Date: Feature Week of July 20, 2003
Topic: Black Press Business/Economic
Author: William Reed
Article ID: article_ema072003a

UNFINISHED BUSINESS IN AFRICA

How Do We Handle The AIDS Drug Apartheid?

The majority of the world�s Black people are paying the price of the AIDS pandemic.  In South Africa 10 percent of the population is infected with the HIV virus.  There are 1,700 people infected every day, yet nearly all the key anti-retrovirals used to suppress the HIV virus are under patent by major pharmaceutical firms and sell at prices ranging from 4 to 12 times the price of generic equivalents available on the world market.  Now that President Bush has returned from his Africa trip, where he discussed a U.S. commitment to increase spending to combat HIV/AIDS there, it�s important to address the business aspect of this issue.

 Access to cut-rate HIV pills would save millions of lives worldwide, but rich pharmaceutical firms refuse their sales.  Profits on prescription drugs are made mostly from sales in the U.S. and Europe, yet the companies that make these drugs are increasingly concerned about what's happening in South Africa, whose leaders say they need to bypass patent laws to provide cheap generic versions of AIDS drugs to their citizens.  In South Africa AIDS therapy costs $10,000 per person per year at current patented prices.  If the South African government attempted to treat 700,000 people, this would cost $7 billion at current patented prices, equivalent to 27 times the government's entire budget for medicines.

 Prior to his African trip, AIDS activists there questioned President Bush's purported commitment to fighting the pandemic, asking whether his policies were aimed more at helping leading drugs companies: "Is the pharmaceutical industry running your AIDS program?  And does it want to run ours too?" an African medical leader asked in an open letter to the US leader.  Ironically, just before his visit, President Bush announced that Randall Tobias, the former chairman and CEO of Eli Lilly Co., would take the position of "Czar" in charge of U.S. global HIV/AIDS funding.

The world�s pharmaceutical companies comprise the highest earning industry on the planet, but they refuse to allow generic AIDS drugs to be sold, condemning millions to unnecessary deaths.  It's not as if the pharmaceutical companies stand to gain a large amount of money, or are at risk of being unable to fund further research.  The markets in question are tiny - in 1999 only around 3 percent of Glaxo Wellcome's turnover came from the whole of Africa and the Middle East - South Africa itself is thus a financially insignificant market.  Nor do drug companies actually do all research: much of the work is done in universities and other public institutions who then license companies to produce their discoveries commercially, the university getting a share of the profits.  Major pharmaceutical companies spend around twice as much on marketing as research and development.  The AIDS drugs at issue in South Africa are relatively old and their development costs are already paid off - the only remaining cost for the companies is the small one of actually producing the drugs, making their profit per unit around 95 percent.

The patent system restricts the free market in such a way as to increase prices.  While originally designed to encourage research and development by protecting inventors' rights to market their discoveries, current international patent law allows companies to keep exclusive rights over drugs long after the start-up costs have been paid for.  This allows them to keep charging high prices when even a free market would have let cheaper competitors in to sell the now-established product. The drug companies are trying to protect a privileged market position that permits them abnormal profits at the cost of thousands of lives.

Although he made significant commitments, key questions about Bush�s AIDS policy remained unanswered; including the level of funding that will actually be appropriated.  While $3 billion dollars a year has been authorized by Congress, Bush requested no additional funds for this fiscal year and less than $2 billion for fiscal year 2004, including only $200 million instead of $1 billion for the Global Fund to Fight Aids.

Blacks in America and Africa have reason to follow this issue closely.  Every day 8,500 people die of AIDS - many of them unnecessarily.  Bush, Congress, drug companies and the caring public need to get their concern together with the necessary cash so the world can close the loop on this unfinished business. 

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