Under intense pressure from AIDS activists and members of Congress, the manufacturer of AZT agreed yesterday to cut the costly AIDS drug's price by 20 percent immediately. The action comes only a month after findings by federal AIDS researchers effectively expanded the drug's potential American market from 20,000 people to 650,000. Those researchers found that taking AZT early in the course of infection could delay the deadly symptoms of AIDS in many. Since then Burroughs Wellcome, the manufacturer, has been besieged with protests over its high cost. "The public and private health providers of this country just could not afford to subsidize a company's profits to fight this epidemic," said Mervyn Silverman, president of the American Foundation for AIDS Research. "They have much more than recouped their initial investment. This is a start, but there will have to be more {price cuts} later." Despite the overnight explosion of AZT's market, and the immense profits that will clearly come, until yesterday the company's officials said only that they would continue to assess the price structure of the drug, which remains the only one licensed to treat the AIDS virus directly. AIDS activists have picketed and protested the company's Research Triangle, N.C., headquarters around the clock since the federal findings were announced in August. And last week, activists across the country staged highly publicized demonstrations against the company. But after Burroughs' representatives met yesterday with Rep. Henry A. Waxman (D-Calif.), chairman of the House subcommittee on health and the environment, the company announced that it would cut the wholesale price from $1.50 to $1.20 per capsule. That means that for patients on a currently recommended full dose of the drug, the annual price should fall from $8,000 to $6,400. "Although the precise timing and total number of patients remain uncertain," said T.E. Haigler Jr., Burrough's president, "It now appears the number of patients on Retrovir will be growing over time." Retrovir is the company's brand name for AZT. Many AIDS patients, doctors and, increasingly, government officials have said that Burroughs has reaped more than its fair share of profits from AZT. Now that hundreds of thousands of people infected with HIV, the AIDS virus, but not yet visibly sick have been encouraged to take the drug, federal health officials have become alarmed at how much the government might have to pay each year to foot the insurance bill. Cost estimates range from $2 billion to $10 billion a year, depending on how many people take the drug and what dose is used. Recent studies have suggested doses half as large as those originally tested may be just as effective for AIDS patients, and that for those who are infected but not yet sick, even smaller, and therefore cheaper, doses migh be useful. But even the most optimistic forecasts suggest that Americans will still be paying billions of dollars for AZT in the coming years. Increasingly, those who need the drug most are black or Hispanic, poor and uninsured. They are those least able to afford it. Because the federal government is expected to emerge as the drug's largest buyer under its Medicaid program and subsidies mandated by Congress, public health officials and legislators have been investigating ways to force the company to cut its price. "This is definitely a good faith effort that responds to the concerns of the AIDS activist community," said Jean McGuire, executive director of the AIDS Action Council. "But let's not be naive. Senators were talking about putting a cap on their prices, and Congress was starting to see red over the numbers." This is the second time the company has cut the price of the drug by 20 percent. In 1987, also after intense protest, Burroughs agreed to reduce the price to its current level of about $8,000 for a full annual dose.