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NEWS
AIDS DRUGS BATTLE DEEPENS

March 8, 2001
AIDS Drug Battle Deepens in Africa
By RACHEL L. SWARNS
JOHANNESBURG, March 7 -
An Indian maker of generic
drugs asked South Africa today to give it the right to sell eight AIDS
drugs currently available only from their patent- holding multinational
companies at high prices.

The announcement by Cipla Ltd. of Bombay, a large
producer of drugs, opened a new front in the struggle over patented
medications in a country, and continent, ravaged by AIDS and too poor to
afford life-prolonging treatments.

South Africa has more people infected with H.I.V.
than any other country on earth - roughly 20 percent of its adults carry
the virus. But few can afford the $10,000 to $15,000 a year that is the
normal cost of the AIDS regimen in the West.

Cipla's move came as a leading producer of anti-H.I.V. medicines, Merck, said it was slashing prices in South Africa
and other developing countries on two important AIDS drugs in a
developing
price war.

It began last month when Cipla offered to sell
drugs to South Africa and other governments for $600 a year per patient,
or
about $400 below the price offered by most big drug companies that hold
the
patents. But South Africa could take advantage of the offer only if it
compelled the patent holders to license the drugs, for instance on the
ground that in national emergencies, demand was not being met at fair
prices.

In a letter to the Department of Trade and
Industry today, Cipla said it was asking for a patent commissioner to
grant
this kind of compulsory licensing. Such a decision could give Cipla the
upper hand in the African market.

The multinationals argued that they need high
prices in order to carry out their research, even though the prices put
the
remedies out of the reach of millions of people with H.I.V.

The price cuts are welcome news to Africans, but
even the much lower costs could overwhelm many countries, whose per
capita
incomes might be half of the annual drug cost. South Africa has not
indicated at what price it would be willing to buy, and presumably it
would
rely on international donors to bridge the gap between the lower charges
and its ability to pay.

AIDS developments have consumed South Africa
this
week. Thousands of banner-waving demonstrators have marched the streets
demanding drug price cuts, and the big drug makers went to court to block
a
law that in their view undercuts patent protections. They contend the law
gives the health minister too much power to allow cheaper versions of
patented drugs. That case was postponed until next month, but pressures
on
the drug industry are growing.

Merck said today that it would make one of its
major drugs, Crixivan, available at $600 per patient per year, and
another,
Stocrin, available for $500. They are taken in combination with other
drugs
as an H.I.V. cocktail. Merck said that at those prices, it would make no
profits on the sales.

In the United States, Crixivan costs more than
$5,000 per patient per year.

Other companies have also responded to the price
pressures. Last month, GlaxoSmithKline P.L.C. said it would offer
discounted drugs to employers and nonprofit groups.

Two weeks ago, the Bush administration agreed to
continue the policy of not seeking sanctions against poor countries
ravaged
by the AIDS epidemic, even if American patent laws are broken, so long as
the country abides by World Trade Organization treaties.

South Africa is riding a wave of international
support after being pilloried for demanding low-cost drugs and neglecting
expert opinion on the cause of AIDS.

"There's an increasing understanding that the
epidemic has catastrophic implications in many developing countries,"
Julian Fleet, a senior adviser on law and ethics at the United Nations
AIDS
agency, said in a telephone interview from Geneva.

"Increasingly, governments in the North are
realizing that mechanisms like compulsory licensing are tools that should
be considered to make medicines more affordable," Mr. Fleet said. "There
has certainly been a change in the last year to 18 months."

It has been the images of the dying, in part,
that
have forced the climate to change. In December, the United Nations
reported
that 25.3 million people in sub-Saharan Africa - the bulk of the world's
infected - had H.I.V. or AIDS. Last year, 2.4 million in the region died
of
AIDS.

They are dying in flimsy metal shacks and in
crowded hospital wards. Abandoned babies wither in the arms of strangers.
Parents bury children. And relatives and friends, doctors and nurses, are
unable to offer the medicines that could save thousands of lives.

In May five multinationals, backed by the World
Health Organization and other United Nations agencies, offered to sell
their components to poor nations at much lower prices. One was Merck.

Negotiations have gone slowly. To date, Uganda,
Senegal and Rwanda have agreements. The companies refuse to say how much
they are charging, but the cost of a typical cocktail in Senegal is
$1,000
a year, according to the care agency Doctors Without Borders. Merck says
it
will now offer each of two AIDS drugs at roughly half that price.

If Cipla were to win a license, it would offer
eight drugs and their combinations at an annual cost per patient of about
$600.

Cipla officials, who have offered to pay
royalties
for the license, said that before they took their step today they asked
several multinationals to grant the license voluntarily.

"We've had no concrete response from the
multinationals to date," said Dr. Yusuf K. Hamied, chairman of Cipla, in
a
telephone interview from Bombay. "We have now decided it is best to
approach the government. What we've offered is an opportunity to Africa.
It's up to the Africans to take it up."

But the procedure to win a compulsory license
can
be slow and costly. Cipla must first file its request with the
commissioner
of patents, who will then hear arguments from both sides, said MacDonald
Netshitenzhe, South Africa's registrar of patents in the Department of
Trade and Industry. Such cases can take years.

Cipla's supporters, including officials at the
Consumer Project on Technology, a Washington group started by Ralph
Nader,
note that drug company officials have repeatedly suggested compulsory
licensing as a preferable alternative to the South African drug access
law
they will challenge in court next month.

That law, the drug companies say, is overly
broad
and would give the health minister too much power.

Several officials at the big drug companies
today
said they did not know enough about Cipla's decision to comment. Others
said they would argue against the plan, saying South Africa has not taken
advantage of the discounted drugs it has been offered. (South Africa
argues
that many of these offers are short-term and not explained in detail.)

"If they accuse us of abusing our patent
position,
we can only say that we have offered the governments of all developing
countries preferential pricing," said Kevin McKenna of Boehringer
Ingelheim
Pty. Ltd. in South Africa, which produces the anti-AIDS drug nevirapine.

"The South African government has not yet come
back to us in response to our letter, so I think we could hardly be
accused
of abusing our patent."

Officials at GlaxoSmithKline said that
petitioning
under South Africa's patent law "would be the appropriate course of
action
should Cipla feel that their request is justified." But they added that
they did not know enough about Cipla's plans to comment further.

Jo-Anne Collinge, a spokesman for the Health
Department, said government officials, too, were waiting to hear details
about how Cipla planned to produce the drugs, the scale of production and
the likely pricing. The government itself has never requested a
compulsory
license, even though it can under the law, because it feared retaliation
from its Western trading partners, which threatened sanctions when the
idea
was debated a few years ago.

But Cipla's overture alone might force the drug
companies to change, some experts say.

"Just the pressure of the possibility of this
could be enough to force the pharmaceutical companies to really act,"
said
Frederick M. Abbott, a government consultant who specializes in
international trade law and intellectual property.

"The talk from the pharmaceutical companies
about
intending to provide low-cost pharmaceuticals goes back years, and every
day this goes on, people die in South Africa," said Mr. Abbott, who is
also
a visiting law professor at the University of California at Berkeley.

"The necessity is not to have lawyers debating
statutory language," he said. "The necessity here is getting drugs."

Copyright 2001 The New York Times Company