Second of three articles

Raymond V. Gilmartin's private jet touched down at Geneva-Cointrin airport near midnight on March 26. Early next morning, on four hours' sleep, he sped to the hilltop headquarters of the World Health Organization. His name appeared on no calendar, but he was expected. He carried the brief of a $350 billion industry on the run.

Two years of public censure, with charges of profiteering on history's worst pandemic, had brought the manufacturers of AIDS medicines close to pariah status in U.N. forums. Declarations known as "soft law" threatened the value of their patents. Their reputations as health-givers had suffered as 35 million people with HIV--25 million in Africa--faced death without the drugs that could prolong their lives.

Merck, the New Jersey drug giant for which Gilmartin was chairman and chief executive, had begun to compare the stakes with those faced by infant formula makers accused of promoting breast milk substitutes in countries where they did more harm than good. "No matter what Nestle could do or say, they never really managed to get over that slogan that they killed babies," one manager said.

Gilmartin had come to WHO Conference Room 7079 to reveal an industry secret. Facing Director General Gro Harlem Brundtland and a panoramic Alpine view, he said that five major pharmaceutical companies had committed in principle to substantial discounts on their AIDS medicines in poor countries. The conditions of their offer, broadly drafted, included burden-sharing by governments and reinforced protection of the industry's patents.

Now Gilmartin wanted to know: Would Brundtland care to sponsor the initiative and take a leading role in its announcement?

Brundtland and her colleagues in the U.N. system and at the World Bank confronted a dilemma that would shadow them during six weeks of intense, confidential talks. The companies made clear they intended to go public with the offer before the WHO's World Health Assembly on May 15. The U.N. agencies could not afford to spurn a proposal that appeared to be a historic advance against AIDS. And yet they were loath to endorse an industry plan whose design and essential details were beyond their control.

When a deal was finally announced on May 11, it was heralded worldwide as a triumph for both sides, and a turning point in the world's response to the poorest AIDS sufferers. But behind the agreement was another story.

Interviews with most of the participants, together with documents obtained by The Washington Post, show that from the start, the potential partners--five companies and five international agencies--were riven by doubts and disputes. Each side tried in some measure to subvert the other's goals. The agencies had an unspoken aim to drive prices of patented AIDS drugs down to the level of generics, and to make those prices available as widely as possible. The drug firms sought to maintain prices in most markets by offering selective discounts that would remain under their control. In the long term, the structure of their offer primed new markets by building demand while limiting the duration and scope of the discounts.

Most of all, the drug companies wanted to squelch an increasingly damaging debate on prices and patents that the U.N. agencies had helped touch off.

"The price issue was always discussed as preventing people from being treated," said Boehringer Vice Chairman Rolf Krebs. "We took the price away."

While the deal has quieted that debate, it has not abolished the primacy of price in determining who gets the drugs. In the eight months since the agreement, only one of the five companies, Glaxo Wellcome, has been willing to disclose its AIDS medicine discounts. On the whole, the companies are negotiating variable prices in strict confidence--drug by drug, firm by firm, country by country. More important, perhaps, neither the companies nor their partners--local governments, international donors and agencies--have committed in practical terms to bring treatment to significant numbers of the dying.

The only consummated arrangement thus far is in Senegal, though Uganda is close behind. Ibra Ndoye, Senegal's AIDS coordinator, said the discounts will enable his country to offer an unspecified "range of therapeutic choices . . . at access costs ranging from about $1,000 to $1,800 a year," down from the $10,000 or more at previous market prices.

The number of patients treated will increase eightfold, he said. That five-year goal will add between 420 and 889 patients to the rolls of the privileged, depending on whose figures are used. There are an estimated 79,000 Senegalese men, women and children infected with the AIDS virus. Because that number continues to grow, the target rate of coverage in 2006 is, at best, under 1 percent.

Other countries in sub-Saharan Africa, which generally have a much higher prevalence of AIDS and less effective efforts to fight it, are likely to fall short of that mark.

Setting Conditions

The pharmaceutical industry began 2000 on the defensive. For a decade, makers of AIDS medicines had rejected the idea of lowering prices in poor countries for fear of eroding profits in rich ones. The position required a balancing act, because the companies had to deflect attacks on the global reach of their patents, which granted exclusive marketing rights for antiretroviral drugs.

The industry argued that the real obstacles to AIDS treatment in Africa and other poor regions were not drug prices but social, managerial and political barriers, the absence of roads and records, shortages of caregivers and "the lack of resources to provide even rudimentary health care to many citizens," as the International Federation of Pharmaceutical Manufacturers Associations put it this year.

