A Turning Point That Left Millions Behind

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.