BUSINESS, Page 81How Much for A Reprieve From AIDS?Accused of overcharging for AZT, manufacturer Burroughs Wellcomedefends 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-
