BEIJING (AFP) - A family in central China's Anhui province has been awarded 45,000 yuan (5,430 US dollars) in compensation from a local hospital after their relative died after contracting AIDS during a routine surgical procedure, state press said.

The Anhui high court ordered the Fuyang Number Two People's Hospital to pay compensation to the family of Xia Zhenrong last week, Xinhua news agency reported Tuesday on its website.

Xia contracted HIV, the virus that causes AIDS, after a blood transfusion during a back operation in May 1995, the report said.

She launched her lawsuit against the hospital upon discovery in March 2002 that she had Acquired Immuno Deficiency Syndrome, for which there is no known cure. She died on May 20 of that same year.

"This is not the first case that a person contracting AIDS in a surgical procedure has sued and won in China," said Hu Jia, a director of AIDS Action Project, one of China's only non-government AIDS awareness groups.

"The award is way too low and is not enough to compensate the duress patients go through when finding out they have got AIDS, or the medical expenses already paid," he said.

Very few of these types of cases reach compensation level, he said, as the government usually chooses to hush up the cases by settling out of court.

There are roughly one million HIV-positive people in China, a figure that could increase ten-fold by the end of the decade, top government and international health officials have warned.

Hundreds of thousands of people were infected during a government-sanctioned, appallingly unsanitary blood-collection program in central Henan and other provinces in the 1980s and 1990s.

By Russell Flannery

Health care in China in many ways hasn't changed much since New York-born Roberta Lipson got there in 1979 to sell medical equipment for a small Boston company. She'd gone through college with an interest in the ancient culture of a country just then opening to the modern world. She remains in the field that gained her entrée, but with an eye very much to the future, not the past.

Medicine in her chosen land ought to be ripe for the new. The health system is still state-dominated and, as the panic surrounding the SARS epidemic has made clear, the level of care in most of the country lags behind that of much of the world. About three-quarters of its citizens have no insurance coverage, and China--forget SARS--boasts some of the world's worst problems with tuberculosis, hepatitis and, it is suspected, HIV .

Much has improved in the past two decades. Growing income in China's booming economy and rising educational standards have raised demand for common checkups, cosmetic surgery and dental and eye care among a new middle class of about 400 million.

SARS, if nothing else, illustrates that the government doesn't have the budget or personnel to provide for all of China's health needs. In the future private companies--domestic and foreign--will take a bigger part in everything from hospital services to drug distribution to health insurance. "We welcome a greater role for companies that can offset some of the relative weakness of the existing system," says Peter Zhang, a district health chief in Shanghai.

Lipson anticipated that early on, co-founding in 1981 with fellow American entrepreneur Elyse Silverberg their now-Nasdaq-listed company, Chindex International. At $71 million in sales last year, it provides lessons in how to work through China's "system"--a morass of rigid state-run hospitals, murky investment rules and a protectionist distribution web. Chindex sells to 2,000 of the biggest buyers of imported medical products and equipment in the country.

Chindex, for instance, is a key sales rep in China for Siemens medical equipment and distributor of skin-care lines for L'Oréal. Even as SARS was peaking in April, Chindex was rolling out Natural Formula creams, shampoos and deodorants made by Nesh Cosmetics of Israel. Later this year it plans to introduce a line of feminine products from U.S.-based C.B. Fleet.

But Lipson does more than equip and stock emergency rooms and medicine chests. Chindex started the nation's first private for-profit hospital in Beijing in 1997. It plans to open its second in Shanghai in the second half of this year.

The stakes in China's health care are big not only for industry entrants like Lipson's. If China can't convince foreigners that it has an adequate health system, the country's status as the world's No. 1 recipient of foreign direct investment ($53 billion last year) will be in jeopardy in the future. And successful reforms could also go a long way toward solving a key Chinese macroeconomic problem--what to do about its high savings rate, now at about 40%. That money, worth about $1 trillion, could drive economic growth if channeled into health insurance or directly into physician fees. Today most is on deposit at insolvent government banks that channel it to other hapless government companies.

