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 (MYL.O) and Aurobindo Pharma (ARBN.NS), 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.” Read more via the Reuters