Merck cuts HIV Drug Prices For Poorer Countries
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HIV Drug Prices Cut For Poorer Countries Other Firms May
Follow Merck's Lead
By Paul Blustein and Barton Gellman Washington Post Staff Writers
Thursday, March 8, 2001; Page A01
Merck & Co., the pharmaceutical giant, said yesterday that it is cut-
ting 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, Crixivan, and $500 per patient
per year for another crucial AIDS drug, 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 coun-
tries. Moreover, Merck announced it would no longer restrict its dis-
counts to Africa and would offer the lower prices in many other devel-
oping countries, provided it could be assured that the cheap drugs
wouldn't be re-exported. 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, re-
flect 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 in-
volves "cocktails" of several drugs, typically requires patients to re-
ceive 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. "Antiretrovi-
ral 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 sig-
nificant 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 law-
suit 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 epi-
demics, 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 AIDS drug makers
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 prof-
its. 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 se-
cure distribution, medical support systems and other conditions.
That structure enabled the five companies -- GlaxoSmithKline, F. Hoff-
man 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 unraveling. Glaxo, Bristol-Myers and Boehringer have been negotiat-
ing 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.
2001 The Washington Post Company
Cecilia Snyder
mailto:csnyder@ccmc.org
Senior Project Associate
Communications Consortium Media Center
1200 New York Ave
NW Suite 300
Washington DC 20005-1754
Tel: 202-326-8711
Fax: 202-682-2154
http://www.ccmc.org Communicating for Change
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