SHANGHAI--Infected people like Wang Baoliang don't understand why domestic pharmaceutical manufacturers have spent years exporting lifesaving generic HIV/AIDS drugs when he's dying for lack of affordable treatment.

Beijing has frequently touted its economic impotence in offering AIDS sufferers anything other than traditional herbal remedies to alleviate their more minor symptoms. With only 320 of the approximately 30,000 people officially registered with the disease receiving protease inhibitors, how could the government offer treatment to the 1 million estimated unregistered sufferers or the 10 million infected people the United Nations predicts in China by 2010?

With western multinational pharmaceutical giants holding patents for AIDS cocktails costing as much as US$12,000 per year, and the average peasant's annual salary only 2,360 Yuan (US$285), what was a poor developing country like China -- an eager new World Trade Organization member with a bad reputation as the world's Mecca for producing fakes -- to do, if it was to remain attractive to investors?

Early on, the plan was to use carrot and stick incentives with western drug firms, hoping engagement would help them bargain sufficiently inexpensive prices so that they wouldn't have to take drastic, patent-breaching measures.

Beijing stayed silent at the November 2001 WTO meeting in Doha, Qatar, when Indian and Brazilian negotiators were busy winning an aggressive campaign for a 15-year grace period in implementing the Trade Related Aspects of Intellectual Property Rights (TRIPs) protocols, giving developing countries the right to break pharmaceutical patents to address urgent health crises until 2016.

Stemming from a controversial 1994 decision at the Uruguay WTO talks, TRIPs required all member countries -- regardless of their stage of economic development -- to automatically extend the pharmaceutical patent protections enjoyed by wealthier member countries. The debate has brought developed and developing countries head-to-head in an ethical debate.

It is easy to understand why western pharmaceutical companies might
cringe at the thought of developing countries formulating generic versions of drugs they have spent hundreds of millions of dollars to research, develop and establish patent protections for.

But negotiators from developing countries attending the meeting in Doha argued that patent protections ultimately relegate the poor -- by and large the biggest victims of public health epidemics -- to death, simply because they can't afford expensive treatments.

Although the 15-year grace period gives developing nations the freedom of additional time and breathing room before implementing the TRIPs provisions, China has been torn between its growing AIDS epidemic and the crucial need to bolster its economy by appeasing foreign investors.

To be fair, although China was reticent to make waves as a freshman in Doha, it was beginning to lift the lid on its tightly veiled AIDS crisis by concurrently hosting the nation's first international conference on HIV/AIDS.

Wang Baoliang -- a gaunt middle-aged man with sunken eyes -- risked inevitable detention to travel from his hometown in Henan Province's Cuixian County to Beijing during the conference, protesting the government's failure to alleviate his village's AIDS epidemic.

"The scariest thing is having no treatment," sobbed Wang with palpable anguish. At this underground meeting organized for Henan AIDS villagers by activist Dr. Wan Yanhai and aimed at helping infected people marginalized by the disease have their voices heard, nearly everyone was crying.

Like the majority of adults in Cuixian County and throughout similar 'AIDS villages' around China, Wang Baoliang was infected through government-sponsored for-profit blood sales in the mid-1990s. He fears the lack of medication means not only that he will die from the disease, but also that his children will become forgotten orphans.

In the face of this quagmire, the director of China's Department of Disease Control Qi Xiaoqiu baffled nearly all punters last September when he said Beijing "could not afford to wait any longer" to negotiate affordable prices with western drug firms. Just as advocates for people with HIV/AIDS were starting to breath a sigh of relief that Beijing was having a change of heart and would take advantage of the TRIPs grace period, Qi retracted his statement the very next day, disavowing he had ever done so much as to imply the mere consideration of breaking pharmaceutical patents.

So, if the problem of patented medications is truly so cumbersome, how was Northeast China Pharmaceutical Group able to secure the State Drug Administration's (SDA) approval last August for Kedu, a knock-off that the drug's production manager Chen Ying confirms is 'virtually identical' to GlaxoSmithKline's AZT?

Actually, patents had almost nothing to do with Northeast's delay in producing medication, noted the firm's patent manager, Wang Xuzhen. She explained, "Only a portion of the original AZT medication was ever patented in China, and those protections expired about six years ago."

"We could have been making medicine for Chinese all along; the problem was that we perceived AIDS as a foreigners' disease," Wang admitted.