At the same time, the drug makers justified high profits as vital for underwriting the costs of research and development--work that leads to most medical innovations. The return on their investment did that and more. Even after plowing $21 billion back into R&D, the 10 largest U.S. drug makers had $100 billion more in sales than manufacturing costs over the 12 months ending in November, Forbes magazine calculated. On June 22, the New England Journal of Medicine described the rate of return on assets as the highest of any industry.

In the late 1990s, an unexpected synergy between AIDS activists and critics of globalization started eating away at the political framework that supported the boom. AIDS organizers tormented Vice President Gore's presidential campaign and chained themselves to desks in Trade Representative Charlene Barshefsky's office, pressing the Clinton administration to stop backing the industry against generic competitors. The slogans of the activists--"Pfizer's Greed Kills," "Death Under Patent," "Medical Apartheid"--sliced into the industry's long-standing efforts "to portray itself as being driven by improving the human condition," said Michael Artinger of Decision Resources, a pharmaceutical research firm.

On Dec. 1, 1999, President Clinton announced a new trade and patent policy "flexible enough" that "people in the poorest countries won't have to go without medicine they so desperately need."

Pharmaceutical executives anticipated further setbacks at a May 15 gathering of health ministers in Geneva, and at July's international AIDS conference in Durban, South Africa. As U.N. Deputy Secretary General Louise Frechette said in an interview, AIDS had "gone up quite a bit in the cosmic scale of priorities."

By Dec. 6, 1999, after an AIDS summit in New York in which U.N. Secretary General Kofi Annan called for new public-private partnerships, the industry decided to act. Vice Chairman Kenneth E. Weg of Bristol-Myers Squibb and Glaxo Wellcome Chairman Richard Sykes pulled Harvey E. Bale Jr. aside as they left U.N. headquarters. A former U.S. trade official, Bale ran the global umbrella group of pharmaceutical lobbies.

The two executives asked: Would Bale make a few discreet calls and find out which AIDS drug makers might be interested in joining a counteroffensive?

Six companies took part in Bale's first conference call six weeks later, on Jan. 20. Mid-level executives at Glaxo and Bristol-Myers volunteered to draft a set of principles that could guide an AIDS treatment initiative. One paper would set down the rationale for intellectual property protections, while the other would lay out conditions for price discounts.

For credibility, the so-called sherpas preparing for meetings at the top levels of their companies agreed that any industry plan would need to be embraced by international authorities. They focused on two: Annan and Brundtland, each of whom had something to prove on the issue. Annan's call to arms had come the previous month. It might be worth suggesting, someone said, that Brundtland make an equally public request.

Four days later, Bruntland, the WHO director general, gave her second annual speech to the policymaking executive board. Much of it centered on AIDS. "Squarely put, the drugs are in the north and the disease is in the south," Brundtland said. "I wish to invite the pharmaceutical industry to join us in taking a fresh and constructive look at how we can considerably increase access to relevant drugs."

A teleconference on Feb. 8 brought high-ranking officers of the six companies into the talks for the first time. Among them were Weg of Bristol-Myers; Glaxo Executive Director James Cochrane; Per Wold-Olsen, Merck president for Europe, Middle East and Africa; Pfizer Senior Vice President Ian C. Read; Boehringer corporate marketing director Riku Rautsola; and Roche's global pharmaceutical chief, William M. Burns.

To a man, they were frustrated.

"We've got to get off the subject of prices!" Burns exploded, speaking from his headquarters in Basel, Switzerland. "Prices are not the issue."

At the first mention of prices, lawyers chimed in from speakerphones. They cautioned the executives to steer clear of price-setting, for fear of antitrust violations. But that was not where this conversation was going.

Some of the participants, including Cochrane, wanted to take on the industry's critics--above all Bernard Pecoul of the French medical aid group Doctors Without Borders, and James Love of the Consumer Project on Technology in Washington. According to participants, Jeffrey L. Sturchio of Merck and Glaxo's Ben Plumley, public affairs specialists, said that would be a losing battle. The only way to turn perceptions around, Sturchio said, was "to make something affirmative happen," including substantial price cuts.

That view was not unanimous. Pfizer's Read registered strong dissent, and Pfizer withdrew.

"He said, 'We're not interested,' " said Wold-Olsen. A third participant in the call, speaking on condition of anonymity, said Read "could not accept the concept that affordability was an issue. . . . Pfizer felt it was simply not true. The philosophy here is that the U.S. price of the medicine represents good value, and any discussion of preferential pricing undermines that value in core markets."

