Cipla stirs pharma world with its AIDS cocktail

By C. Rammanohar Reddy

The global pharmaceutical world is unlikely to be the same after the dramatic offer by the Indian firm Cipla to price a three-drug cocktail for AIDS treatment at less than a U.S. dollar a day, which is as little as one-thirtieth to one-fortieth the price ($10,000 to $12,000 a year) at which the drug majors sell these medicines in western markets.

Cipla's offer of $350 for an annual dose is only to Medicins Sans Frontieres (MSF) for free distribution in its AIDS programmes in Africa. But Cipla has also said that it is ready to sell these drugs to governments at $600 a dosage and Mr. Amar Lulla, joint managing director of the company, says, ``as the volumes get larger prices could fall even further.'' This is almost certain to happen now that Ranbaxy, another Indian pharma major, has announced that it will start production of antiretroviral drugs that suppress the human immunodeficiency virus (HIV).

The Cipla offer - to be formalised shortly - brings to a head a year of global developments in which the regime of high pharma prices and patents has been pushed on to the defensive by powerful political, ethical and economic arguments. In the U.S., groups of senior citizens have been lobbying Congress to allow parallel import of generic medicines to get a round the high prices charged by the local drug majors. In South Africa, decisions have been taken to permit both parallel imports and generic medicines for AIDS treatment.

MSF has been leading a high-profile campaign to make access to medicines more affordable in the poor countries. And more recently the U.K. charity OXFAM has launched a global campaign to cut the cost of medicines for the poor and has singled out Glaxo- SmithKline in its demand that the drug companies commit themselves ``to respect a pro-public health interpretation of the TRIPS (trade-related intellectual property rights) agreement.'' In all this, the high prices charged for drugs under patent have come under attack and inevitably the TRIPS in respectability regime of the WTO has been on the rack.

Increasingly, the last vestiges of the intellectual protection that were used to cloak TRIPS are being removed as even the hard core among free trade economists have begun to expose the costs of monopoly privileges given to holders of patents. Among the many convincing arguments made in a recent article by the free trade economist, Dr. T. N. Srinivasan of Yale University, two are worth mentioning. First, studies in the U.S. have shown that contrary to the rationale usually offered for high patent protection, patents do not spur innovation. Second, in the global TRIPS regime the (monopoly) benefits go to the rich countries and the ones that pay are the developing countries, which is a large cost especially in pharma prices. There is no balance in the pact.

In response, perhaps to public criticism, five drug majors last year offered to drop the prices of their antiretroviral drugs for the African markets by up to 80 per cent. The catch was that the prices and quantities were to be negotiated with individual governments. To date only two countries have been able to make deals and the quantities remain very small. According to one UNAIDS report only 900 of Senegal's 79,000 patients will benefit from the package. And annual drug prices at $1,000 to 1,800 for each patient are much above Cipla's offer.

Cipla, on its part, has intelligently prepared itself for its foray into Africa. After being pressured by Glaxo to withdraw its drugs from Ghana it wrote to five drug majors that owned the patents for antiretroviral drugs offering to pay 5 per cent as royalty in return for a licence to produce these drugs. (Cipla cited communication of the U.S. pharma association, PhRMA, that mentioned 5 per cent as the ``industry average'' for a licence). Cipla says the firms are yet to respond.

The company's Mr. Lulla says that the $350 offer is ``a gesture'' in response to a calamity that is ``wiping out a generation'' in Africa and while no figures are mentioned there is a suggestion that it will lose money at this price.

Critics say that even AIDS treatment that costs a dollar a day is out of reach of most patients in poor countries. The other argument is that equally important are counselling and close monitoring of medication, which poor patients in the poor countries will not receive.

But many of these arguments are dispelled by the Brazil experience which has now become the model for AIDS treatment. Every Brazilian who is HIV positive is entitled to free treatment in this ambitious universal programme. The country produces its own inexpensive generic equivalent of the cocktail of antiretroviral drugs by the issue of compulsory licences for patented medicines.

An exhaustive article in the New York Times recently measured the success of the Brazilian programme: a halving of AIDS-related deaths in four years, containing the spread of the HIV population to half of what was projected six years ago and a saving of half a billion dollars by producing the generic equivalent of the patented medicines. Brazil spent $444 million on its universal AIDS treatment programme last year but claims to have saved in the process $422 million in hospitalisation costs. (It has been taken by the U.S. to a WTO dispute panel over aspects of its patent legislation. However, the crucial clause - Article 71 - covering issue of compulsory licences is not under dispute.)

With the ground shaking under its feet, the WTO in many respects continues to adopt an ostrich-like attitude. In an article in the International Herald Tribune on February 22, the WTO chief, Mr. Mike Moore, made a pathetic defence of TRIPS by claiming that the agreement struck ``a healthy balance'' between ensuring the availability of medicines for the poor and the need to encourage research by providing patents. The fact is that some of the patented medicines are never ``discovered'' by the drug majors. The research is often done in publicly funded programmes. The New York Times has pointed out that the drug d4T was synthesised by the Michigan Cancer Foundation in 1966 while its application for AIDS treatment was discovered at Yale University. And the National Institutes of Health developed ddI for AIDS patients and then licensed it to Bristol-Myers Squibb.

While Indian firms are shaking the world pharma industry, the Government of a country which is home to some five million HIV- affected people is as far away as it can be from Brazil in AIDS treatment. Dr. N. Kumaraswamy at the Chennai-based YRG Centre for AIDS Research and Education says that only up to 10 per cent of the AIDS patients at his centre are now on a regular dosage of antiretroviral drugs as no more can afford the medicines. The rest are only screened for opportunistic infections. Mr. Lulla claims that the Cipla cocktail in India is priced at the equivalent of $1,100 a year while Dr. Kumarasamy puts it at a monthly Rs. 6,500 to 8,000, which is closer to $1,500-$2,000 a year for each patient.

Compared to the universal programme of Brazil, the Government of India's attitude can only be described as criminal. Dr. Kumaraswamy is only aware of a UNICEF-supported programme that provides free antiretroviral medicines to pregnant mothers for four weeks. Asked if Cipla has made any offer to the Government of India as it has to MSF, Mr. Lulla says that the firm did offer to donate a free dose of one antiretroviral drug, Nevirapine, to pregnant and young HIV mothers for as long as two years. And the response? Mr. Lulla said, ``The Government has not replied.''

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