Hope for change in health care is high because of fallout from SARS. Wu Yi, a feisty, no-nonsense protégé of retired Chinese economic czar Zhu Rongji, now leads China's health ministry. A former trade negotiator, Wu was named to the job in April, after the authorities in effect admitted to a botched coverup of the epidemic. Besides her solid reputation in government and pledges to spend more money ($350 million for poor areas this year), Wu is seen as important because she was also made vice premier and her clout will raise the political importance of the health ministry. She could lead the biggest overhaul of China's health care system in half a century.

The system needs it. Although China has opened up much of its economy in the last two decades, the vast majority of its 70,000 hospitals and clinics are government-run. Artificially low prices for medical visits encourage overprescription of drugs that are sold at in-house pharmacies. There are about 10,000 drug distributors, compared to about 100 significant ones in the U.S., according to research firms. "There's going to have to be a lot of consolidation and efficiency improvements in the whole industry," says Robert Pollard, general manager in China for London-based Isis Research, a health care market research company.

Lipson, 48, Chindex's CEO and holder of 13% of its shares, succeeds even in this environment with solicitousness toward her best accounts. The sole distributor of Siemens color-ultrasound products in China for more than a dozen years, Chindex impresses the German giant with an annual "users' event" attracting 600 clinicians from around the vast country. "They are very close to the customers, and you have to have been entrepreneurial in arranging financing and providing service all of this time to achieve that," says Steven Feinberg, head of Siemens' "medical solutions" division in China.

Customer knowledge helps with a chronic problem for nearly all businesses in China: collecting bills. A key to Lipson's staying power over the years has been her ability to roll with the bureaucracy in Chinese health care.

Chindex, whose Washington, D.C.-area base is a legacy of its origins in channeling American exports, today has a scant market capitalization of $11 million, even after its stock has doubled in the last six months. Few U.S. analysts follow the China-focused company, and profits have been choppy, despite sales that are clearly on an uptrend.

Chindex this year is expanding the number of products it sells to China's pharmacies. That's not easy right now because China largely doesn't allow foreign distributors to sell drugs through that channel. Hospitals that have been getting as much as 70% of their revenue from drugs don't like the gradually easing restrictions, but are being forced by Beijing to generate cash elsewhere.

Until drug sales are more readily allowed, Lipson will continue to use proxies: consumer goods such as skin-care items whose relatively high profit margins look good to druggists. "We need to bring more people into stores, and this is a good way," says Zhang Peijing, manager of a drugstore on Shanghai's swank Nanjing Road. The first floor of her store alone has displays of Natural Formula and L'Oréal items. Nearby lies a display case of ginger root and other traditional Chinese medicines.

By getting close to the pharmacies now, "we'll be right there" when WTO reforms kick in, says Lipson. Right now in Shanghai a common painkiller made in China by Roche sells for 10 cents a pill. Lipson wants to be a supplier of Western brands for that kind of relief, in addition to creams and gels. Sales of both potent prescription drugs and over-the-counter remedies are likely to grow as China overhauls its health reimbursement system in the coming years.

And then there's the ultimate vertical integration, hospital operations. From selling equipment, Lipson figured out early on that for customers seeking quality, the facilities themselves are largely a mess. In contrast, her Beijing United Family Hospital has big bay windows, color TV and modern equipment. Companies with affiliated health plans include Motorola and ConocoPhillips. Unlike what you see at local hospitals, patients don't wander around unaccompanied, rooms are cleaner, and sessions with doctors are longer and more private. "It's like getting treatment in the West," says Christian Murck, chairman of the American Chamber of Commerce in Beijing and managing director of the U.S.-based public relations firm APCO Worldwide. He knows firsthand because he's been a patient.

To get the hospital license, Lipson forged a joint venture with a minority investor, the Chinese Academy of Medical Sciences. Revenue last year climbed by 48% to $12 million. "We will prove our model successful," Lipson says. The hope is that success in Shanghai will pave the way for investment with a partner that will create a full chain. What about buying state-owned hospitals? Lipson says no thanks.

