Globally, the ARV market accounts for less than 3% of pharmaceutical sales worldwide and Africa's portion of this has been negligible.
However, with the World Health Organisation's campaign to get three million people on ARV treatment by the end of this year (the 3-by-5 campaign), there has been a scramble to ensure improved supplies.
The US President's Emergency Plan for AIDS Relief (PEPFAR) has also made cash available for some of the continent's poorest nations to buy ARV drugs. PEPFAR is a five-year aid programme operating in Botswana, Cote d'Ivoire, Ethiopia, Kenya, Mozambique, Namibia, Nigeria, Rwanda, South Africa, Tanzania, Uganda and Zambia.
Initially, pharmaceutical companies preferred to offer cut price deals on ARVs to low income countries rather than lose ground to generic companies such as India's Cipla and Ranbaxy. In South Africa, for example, over the past five years a year's supply of ARVs has dropped from US 15,000 to 185.
Most cut-price offers cover first-line drugs, the standard package offered to patients. Second-line drugs for people who develop side-effects or resistance to the first-line drugs are significantly more expensive.
In addition, points out Andy Gray from the Nelson Mandela School of Medicine in South Africa, cut price deals have traditionally been negotiated on a product-by-product, country-by-country basis and the results have been kept confidential. Smaller countries with less negotiating power could end up paying more than others. Negotiated deals may also be time-limited.
ARV market leader GlaxoSmithKline (GSK) is one of a number of companies that now offers not-for-profit prices to governments and humanitarian organisations in over 100 countries.
Our not-for-profit prices are comparable with the cost of generic drugs,
GSK vice-president Dr John Dillon told a recent conference on AIDS in Africa.
Combivir, our leading antiretroviral, is available at US 65c per day including delivery costs. The February 2005 pricing report by Mdecins Sans Frontires shows that the average cost of generic equivalents is US 75c a day.
However, many pharmaceutical companies have run into a wall of regulatory and logistical problems when trying to sell their drugs in Africa. Most African drug regulators are poorly equipped to evaluate medicines and take a long time to approve new drugs. Kenya, for example, requires pharmaceutical companies to conduct local trials of their products before they can be licensed.
The endless red tape could be one of reasons behind the recent move of pharmaceutical companies to go beyond price-cutting and do deals with African generic manufacturers - predominantly with the South African-based Aspen Pharmacare, sub-Saharan Africa's largest generics company.
However, critics say that these deals are aimed at ensuring that the pharmaceutical giants maintain market control - by deciding who can manufacture their patented drugs and, to a large extent, how much they will cost.
GSK took the first step in 2001, when it granted its first voluntary license to Aspen for the manufacture and sale of versions of GSK's ARVs.
Last year, the company granted five new voluntary licenses to other African companies.
In April this year, Gilead Sciences agreed to give Aspen a non-exclusive licensing and distribution deal for Gilead's ARVs Truvada and Viread.
Gilead will provide active pharmaceutical ingredient to Aspen and transfer the necessary technology for tableting the products to Aspen's South African operations.
Aspen will supply the 95 resource-limited countries in Gilead's Global Access Programme, including every country in Africa. Aspen will also pursue regulatory approval for the products in the African countries where they are not already registered and will sell the ARVs at prices set by Gilead.
On announcing the deal with Gilead, Aspen CEO Stephen Saad said it showed how north-south collaboration can be used to provide solutions to some of the world's biggest socio-economic challenges.
In July, Merck's South African subsidiary, Merck Sharp & Dohme (MSD), granted a non-exclusive, royalty-free patent license for the manufacture and supply of a generic version of the ARV efavirenz (Stocrin) to Aspen.
MSD will continue to supply Stocrin to Southern Africa at not-for-profit prices.
However, there are concerns that these deals are aimed at ensuring the pharmaceutical brand leaders retain control over African markets rather than let generic companies in.
The advantage of generics is that they can combine all three ARV drugs into one or two pills to be taken twice a day - unlike branded drugs made by different companies. This makes it much easier for patients to take their medication.
In addition, it is far easier for countries with weak health systems to deal with one generic company rather than a number of different suppliers.
However, GSK's Dillon warns that while generic manufacturers have a role, it would be counter-productive to ignore or undermine the role of the research-based industry.
Existing medicines will become increasingly less effective as resistance to them develops, says Dillon. Intellectual property protection is of critical important to the research and development-based industry. If there is no intellectual property protection, there will be no research and development and without this, there will be no new medicines or vaccines.
There has been much debate about the role of generic ARVs in Africa.
AIDS activists were infuriated by PEPFAR's decision not to funds ARVs that did not have the approval of the US Food and Drug Administration (FDA).
This was seen as an attempt by PEPFAR to guarantee African markets for expensive patented brand-name drugs. However, the FDA has since approved a number of Aspen and Ranbaxy generic ARVs, although most PEPFAR projects have yet to get access to these generics.
According to one of the world's leading AIDS experts, Canadian virology professor Mark Wainberg, there have been many attempts to deliberately obfuscate issues relating to the use of generic drugs, which some portray as unsafe because they may not have met the same criteria for approval as brand-name products.
Wainberg points out that the WHO has set up a Prequalification Project which evaluates generic drugs based on bioequivalence data submitted by the companies to ensure that they are of good quality. Canadian, European, and Australian drug regulators are assisting the WHO to assess ARVs and inspect manufacturing premises
I believe that we should support the WHO initiative and move forward, with the understanding that efforts will be made to prove the bioequivalence of generic and brand-name products as soon as possible but that lesser standards may be acceptable in the short term, says Wainberg.
However, confusion has resulted in some African countries that don't recognise the FDA-approved PEPFAR drugs but do accept drugs that have been through the WHO prequalification process. The US has thus been urged to fall in line with the WHO, which should be providing global leadership on which ARV drugs are of acceptable quality.
Humanitarian organisation Mdecins Sans Frontires (Doctors without
Borders) identifies three essential factors to ensure lower ARV prices, namely government commitment to centralised procurement, overcoming patent barriers when necessary, and fostering generic competition.
The cost of treatment for the patient should never be a barrier, and that means treatment will have to be free for the majority of patients.
The cost of drugs is frequently cited as a reason for treatment interruptions, MSF's Dr Lulu Oguda told the US Senate Foreign Relations Committee Subcommittee on African Affairs at a recent hearing on AIDS in Africa.
While the pharmaceutical industry has co-operated with Africa in the fight against HIV/AIDS, there are still plenty of opportunities for better co-operation. The pharmaceutical giants can choose not to register its patents in poor countries which would ensure that generic manufacturers can simply make their own versions without securing voluntary licenses. In addition, they can help developing countries to develop their own technological capacity to manufacture drugs and drop the prices of second line ARV drugs. In the absence of these measures, governments facing AIDS crises are within their rights to issue compulsory licenses for patented drugs.