Image copyright Getty Images Image caption World Health Organisation guidelines allow the global sale of the drug for a discount
Drug giant Pfizer is to allow the manufacture and sale of its HIV drug without the price tag of more than $10,000 (£7,000) a year.
The company has announced it is to introduce a ‘generic version’ of its blockbuster HIV drug, called Sustiva.
Its price is due to be cut to just $3,200 in developing countries.
The announcement is part of an agreement between Pfizer and the drug manufacturer, Gilead Sciences, over their patents.
While patents currently need to be strictly enforced, the practice is to allow companies to license their patents to other companies in return for allowing the generic manufacture of their drugs.
Gilead will manufacture the cheaper version of Sustiva and distribute it to developing countries at a cost of $3,200.
The drug will be sold for $1 in certain African countries and will be free of charge for people in most parts of Europe and the US, including Puerto Rico.
In developing countries, AIDS drugs are usually less expensive as the real cost of manufacturing is cheap labour and low production costs.
Pfizer has found that Sustiva, which was originally manufactured by the company GlaxoSmithKline, costs much less than it does in the USA and Europe, making it more affordable for developing countries.
Companies patent their medicines for years – Pfizer has been granted 52 patents for Sustiva – making it rare to have access to the generic version of the drug.
When such a rare opportunity for the cheaper generic version emerges, companies are usually forced to license their patents to other companies.
After the drug is licensed for sale, the patented drug costs far more.
In 2016, for example, the company announced a cut in prices for Pfizer’s HIV AIDS drug Tyzeka to $1,200 a year from $5,000, but Gilead still charged $3,000 a year.
Now a year later, Pfizer and Gilead have decided they both want to participate in ‘commonly accepted common decency standards for a fair license’, with an effective price for Sustiva of $3,200 – far less than the prices paid in the USA and Europe.
The cut in Sustiva prices will benefit 200 million people around the world who currently cannot afford the US patent price.
Gilead will finance the manufacturing of a generic Sustiva in India and manufacture it globally and it is expected that there will be no revenue sharing.
The decision by the two companies follows the signing of a new free trade agreement between the EU and India in September.
European Free Trade Association Member states Ireland, Portugal, the UK and the Netherlands – known as the EU-India Trade Partnership Agreement – will allow patent licenses for generic drugs that are in high demand across the world.
This will allow Gilead to produce the cheaper version of Sustiva at a cost much cheaper than the USA and Europe.
Since the agreement came into force, Indian pharmaceutical company Natco has already launched a generic version of Sustiva, selling it for $3,200 in 2016.
Unlike the USA and Europe, Indian patents do not have specific provisions for the import of low-cost medicines under ‘country of origin’ regulations.
At the start of this year, Indian Prime Minister Narendra Modi’s government eased rules on importing generic drugs manufactured in India.
People will increasingly see prices come down and access to life-saving medicines improve in countries with more liberal policies, so that the AIDS epidemic will be better controlled, regardless of which company produces the drugs.