Pharmacia Nears Deal to Sell Cheaper Version of AIDS Drug to Undeveloped
By SCOTT HENSLEY
Staff Reporter of THE WALL STREET JOURNAL
Attempting to break a stalemate over getting AIDS drugs into developing
nations, Pharmacia Corp. is near a deal to allow generic drug makers to sell
cheaper versions of its drug
Rescriptor in poor countries only.
Pharmacia, one of the world's largest drug companies, would license
Rescriptor to the nonprofit International Dispensary Association of the
Netherlands. In turn, the association, would line up generics manufacturers
to produce the medicine for use in as many as 78 poor countries.
In a novel tactic, the Pharmacia agreement with IDA would stipulate that the
medicine, known generically as delavirdine, be a different shape and color
from the original pill. This
distinction would make it easier for customs officials and other authorities
to crack down on illegal shipments back to the U.S. and other developed
The pact is an effort to make essential medicines available at reduced prices
in the developing world while protecting the economic interests of brand-name
drug makers in their
profitable home markets. the program's developers see this as a model that
could be applied to a broad range of essential medicines and hope that other
drug makers will follow Pharmacia's lead.
"The key is to make some things happen," said Fred Hassan, chairman and chief
executive of Pharmacia, based in Peapack, N.J. "It may not be the perfect
solution, but we're trying to do
something instead of debate."
The architects of the agreement describe the new model -- but not the role
that Pharmacia will play, which is expected to be unveiled at the World
Economic Forum in Davos, Switzerland
-- in a paper being published Saturday in the British medical journal Lancet.
Until now, branded drug makers have generally resisted calls to license their
patents to poor countries or to generics makers, either voluntarily or by
compulsion. They fear setting a
precedent that would erode profits if cheap medicines from the developing
world are diverted to key industrial markets.
Merck & Co., Bristol-Myers Squibb Co. and GlaxoSmithKline PLC, among others,
have offered discounted or free medicines to developing nations, but the
programs haven't met the needs
of tens of millions of patients dying from HIV/AIDS and some other diseases.
Under the Pharmacia approach, drug patent holders would award nonexclusive
licenses to generics makers for sale of cheap, faithful copies of key drugs
only in the poor countries where they are urgently needed. Generics makers
would pay a royalty to the patent holder, 5% in the Pharmacia case, and would
be encouraged to compete on price. Generics makers would be
prohibited from selling against the patent holder in developed markets,
however, thus preserving profit incentives for the branded drug industry.
Rescriptor prevents HIV from entering the nucleus of white blood cells and is
used in combination with other AIDS drugs. It currently costs more than $300
a month in the U.S.; the generic version is expected to cost considerably
Pharmacia has little to lose by serving as a guinea pig in the experiment.
Several years ago the company made a strategic decision to emphasize drugs to
treat illnesses other than HIV/AIDS and hasn't promoted Rescriptor actively
or pursued research of related medicines. In 1999, in the U.S. and some other
markets, Pharmacia licensed Rescriptor to Agouron Pharmaceuticals, now a
division of Pfizer Inc. Sales of Rescriptor in the developing countries where
Pharmacia kept its rights are so low the company hasn't been required to
disclose them and they aren't immediately available, a spokeswoman said.
Details of the contract between Pharmacia and the Dutch nonprofit are still
being hammered out, but the parties said they expect to reach an accord
within weeks. Henk den Besten, managing director of the group, said several
generics makers already have expressed interest in participating, but he
couldn't predict how long it would take for the first medicine to reach
patients. The group has a 30-year record of having generic medicines produced
and then getting them into the hands of doctors and patients in developing
A potential advantage of the new plan would be faster, better production of
generic drugs, which has been a stumbling block in developing nations. Under
the friendly technology transfer, generics companies would receive know-how
beyond the patent,
such as manufacturing expertise and data that would be useful in registering
the products with national regulatory authorities. The voluntary approach
would also eliminate delays from legal fights.
If Pharmacia's compromise spurs imitation, it could mute some protests by
activists who say rich companies haven't adequately responded to the growing
Pfizer, in a written statement, said it welcomes the path described in the
Lancet paper for licensing patented drugs to generics makers and supports
Pharmacia's plans for Rescriptor. Pfizer's support is crucial since the New
York-based drug maker is expected to close its $55 billion deal to acquire
Pharmacia later this quarter.
A spokesman said London-based GlaxoSmithKline "doesn't count out generics
companies" and is prepared to let them make its products subject to certain
conditions. He couldn't comment on the specifics of the Lancet paper or
Pharmacia approach because he hadn't seen them. GlaxoSmithKline makes several
HIV drugs, and has offered them at cost to countries in need. The drug maker
also has given a license for some HIV drugs to Aspen Pharmacare, a South
African generics maker.
Amir Attaran, a Harvard University lecturer, matchmaker for the Pharmacia
deal and co-author of the Lancet paper, believes that defusing the arguments
over patents could shift attention to the bigger problem: the shortage of
funding for the humanitarian efforts and health-care development needed to
save the ill. "An enormous debate has raged over patents and
access," he said, "however, it has crowded out the debate over things such as
financing." With a new approach to licensing, he hopes, the world can now
discuss "the elephant in the living room: that nobody is prepared to pay for
the medicines and therefore people will die by the millions" unless action is
-- Mark Schoofs contributed to this article.