Statement of Bill Haddad, Chairman/CEO, Biogenerics, Inc. representing Cipla, Ltd. on AIDS medicines

June 7, 2003

In Lima Peru last Saturday (June 7) nine Andes nations and Mexico flatly rejected bids from the large multinationals companies (Roche, Merck, Glaxo) in favor of generic offers at the first ever "level playing field" permitting generics and brands to compete on the price and the quality of their medicines.

What also bit the dust was the so-called "Accelerated Access to Medicines Program" announced with great fanfare last year by Kofi Annan, the UN Secretary General, and conceived by his advisor, Jeff Sachs. Participating in the Kofi Annan "initiative" and lending their support to the program were WHO, UNAIDS, UNICEF, big Pharma, the U.S. government and the Ministers of the Caribbean nations.

Big Pharma got the headlines they sought: major companies reduce the price of ARV medicines by eighty percent.

Although Cipla had started the tidal wave towards lower prices...three hundred vs twenty-thousand dollars a a year per patient...and other generic companies followed, none were permitted to participate in the announcement and no mention was made of the generic actions that started the downwards spiral of prices. In effect, the generic companies were shutout. The result was a near monopoly in the Caribbean at ten times the generic price. That exclusion continued until last week.

When the campaign spread to Central America and the Andes, Cipla protested in Brussels and Geneva and although banned from the "Accelerated" meeting of Central American Ministers of Health in Panama City in January, the generic point of view was permitted an hour presentation but was prohibited from announcing its competitive prices and was banned from the press conference. The generic prices would undermine the objective of the meeting: Latin American headlines announcing that Big Pharma had cut its prices for AIDS medicines by eighty percent. They got their headlines; generic competition or generic prices were not mentioned or compared.

Several Central American Ministers, although they had signed the "Accelerated Agreement" said they wanted to hear the generic story. Local meeting were held and most will include generic pricing in their plans.

This Central American action helped to persuade the Andean nations to abandon the long planned Accelerated meeting with Big Pharma and invite generic companies to participate setting only one requirement: approval of their plants and products by WHO. Four generic companies participated in the Lima negotiations that ended on Saturday, June 7.

Participation was facilitated by the Pan American Health Organization and arm of WHO.

When the Pharma companies, with the exception of Abbott, refused to lower their prices to competitive levels, they were eliminated from the competition.

In removing formal and informal barriers to use of affordable AIDS medicines, the Andean nations and Mexico not only opened the door to competition in Latin America, but possibly throughout the world.

The Andean nations said that the negotiations had provided them with the savings (informally estimated at $170,000,000) to treat an additional 150,000 persons.

The Andean nations and Mexico said they had set a "reference price" based on generic competition and any company wishing to participate in their orders must either meet that price or offer a lower price. No higher bids will be considered. Suffice it to say the multinationals were stunned.

The discussions and negotiations prior to the decision were professional and focused on price and quality, product by product. After the general session at which the rules were explained, each company had a private audience with a committee composed of all of the participating nations.

At a second private session, each company offered its prices product by product.

Almost as important were the comments of the Ministers of Health. The Deputy Health Minister of Mexico summed up this way: "this is not about brands or labels. It is about people." All the other Ministers offered similar comment. The chairman, the Peruvian Minister of Health, said these nations could not sit on the sidelines while people were dying.

Each company whose bids were accepted will now negotiate with the nations represented at the Lima meeting.

With their heels dug in, it is doubtful that the multinationals, even when they they have and as they will...the behind-the-scences power of the U.S. Trade Office and the U.S. government, it is doubtful that they will be able to force these nations to reverse their decision. Either the multinationals offer a competitive price or they are excluded from the process. Tough statements by courageous Ministers of Health. To date, only Brazil has stood up to the multinationals.

(Look for a multinational statement attacking the process that was in preparation as the negotiations ended).

These actions may be the harbinger of how other nations, individually and collectively, will negotiate in the future. Prices are now set; they will soon be transparent and could serve as a reference point for countries that continue to be pressured formally and informally.

For further information these are the contacts:

Marie A. Euadros Ballou Press Secretary

Minister of Health, Peru



Bill Haddad

845-278-8800; 845-878-3046

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