Read did not return telephone calls to his office and his home seeking comment. Andrew McCormick, Pfizer's vice president for media relations, declined to detail Read's role in the intercompany talks.

The company principals, now reduced to five, met face to face for the first time on March 2 at the Radisson Heathrow Hotel near London, not far from Glaxo's Middlesex headquarters. In the third-floor Edwardian Suite, laid out as a mock boardroom, they reviewed the confidential "merged drafts" of their initiative.

As planned, the preamble cited Kofi Annan. It said the companies were "taking up his call to action" and would "significantly expand our response to the HIV/AIDS pandemic."

The companies implied, but never stated directly, that they would cut prices of their AIDS drugs steeply in the developing world. But they had five conditions for such a move. These made up the core, nearly word for word, of the "joint statement" that would be issued with the United Nations two months later.

The five things the companies required before making price cuts began with "unequivocal and ongoing political commitment" by the recipient countries. International agencies would have to assume responsibility for building up health care infrastructures capable of monitoring patients and their compliance with dosing schedules. Drugs would be sent only into "an efficient, reliable and secure distribution system" to prevent interruptions of treatment and diversion of products to other markets.

If the U.N. agencies agreed that AIDS drug treatment was "a shared responsibility of all sectors of society," then companies were willing to acknowledge that "affordability is an issue in developing countries." Finally, the firms wanted support from all concerned for "adequate and enforced intellectual property rights" to "provide the prospect of a satisfactory return on investment in the high-risk search for new medicines."

How to frame the last proviso became the most contentious dispute among the companies. Some wanted the U.N. partners explicitly to renounce use of two mechanisms that limited the industry's price-setting power. One was the "compulsory license," which gives a government legal power to permit manufacture of a drug without the patent-holder's consent while paying "reasonable royalties." The other was "parallel importing," in which a country purchases products at lower cost in another market and resells them, without the manufacturer's consent, at home.

Pfizer, meanwhile, was not permitted to sit out the fight. An angry buzz had built up in South Africa, demanding radical cuts in the price of Diflucan, a leading antifungal agent used in combating secondary infections in AIDS patients.

On March 21, the protest group ACT UP New York performed a classic of the gonzo confrontations it had been staging since 1987. Two members in ragged clothing walked into Pfizer's 42nd Street lobby and scuffled loudly, diverting security. Eight more, dressed in conservative suits, slipped into the express elevator for the 23rd-floor executive suites.

"You can't just barge in here!" blurted a receptionist as they raced out of the elevator. ACT UP leader Eric Sawyer headed for Chairman William C. Steere Jr.'s southeast corner office with a letter he intended to deliver personally. Alerted by the commotion, someone began closing the outer doors. Sawyer ended up in a footrace with Steere to the inner door. "He literally slammed it in my face, just as I got there," Sawyer said.

As they waited for security to drag them away, Sawyer and his comrades gleefully telephoned reporters to say where they were and why. They also notified Pfizer managers that they had scheduled a meeting to enlist the support of New York City Comptroller Alan G. Hevesi, who manages $100 billion in pension funds that now hold nearly 24 million shares of Pfizer stock. The city, they noted, had a history of socially conscious investment in Africa. Soon after, Hevesi sought out Pfizer executives and asked them to include Sawyer in follow-up meetings.

Ten days later, Pfizer delivered a letter to activist Mark Heywood in South Africa. Signed by country director George Flouty, it said the company would "deliver Diflucan free of charge through appropriate medical specialists for South African HIV/AIDS patients suffering from cryptococcal meningitis who cannot afford this treatment."

According to Jack Watters, Pfizer's medical director for Europe, Asia and Africa, the company had been planning just such a donation since the previous December. Asked by a reporter for documentation of that planning, he replied: "I'm not going to spend a lot of energy trying to disabuse [activists] of their notions because, frankly, I think I should put my energy into making the program work."

U.N. 'Cannot Afford Not To'

In the six weeks after Gilmartin's March 26 call on Brundtland at WHO headquarters, the companies dispatched executives in careful sequence to secure advance support. The "prior to launch" rollout schedule, a copy of which was obtained by The Washington Post, assigned emissaries, dates and a priority of First, Second or Third to 209 individual contacts in government and public health.

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

CAPTION: The Cost Gap of Fighting AIDS (This graphic was not available)

CAPTION: The Main Pharmaceutical Players (This graphic was not available)