He hopes it will help save hundreds of thousands of lives.
The agreement between the Clinton Foundation and the drug companies aims to halve the cost of HIV/AIDS diagnosis and lower the price tag of second line anti-retroviral (ARV) drugs by 30 per cent or more.
"This is only the first step," Mr Clinton said. "We expect to lower the cost of more second line drugs later this year."
Mr Clinton said the deal with the nine companies was a "step in the right direction" but admitted he would like to see more of the world's biggest drug companies on board.
The deal Mr Clinton announced involved smaller companies.
Four companies - Chembio Diagnostics Inc, Orgenics, a subsidiary of Inverness Medical Innovations, Qualpro Diagnostics and Shanghai Kehua - will offer rapid HIV/AIDS testing at half the current cost and provide results within 20 minutes.
Mr Clinton said cutting the cost of the rapid tests would save "tens of millions of dollars" over the next four years.
Another four companies - Cipla, Ranbaxy, Strides Arcolab and
Aspen Pharmacare - will offer the first line drug Efavirenz, with ingredients supplied by Matrix Laboratories, at below market rates.
Cipla will also provide the second line drug Abacavir at lower cost.
The drug firms involved will lower drugs costs by improving and modernising the production process, moving production to countries with lower labour costs and reducing profit margins while increasing the volume of output, he said.
More than 90 per cent of HIV carriers are unaware they are infected, so raising AIDS awareness is a fundamental priority, Mr Clinton said.
"This agreement today can help to save hundreds of thousands of lives,” Mr Clinton said.
First line drugs
First line drugs are used in the earliest stage of treatment.
When patients become resistant to first line treatment, more expensive second line drugs are given.
Some quarter of a million people already benefit from first line treatment resulting from Clinton Foundation agreements announced in 2003, the former president said.
Mr Clinton said up to one million people could receive first line treatment at reduced cost through the new initiative by the end of the year.
"You're going to see an enormous explosion in 2006," Mr Clinton said about the number of people receiving ARV treatment.
He said 40 million people are infected with HIV/AIDS and 8,000 people die from the disease every day.
Mr Clinton cited the African country Lesotho, where every child under the age of 12 was now being tested, as an example of the progress that has been made in raising AIDS awareness.
The Clinton Foundation provides access to reduced prices for drugs and testing in 50 developing countries, and works with directly with 20 governments in Africa, the Caribbean and Asia in the fight against the disease.