Other medical-service companies are looking at China. UK-based BUPA Health Care Asia has a local partner and an investment from JPChase to gain 70% stakes in eye-surgery centers in the eastern Chinese cities of Hangzhou and Nanjing.

Medical insurance? Cigna hopes to get a license for a joint venture with the China Merchants Group by the end of the year. But in that sphere, beware of false claims, says Stephen Harner, a Shanghai-based financial industry consultant. This is anything-goes China, after all. "Premiums are high because the insurers don't want to lose their shirts," Harner says.

By KIM CURTIS, Associated Press Writer

SAN FRANCISCO - Several hemophiliacs filed a lawsuit against Bayer Corp. and other companies, claiming they exposed patients to HIV and hepatitis C by selling medicine made with blood from sick, high-risk donors.

The lawsuit alleges the companies continued distributing the blood-clotting product in Asia and Latin America in 1984 and 1985, even after they stopped selling it in the United States because of the known risk of HIV and hepatitis transmission.

The lawsuit filed Monday in federal court seeks class-action status on behalf of thousands of foreign hemophiliacs who received the product, said attorney Robert Nelson. It accuses the companies of negligence and fraudulent concealment.

"This is a worldwide tragedy," Nelson said. "Thousands of hemophiliacs have unnecessarily died from AIDS and many thousands more are infected with HIV or hepatitis C."

Bayer rejected the claims, saying in a statement from its headquarters in Leverkusen, Germany Tuesday that it would examine the lawsuit and prepare its defense.

"Bayer at all times complied with all regulations in force in the relevant countries based on the amount of scientific evidence available at the time," the company said, adding that decisions made 20 years ago should not be judged by today's scientific knowledge.

Nelson said the lawsuit was filed in California because defendant Cutter Biological, now a division of Bayer, was formerly based in Berkeley. Several plasma donation sites also were located in the San Francisco Bay area, he said.

The lawsuit was filed less than two weeks after an investigation by The New York Times accused the company of selling old stock of the medicine abroad, while marketing a newer, safer product in the United States.

Bayer told Times it sold the old medicine because some customers doubted the effectiveness of a new version of the product, and because some countries were slow to approve its sale.

While the company said it acted responsibly and in line with the best medical knowledge at the time, Bayer and three other companies that made the concentrate settled 15 years of U.S. lawsuits from people who took the drug, paying about $600 million.

The medicine, called Factor VIII concentrate, can stop or prevent potentially fatal bleeding in people with hemophilia.

Early in the AIDS epidemic, the medicine was commonly made using mingled plasma from 10,000 or more donors. Because there was not yet a screening test for HIV, the virus that causes AIDS, thousands of hemophiliacs were infected.

But the lawsuit alleges Bayer and the others refused to take precautions that could have made the product safer.

As of 1992, the contaminated blood products had infected at least 5,000 hemophiliacs in Europe with HIV. More than 2,000 had already developed AIDS and 1,250 had died from the disease, the lawsuit said.

By the mid-1990s in Japan, hemophiliacs accounted for the majority of the country's 4,000 reported cases of HIV infection and virtually all infections of Japan's hemophiliacs have been linked to contaminated blood products imported from the United States, the lawsuit said.

In Latin America, at least 700 HIV cases are linked to use of contaminated blood products by hemophiliacs, the lawsuit said.

Steve Sternberg USA TODAY

WASHINGTON -- Health and Human Services Secretary Tommy Thompson said Tuesday that the United States has stepped up pressure on other countries to follow the nation's example and boost funding for global AIDS programs.

AIDS advocates, however, say the United States should do even more, criticism Thompson brushed aside.

''We are active players, we are going to continue to be active players, and we want other members of the world community also to shoulder the burden,'' Thompson told reporters on the eve of his first board meeting as chairman of the Global Fund to Fight AIDS, Tuberculosis and Malaria.

