TIME: Almanac 1993/TIME Almanac 1993.iso/time/100289/10028900.002

Text File | 1992-09-23 | 6.7 KB | 129 lines

                úµ4                                                          BUSINESS, Page 81

How Much for A Reprieve From AIDS?


Accused of overcharging for AZT, manufacturer Burroughs
Wellcome defends the cost of the drug but cuts its price 20%

By Christine Gorman


    To someone suffering from AIDS, the drug AZT
(azidothymidine) can mean the difference between a precipitous
death and a few more months of hope. The drug blocks the AIDS
virus from reproducing, thereby cutting dramatically the amount
of virus circulating within the blood. At the same time, a
victim's ravaged immune system can replenish some of its chief
defenders, called helper T cells, which may double in number
during AZT treatment. Yet the drug has two notorious drawbacks.
One is its side effects, which can include severe anemia. But
the more bitter issue is its cost. A year's supply for a person
who takes twelve capsules a day has run upwards of $8,000. For
patients who lack full health insurance or other financial
resources, the chance to prolong life seems cruelly out of
reach.

    The high price of AZT, sold under the trade name Retrovir,
has become one of the most passionate controversies of the AIDS
epidemic. Activists have accused Burroughs Wellcome, the drug's
manufacturer, of taking unseemly advantage of desperate AIDS
patients. AZT, which is being taken by more than half the
42,000 people with AIDS in the U.S., ranks as one of the most
expensive drugs on the market. The debate comes at a
particularly crucial time for 7,000 AIDS patients who have
depended on federal help to buy the drug. The $20 million
program to provide them with AZT expires at the end of this
week.

    In its defense, the North Carolina-based pharmaceuticals
maker, a subsidiary of Britain's Wellcome P.L.C., cites the high
cost of research and development. In an attempt to defuse the
cost crisis, the company said last week that it will cut the
wholesale price of AZT 20%, to $1.20 a pill. One reason the
company is able to do so is that the potential market for the
drug has grown substantially in recent weeks with the discovery
that AZT can help a far larger group. A Government study
released in August concluded that the drug, besides helping
people who have AIDS, can also postpone the appearance of the
disease in people who are infected by the AIDS virus but are not
yet ill. Since no other antiviral drug has been approved to
fight AIDS, the finding increases to 600,000 the number of
potential AZT customers in the U.S.

    While Burroughs Wellcome said it had been planning the cut
for some time, the announcement came on the heels of angry
protests. Well-organized AIDS activists condemned AZT's high
price at stock exchanges in London, New York and San Francisco,
chanting such slogans as "Be the first on your block to sell
your Burroughs Wellcome stock." Senate staffers in Edward
Kennedy's office began researching possible ways to nationalize
the drug by invoking a law, dating from World War I, that allows
the Government to revoke exclusive patents and licenses in the
interest of national security. And the House Subcommittee on
Health and the Environment launched an investigation into
possible "inappropriate" pricing of the drug. Burroughs'
decision to cut prices last week "is a good first step," said
Henry Waxman, the subcommittee's chairman. "But I think the
company can do better."

    Burroughs Wellcome refuses to disclose its profit on AZT,
but industry analysts believe it could range from a low of $25
million to a high of $100 million on this year's sales of $200
million. When the costs of overhead and continuing research are
factored in, "the average operating profit from all the sales
of Burroughs Wellcome is 20%. Though they have a 30% operating
profit margin on AZT, it's still within the bounds of the
pharmaceutical industry," says Jo Walton, who follows the
industry for Shearson Lehman Hutton in London.

    Critics argue, however, that AZT should not be subject to
the usual practices of the pharmaceutical industry. The drug was
first synthesized in 1964 by a Government-funded scientist in
Michigan who was searching for a cancer treatment. Although that
application never panned out, investigators at the National
Cancer Institute, along with scientists from Burroughs Wellcome,
discovered in 1984 that the drug blocks the AIDS virus from
reproducing. By some estimates, the help provided by the
Government scientists eventually allowed Burroughs to hold its
development costs to less than $100 million, in contrast to $125
million for the average drug.

    Yet in 1984 no one was manufacturing AZT, in part because
of the colossal expense of producing a drug that would be
helpful only to a relatively small group of people. Scientists
believed at the time that AZT would be effective only for those
suffering from full-blown AIDS, and they were confident that
more effective AIDS drugs would soon supplant AZT. As a result,
the Government invoked the Orphan Drug Act, a law passed in 1983
to give pharmaceuticals makers financial incentives to develop
treatments for rare diseases. The law allowed the Government to
give Burroughs Wellcome an exclusive seven-year license, to
commence when AZT reached the market.

    For its part, Burroughs Wellcome made some crucial
breakthroughs in developing AZT. The company designed and
executed a six-step manufacturing process to convert a key
ingredient, thymidine, a biological chemical first harvested
from herring sperm, into AZT. Contends company spokeswoman Kathy
Bartlett: "We're the ones who turned this useless chemical into
useful medicine."

    Even if Burroughs refuses to reduce its price further, some
patients may begin paying less for AZT treatment. Doctors are
discovering that combining the potent antiviral drug with such
other formulas as interferon (an immune-system booster) or
probenecid (an antigout drug) lowers the dose of AZT necessary
for effective treatment. In addition, people who are infected
with the AIDS virus but show no symptoms need only about half
the full-strength dose to slow the course of the disease.

    The desperate search for other AIDS treatments has not
flagged. Last week a group of San Francisco AIDS activists
announced the results of their highly controversial underground
test of Compound Q, a chemical derived from a cucumber-like
Chinese plant. Although many of the 34 patients tested with the
drug seemed to show marked improvement, three have died. The
deaths have not been directly attributed to Compound Q, but the
uncertain results proved once again how important AZT has become
to AIDS patients as a life- giving drug and a symbol of hope.