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An AIDS Drug Feud

Indian generic pharmaceutical manufacturer CIPLA is under attack for its prices in India

by Jean-François Tremblay
September 24, 2007 | APPEARED IN VOLUME 85, ISSUE 39

A curious feud has broken out between Cipla, an Indian generic drugmaker that is the leading supplier of AIDS drugs to international agencies, and the AIDS Healthcare Foundation (AHF), a U.S.-based nongovernmental organization (NGO) that operates a network of AIDS clinics and campaigns worldwide for more affordable AIDS drugs.

In ads printed in leading Indian newspapers last month, AHF accused Cipla of selling one of its AIDS drugs in India for twice the price Cipla sells it in Africa. The drug in question, Viraday, is a once-a-day cocktail of three antiretroviral (ARV) drugs. One of the drugs in the formulation is tenofovir disoproxil fumarate, a compound invented by Gilead Sciences that is protected by patents in many countries but not in India.

Cipla because it's the largest supplier of antiretroviral drugs," says Chinkholal Thangsing, head of AHF's Asia-Pacific bureau in New Delhi. AHF may attack other Indian generics producers in the future, Thangsing says, but it started with Cipla because "we can't go after many targets all at once."

Founded in Los Angeles in 1987, AHF has the motto, "Fight for the Living and Care for the Dying." It has repeatedly sued leading pharmaceutical companies around the world to force them to lower prices on their ARV drugs. AHF claims to be the largest AIDS organization in the U.S. According to its annual report, it operates 24 outpatient centers and pharmacies in the U.S. as well as 39 health care centers in developing countries, including India.

Cipla is probably most famous for its offer in February 2001 to sell a cocktail of ARV drugs to humanitarian organizations for less than $1.00 per patient per day. This groundbreaking action led to a flurry of initiatives by major drug companies to lower the prices of their ARV drugs in developing countries.

Today, in terms of the number of treatments it produces, Cipla is the world's largest supplier of ARV drugs. It is notably a leading supplier to the William J. Clinton Foundation, which buys Cipla drugs for distribution in developing countries. After Bill Clinton visited a Cipla plant in India last year, he commented that "Cipla's commitment to the expansion of care and treatment for people living with HIV/AIDS in the developing world is commendable."

Another major buyer of Cipla's ARV drugs is Doctors Without Borders (DWB). The group publishes an annual guidebook describing the various AIDS treatments available worldwide and the prices at which they are sold. AHF used the information in this guidebook to attack Cipla's pricing policy in India. Tido von Schoen-Angerer, the director of DWB's medicine campaign, tells C&EN that he's perplexed by AHF's attack on Cipla. Although Cipla did provide DWB with a quotation for selling Viraday in Africa, he says the company has, so far, only sold the product in India.

A drug can be sold at all sorts of prices, von Schoen-Angerer notes. Cipla, for example, adjusts its prices according to where a country sits in the United Nations Human Development Index. India ranks as a country that enjoys "medium" development, whereas many African countries are ranked as "low." In addition, von Schoen-Angerer says, groups that buy AIDS drugs for Africa tend to do so in huge quantities that may trigger a volume discount. Within India itself, he believes, drug companies sell at different prices to government hospitals, private hospitals, and NGOs.

AHF's Thangsing responds that whether or not Cipla actually sells Viraday in Africa is immaterial. The price that Cipla quoted to DWB is evidence of how low it can go. Thangsing says he'd like to see more clarity in Cipla's pricing policy. He adds that quantity discounts can be achieved in India merely by forming a buyers' group of several NGOs.

Thangsing says he does not know what price Indian public hospitals pay for the drugs they buy from Cipla. The government provides treatment for about half of India's AIDS patients. But he says it is obvious that Cipla charges conspicuously less when it exports to Africa than when it sells in India, even if quantity discounts in African orders are considered.

The Indian government has found some merit in AHF's allegations, which are being investigated by the Monopolies & Restrictive Trade Practice Commission.

When it put up its attack ads last month, AHF claimed it was endorsed by many Indian NGOs. One of the organizations cited is the New Delhi-based Love Life Society, a group that provides assistance to HIV-positive people.

Its director, Francisco X. de Melo, tells C&EN that he has a staff of five people and the help of 25 volunteers. The NGO has offices in hospitals and provides counseling services to illiterate AIDS patients in Delhi who have difficulty keeping up with the requirements of their drug regimens.

According to de Melo, many poor patients cannot afford Cipla's medicines, because the government does not provide enough support. Viraday, in particular, is a so-called second-line treatment that is not covered by government programs. As a result, de Melo says, he strongly supports AHF's campaign against Cipla.

Positive Women Network (PWN) is another group that is cited in AHF's ad as endorsing the campaign against Cipla. The NGO, based in the southern city of Chennai, provides support to HIV-positive Indian women and their children.

PWN Director Kousalya Periasamy tells C&EN that her group did not endorse AHF's campaign and that its name appears in the ad by error. She says she asked AHF not to include her group's name, but AHF responded that the ad had already gone to print. She adds that her group was formed with Cipla's financial help and that it still gets drugs from Cipla at reduced prices. "I told AHF that if they want to be against Cipla, I want nothing to do with this," she says.

Cipla has been outraged by AHF's campaign. Unidentified company executives told India's Economic Times newspaper that AHF is influenced by multinational drug companies. Cipla, opposed to the strengthening of pharmaceutical patent laws in India, has long been the bane of the multinationals. The paper further reported that AHF's treasurer, Gregg H. Alton, is also a senior vice president and general counsel at Gilead.

Gilead executives do have valid reasons to be ill-disposed toward Cipla. Whereas 11 Indian drug companies have agreed to pay a royalty to Gilead for the rights to manufacture tenofovir, Cipla filed a petition in February demanding that tenofovir not be granted patent protection in India, arguing that the drug lacks novelty.

The suggestion that its agenda is controlled by major drug companies has, in turn, infuriated AHF. Thangsing tells C&EN that it's an attempt by Cipla to divert attention from the fundamental issue of the price differential between the drugs it sells in Africa and India. In a statement in defense of its own integrity, AHF said, "It is not for sale to anyone, at any price." The statement also refers to legal actions the group had undertaken against various pharmaceutical companies. AHF's statement also noted that it opposes Gilead's request for patent protection for tenofovir in India.

Further illustrating AHF's divergence from the agenda of most major drug companies, AHF Communications Director Ged Kenslea tells C&EN that the group opposes "the pursuit of patents for lifesaving medicines by pharmaceutical companies in developing countries." AHF, he adds, supports the rights of countries to ignore drug patents when it is "necessary to protect public health."

As to why Alton, AHF's treasurer, also holds a senior position at Gilead, Kenslea explains that he serves as a volunteer member of AHF's board of directors. "AHF values the experience that he brings to the table and his oftentimes different, but welcomed, perspective as we try to navigate improving and expanding the availability of antiretroviral treatment globally," Kenslea says.

Yusuf K. Hamied, Cipla's chairman, declined to provide comments for this article. During a short telephone conversation with C&EN, he said it would not be appropriate for him to talk to the media because his company is preparing to sue AHF for damage to its reputation. AHF has confirmed that Cipla has threatened to sue it for $25 million.

With India's antitrust commission investigating AHF's allegations and Cipla apparently intent on suing AHF for making those claims in the first place, the feud between the two organizations will likely remain in the public eye for several more months. It's an odd battle for two natural allies in the fight against AIDS.



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