Drug Makers Drop South Africa Suit Over AIDS Medicine

Pretoria, South Africa — Bowing to mounting public pressure, the pharmaceutical industry today dropped its legal effort to prevent South Africa from importing cheaper anti-AIDS drugs and other medicines. 

All 39 drug makers that had sued South Africa in 1998 conceded today that a South African law allowing the government to purchase brand- name drugs at the lowest rates available anywhere in the world complied with international trade agreements. During its three-year fight, the industry had closed factories here, canceled investments and said that health officials were intent on destroying international treaties intended to protect drug patents — an issue that has created a clash with AIDS activists.

But in ending its legal efforts today, the companies agreed that the law could be enforced as written, and said that they would pay the government's legal costs. The companies that began the negotiations that led to today's settlement were Bristol- Myers Squibb and Merck, both of the United States, GlaxoSmithKline of Britain, Hoffmann-La Roche of Switzerland and Boehringer Ingelheim of Germany.

News of the deal sent government supporters dancing through the courthouse, popping bottles of champagne and juggling messages of congratulations from former President Nelson Mandela and Secretary General Kofi Annan of the United Nations, both of whom had called on the companies to drop the case.

The decision was expected to embolden other developing countries that have also been calling for cheaper drugs to deal with the spreading AIDS epidemic. But for today, the attention was on South Africa and its thousands of supporters who had marched through the streets here and abroad in recent weeks demanding cheaper drugs for the developing world and an end to the lawsuit.

"Obviously, this is a victory for all of us," Dr. Manto Tshabalala-Msimang, the South African health minister, said at a news conference this morning. "We hope our experience has contributed in some way to the larger debate on access to affordable health care for developing countries and for the poor in wealthier nations."

The settlement was expected to help repair the image of South Africa, which was pilloried last year when its president, Thabo Mbeki, questioned the safety of anti-AIDS drugs and whether the virus H.I.V. actually caused AIDS. And it also reflected the unexpected strength of an unlikely coalition of American advocates for AIDS patients, European doctors, African officials and lawyers. In recent weeks, they had marched, protested and highlighted the images of poor Africans who were dying because they lacked AIDS drugs that were readily available in the West.

Still, the most sweeping aspects of the South African law will not take effect for several months and it seems unlikely that they will dramatically improve access to AIDS drugs in this country, which has more people infected with H.I.V. than anywhere else. 

In December, the United Nations reported that 25.3 million people in sub-Saharan Africa — the bulk of all cases in the world — had AIDS or H.I.V, the virus that causes AIDS. Last year, 2.4 million in the region died of AIDS. Some 250,000 died here in South Africa.

The government says brand-name AIDS cocktails are still too expensive, even those that are sold more cheaply outside of South Africa, and advocates for AIDS patients fear that President Mbeki's misgivings about the safety of drug cocktails routinely prescribed in the West may slow the way forward. 

"It's a huge symbolic victory," said James Love of the Consumer Project on Technology, an advocacy group that works to push down the price of drugs. "But it's probably much less of a substantive victory than people realize."

In February, as pressure built on the pharmaceutical industry, the United States, once the industry's staunchest ally in the case, reiterated that it would not seek sanctions against poor countries ravaged by AIDS, even if American patent laws were broken, so long as the countries abided by international treaties governing intellectual property.

In March, as thousands of people demonstrated here in support of South Africa's law, several drug companies slashed the prices of their AIDS medicines to levels unimaginable even two months earlier. 

And this month, when the criticism of the companies continued unabated, the chief executive officers of five of the world's biggest drug makers called Mr. Annan of the United Nations and asked him to contact President Mbeki to help broker a deal, one of the executives said. 

The writing was on the wall: The European Union, the World Health Organization and France's National AIDS Council, among many others, had all publicly lined up to support South Africa's position in the lawsuit. 
"We don't exist in a vacuum," J. P. Garnier, chief executive of GlaxoSmithKlein, said in a telephone interview from Philadelphia. "We're a very major corporation. We're not insensitive to public opinion. That is a factor in our decision-making. 

"We don't want the public to misunderstand the issues," said Mr. Garnier, who was the executive nominated to call Mr. Annan two weeks ago. "We have never been opposed to wider access. We have discounted our drugs. We've done everything we could. Frankly, the legislation was the worst distraction. It did not allow us to communicate our message effectively."

The South African law that the drug companies were fighting — known as the Medicines and Related Substances Control Act — was passed in an effort to reduce the prices of most medicines by eliminating price mark-ups and encouraging the use of generic drugs. (South Africa cannot currently import generic AIDS drugs, although an Indian drug maker is seeking special permission from a patent commission to do so.)

The law forbids drug companies from offering cash, vacations or other incentives to doctors who prescribe their drugs. It requires pharmacists to tell customers when a cheaper generic exists and requires them to sell that medicine unless the doctor or patient forbids it. 

The law has been closely associated with AIDS drugs, but in practice, it will likely achieve far less on that front than many had hoped.

Only about 10,000 people are currently believed to have access to anti-AIDS drugs here. But with companies reducing prices and the new law opening the door to new markets, that number is expected to jump to as many as 100,000 by next year. 

But the United Nations estimates that some 400,000 people are currently in need of antiretrovirals and most of them will still die without the life- sustaining pills.

During the past two years, the price of anti-AIDS drugs in Africa have plummeted to $1,000 a year per patient for patented drug cocktails ($600 for generic copies) from $10,000, according to officials at the World Health Organization.

Hemant K. Shah, another industry analyst, said he doubted that given the drug industry's experience in South Africa that it was unlikely that drug companies would attempt a similar lawsuit in the future. 

"This has been a public relations disaster for the companies," Mr. Shah said. "The probability of any drug company suing a developing country on a life-saving medicine is now extremely low based on what they learned in South Africa."

With the court case resolved, AIDS experts are hoping that the government, drug companies and activists will focus on raising money for antiretrovirals and upgrading the health care system. 

Under the settlement, government and pharmaceutical industry will collaborate in the writing of regulations for the most contested sections of the Medicines Act. The health minister, Dr. Tshabalala-Msimang, talked of "starting on a very clean slate." She promised to work closely and constructively with the drug companies.

As the courtroom cleared, the health minister's comments were cheered by Prudence Mabele, 29 and H.I.V. positive, though she confessed that she still had doubts about whether she or any infected people would actually benefit from the settlement.

"I would like to trust," she said, after she had finished dancing with the celebrators this morning. "But we must see. I want to see the drugs."