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The battle over the price of AIDS medications in Africa is focusing new attention on pharmaceutical companies' pricing practices for many drugs in the U.S. and around the world. 
AIDS activists have shifted their campaign for cheaper drugs beyond the impoverished sub-Saharan Africa nations ravaged by the disease. Adopting the slogan "Medication for every nation," they want prices lowered in Asian and South American countries where the cost of treatments for AIDS exceeds the ability of many people to pay. 

In the United States, where price relief for seniors is an intense political issue, activists view developments in Africa as evidence that prices of many medications are often irrational and arbitrary. 
"What we're seeing is that there is a lot of discretion in the way drugs are priced and there is a capacity for gouging that needs to be looked at," said Tim Fuller, executive director of the Gray Panthers, a lobby for seniors. 
A broader debate about drug pricing is exactly what pharmaceutical companies feared last May when they started ratcheting down the cost of AIDS medications in South Africa, which said last week nearly 25% of adults now carry the human immunodeficiency virus that causes AIDS. 
T

he companies maintain that they must charge high prices for new drugs in affluent nations to finance discovery and development of pharmaceuticals, which can cost as much as $500 million each to bring to market. 
Those claims have invited financial scrutiny of pharmaceutical firms, which, according to a study published last year in the New England Journal of Medicine, have a higher rate of return than any other industry. Add to that a recent Congressional Budget Office report that cited skyrocketing advertising expenditures as a contributor to higher drug prices, which are accelerating by 12.6% annually. 

Recent price cuts in Africa resulted from intense business and political pressures on an industry that has long resisted taking so dramatic a step. 
The immediate catalyst was last month's offer from Indian generic-drug maker Cipla to provide South Africa eight HIV drugs at rock-bottom prices. About the same time, South Africans protested a lawsuit filed by 39 pharmaceutical companies to prevent the country from buying cheap knockoffs of drugs still under patent protection. 

Bristol-Myers Squibb Co. said March 14 that it would sell two HIV drugs in Africa below cost and would not enforce the patent on one, Zerit, against generic competition. A week earlier, Merck & Co. said it would sell two drugs used to treat HIV, Crixivan and Stocrin, at cost in South Africa and more than two dozen other developing countries. 
The new pricing makes sub-Saharan Africa less attractive to generic producers, which would no longer enjoy a big price advantage over brand-name-drug makers. The effect of the price cuts on drug company profits is minimal, because poor nations haven't been big consumers of expensive AIDS drugs. Worldwide, AIDS medications account for only 2.5% of pharmaceutical sales. 

The cuts also were important in terms of public relations. 
"They did exactly the right thing," said David Galas, chief academic officer at the Keck Graduate Institute in Claremont and an expert on patent issues. "It was costing them too much in terms of their public image." 
Assessing the price cuts from a public health perspective is harder, Galas said. "It is impossible to say what impact they will have on the AIDS problem." 
Activists and the companies agree that substantial foreign aid is needed to help poor nations pay for the drugs, which are beyond the reach of many Africans even at reduced prices. An "AIDS cocktail" of Merck's Crixivan and Bristol-Myers' Zerit and Videx would cost $900 annually. In 1999, per capita income in Uganda was $1,060 and in South Africa $6,900, according to U.S. government data. 

Africa's AIDS problem isn't simply a matter of money. Its developing nations lack the medical infrastructure to distribute drugs and monitor patients, who must consume as many as 30 pills daily. Doctors must regularly check for side effects that can include pain and liver damage and measure the level of virus and T-helper white blood cells in a patient's system for signs the drugs are working. 

Studies have shown that even in the developed world, patients have difficulty sticking to AIDS drug regimes. In a study in Britain, one in four people taking antiretrovirals did not take them as prescribed. 

Pharmaceutical firms are reluctant to deal with nations with weak infrastructure for broad medical and economic reasons. Patients who take medications irregularly increase the odds that the AIDS virus will mutate to a drug-resistant strain, said Joel Hay, a pharmaceutical economist at USC. 
And there is the risk that AIDS medications will not reach patients in Africa but will be diverted to affluent nations, hurting high-margin sales. "It is a real dilemma," Hay said. "In poor countries, it is very hard to police where the drugs end up." 

