Programs to Provide Reduced-Cost Drugs to African Nations Controversial, Second Article in Washington Post Series Reports
On May 11, 2000, five major pharmaceutical companies and five international health organizations announced a joint initiative to deliver AIDS therapies to developing nations at reduced prices. The announcement was heralded as a "triumph" in the global fight against HIV/AIDS and a "turning point" in the international community's efforts to treat AIDS in the developing world, the Washington Post reports in the second of three articles on "AIDS, Drugs and Africa." The announcement followed calls, made by U.N. Secretary General Kofi Annan and WHO Director General Gro Harlem Brundtland, for the drug industry to respond to the global AIDS pandemic with lowered prices and increased drug availability. The initiative, announced by Glaxo Wellcome, Merck & Co., Boehringer Ingelheim, Bristol-Myers Squibb and Roche, along with UNAIDS, WHO, UNICEF, the World Bank and the U.N. Development Program, was based on a five-principle document drawn up by the pharmaceutical companies earlier in the year "implying" that the companies would "steeply" lower the prices of their AIDS drugs in the developing world. In return for the reductions, the companies asked for "unequivocal and ongoing political commitment" from the recipient governments and the assumption of responsibility for increased medical infrastructure needed for treatment by the international agencies. The firms also wanted the acknowledgment of the importance of "adequate and enforced intellectual property rights" by all parties, to "provide the prospect of a satisfactory return on investment in a high-risk search for new medicines." The drug companies were specifically concerned about "compulsory licensing," which gives governments the power to manufacture a drug without the patent holder's approval, and "parallel importing," which allows a country to purchase drugs in a foreign market at lower costs and resell them at home without the manufacturer's consent. The drug companies' proposal left "far more questions" than answers, according to a memo drafted by Annan's advisers. The advisers also expressed concern that the proposal would "raise expectations that could not possibly be fulfilled" because "even if [drug companies] reduced prices by 90% and made antiretroviral therapy available to patients for $1,000 a year, this would still put it out of reach for the vast majority of people in Africa." But despite these objections, the memo ended by saying that the United Nations "cannot afford not to become involved in some way." At a meeting in March, Brundtland's special adviser on AIDS, Daniel Tarantola, presented WHO's own version of the initiative, drawing "heavily" on the industry papers, but leaving out the section on intellectual property rights. Industry representatives called the clause a "deal-breaker" and lobbied for its inclusion. The Wall Street Journal learned of the negotiations and informed UNAIDS chair Peter Piot that it planned to go to press with the story. In a May 10 memo to Annan, Marta Mauras, chief of staff to U.N. Deputy Secretary General Frechette, wrote that Piot would launch the initiative the next day, "forced" by the fact that the Journal would run the story the following day.
"Ebullient" versions of the story quickly appeared in news outlets around the world and the groups reconvened on June 12 to discuss the specifics of the deal. Once again, clauses concerning pricing and intellectual property rights were issues of contention, with Merck threatening to walk out of the discussions if patent rights were not protected. Others worried about how to handle the anticipated demand, with 25 million people infected with HIV in sub-Saharan Africa alone. Reaction from African governments had been "harsh," including a statement from health officials saying that the announcement "could lead to the alienation of governments from their people, as the public was given the impression that the prices of antiretroviral drugs have been drastically reduced and immediately available." Under "increasing pressure," Glaxo announced that it would sell Combivir, its two-drug therapy, at $2 a day, leaving four of the five companies still declining to announce prices. In July, Merck announced a joint $100 million venture with the Bill & Melinda Gates Foundation in Botswana to create a "model program" for the purchasing and delivery of antiretroviral drugs. That same week Boehringer announced a five-year plan to donate nevirapine, proven to reduce vertical transmission rates, to developing nations. Industry leaders, such as Glaxo's Richard Sykes, acknowledged the futility of their efforts, noting that "little of practical value" would come of the joint announcement and "at most, a few hundred thousand individuals would benefit."
The Generic Angle
At a September meeting in Brussels, Belgium, Yusuf Hamied, CEO of India's largest drug manufacturer Cipla, made an offer to produce and sell generic versions of patented AIDS medications at five to 10 cents on the dollar, as a "global public service." Cipla, which already markets the drugs in India, is not bound by trade agreements to change its manufacturing processes until 2005, and has the support of Doctors Without Borders and other Asian generic drug manufacturers. Cipla's offer has highlighted the "striking differences" between drug prices and manufacturing costs. Hamied proposed selling a three-drug package at an annual cost of $800, while the same package costs $9,080 wholesale in the United States. The drug companies have since launched patent-infringement lawsuits against Cipla. Meanwhile, the International Antiviral Therapy Evaluation Center, a not-for-profit organization, approached private businesses in Africa, which face a loss of skilled workers from the epidemic, about subsidizing the cost of treatment. The center found "significant interest" among several large employers, but was rebuffed by drug companies when it approached them about offering discounts to an employer-financed initiative (Gellman, Washington Post, 12/28).