The United States and a key group of developing countries struck a deal Wednesday on how to give poor states access to cheaper medicines, potentially ending a dispute undermining free trade talks, a top envoy said.

Allowing poorer states that are unable to manufacture medicines to import cheap generic drugs is seen as vital to beating major killers such as AIDS  and malaria. But it also means setting aside patent laws protecting multinational companies.

The agreement was reached by the United States, which has a powerful pharmaceutical industry, generic drug producers Brazil and India and African representatives South Africa and Kenya.

Although not a formal group, they are seen as representing all sides in the argument.

"The five are agreed," the chief mediator on the drugs issue, Singapore's ambassador Vanu Gopala Menon, told journalists.

A formal verdict on the deal by the full World Trade Organization (WTO) membership of 146 states was not expected before Thursday to give time to delegations to inform their governments.

But initial reaction from other envoys at the Geneva trade body, where all decisions are taken by consensus, was clearly positive, trade diplomats said.

"It looks like it is in the bag," said Norway's ambassador Kare Bryn on leaving a meeting at which the text was being presented to all delegates for the first time.

The United States blocked a deal on cheap drugs drafted at the end of last year even though it was backed by all other WTO members.

U.S. drugmakers feared the agreement could let generic companies in developing countries, such as Brazil and India, start copying nonessential drugs like Viagra, the anti- impotence pill.

Under the new proposals WTO states would pledge not to abuse the system and only waive patents to import generic medicines "in good faith," not for commercial gain.

All "reasonable" steps would be taken to ensure drugs and drug ingredients sold to poor countries did not turn up on rich country's markets.

A number of richer developing countries were also set to declare they would only use the system in dire health emergencies.

"It provides some comfort to the U.S. pharmaceutical companies that were worried about abuse," said South Africa's top trade envoy Faizel Ismail.

A spokesman for the U.S. drug industry's largest trade group, Pharmaceutical Research and Manufacturers of America (PhRMA), declined to comment on the negotiations "until a consensus is reached."

An agreement on drugs would give a needed boost to the WTO's troubled Doha Round of free trade talks ahead of a crucial summit next month in the Mexican city of Cancun.

But nongovernmental organizations (NGOs) have attacked the deal, saying it imposes too many conditions on poor states.

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