This study analyses the effect of the Andean countries' June 2003 negotiation of antiretroviral drug (ARV) prices. The objectives were to assess the problems faced during the negotiation process, to evaluate the impact of the negotiation on ARV prices, and to identify factors that could make it difficult for countries to implement the results of the negotiation. METHODS: Price information of ARVs purchased by public programmes during 2004 was collected from the ministries of health. A survey of the ministries of health was conducted using a questionnaire with information related to the countries' health care and drug regulations and policies. Interviews with a convenient sample of key Andean health authorities and other stakeholders were also conducted. RESULTS: Study results show that the negotiation did achieve lower prices and higher quality and bioequivalence standards for ARVs. However, in general, the public health care programmes of the six countries analysed did not purchase ARVs from the companies that participated in the negotiation, nor did they base purchases on the prices or quality and bioequivalence criteria established in the negotiation. Prices paid by the Andean countries' public programmes in 2004 were a weighted average of 65% higher than the negotiated prices; and this difference in negotiated prices vs. actual prices represented 39.5% of the programmes' ARV expenditures in 2004, or US$18 million in ARV expenditures. CONCLUSION: The successful development and implementation of multinational price negotiations requires that participant countries coordinate pharmaceutical regulations and policies, and pool procurement processes.