Concerned by the high price of azidothymidine (AZT), the only drug so far approved for treatment of AIDS, federal officials have accelerated development of a competing drug they hope will eventually be available at a lower cost.

The new drug, cyano-thymidine, is one of a number of potential AIDS treatments under development with the support and collaboration of the National Cancer Institute (NCI). But Department of Health and Human Services officials say that because cyano-thymidine may be a competitor of AZT and could affect its price, they are pushing it forward unusually fast. A request for proposals to manufacture and test the drug is expected to appear in the Federal Register today.

"It seems to me that one of the legitimate goals of government is to see that competition does occur," said Dr. Samuel Broder, director of NCI's clinical oncology program. "It's not exactly the hand of Adam Smith at work. It's a conscious decision to promote competition."

Treatment with AZT is estimated to cost up to $10,000 a year.

AZT's manufacturer, Burroughs Wellcome Co., one of the country's leading pharmaceutical companies, has been heavily criticized by AIDS researchers and by AIDS patient groups for the price of the drug. Burroughs Wellcome officials have said the price is justified because the company is making a major financial commitment to a drug that could be replaced soon.

Cyano-thymidine is one of a group of drugs being developed that, like AZT, work by stopping the AIDS virus from multiplying inside a cell. Some other drugs are much farther along in the development process. For example, Broder said that dideoxycytidine is being tested in AIDS patients in large-scale trials and that testing of dideoxyadenosine in AIDS patients will start this summer or fall. In contrast, he said, cyano-thymidine "has just been synthesized" and is not ready to be tried on humans.

However, cyano-thymidine's chemical similarity to AZT and the early signs that it is less toxic to human cells than AZT make it likely that the drug's development will proceed relatively rapidly, he said.

In its requests for proposals for dideoxycytidine, dideoxyadenosine and cyano-thymidine, the Department of Health and Human Services has included a new requirement -- instituted last spring -- that successful bidders be able "to package, market and distribute antiviral pharmaceutical products in a nationwide marketing system at a reasonable price."

The new guidelines, Broder said, "give reasonable grounds for inquiring about price. We can start asking them to defend their prices."

Federal officials feel they have no such authority in the case of AZT, although the drug was developed in conjunction with the National Institutes of Health.

AZT was first synthesized in 1964 in an attempt to create a drug effective against cancers, but it lacked the toxicity necessary to kill cancer. Research was ended, and -- like all other drugs for which no particular use is found -- AZT passed into the public domain.

In 1984, NCI, having isolated the AIDS virus, began an aggressive search for a treatment drug. Burroughs Wellcome, the North Carolina subsidiary of the British Wellcome Foundation, had a particular interest in antiviral drugs and agreed to collaborate with NCI in the search.

The company had on its shelves a small amount of AZT that it had synthesized. After the company sent a sample of AZT as one of a number of drugs to be tested, NCI discovered an encouraging activity against the virus.

AZT became the object of a concentrated development effort by Burroughs and NIH, which first tested the drug on AIDS patients. Encouraged by its findings, NCI helped Burroughs arrange a large-scale test of the drug, helped the company monitor the results and worked closely with the Food and Drug Administration -- steps that enabled AZT to make a quick jump to the marketplace.

It was then, as it made a major commitment to manufacture the drug in quantity, that Burroughs announced that its price for AZT would be $7,000 to $10,000 per person per year.

"It was a great surprise to us," Broder said. "The price was high. But there wasn't much to be done about it. We had made a deal. Burroughs had been very, very aggressive. They had taken a lot of risks. They had done a fine job. And a deal is a deal. We didn't impose conditions at the beginning. We couldn't do it at the end."

Nevertheless, Broder added, "We did have several frank exchanges of views."

Others, however, have been more critical of the company. In a hearing last March before the House subcommittee on health and the environment, Chairman Henry A. Waxman (D-Calif.), asked T.E. Haigler Jr., president and chief executive officer of Burroughs Wellcome, to defend the price.

"The effort {to get the drug to market}," Haigler said, "involved a significant financial risk. The full usefulness of Retrovir {the trade name of AZT} is unknown. Efficacy and speed of introduction of other therapies are unknown. Our financial returns are uncertain . . . . We are trying to set the price based on what we think is a reasonable price for this drug that is shown to be effective for this particular disease."

Dr. David Barry, the company's vice president of research, said last week that most AIDS patients will not have to bear the drug's full cost. "It's not a surprising price," he said. "People always think of pharmaceutical costs as being out-of-pocket. But best estimates are that 80 percent of the patients will have some coverage -- Medicaid, Medicare, municipal and state programs."

Cyano-thymidine was developed by scientists at NIH and the Michigan Cancer Foundation. HHS has applied for a patent on the drug on behalf of the government and is considering a royalty arrangement with the successful bidder. The Michigan Cancer Foundation has agreed to sign over to the federal government its share of the patent.