Cipla’s ‘Crusade’ Moves Company into International Market for AIDS Drugs, Wall Street Journal ReportsCipla Ltd. CEO Yusuf Hamied's offer of "deep[ly]" discounted AIDS drugs wasn't driven "simply [by] compassion" but was instead "very much a business deal," the Wall Street Journal reports in a front-page story on the Indian generic drug firm and the man behind the drug offer that set off an "extraordinary price war." In early February, Hamied extended an offer to sell a three-drug combination therapy to Doctors Without Borders for $350 per patient per year, or 1/30 of the treatment's cost in the United States. The offer is helping "transfor[m] the debate over how to provide critical medicines to poor nations," according to the Journal. Generic drug makers, like Indian firms Cipla, Hetero Drugs Ltd. and Aurobindo Pharma Ltd., are "[f]or the first time ... being taken seriously by the United Nations," making them suddenly "important players" in a new U.N. anti-AIDS plan for Africa. Multinational drug companies call the generic drug makers "patent pirates," but are "nonetheless responding with discounts for developing nations that the drug giants themselves would have labeled impossible just a few months ago," the Journal continues. The price breaks have also caught the attention of AIDS activists who are increasing pressure on multinational corporations and governments to reduce prices and patent protections. And Cipla continues to "kee[p] up the pressure" with a series of additional price-reduction announcements and meetings with international stakeholders. The company last week filed a request in South Africa for a compulsory license for AIDS medications after it failed to get a response from major drug makers to its offer of profit-sharing on generics in Africa. Hamied is also scheduled to meet with World Health Organization officials later this month to discuss ways to administer international sales of generic AIDS medications, and he has been invited to speak in June at a special meeting of the U.N. General Assembly.
Indian Law, Cipla and Generics
Because a 1972 Indian patent law protects only the drug-making process and not the drug itself, generic firms like Cipla can legally produce patented AIDS drugs by tinkering with the production formula. The law's existence is largely due to Cipla, which petitioned the government in 1970 because a foreign patent holder wanted to prevent the firm from making Propranolol, a heart disease drug. Cipla went to then Prime Minister Indira Gandhi and, according to Hamied, asked, "Should millions of Indians be denied use of a life-saving drug just because the originator doesn't like the color of our skin?" However, the law is in jeopardy because international trade rules require India to enact "strong" pharmaceutical patent laws by 2005, which would include protections for drug patents. Some say that this threat is partly responsible for Hamied's offers. Denis Broun, a former U.N. pharmaceuticals specialist who advised Hamied over the last year, said he believes Hamied is "mostly concerned with influencing patent laws in India," as opposed to having a real impact on the fight against AIDS. "He is pretty cleverly using the AIDS issue to push his views, and show their validity. He is pursuing, internationally, an Indian objective," Broun added. The effective use of antiretroviral medications requires "specially trained doctors and nurses and careful tracking of patient dosages," Broun said, a fact that makes him wonder if Cipla's offer, as well as recently announced discounts by major drug companies, will have "impact beyond their publicity value." In addition, Doctors Without Borders has indicated it does not want to be a "global drug distributor," and if it gets funding for Cipla's offer, will only set up small "pilot projects" to dispense the drugs. Cipla has not always sought to lower prices. The company recently asked the Indian government to impose a 35% import duty on GlaxoSmithKline's lamivudine, an AIDS drug Cipla also makes, and is engaged in a "bitter dispute" with the Indian government over price-control regulations.
Hamied, who opened the company warehouses to supply free medicine after the Jan. 26 Gujarat earthquake, said the AIDS-drug offers are his "social obligation to society." He said that the earthquake "finally" prompted him to act because the event made him think about "unavoidable deaths, and then about all the AIDS deaths that could be avoided in Africa." On Feb. 6 he made the initial offer to Doctors Without Borders, which was followed the next day by an official confirmation letter. Since then, Cipla has also "slashed" its domestic AIDS drug prices by 35%, but has not been contacted by the Indian government about subsidizing a program to supply reduced-cost AIDS medications to its citizens. Although Cipla is the market leader in AIDS drugs in India, it is not a "thriving business" because most Indians try herbal remedies and diet improvements before turning to drugs. Some hospitals still will not admit AIDS patients, and many patients are "reluctant" to see a doctor in the first place. A year's supply of antiretroviral medications, which Cipla sells for $1,090 in India, costs more than the average per capita annual income of most Indians. According to the Journal, Cipla could take in as much as $100 million if it can break into the South African market. The $350 offer has not been extended to developing country governments, but Cipla has said it will provide governments with the drugs at an annual cost of $600 per patient. The United Nations has also contacted Hamied about the discounts, but he is "frustrated" with the organization's response, saying it is "only working with the multinational [drug companies], so good luck to them." Talks between Cipla, other generic makers, governments and international organizations continue. Hamied warned against "[f]ly-by-night" generic drug makers that may not have fully implemented international quality standards entering the market, but said he "genuinely believe[s] there is room for everyone" because the need for AIDS medications is so great (Pearl/Freedman, Wall Street Journal, 3/12).