Patients vs. Patents

AIDS: South Africa's Trial and Tragedy

In March 7, in a courtroom in Pretoria, South Africa, Judge Bernard Ngoepe looked down at the phalanx of lawyers assembled before him. Yes, he told them, this was a landmark case about patent rights and intellectual property, but it was also about life and death. Which was why he was allowing a local AIDS activist group to join the proceedings.

“There are a lot of people,” Ngoepe noted, “many beyond our boundaries, who are interested in this matter.”

The lawyers hardly needed reminding. They represented 39 of the world’s largest pharmaceutical companies. And their legal suit to stop South Africa from acting on a 1997 law allowing it to import low-cost generic drugs was already—on day two—a mammoth public-relations fiasco.

Human-rights groups accuse the companies of gorging on profits while some of the poorest people on Earth live in torment and die long before their time. Few media outlets have resisted the urge to label the case “Patients vs. Patents.”

On the face of it, how else to characterize the situation? Already, 12 million sub-Saharan Africans have died of AIDS. More than 25 million in the region, many of them infants, are infected by HIV—one in five living in South Africa. But only 10,000 victims have access to medicines that would extend their lives or alleviate the wracking symptoms. The reason is simple: Neither they nor their governments can afford the AIDS drugs manufactured by the multi-billion-dollar industry. Each drug costs about US$6,000 per person per year, the same price as in the West. But South Africa has an annual health-care budget of $50 per person. Other countries spend $5 or less.

Even an offer by five of the “Big Pharma” companies last May to slash prices on some of the drugs by 80 to 90 percent, down to $1,000, is still far beyond many countries’ reach. Only Senegal, Rwanda, and Uganda have taken up the offer. Without cheaper generics, says the South African government, it can’t begin to stem the tide of disease and death. The case has been adjourned until April 18 or—as Jamie Love, director of the Washington, D.C. activist organization Consumer Project on Technology, acidly puts it—“about 12,000 or so South African deaths from now.” [On April 19, the 39 companies withdrew their suit completely, but asked the health ministry to reconsider a law regarding compulsory third-party licensing on patented medicines.—WPR]

Jockeying for position outside the courthouse has been frenetic in the past two weeks. It began with Indian generic manufacturer Cipla suddenly announcing it would sell a three-drug AIDS cocktail for an at-cost $350 to the Nobel Peace Prize-winning group Doctors Without Borders/Médecins Sans Frontières—though it would charge African governments $600.

Cipla’s multimillionaire chair, Dr. Yusuf Hamied, managed to sound both compassionate and cutthroat in explaining his reasons for the offer: “There is a holocaust in Africa (and) it’s my social obligation to society. ” But it was also “a way to break the stranglehold of the multinationals.”

Trying to regain some of the moral high ground, three companies—the U.S.-based Merck & Co. and Bristol-Myers Squibb, and Britain’s GlaxoSmithKline—have responded by dropping their previous reductions even further, down to $600 per drug. But in Merck’s case, it wants African governments to guarantee that the drugs will not be reexported to other countries. Neither manufacturer has pulled out of the court case. Instead, the industry has been feverishly trying to explain that painting it as the sole villain in the human tragedy that is AIDS is unfair. Prices could be hacked to rock bottom, it argues, drugs given out for free, but major obstacles will remain in getting them to those in need.

The overriding hurdle, says the industry, is the lack of a medical infrastructure in much of Africa—though not South Africa—and therefore the lack of a drug-delivery system. There are too few doctors, with or without AIDS knowledge, not enough clinics, drug-monitoring labs, or storage facilities. In the absence of public education, there is a perpetuation of high-risk behavior and self-medication that may lead to drug resistance. It happened with TB, says the industry, and it will happen with AIDS.

To top it off, political instability or corruption has led to black markets in several countries. If cheap generics are allowed in, it predicts, that’s where they’ll end up. “This a complex problem with many factors, but that message doesn’t seem to have sunk in. Whatever we do, like cutting prices, our critics still say it’s too little, too late,” says Jeff Tyrwhitt, spokesperson for the 80-member Pharmaceutical Research and Manufacturers of America.

Africa accounts for only 2.5 percent of the industry’s $200 billion in global sales, but Tyrwhitt claims that “half the drugs sold there never make it to patients.” Tyrwhitt is diverting the issue, counters a vehement Jamie Love. His organization, along with Doctors Without Borders, has been running a campaign called Access to Essential Medicines for the past two years. It’s trying to get the industry to drop prices—not just on AIDS drugs but on life- saving medicines for a range of deadly infectious diseases. “Money could be spent on other parts of the problem if it didn’t have to go toward prohibitive drug costs, ” he says.

The industry contends it can’t drop prices, not because it’s expensive to manufacture drugs—it isn’t, as it readily admits—but because profits are reinvested in high-cost research and development (and marketing and lobbying). North American companies alone spend $27 billion a year developing new drugs, 95 percent of which fail, never recouping costs.

They say they cannot stand by while South Africa allows their most precious asset, patents, to be infringed by importing generic knockoffs through what is known as compulsory licensing. Without patent protection, there is no incentive to develop new drugs.

