Ethics and AIDS Drugs

The

latest drug cocktails may soon downgrade AIDS from a death sentence to a chronic disease--in countries that can afford the typical $15,000 annual cost per patient. But what about the cash-starved developing world, which currently accounts for nearly 90% of new HIV infections? It's an issue that countries like South Africa and Thailand are struggling with. And a growing number of government health ministers and AIDS activists are proposing an unusual solution: rip off the drug companies.

They're not really stealing, of course, but that's the way U.S. drug companies--backed by Uncle Sam--view a tactic being employed in South Africa and elsewhere. The tactic uses a loophole in the World Trade Organization's Trade-Related Intellectual Property Rights agreement to exempt worst-hit countries from patent restrictions on essential drugs. The loophole, Article 31, authorizes emergency use of "compulsory licensing" to produce essential drugs locally as long as royalties are paid. Another tactic: parallel importing, or buying in a country where the needed drugs are cheaper, circumventing artificially high prices set by the patent holders for some areas.

The hottest debate is in South Africa, where nearly 3.5 million of that country's 40 million citizens are HIV-infected--more than three times the U.S. rate--and 50,000 new HIV cases emerge each month. Drug prices tend to be high, a holdover from apartheid, when price premiums were needed to encourage foreign companies to override sanctions. Says Mojanku Gumbi, an adviser to South Africa's new President, Thabo Mbeki: "This is not about intellectual property rights. It's about pricing structure and segmenting of markets. We are saying that the drug companies can't make the same profits they made under apartheid."

South Africa passed a law last year that gives the Ministry of Health discretion to authorize parallel importing and compulsory licensing in critical situations. But a consortium of 40 drug companies--about a third of them American--filed a suit that has kept the law tied up.

In the U.S. the debate erupted in public recently when Vice President Al Gore declared his candidacy for the White House. AIDS activists heckled him and brandished signs accusing him of siding with the drug companies. Gore, shaken by the ferocity of the attacks, shifted course and said he supported compulsory licensing and parallel importing, "so long as they are done in a way consistent with international agreements."

A similar struggle has been going on in Thailand, which has an estimated 1.5 million HIV infections out of a population of 60 million. Yet Thailand's ability to produce drugs locally has forced the multinational companies to drop prices. Until last year, Flucanazole, an important antibiotic used to fight a fatal form of meningitis that accompanies AIDS, cost $7.36 a tablet. This year the Thais began manufacturing it locally, and the price dropped to $1. Glaxo Wellcome reduced the price of AZT to less than $1 per tablet after Thailand began making its own version.

Pharmaceutical companies insist the high prices are necessary to finance new-drug development. That's certainly true, at least initially. Yet many of the recent breakthroughs have been paid for by U.S. taxpayers. AZT was discovered by the National Cancer Institute and given to Burroughs Wellcome (now Glaxo Wellcome). DDI was developed at the National Institutes of Health and licensed to Bristol-Myers Squibb.

To its credit, Bristol-Myers Squibb has also taken the lead in philanthropy, with an offer to give $100 million to fight AIDS in five African countries over the next five years. A sizable chunk is earmarked to bring African doctors to the U.S. so they can be trained to carry out research and clinical trials back in Africa. But even that has raised a red flag among activists. "A lot of the companies are using the cheaper labor costs and the lack of ethical codes in developing countries as a way to get the trials done more cheaply and quickly," says Dan Berman of Doctors Without Borders. A better solution, the activists suggest, would be for drugs known to be effective to be made available at a price these regions can afford.