AIDS Drugs and Africa: Profits vs. People

When Poor Nations Need Expensive Treatments

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PRETORIA, South Africa, MAR. 17, 2001 ( Should pharmaceutical companies cede their patents to help AIDS victims in Africa? Should the firms sell the drugs below cost?

Debate over these questions has intensified recently as activists, countries and drug firms grapple with the problem of how to make AIDS treatments accessible to people who normally could never afford them.

Pharmaceutical giant Bristol-Myers Squibb this week announced that it would no longer try to stop other companies in Africa from making generic versions of one of its drugs used to treat human immunodeficiency virus (HIV), the New York Times reported March 15. Bristol-Myers holds the patent on d4T, or stavudine, sold as Zerit, and said it would not use its legal rights to keep lower-cost generic versions of this drug out of South Africa or any other African nation.

Bristol-Myers also said it would slash the price of Zerit and another AIDS drug, ddI, or didanosine, sold as Videx, in Africa, to a combined price of $1 a day. In the United States, one day´s dose of the two drugs costs $18.

The decision was praised by many activists who have been urging the drug companies to allow generic-drug makers to make cheap versions of lifesaving medicines. «This is groundbreaking,» said Kate Kraus, a member of ACT UP Philadelphia, a group that has led protests around the world against the big drug makers.

Bristol-Myers´ announcement came shortly after U.S.-based Merck & Co. decided it would offer Crixivan and Stocrin, its two anti-retroviral medicines, for $600 and $500, respectively, per patient per year in the developing world. «At these prices, it said, it would make no profit,» the Financial Times reported March 7.

Property rights

The decision to reduce prices came just after a trial commenced in South Africa, brought by 39 pharmaceutical companies who are challenging a 1997 law giving the government power to produce or import cheaper versions of drugs still protected by patent. South African authorities say that with up to 4 million HIV-positive people in their country, the drug industry has not reacted sufficiently to help meet the high cost of treatment for infected patients. The companies, for their part, accuse South Africa of letting the AIDS problem get out of control.

Human rights groups say the case goes beyond legal matters, the Washington Post noted March 6. The deeper question, the groups say, is to what extent the property rights of prosperous Western corporations should prevail against the developing world´s need to curb a major public health crisis. It´s estimated that of the 36 million people living with HIV, more than 25 million are in sub-Saharan Africa.

The pharmaceutical debate is not limited to AIDS treatments. The Guardian newspaper in England reported Feb. 12 that sufferers of diarrhea, meningitis, malaria and tuberculosis also go untreated because the drugs they need are too expensive for them.

The cost of treatment for HIV is particularly high. AZT and 3TC, the basic anti-retroviral drugs, carry an annual price tag of $10,000 to $15,000 per patient. By contrast, most workers in South Africa earn less than $3,000 a year — and they are considered rich by the continent´s standards.

Brazil, India and Thailand have started producing cheaper versions of anti-HIV drugs. Cipla, an Indian firm, asked the South African government for permission to sell inexpensive generic versions of eight of the 15 commonly used anti-HIV drugs, the New York Times reported March 10. Cipla has said it could offer an AIDS regimen for $600 per patient per year.

Recouping research costs

In their defense, the pharmaceutical companies argue that they need patent protection to recoup the vast sum it costs to research and develop drugs. They say it takes $1 billion to get a new medicine to market.

The Financial Times in a March 9 article considered that the decision by Merck to lower prices «could set an extremely dangerous precedent for the drugs industry» and lead to an «all-out price war.» The same could occur for other patented drugs. The newspaper quoted Trevor Jones, director-general of the Association of the British Pharmaceutical Industry, who said, «While the industry is more than willing to do what it can, it cannot act as a sort of National Health Service to the world.»

The Financial Times warned that if the industry cannot overcome the impression that it is willing to place the sanctity of patents above the sanctity of life, support for intellectual property on medicines could erode. «That would undermine the entire foundation on which drug research is built,» the newspaper said.

The same paper, however, pointed out Feb. 17 that the patent system, which enables companies to recoup research costs and make profits, has a disadvantage: The price of patented medicines bears no relation to the cost of manufacturing them. And while companies claim that they operate in a competitive environment, when a medicine finally goes off patent, generic manufacturers can charge a tenth of the price and still make a profit.

Furthermore, the Financial Times argued, the industry´s claim that it needs «super-profits» to undertake risky research investments is undermined by the huge amounts it lavishes on marketing. GlaxoSmithKline, the newly merged Anglo-American company, boasts that it spends $500,000 an hour on research and development. But it invests nearly twice as much in sales and marketing.

On the question of patent protection, the Guardian newspaper Feb. 12 contended that «patents are killing people.» Moreover, the British paper said, intellectual property protection «has become a tool to make permanent the growing inequality of the global economy.» The Guardian observed that the United States now accounts for 275,000 patent applications a year. By contrast, 26,000 patent applications were filed in 1997 to the African intellectual property organization and only 31 came from resident Africans.

Even at much lower prices, relatively few Africans can afford anti-AIDS drugs without outside assistance; the poorest nations have annual health budgets equivalent to $10 per person. So the next step could be action by the Group of Seven major industrial powers, the Wall Street Journal reported March 13. Pressure apparently is building to announce an anti-AIDS plan at the G-7 summit in Genoa, Italy, this June.

Italy, which is hosting the summit, has proposed creating a trust fund of at least $1 billion — part from governments, part from private companies — that would be managed by the World Bank and would fight AIDS, tuberculosis, malaria, dysentery and other diseases.

A way has to be found whereby drug companies receive sufficient protection in order to have a financial incentive to keep producing new products. At the same time it is clearly unjust to charge Third World countries the same prices for treatment that people in the richest nations pay.

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