches on production of patented products."
Tarantola,
Brundtland's adviser, expressed anxiety about how "to cope with the anticipated
demand." There was much discussion of how to ration the program's resources
without appearing to say no to any request.
From African governments,
the response thus far had been harsh. Health ministers from southern
Africa issued an angry joint statement from Pretoria, South
Africa, saying that the May announcement "could lead to
alienation of governments from their people, as the public was given the
impression that the prices of antiretroviral drugs have been drastically reduced
and immediately available."
By June 21, Piot was writing to the five
companies, citing "increasing pressure from the public . . . to provide concrete
information on what industry is actually offering, in order to determine whether
our collaborative initiative is a worthwhile endeavour." Price would be "a
critical element." Would the companies please announce targets?
Four of
the five companies politely declined. Glaxo announced the price floor it had
established secretly in January 1997: Combivir, its patented two-drug mix, for $
2 a day. Others made decisions but chose not to share them. Merck, for example,
resolved confidentially to negotiate sales of Crixivan and Stocrin at about
one-third of their market price, and Roche would vary its discounts from 10 to
80 percent.
Weg warned from the beginning that the five companies might
launch separate initiatives as self-interest guided them. Merck became the first
to break ranks, on July 10. Against the urging of many outside experts it had
consulted, Merck teamed with the Bill & Melinda Gates Foundation to announce
a $ 100 million program on behalf of a single country, Botswana. The program's
designers, Merck's vice presidents for public relations and marketing, had made
their first trip to Botswana six days before.
Gilmartin, the Merck
chairman, said the company was "focusing intense efforts" to make Botswana a
model program. Sturchio made clear the same day that "the lessons learned" were
to be applied "by other donors" elsewhere. Yet Botswana is among the tiniest
countries in Africa, with 1.6 million people, and the
wealthiest, with per-capita income measured at $ 3,600 in 1998. Applying the
Merck model across Africa would cost "other donors" roughly 200
times more than Merck's contribution.
The same week as Merck's
announcement, Boehringer unveiled a plan to donate nevirapine for five years to
prevent infection of infants in poor countries. A drug trial known as HIVNET 012
had concluded the year before--July 12, 1999--that two doses of the Boehringer
drug, one to a woman in labor and the other to the newborn child, worked better
than AZT at lower cost to prevent transmission of the AIDS
virus.
This new high profile for nevirapine as a short-term preventive
drug gave life to Boehringer's hopes of marketing it for chronic adult therapy.
In that context, the donation program will "build government acceptance and
government awareness," creating "the first pockets of expertise" on the drug,
said Rautsola, the company's marketing director.
The number of patients
served by the company's donation and discount plans, he said, would be limited
by factory capacity, among other things. He cited the long lead time and "very
significant investment" required even to double the number of patients who use
nevirapine worldwide--about 118,000, according to October company data--and
said, "We're not there yet."
"For mother-to-child transmission, that's
image-building and market development," said Joep Lange, a member of
Boehringer's scientific advisory board. The company has its eye on long-term
treatment of adults, he said, because "the great thing about
AIDS drugs is you have to keep taking them."
'Little of Practical Value'
Occasionally,
usually in private, industry executives acknowledged that their pricing plan
would have limited impact, at least for those awaiting drug therapies.
On May 17, Glaxo's Richard Sykes lunched at London's Trafalgar Square
with Clare Short, the British secretary of state for international development.
His assessment of the AIDS treatment initiative was blunt.
The company's offer of $ 2 a day for AIDS drugs, Sykes
said, "was still an unattainable price for most countries and individuals,"
according to notes obtained by The Washington Post. He said his company "was not
prepared for their drugs to be used in ineffective health services, because of
the major risks of drug resistance arising from breaks in treatment."
"He felt, therefore, that little of practical value would emerge from
the U.N.-industry announcement" made six days earlier, the meeting notes said.
"At most, a few hundred thousand individuals would benefit."
Two weeks
earlier, Pfizer had held its annual meeting of shareholders at New York's Grand
Hyatt Hotel. In light of ACT UP's recent infiltration, Pfizer blanketed the
hotel with what appeared to be hundreds of security guards wearing radio
microphones under their blazer cuffs.
Chairman William C. Steere Jr.
fielded a question from an unidentified shareholder. She asked why Pfizer had
chosen to donate Diflucan in one country rather than cut prices more widely, or
permit generic manufacture of the drug's chemical equivalent, fluconazole.
Steere answered in terms of safeguarding the company's assets. He said
the industry "lives and dies on intellectual property," and giveaway programs
are best for protecting patents. "In the whole nature of philanthropy, we feel
this increases shareholder value," he said. "We're a heavily taxed industry,
heavily regulated, and the kind of philanthropy and charitable contributions we
make, in terms of our pharmaceuticals, helps us dramatically with our regulators
and with our legislators."
If the industry saw its new public spirit as
an exercise in damage control, so did many donor governments.
In
Britain, Clare Short's Department for International Development had not changed
its views appreciably since it published "An Emerging Consensus" two years
before: "Universal access to antiretrovirals will remain a burning issue for
activist groups but even the most impressive initiatives from rich countries and
donors will be unable to finance such initiatives in the near future."
Paul R. DeLay, the chief of the HIV/AIDS division of
the U.S. Agency for International Development, said, "It's easy to sit in
Washington and say yes, every person deserves the best care in the world. Our
budget in Malawi is $ 7 million. That's $ 7 per infected person per year, and we
are the largest donor in Malawi. [AIDS drugs are] something
that right now can't be offered to the mass of humanity."
