The agreement between the Clinton Foundation and the drug companies aims to halve the cost of HIV/Aids diagnosis and lower the price of second-line anti-retroviral (ARV) drugs by 30 per cent or more.

"This is only the first step," Clinton said. "We expect to lower the cost of more second-line drugs later this year."

Clinton said the deal was a "step in the right direction", but he would like to see more of the world's biggest drug companies on board. The deal Clinton announced involves smaller companies.

"This agreement today can help to save hundreds of thousands" of lives, Clinton said.

First-line drugs are used in the earliest stage of treatment. When patients become resistant to first-line treatment, more-expensive second-line drugs are given.

About 250,000 people already benefit from first-line treatment resulting from Clinton Foundation agreements announced in 2003, the former president said.

8,000 die every day

Clinton said up to a million people could receive first-line treatment at reduced cost through the new initiative by the end of the year. "You're going to see an enormous explosion in 2006," Clinton said about the number of people receiving ARV treatment.

He said 40 million people are infected with HIV and 8,000 people die of Aids every day.

Four companies - Chembio Diagnostics, Orgenics, a subsidiary of Inverness Medical Innovations, Qualpro Diagnostics and Shanghai Kehua - will offer rapid HIV testing at half the current cost and provide results within 20 minutes.

Reducing profit margins

Clinton said that cutting the cost of the rapid tests would save "tens of millions of dollars" over the next four years.

Another four companies - Cipla, Ranbaxy, Strides Arcolab and Aspen Pharmacare - will offer the first-line drug Efavirenz, with ingredients supplied by Matrix Laboratories, at below-market rates. Cipla will also provide the second-line drug Abacavir at lower cost.

The drug firms involved will lower drugs costs by improving and modernising the production process, moving production to countries with lower labour costs and reducing profit margins
while increasing the volume of output, he said.