He said the European Commission has finally made good on last year's pledge to supply the fund with 60 million euros (roughly $70.5 million) and has agreed to add another 375 million euros (roughly $440.8 million) over the next five years. ''Hopefully, they will increase it again,'' he said.

More than two decades into the AIDS epidemic, the disease is still spreading. Roughly 40 million people are infected with HIV worldwide, and 14,000 people becoming infected each day.

Although AIDS advocates praise President Bush's five-year, $15 billion AIDS initiative, they note that Bush asked Congress to supply just $1.7 billion of the $3 billion he had pledged next year for government-sponsored AIDS in his State of the Union address.

Most of the $1.7 billion will be used to treat up to 3 million people with anti-HIV drugs, 10 million with other types of drugs and prevent 7 million new infections.

The United States also will contribute $350 million of the total to the United Nations' Global Fund to Fight AIDS, Tuberculosis and Malaria. U.N. Secretary-General Kofi Annan has asked the United States to supply $3.5 billion a year to the fund, which was set up three years ago by the United Nations and the G8 group of industrialized nations.

Congress has authorized up to $1 billion for the fund, but only on condition that the total amount not exceed one-third of the total given by other countries. ''We're above that,'' Thompson said, noting that the United States has contributed nearly half of the amount now in the fund.

But AIDS advocates say the money falls far short of an estimated $5 billion the fund will need next year to begin to make a difference.

''We're letting millions of people die and millions of children be orphaned for lack of funding,'' says Jeffrey Sachs, a leading Columbia University economist and AIDS expert. ''The global fund is facing a desperate shortage of money.''

''Pledges by a number of countries have not been funded,'' says Nils D'Daulaire, president of the Global Health Council. ''A pledge doesn't have a lot of value unless there's money to back it.''

Thompson says that fund's board of directors will take up the shortage when they meet Thursday. He also plans to invite corporate executives to accompany him to Africa as part of his fundraising drive. ''If I can get people to Africa, visit these orphanages and get them to pick up and hold some of these orphans, that's the best way to tell the story.''

Thompson also said Tuesday that he probably would not stay on as health secretary if Bush is re-elected and will pursue opportunities in the private sector.

MANILA (AFP) - Without constant monitoring, the Philippines could be within a few years or a few thousand cases from the threshold of a devastating AIDS epidemic, despite currently low infection rates, experts warned.

A large, jetsetting labor force, a national aversion to condoms and irresponsible sexual behavior are crucial precursors to an epidemic explosion, UN and government officials told Thursday a ceremony to mark a new AIDS prevention partnership with the government, the UN's AIDS program and two foreign companies based here.

The Philippines has confounded experts with its low prevalence of the Human Immunodeficiency Virus, which causes AIDS. Fewer than 2,000 cases have been reported in 19 years, with 253 deaths.

"The Philippines may be lucky to have a number of factors that have kept the HIV prevalence low to date. But luck is not the way to control the epidemic," warned Zahidul Huque, an official of the United Nations Population Fund.

Common to most areas that have suffered the brunt of an AIDS epidemic -- such as South Africa, with the highest proportion of HIV-positive people in the world -- is an exponential increase in the number of reported cases in a short span of time.

"We should seize the window of opportunity now, while we can still do something about it," said Consorcia Quizon, head of the health department's epidemiology center, who placed the department's annual budget for AIDS prevention at 20 million pesos (376,000 dollars).

"Maybe we haven't had the critical mass of infected people from whom other people are going to be infected," she said.

"We cannot say that that will be the same situation next year, or in the next five years."

She told AFP actual HIV infections in the Philippines could be closer to 6,000, while Huque said it could be "somewhere between 7,000 and 9,000."

"If you double it, like you get 20,000, that would be a critical mass I would say" and would unleash a nationwide epidemic, Huque told AFP.