According to Edward Lehman, a partner at Beijing-based Lehman, Lee & Xu, a law firm that specializes in patent and trademark issues, only a handful of western drugs have ever enjoyed legal patent protection in China. There was no patent law in China before 1985 and pharmaceuticals -- including AZT -- couldn't receive patent protection until 1993.

Lehman said, "After 1993, only a handful of western drugs were patented in China because, with worldwide patent protection costing US$1 million a year, companies felt there was no point wasting their money on patent protection in a country whose legal system they had no confidence in."

In the absence of a legal patent, although the Chinese government offered western pharmaceutical companies administrative protection for their drugs, infringements of patents were so difficult and costly to remedy that loopholes were always open if the government wanted to take advantage of them.

Fu Xiaoqing, one of Lehman, Lee & Xu's specialists in pharmaceutical patents, explained extensive innovation, design and utility patents in every conceivable jurisdiction are needed to completely bar the production of generic copycat drugs. "This means that if an AIDS drug is process patented only in tablet form, another firm could produce it in crystalline form. They could also take a medication like aspirin with a use patent on headaches and produce it generically for reducing fevers," Fu said.

Taking advantage of these loopholes -- not tied to patent expiration but creative marketing and production -- is exactly what Shanghai-based Desano Pharmaceuticals did in order to secure SDA approval for Didanosine (DDI), Stavudine (D4T) and Nevirapine (NVP) last September and October.

"It wasn't until November 2001 that the Chinese government told us there wasn't a patent problem," confirmed Desano's assistant general manger Zhang Junjie, a pharmacologist by trade.

Zhang explained that with DDI, "The biggest difference is that Bristol-Myers Squibb uses a calcium carbonate and magnesium stomach buffer, while we're using citrate phosphate." Neither D4T nor NVP ever had utility patents, process patents or administrative protection in China.

Following Desano's anticipated SDA approval to produce AZT, Zhang says the firm plans to produce two separate cocktails, both using DDI and NVP, plus either AZT or D4T, depending on patients' tolerance levels.

Aside from these four medications, Zhang says every other western AIDS drug medication enjoys complete discovery, process and utility patent protections in China until about 2006. "We have now exhausted all of our options for producing generic medications unless the government either negotiates lower prices for patented medications like Efavirenz (EFV) or takes advantage of the TRIPs grace period."

Although Desano is only now just turning its attention toward the mounting need for inexpensive antiretroviral medications inside China, the company has been actively engaged in exporting HIV drug components to India and Brazil since the firm's founding in 1996.

Consequently, it was not surprising to find executives from the Indian drugs firm Cipla in an adjacent conference room discussing the firms' ongoing partnership in formulating combination tablets that cost Indian patients on the subcontinent about US$300 a year.

"While we have seen great progress in the Chinese government's attitude towards HIV/AIDS, they have yet to force the issue of ensuring our population has access to medicine as well as countries like India and especially Brazil have," Zhang openly admitted. He added, "The bottom line is that China would have plenty of inexpensive and effective AIDS medications if the disease was enough of a priority."

Compared to Cipla's medication, Zhang anticipates Desano's cocktails would cost 3,000 to 5,000 yuan (about US$363 to $605) per year. He says they have the production capacity to manufacture AIDS cocktails for 500,000 people annually.

But in China, where doctors are underpaid and their salaries are inextricably linked to the medications they prescribe to patients, Zhang conceded the cocktails' true cost to patients is hard for anyone to predict.

"We hope the hospitals don't raise the prices -- at least not more than five to 10 percent -- because these medications shouldn't be looked at as a source of potential profit," said Zhang.

The true cost of the drugs is fundamental to the debate, considering the vast majority of Chinese have no medical insurance. Even for Zhang, an executive at one of China's most prestigious pharmaceutical firms, his insurance plan only covers 280 yuan (US$34) of medical expenses per year.

Few would deny that having more inexpensive, generic drugs on the market is an important part of providing China's growing population with HIV/AIDS affordable medication. But for most Chinese -- like Wang Baoliang -- 3,000 to 5,000 yuan a year is still too expensive.

Ideally, Zhang believes the best way to circumvent doctors and hospitals inflating the cost of AIDS drugs would be to sell them directly to the government, which in turn could dispense them directly to patients.

"I would like to say it is enough that my firm can produce enough drugs for about half of the HIV-positive people we believe exist in China," said Zhang. "But the reality is that without government partnership and support for low-cost anti-retrovirals, our company's efforts will be marginalized."