March 1, 2001

Staff Reporters of THE WALL STREET JOURNAL

United Nations Secretary-General Kofi Annan is preparing to launch a new campaign to reduce prices of AIDS drugs in developing nations and convince wealthy nations to pony up the cost of treating the killer disease and stemming its relentless spread.

Several top U.N. officials believe the major drug companies -- chastened by a flood of criticism -- are willing to offer further price cuts for the AIDS drug cocktails that have proven effective in wealthy countries, but are inaccessible in poor ones.

In a private video conference Wednesday, Mr. Annan and senior officials from the U.N. and the World Bank agreed to push for such price cuts and additional funding in advance of a major U.N. General Assembly meeting in June. "We are thinking of what we can get out of world leaders," said Shashi Tharoor, interim head of the U.N.'s department of public information, who stressed that the meeting was a first step.

Mr. Annan, who has made AIDS a top priority, is also responding to dramatic recent developments, according to Mark Malloch Brown, head of the United Nations Development Programme and a participant in Wednesday's meeting. In particular, Mr. Annan wants to capitalize on the surprise offer in January by Cipla Cipla's lower price "revolutionizes the situation," said Mr. Malloch Brown. U.N. officials believe the Indian company's price pressures the big pharmaceutical companies to match or beat Cipla's offer. Some U.N. officials said they believe the pharmaceutical companies may be willing to offer deeper discounts in response, perhaps bringing down the annual cost of treating a patient to within the grasp of many more people and governments in Africa and other poor nations.

"We get signals ... that the companies are considering going considerably lower," said David Nabarro, executive director in the office of World Health Organization's director general, Gro Harlem Brundtland. "I will be amazed if we don't see big shifts not only in prices, but also in the resources available to buy these drugs so that more than a few thousand people can benefit," Mr. Nabarro added.

To date, only Senegal, Rwanda and Uganda have formally agreed to terms with the big drug makers under which they get access to discounted prices. But even so, only a few thousand patients are expected to benefit from the discounts this year. About 36.1 million people world-wide are infected with the AIDS virus, 25.3 million of them in Africa.

Gregory Reaves, a spokesman for Merck At Wednesday's meeting, there was a major unresolved question: How exactly to handle offers to sell discounted drugs by manufacturers of generic drugs? Western pharmaceutical companies are casting the generic companies as pirates profiting off their research. Concern over how to protect the big companies' intellectual property has become a flash point of the current debate on how to make medicine available in poor countries that want to import less-expensive generic copies of the drugs. Confounding matters for the U.N. is that officials of the Joint United Nations Programme on AIDS, or UNAIDS, have asked Cipla for details about its offer, but the Indian company said it preferred to deal with individual countries and declined to provide the agency with any further details. Cipla officials couldn't be reached for comment last night.

Participants in the U.N. meeting agreed that any use of generic drugs must fall within current patent law. Generic drugs "have to be part of the discussion and may be part of the solution," said Mr. Malloch Brown. "They sparked this." Many African nations don't offer patent protection for pharmaceutical products, which could allow for widespread legal use of generics.

Mr. Malloch Brown said he and others believe that as drug prices fall, the focus of attention by international public-health groups will shift from pushing drug makers for lower prices to pressuring wealthy nations to fund the drugs' costs.

The poorest African nations have per-capita health budgets of as little as $10 per year, so they can't afford even Cipla's price. "The big gap," said Peter Piot, director of UNAIDS, "is funding." UNAIDS is calling for wealthier nations to provide an additional $7 billion to $10 billion in funding for world-wide AIDS prevention and treatment.

Dr. Piot said he plans to broach the funding issue in a meeting in Washington today with Secretary of State Colin Powell. Separately, Italy is trying to convince its partners in the Group of Seven major industrialized nations to assemble a fund to fight AIDS and other developing-country diseases. Britain is considering a similar endeavor.

Mr. Annan also wants to press African governments to improve their basic health-care systems so that the complicated regimens are used properly. The meeting also focused on how to increase efforts to prevent the spread of the disease, which, while cheaper than treating those already infected, remains underfunded, according to the U.N.

Mr. Annan's office declined a request for an interview, but meeting participants said his leadership is crucial. "He can call up anyone and rally them around this cause," Dr. Piot said.

Write to Michael M. Phillips at michael.phillips@wsj.com