Activists are refusing to allow the debate to focus solely on infrastructure. Health Gap, a coalition of AIDS patient advocacy groups based in Philadelphia, is lobbying Bristol-Myers to extend its offer to all developing countries and to Mexico. 

But Bristol-Myers said it targeted Africa because that is where 70% of the world's HIV-positive people live, and it has no plans to expand the offer. The company said it is negotiating sales with authorities in Ukraine, Barbados and some Central American nations at prices 90% lower than in the United States, a spokesman said. 
In the United States, the price of AIDS drugs is not an issue. The federal Ryan White Care Act, inspired by a boy who died of complications of AIDS contracted from a blood transfusion, provides money for patients who cannot afford antiretrovirals, which can cost $10,000 to $15,000 a year. But the government does not cover other drugs. 

Rising drug costs for seniors have become a political lightening rod, as lawmakers debate ways to help them pay medical bills. The Gray Panthers and other advocacy groups have accused big pharmaceutical firms of using loopholes in patent law to block low-cost generics, tactics the firms deny. Bristol-Myers is involved in lawsuits over patent extensions on its breast-cancer drug, Taxol, and its anxiety medication, BuSpar. 

The drug industry's concessions in Africa are whetting demands for reform. "Good public policy is not made on one disease alone," AIDS activist James Love of the Washington-based Consumer Project on Technology said in an Internet discussion group. "I don't think it is useful for any one illness advocate group to cut a separate deal for a handful of drugs and declare victory in terms of public health." 

Congress has taken small steps that would chip away at the pharmaceutical industry's pricing structure. Proposed legislation would allow wholesalers to import cheaper drugs from other countries, though there is no guarantee intermediaries would pass on savings to consumers. 
The industry contends such rule changes would undermine its ability to offer bargain-priced medications to the world's needy. 
"To offer these prices [in Africa], we have to be assured that we can retain our pricing structure in the West. We have to have a return on our investment that we can reinvest in discovery of new medicines," said Nancy Pekarek, spokeswoman for GlaxoSmithKline, which makes Combivir, a combination of AZT and 3TC that is typically administered with a third HIV drug. It sells in Africa at $730 for a year's worth compared with $6,200 in the United States. 

The alternative to tiered pricing is a single world price that would put vital medications beyond the reach of poor nations, said USC's Hay. 
"Corporations have a responsibility to make a profit, and if they are forced to charge the same price everywhere they will abandon poor countries completely," Hay said. "No one gets upset when people pay different prices for different classes on an airplane. Why should it be different for medical care?" 

The price cuts in Africa didn't come about suddenly. The Clinton administration, under pressure from AIDS activists as Al Gore's presidential campaign got underway, reversed its policy of enforcing trade sanctions against developing countries that ignored patent laws to import low-cost generic drugs. 

Having lost important political support, the industry last May announced the first in a series of price cuts on much-needed AIDS medications. Besides American firms Merck and Bristol-Myers, Britain-based GlaxoSmithKline, Hoffmann-LaRoche of Switzerland and the German firm Boehringer Ingelheim joined in the cuts. 

But negotiations with African nations moved slowly, and only Rwanda, Senegal and Uganda have agreements. Earlier this year, the Bush administration said it would continue former President Clinton's policy, dashing any hope the industry had of change. That, combined with offers from Indian generic-drug companies, set the stage for deeper price cuts. 

The cuts haven't eased the political pressure on pharmaceutical firms in South Africa. The European Parliament has adopted a resolution calling on them to drop a suit challenging South Africa's right to obtain low-cost generics. The suit has delayed implementation of a 1997 law that allows the country to import generics without permission of the patent holders. It also allows the government to license local companies to produce cheaper versions of patented drugs. 

Pharmaceutical firms said they must fight the law because it would permit generic competition for all drugs, not just AIDS medications. The trial is set for mid-April.