If Acquired Immuno Deficiency Syndrome hit five percent of the Philippines' 80 million people, national economic output could be devastated -- assuming the productive segments of society were affected, he said.

Nearly 10 percent of Filipinos work overseas, including several hundred thousand seafarers considered high risk for AIDS infection.

Rates of infection in commercial sex workers and intravenous drug users have been "consistently less than one percent," said Quizon. But while surveys show there is a high degree of AIDS awareness in these high-risk populations, it has "not translated into a change in behavior."

While sex is the main mode of HIV transmission in the Philippines, a national survey conducted by a Manila university last year showed 70 percent of men aged 14 to 45 did not use condoms.

The largely-Roman Catholic Philippines follows the lead of the church, which considers the use of contraceptives to be encouraging of promiscuous sexual behavior.

Huque warned that without continued attention to HIV/AIDS and funding of awareness and treatment campaigns, the Philippines is at risk for a higher infection rate, and urged Manila to do more to take its fight against AIDS to "every corner of the country."

The two companies, Amkor-Anam and Shell Philippines Exploration, have agreed to contribute funds and resources to promote AIDS awareness in their workplaces.

JOHANNESBURG (Reuters) - South Africa's top tourism trade group has launched a new "AIDS insurance" policy to provide potentially life-saving drugs to travellers who might become infected while on holiday.

South Africa has the world's single highest AIDS caseload with some five million people infected with the HIV virus .

Gail McCann, chief executive officer of the Southern Africa Tourism Services Association (SATSA), said on Friday the policy was being offered to group members who want to both protect their clients and prolong the lives of HIV -infected staff.

"People coming to South Africa are a little nervous from an AIDS perspective. This might help," McCann said.

The insurance will pay for and deliver anti-retroviral drugs so treatment can begin with a 72-hour window which doctors say may prevent infection from taking hold.

South Africa currently does not provide anti-retroviral drugs in public sector hospitals, a policy government critics say is causing the AIDS deaths of some 600 people every day.

"If you get to a game lodge and you have a risk exposure they would be aware of who to contact," said Charles Parsons, chief executive officer of Calibre Clinical Consultants, the AIDS services company handling the insurance policy.

While SATSA -- which represents more than 800 tourism-related companies including such giants as South African Airways -- hopes the "AIDS insurance" may calm nervous travellers, they say one of the key aims of the programme is to give tourism company employees greater access to HIV treatment.

McCann said the health insurance policy would be extended to company employees at a cost of as little as 3.50 rand (26 pence) per month.

"It won't save their lives but it will prolong their lives," McCann said. "AIDS is a reality in South Africa...a lot of money is being spent and being lost on retraining our staff because they are dying from AIDS."

GENEVA (AFP) - The Global Fund to Fight AIDS, Tuberculosis and Malaria appealed to donors to help provide three billion dollars (2.5 billion euros) by the end of next year to finance prevention and treatment programmes.

"On the occasion of its Fifth Board Meeting, the Global Fund implored public and private donors to contribute three billion US dollars by the end of 2004 in order to fully finance anticipated country proposals to prevent and treat AIDS, TB and malaria," a fund statement said after the meeting here.

It said the Fund's Executive Director Richard Feachem had acknowledged the combined leadership of the United States and France in resource mobilization. In authorizing up to one billion dollars for its 2004 fiscal year, US President George W. Bush and Congress had challenged other donors to respond, and they had responded, the statement said.

France's President Jacques Chirac had led an effort for Europe to raise one billion dollars and had called on public and private donors outside the United States and Europe to also raise one billion dollars.

"The Global Fund also praised the outcome of the recent Evian Summit, where G8 and African Heads of State, as well as the United Nations Secretary General, reaffirmed their support for the Global Fund," it said.

The purpose of the Fund is to attract, manage and disburse additional resources through a new public-private partnership that will make a sustainable and significant contribution to the reduction of infections, illness and death, thereby mitigating the impact of HIV/AIDS, tuberculosis and malaria in countries in need, and contributing to poverty reduction.