Most legal observers agree that the law at the heart of the case, brought in by former President Nelson Mandela, breaks the international treaty on intellectual property signed by South Africa and policed by the World Trade Organization. It would not if the country officially declared a national emergency—a move it briefly considered earlier this month, then, inexplicably, decided against.

The industry is fully aware there is an AIDS crisis, but throwing out the patent rule book is not the solution, says Bob Huber, spokesperson for pharmaceutical giant Pfizer Inc. in New York, which is not part of the lawsuit but strongly supports it. “There are some circumstances where there clearly is an emergency, but then we see the need for donation programs—not compulsory licensing of generics or significant price reductions.”

Like many in the industry, Huber wonders how several African nations justify buying armaments when they provide so little health care for their people. “Africa’s defense ministers just met to see where they could get the cheapest arms,” he says pointedly.

U.S. companies also fear that if prices drop drastically in the developing world, pressure to reduce the cost of AIDS drugs—indeed all drugs—back home will follow as surely as night follows day. “They’re afraid of the slippery slope, and they’re right to be,” says Dr. Michael Schull, the Toronto emergency-room physician who heads the Canadian branch of Doctors Without Borders. The group has AIDS projects in 40 developing countries. Schull doesn’t like the oversimplified notion of good (his own organization) versus evil (the industry). “There are people out there who want to break down international trade mechanisms, want the companies to give the drugs for free out of altruism. We’re not part of that. What I’m concerned about is access to essential drugs.”

But the industry’s insistence that price is just one aspect of the AIDS epidemic, equal to all others, is wrongheaded, Schull stresses. If drugs aren’t affordable, he says, even the best health system can’t tackle the disease. Still, Schull adds, “They’re right when they say the crisis isn’t entirely their responsibility. It isn’t.”

No need to tell that to Gregory Hartl of the World Health Organization in Geneva. “We don’t vilify the industry here,” he says. “There are others who should be in this fight.” WHO needs $5 billion a year in new money to combat AIDS and other dangerously resurgent infectious diseases, such as malaria and tuberculosis. And it wants Western countries, foundations, even private donors to supply it.

What it seeks from the industry is a willingness to consider what it’s long adamantly refused: a differential pricing system in which poor countries pay less for drugs than the West. In return, mechanisms could be put in place to prevent the reexport of drugs into richer countries and, perhaps, to consider the extension of patent rights.

Critics may resent WHO even negotiating with the industry, but Hartl argues that “you have to be realistic and take their concerns into account.” Their responsibilities, too. Drugs are only one part of the equation, he says. African governments have to do their part, too. “We’re trying to go back to the beginning and get them to work on prevention. We’re trying to explain that spending money on health care is an investment in their future, a prime factor in economic development.”

Dr. Mark Wainberg, former head of the International AIDS Society, now director of McGill University’s AIDS program, thinks the industry has been its own worst enemy in not anticipating the pricing crisis and acting preemptively by lowering costs. But, he adds, many Third-World countries have had skewed spending priorities. “You can’t whitewash anybody in this crisis. Ethiopia says its number-one enemy is Eritrea, India says Pakistan, when in both cases, it’s AIDS. This type of thinking leads to misallocation of resources.”

There is optimism in Geneva, though. At the start of 2000, action on AIDS in the Third World was “nowhere,” says Gregory Hartl. Then came the first United Nations Security Council debate on the issue, followed by last summer’s G-8 summit—both of which underlined the crucial need for a resolution to the crisis. There’s a critical mass accumulating, he says, “a lot of activity behind the scenes.”

Murray Elston, president of Canada’s Research-based Pharmaceutical Companies, a 58-member industry association, thinks the onus is on Western governments or the U.N. to call together a broad coalition of different interests. The industry is motivated to participate, he says, but not if its input is used for target practice.

Nor are drug companies recognized by some governments as an integral part of medical care, he says. “Often we’re not invited in, we’re on the outside looking in.” Outside is where they often prefer to be, Dyann Wirth of Harvard University’s School of Public Health dryly comments, at least when it comes to drugs for “neglected diseases.” Only 13 of the 1,223 new drugs patented between 1975 and 1997 were for infectious diseases. One percent. Yet 6.1 million people died in 1998 of TB, malaria, and respiratory illness. Wirth’s recent study of 24 multinationals found not one of them working on a much-needed new drug for malaria.

Indifference to developing nations also surfaced with Eflornithine. Originally developed to fight cancer, the drug was found to be so effective in reviving victims from the terminal coma of sleeping sickness that it was called the “resurrection drug.” But its maker, Aventis, halted production in 1999; the last-ever supplies were set to run out in June.Then the company discovered a new, profitable, use for it—as Vaniqa, a female facial-hair remover—and production resumed.

Doctors Without Borders’ Michael Schull asks if Africans with deadly diseases are now to be dependent on drugs having lifestyle benefits in the West—and are AIDS victims to be left in the shadows until the haranguing over intellectual property and patent protection plays itself out?

Sounds like it to Schull. And it disgusts him. “While we’re arguing, people are dying every day at a predictable rate. There is a steady drumbeat, a roll call, of death.”