Clinton Foundation Brokers Deal on Cheap Medicines

October 23, 2003
The Economist

AS PRESIDENT, Bill Clinton was famous for wheeling and dealing. More recently, some of that talent has turned to the fight against AIDS. This week, the William J. Clinton Foundation-a philanthropic body established in 1997-announced a new plan to provide access to anti-retroviral drugs for as many as 2m HIV-infected people in 13 countries in sub-Saharan Africa and the Caribbean by 2008. This is the same goal as was set in George Bush's AIDS plan for 14 countries, announced earlier this year.

The key to the Clinton plan is price. The foundation has brokered an agreement with three Indian companies-Cipla, Ranbaxy and Matrix-and a South African one, Aspen, to offer two key anti-retroviral drug cocktails for as little as 38 cents per person a day, or less than half the price of the most affordable drugs now available in some of the target countries.

The key, says Ira Magaziner, once Mr Clinton's health-care adviser and now chairman of the foundation's AIDS initiative, is to bring sound business analysis to the problem. Industry executives volunteered to pore over these companies' operations for five months, looking for ways to save on production costs while preserving quality. These savings have been passed along as lower final prices, with a small profit margin to keep companies interested.

The big pharmaceutical firms, such as GlaxoSmithKline, which last week cut the price of its own anti-retroviral medicine, Combivir, were invited to take part but declined. The attraction for a firm like Cipla, says Yusuf Hamied, its chairman, is that the foundation's scheme offers the possibility of high-volume, predictable contracts which encourage firms to increase production for otherwise uncommercial markets.

The next step is for countries to start buying. As part of its efforts to boost the health-care infrastructure of its target countries, the foundation has been helping governments raise money, and expects to see the new system put to the test by Mozambique and Rwanda in the next few weeks. Mr Magaziner says the foundation means to do the same for costly HIV diagnostics, and could extend its reach to other countries. If successful, it might even pave the way for cheaper drugs against other nasty diseases, such as malaria.

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