The
Generic Nightmare
On Sept. 28 in Brussels, a 64-year-old chemist
named Yusuf Hamied took the microphone at a table ringed with concentric rows of
dignitaries. Interpreters in acrylic booths translated his words for 130
headsets into the 11 working languages of the European Union.
One of
India's wealthiest men and chief executive of Cipla, its largest domestic drug
manufacturer, Hamied portrayed himself as a visionary for the dispossessed. Top
multinational drug executives, awaiting their turns to speak, heard a nightmare
vision of the future: an offer to sell generic versions of their patented
medicines at 5 to 10 cents on the dollar, as a global public service.
"I
represent the needs and aspirations of the Third World," Hamied told a hearing
chaired by European Commission President Romano Prodi. "It is up to you, the
international community, to grasp this opportunity . . . to alleviate the
suffering of millions of our fellow men who are afflicted with HIV and
AIDS."
Gilmartin and Jean-Pierre Garnier, chief
executive-designate of the newly merged Glaxo SmithKline, listened agog to
Hamied's matter-of-fact price list for chemical equivalents of Glaxo's Epivir,
Boehringer's nevirapine and Bristol-Myers's Zerit. He had plans to add a
knockoff of Merck's Crixivan soon.
Per Wold-Olsen, who also sat through
the talk, said grimly that "what India is doing today as a pirate is not
acceptable to me, and I will want to do everything I possibly can to put
pressure on India to stop."
Cipla already markets the drugs
domestically. Patents are national instruments, and since 1970 India has allowed
them only for manufacturing processes. It is not obliged by new trade agreements
to change that law until 2005, and even then the limits of compulsory
licensing will be unclear. What Hamied wants to do meanwhile--with
support from counterparts in Thailand and advocates such as Doctors Without
Borders--is shape a new global norm permitting export of unlicensed generics to
save lives.
That is precisely what the patent holders mean to squash
with their drug initiative, arguing that they have solved the problem
themselves. So far Cipla has succeeded mainly in drawing unwelcome attention to
the striking differences between drug price and manufacturing cost. He said in
an interview that he is "prepared, if the U.N. buys or UNICEF buys, to give my
anti-AIDS drugs virtually at cost," proposing a year's
treatment for $ 800. That particular three-drug package carries U.S. wholesale
prices totaling $ 9,080, according to the HIV 2000 Report of the research firm
Decision Resources. Retail prices are higher.
The patent holders are
fighting back with lawsuits and legal threats. On Nov. 20, for example, Glaxo
patent chief G.G. Brereton sent a letter by courier demanding that Cipla "cease
all infringing activity in Uganda," where the Indian vendor has begun to sell
its much cheaper chemical equivalent of Combivir.
"Industry
representatives must realize what kind of a ferocious tiger they are riding,"
Swiss AIDS authority Bernard Hirschel told a roomful of them at
a conference on June 19. Antiretrovirals cut AIDS mortality in
Switzerland by 84 percent, he noted--a sharper drop than penicillin, the first
antibiotic, produced against blood poisoning. "Now contrast this with the fact
that [most infected people lack] access to such treatment, and that you can
produce these drugs and can produce them cheaply. You will then start to
understand the urgency and indeed the rage behind the clamor for access."
'They Laughed At Us'
In Amsterdam, Joep Lange
became more dispirited as details of the five-company offer emerged. Lange had
been a principal investigator in pioneering AIDS treatment
trials. He brokered the first serious conversations about discounts between the
United Nations and a drug company--with Glaxo Wellcome in Thailand in 1995.
By this autumn he was convinced the United Nations had been co-opted to
the wrong approach. "The big mistake of the U.N. initiative is that it is
exclusively directed at the public sector," he said. Donor governments are still
unprepared to finance AIDS treatment on a large scale, he said,
and the hardest-hit countries lack the will or means to carry it out.
Lange's International Antiviral Therapy Evaluation Center, a nonprofit
enterprise, proposed a private sector alternative. After selecting simple
treatment protocols, the Dutch group approached large employers in
Africa. Lange reasoned that corporations facing "the loss of
half their skilled work force" might be better motivated, financed and organized
to subsidize AIDS treatment than many host governments.
The Dutch initiative found significant interest. Among the early
recruits were a car maker and a beer brewer with manufacturing facilities on the
continent. Neither was ready to be identified publicly, but Lange felt it was
time to bring the proposal to the five pharmaceutical firms participating in the
U.N. initiative. All of the companies knew Lange well, and at least two, Glaxo
and Boehringer, had installed him on their scientific advisory boards.
In each meeting this fall, the Dutch delegation projected that it might
realistically obtain employer financing for treatment of a million new patients
in five years. Would the drug firms make their AIDS discounts
available on that scale?
"They laughed at us," Lange said. "The
companies are not interested. They don't want to treat a million people
tomorrow. They say, 'We want to do it responsibly,' but there's a lot of window
dressing there. They don't know what could be the repercussions: Their whole
price structure could collapse. They are scared to death."
Staff researcher Robert Thomason contributed to this
report.
About This Series
In a series of
articles this year, The Post is examining the decisions--and missed
opportunities--by international organizations, countries, corporations and
individuals that have shaped the advance of AIDS across
Africa, the continent most affected by the disease. Three
articles this week tell the story of how global pharmaceutical companies
responded to the crisis, including a battle over the prices of
AIDS medicines and a recent rush to philanthropy. Other
articles in this series, as well as supporting documentation, links and live
discussions with the authors, are available online at www.washingtonpost.com.
The Cost Gap of Fighting AIDS (This graphic was not
available) The Main Pharmaceutical Players (This graphic was not available)
GRAPHIC: Illustration, The Washington
Post
LOAD-DATE: December 28, 2000
