JUDY WOODRUFF: Next, a look at the company that makes Truvada, and the broader approach it's taking with AIDS drugs here and in poorer countries. Correspondent Spencer Michels reports for our global health unit.
MALE: That's yours and mine.
SPENCER MICHELS: For San Francisco advertising executive Jay Kerzner (ph), life is pretty good these days, considering he found out he was HIV positive 23 years ago.
JAY KERZNER: I considered it as a death sentence. Your life flips and it bothered me even to hear people laughing, it was that traumatic to me.
SPENCER MICHELS: When AIDS drugs came along, he and other patients took dozens of them a day; the regimen was complicated and confusing. And many of the drugs had serious side effects.
JAY KERZNER: I mean, you couldn't escape the daily diarrhea.
SPENCER MICHELS: But slowly, the pharmaceuticals improved and drugs were combined into easier-to-take cocktails. Kerzner, who is now 66, is taking just five pills a day, down from 20, and many patients are taking only one.
JAY KERZNER: I'm sure I wouldn't be here today if it weren't for the drugs.
SPENCER MICHELS: But those drugs can cost Kerzner and others more than $20,000 a year, paid mostly through insurance or government programs, prices far too steep for most people in low income countries to pay.
DR. PAUL VOLBERDING, University of California San Francisco: I want you to just turn around, let me listen to your lungs.
SPENCER MICHELS: Kerzner's doctor, Paul Volberding, was among the first physicians in the country to diagnose and eventually treat HIV/AIDS.
In 25 years, he has seen death rates plummet in the U.S.
PAUL VOLDBERDING: We typically expect people to live a normal or near normal lifespan even with HIV infection.
SPENCER MICHELS: But, he says, it's a far a different story in poorer countries.
PAUL VOLDERBING: In most parts of the world, that are really facing this epidemic, the people simply can't afford it. The governments don't have the money to provide the drugs, and AIDS kills you if you're not -- if you're not in treatment. So, in most of the world, people still die of this disease.
SPENCER MICHELS: Enter San Francisco Bay Area- based pharmaceutical company Gilead Sciences, which manufactures one of the world's best selling HIV drugs, Viread.
MALE: So, the idea is to get all the component costs down and you can get to a range where it is accessible everywhere.
SPENCER MICHELS: During a recent meeting, employees were discussing plans that might seem counterintuitive for a for- profit company: how to get their drugs distributed in poor countries for a fraction of the cost in the U.S.
Estimates are that 14 million people in the world today-- mostly in poor countries-- need antiretroviral drugs, and that number will increase to 55 million in 20 years.
Clifford Samuel is the company's vice president for international sales:
CLIFFORD SAMUEL, Gilead Sciences: Most of these countries are at a point where they truly understand that everyone is trying to help, and bring some degree of treatment to patients who are really dying fast in their countries.
SPENCER MICHELS: Samuel is leading Gilead's global access program, an innovative tiered pricing scheme that sells drugs at full price in developed countries, 70 percent to 90 percent less in middle-income countries like Brazil, and at no profit in the poorest nations. So, life-saving HIV drugs cost $100,000 to $200,000 a year in 130 of the world's poorest countries hit hardest by the AIDS epidemic.
Gilead has researched, tested and produced several key antiretrovirals, including Atripla, an effective combination of three drugs that is taken once a day.
Coming up with a new drug can cost $1 billion, which is why, the company says, the price in the U.S. and Europe is so high.
But lowering the price in low-income counties was simply the right thing to do according to CEO John Martin, who inspired the program several years ago and watched it evolve.
JOHN MARTIN, CEO, Gilead Sciences: We actually didn't even think of it as a decision, because as we went along in the drug development process, we knew we wanted to make it available. The idea that you would charge full price to the developing world left a long, long time ago.
SPENCER MICHELS: Gregg Alton started putting together Gilead's access program, at a time when most other companies were doing very little.
GREG ALTON, Gilead Sciences: We don't give the product away for free in any market. So, our program is not a philanthropy, it's a sustainable program. But we need to make sure we price the product so patients can actually use the drug. We make the product available at our cost. So, this is our manufacturing cost, the cost of distribution.
SPENCER MICHELS: In addition to selling its own drugs at cost, Gilead has also begun to license its formulas to Indian generic drug firms, which then sell the drugs for an even lower price, around $84 per patient per year.
GREG ALTON: We give them all the manufacturing know-how to make our product, allow them to make both the active pharmaceutical ingredient, which is the key component into the tableting, in India, sell it in India and to 94 other countries throughout the world.
SPENCER MICHELS: Most of the money to pay for the drugs comes from the U.S. and international donor organizations. And that's contributed to a huge increase, nearly a million HIV patients a day, taking Gilead's drugs, in the developing world.
GREG ALTON: I guess I wouldn't call it altruism. It's just doing what we're supposed to do, which is treat disease, you know? And where we do need profits to have our business model, and we do have profits, and we have very good profits. But in these markets we can't make profits.
SPENCER MICHELS: Not making a profit off of AIDS drugs or any drugs in poor countries is becoming standard for global pharmaceutical firms.
Most have accepted that they must recoup their research costs in the rich countries. Nevertheless, low cost drugs still are not reaching millions of poor people, says Sophie Delaunay of Doctors Without Borders.
SOPHIE DELAUNAY, Doctors Without Borders: You still have two patients out of three in need of ARV who don't receive ARV. So, we desperately need to get more medicine, to get new formulations, and to get lower costs and less expensive drugs for these people.
SPENCER MICHELS: One problem, she says, is that handing over drug formulas they've invented to generic drug makers goes against the grain for some companies.
SOPHIE DELAUNAY: I think they're still reluctant, and even though there is some greater awareness of the need to offer licenses and to diminish patent barriers, on the other hand, it's still - it's still very challenging to get drugs available.
SPENCER MICHELS:But other activists, like Ben Plumley are encouraged that companies like Viiv, a Pfizer and GlaxoSmithKline joint venture, have followed Gilead's lead. Plumley used to work in the pharmaceutical industry. Today, he is CEO of Pangaea Global AIDS Foundation.
BEN PLUMLEY, Pangaea Global AIDS Foundation: Back in the early days, at the end of the last century, I got to tell you -- it was really difficult, almost like getting blood out of a stone. This was absolutely opposite to the way they thought. You had one price, one global price, and if you couldn't afford to pay that price, you weren't investing as a government enough in your health care.
SPENCER MICHELS: Today, with more drug companies making ARVs available cheaply, there's a new hitch: those drugs can eventually become less effective as patients develop resistance. So patients in developing nations need other so-called second and third line drugs -- and those drugs, says U.C.'s Paul Volberding, need to be offered at discount prices as well.
PAUL VOLBERDING: The second and third line drugs are more expensive, and there has been a progress there as well in reducing the cost of those drugs. They're not as cheap as the first line drugs, but I think that's where the next battleground will probably be.
SPENCER MICHELS: For its part, Gilead says it will price the next round of drugs cheaply. And for their part, AIDS activists say they intend to keep the pressure on governments and drug companies, to insure that's where the next battleground will probably be.