TCS Daily

What's in a Number?

By Roger Bate - April 12, 2004 12:00 AM

In Romeo and Juliet, Shakespeare asked the question: "What's in a name?" Today the whole world of AIDS policy is asking: "What's in a number?"

The number in question is 140. According to hundreds of media reports, Indian generics companies are prepared to supply anti-retroviral drugs (ARVs) for $140 per person per year.

For the drug activists who have been promoting generic drugs, this number is sweet music to their ears. Right now, the research-based pharmaceutical companies that developed the antiretroviral drugs sell original versions in poor countries at "no profit" or steeply discounted prices that are combined in therapies that cost about $2-3 dollars per day. Even at these prices, the activists said that the research-based industry was dealing in death and "profiteering" from the lives of wretched Africans. And with the new price, negotiated by former U.S. President Bill Clinton, the activists have been proved correct, right? Well, no. Not only have no drugs been supplied for $140, none are likely to be any time soon.

Anatomy of a Raw Deal

In the middle of last week four organizations announced that they would join forces to help more than 100 countries get inexpensive generic AIDS drugs. The organizations are the William J. Clinton Presidential Foundation; the Global Fund to Fight AIDS, Tuberculosis and Malaria; the World Bank; and UNICEF. But these four groups had somehow neglected to ask the generic drugs producers if they could supply drugs at the quoted price. Anil Soni of the Global Fund bashfully explained to The New York Times that "it was a mistake on our part to announce the deal before making sure all the suppliers were in agreement."

The drug companies not consulted are Aspen Pharmacare of South Africa; and Cipla Ltd, Ranbaxy Laboratories Ltd., Hetero Drugs Ltd and Matrix Laboratories Ltd, all of India. So why did the four organizations assume they could quote the price of $140? That was the same figure the Clinton Foundation announced it had brokered last October with Yusuf Hamied, the head of Indian generics manufacturer Cipla.

Dr. Hamied is a remarkable political player. He helped scrap product patent laws in India in the early 1970s, and he has always been hugely ambitious. Given that there are so many drug pricing and regulatory restrictions in India - in addition to massive poverty -- Cipla has always looked to make money abroad.

Dr. Hamied crafted deals with the activist health organization Doctors Without Borders in 2001 to supply ARVs at about $350 per person per year, and after some delays a few thousand people are on treatment with his drugs. Despite the terms of this deal, the final price of Cipla drugs in some developing countries - including distribution costs -- was discovered to be as high as $1,400. Apparently distribution costs were not Dr. Hamied's affair.

He also infamously supplied drugs to Nigeria that soon expired, with perhaps 10% of the 15,000 patients having received treatment. And last October, according to the Clinton Foundation, he had agreed to do what many thought impossible -- sell ARVs for $140 per person per year. The Clinton Foundation did not specify to whom the drugs would be supplied, or any of the strings that might be attached to such a price, but, nevertheless, the price was reported widely as a major breakthrough.

Those skeptics who thought last October's deal sounded too good to be true must have been feeling rather awkward when last week's even larger initiative was announced. But, on closer inspection, the skeptics have been proven correct. Six months since the deal was struck, not a single package has been sold at the $140 price. Furthermore, none are likely to be sold at that price in the near future because even Dr. Hamied is balking when doctors groups and non-profit groups come calling.

But does Dr. Hamied back down? No fear, he brazenly says that if he is given a guarantee of $50 million a year for five years worth of supply he might be able to achieve the price. Such rhetoric in the face of failure is typical of a man who has failed to make good on earlier promises.

Recall that Shakespeare's answer delivered by Juliet to the question "what's in a name?" was that "A rose by any other name would smell as sweet." Dr. Hamied's offer smells more like the substance often used to help roses grow than the smell of the rose itself.

A Bad Cure

But perhaps a failure to provide drugs at $140 is preferable to partial success. Probably the only way the treatments can be made at anywhere close to the $140 price is by throwing drugs together in one pill, without adequate testing of the combinations. And with such fixed dose combinations (FDCs) there are problems in terms of stability of supply, true bioequivalence, and identical pharmacokinetics to current drug supplies. Without resolution of the various FDC problems, patients may indeed receive treatment -- but they may not be kept alive for long since the likelihood of clinical failure is higher than with proven treatments. And clinical failures of this kind are dangerous not just for the patients being treated but for the rest of society as well, since such failure provides opportunities for drug resistance to flourish.

So while the world's media gladly reports that the HIV/AIDS drug supply problem is about to be solved by the generics companies of India, even the companies themselves are unsure they will take part. Only Aspen Pharmacare of South Africa has said it may supply drugs at $140 and then only in Africa. But that, too, is uncertain -- Aspen reportedly buys its raw ingredients from Indian producers like Cipla.

Last week's Announcement by the Clinton Foundation and the other groups may prove to be a turning point in the HIV debate. When the drugs fail to materialize in the coming months, the media -- conned so many times by AIDS activists and generic lobbyists -- may start actually asking: Who is being treated? Where? By whose drugs? Very few drugs have been supplied by generics companies and none at the rock bottom price of $140.

Roger Bate is a visiting fellow of the American Enterprise Institute.


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