LONDON, Sept 21 – Makers of generic AIDS drugs will start churning out millions of pills for Africa containing a state-of-the-art medicine widely used in rich countries, after securing a multi-million dollar guarantee that caps prices at just $75 per patient a year.

Global health experts hope the deal will help address two looming problems in the HIV epidemic - the rising threat of resistance developing to standard AIDS drugs, and the need for more investment in manufacturing capacity.

Bill Gates' charitable foundation will guarantee minimum sales volumes of the new combination pills using dolutegravir, a so-called integrase inhibitor that avoids the drug resistance that often develops with older treatments.

In return the drugmakers, India-based Mylan Laboratories and Aurobindo Pharma, will agree the maximum price of about $75 per patient for a year's supply - less than the list price for one day's supply of a dolutegravir combination in the United States.

The agreement, which will make the treatment available to 92 poor countries, starting in Africa, will be formally announced during the United Nations General Assembly in New York on Thursday.

"We need to make that guarantee because (of) the fixed costs of everybody gearing up to make high volume," Gates told Reuters in a telephone interview. "That just wasn't going to happen unless we put forward a very substantial volume guarantee."

The Bill & Melinda Gates Foundation's pledge is a central plank of a new partnership - the largest of its kind in global health - that also includes the governments of South Africa and Kenya, the Clinton Health Access Initiative, and American, British and U.N. agencies.

Under the deal, Mylan and Aurobindo will ramp up availability of a new fixed-dose combination of tenofovir disoproxil fumarate, lamivudine and dolutegravir (TLD).

Health ministries and other public sector purchasers will be able to buy TLD from next year at the capped price. The agreement could potentially save them more than $1 billion in drug bills over the next six years, the partners estimate.

As well as improving treatment, the drug combination should also reduce the need for more expensive second- and third-line drugs.

Treatment and resistance

Around 37 million people around the world are infected with HIV, according to the United Nations AIDS agency UNAIDS. Just over half of them - about 19.5 million patients - get antiretroviral therapy medicines to keep their disease in check.

That represents remarkable progress in the past 20 years, driven by the availability of a first wave of cheap generic drugs from Indian companies. But rising levels of drug resistance are now a growing concern, while low prices have cut the incentive for investment in generic drug-making capacity.

Dolutegravir pills used in the treatment of HIV are seen at the Kenyan ministry of heath offices in Nairobi, Kenya, June 27, 2017. Photo: Reuters

In six out of 11 countries surveyed recently in Africa, Asia and Latin America, researchers found that more than 10 percent of HIV patients starting antiretroviral drugs had a strain of HIV resistant to the most widely-used medicines.

Once the 10 percent threshold is reached, best practice calls for switching to different drug regimens.

Dolutegravir is already being used on a limited basis as a single drug in Kenya, Nigeria, and Uganda.

The drug was originally developed by ViiV Healthcare, the HIV business majority-owned by GlaxoSmithKline. ViiV has offered licensing deals to generic companies to sell low-cost versions of the medicine in poor countries.

Clinical trials have shown that treatment regimens including dolutegravir work faster, have fewer side effects and demonstrate greater potency against drug resistance than standard HIV drugs used in Africa and other poor countries.

The TLD combination pill developed by Mylan and Aurobindo has already received tentative approval from the U.S. Food and Drug Administration under the President's Emergency Plan for AIDS Relief programme.

In Western markets, makers of patented AIDS drugs, such as GSK and arch-rival Gilead Sciences, notch up billions of dollars of highly profitable sales each year.

But the picture is very different for low-price generic companies in India, which have very low margins.

"The market is always on the edge where these guys don't make enough money to stay in the business," said Gates.

With the HIV-positive population still growing - there were an estimated 1.8 million new cases of infection in 2016 - the number of patients needing treatment is steadily increasing.

Industry experts like Johnson & Johnson Chief Scientific Officer Paul Stoffels question the feasibility of maintaining lifelong treatment for a patient population that could reach 50 million.

"The people who are infected today will need therapy for the next 30 to 50 years, so the science of treatment has to evolve and the science of prevention has to evolve as well to stop the pool of patients growing," he told Reuters in a recent interview.