Drug wars

Slashing the prices of AIDS drugs in Africa isn't going to make a difference -- but letting cheap generic drugs onto the market might ease the crisis

by Tom Witkowski

By the numbers By charging high prices and protecting their intellectual property rights, drug companies -- which in recent decades have earned high returns on Wall Street -- are merely doing what is expected of them in a free-market economy. That means producing profit, not curing disease. Just look at the industry's most notable recent discovery -- a pill for hard-ons on demand. "At the end of the day you're going to get what the market wants, so we'll have 25 different antidepressants for dogs and not one for tropical disease that affects millions of human beings," says Richard Jefferys, director of the Access Project of the AIDS Treatment Data Network in New York. But to change that means starting down the slippery slope into stricter government regulation of the pharmaceutical industry. That leads right into the fires of the debate about nationalized health care. In short, activists say, it's easier to count on promised price cuts to solve the AIDS problem than it is to find a real solution. To pursue that real solution means opening the Pandora's box of compulsory drug licensing and parallel importing. It also means finding out the truth about drug pricing. The AIDS drug AZT, for example, costs $1.69 per pill in the United States, 91 cents in Zimbabwe, and 47 cents in South Africa. Generic knockoffs of the drug cost just 18 cents in Brazil. Government intervention is one reason for those discrepancies, but basic market principles are the other. If a drug company charges $15,000 for an annual course of medication, and no one can afford that in a given market, the company must lower the price to a level the market can bear -- low enough to attract some customers. "Financially, what you want is a product priced high enough to cover your costs and low enough for someone to buy it," says David Scondras of the nonprofit organization Search for a Cure. So in South Africa, for instance, a 70 or 80 percent cut in prices puts the drug within reach of the middle class, Scondras says. Even if the middle class makes up only five to 10 percent of the population, that gives the drug companies a market where before they had none. Thus, dropping prices 80 percent is not a humanitarian gesture; it is just good business. "The drugmakers claim they set prices to cover research costs. That is not true," said Boston University professor Alan Sager, a principal in the School of Public Health's Access and Affordability Monitoring Project, in testimony before the House Ways and Means Committee's Subcommittee on Health on February 15. "They set the prices that they believe will maximize profits, and that's what their stockholders expect. In 1998, the drugmakers' profits averaged more than one and one-half times their research costs." Deborah Socolar, a researcher at the BU monitoring project and an expert on domestic drug pricing, says the five pharmaceutical companies that announced price reductions of AIDS drugs sold in Africa are, indeed, merely maximizing profits: "If you're not selling [these drugs] at all, then to have something coming in, it's revenue they weren't going to have otherwise. Some array of people will now be able to buy the drug. [But] even if you're talking about a 10th of the people in need, it's a pretty feeble response." The ethical and moral solution, activists claim, is for drug companies simply to cover the cost of producing the drugs and whatever research they might do. "We believe you can get the price down to $20 a month," says James Love of the Washington, DC-based Consumer Project on Technology. Profits might suffer in the short term, but human lives would be saved. The Access Project's Jefferys takes it one step further, arguing that the time has come to end the free-market model of today's pharmaceutical industry. "The argument that needs to be made is that there are some areas of life where you can't stand up and wave a flag saying 'free market' and 'public-private partnership' and hope that it's going to be fine," he says. -- Tom Witkowski

Drug companies charge that the manufacture of generic drugs will not solve the sub-Saharan AIDS problem. They're right. Some of these countries don't even have access to clean water. Condom use is not as commonplace as it needs to be. The infrastructure and education that are part of more-successful AIDS treatments in Thailand and Brazil are practically nonexistent in African countries.

"It's too late to do much in Africa," says John Ziolkowski, whose Boston company, AIDS Care Initiative, helps Thailand and India acquire the drug compounds they need to manufacture generic AIDS drugs. "Unless we have a vaccine or a cure, these drugs are a drop in a bucket. There's not a level of infrastructure in place for the treatment that is required."

Even if his own dire assessment of the crisis in Africa is correct, Ziolkowski adds that's still no reason to deny people there access to drugs. "I do believe these governments and people do have a right to access these drugs if they choose. There's no reason not to make drugs accessible to anybody that wants them. It's providing people hope," he says.

One year ago a Malawian woman with AIDS made a statement to Congress asking for more access to drugs. Chatinkha Nkhoma has lived in Germany and the United States, and received her bachelor's degree in international relations from George Washington University in 1995. She was working in the Malawi foreign-affairs ministry when her illness was diagnosed. She is one of the relatively few Africans able to buy AIDS drugs.

"Please allow us to have access to the treatment drugs so we can raise our children a little longer and not leave them as orphans," she told Congress. "Every time I take these drugs, I cannot help but feel guilty, knowing that my brothers, sisters, mothers, fathers, daughters, sons, uncles, aunts, our children, tomorrow's leaders -- they are all dying, slowly and painfully, because they are too poor to afford them."

Nkhoma dismissed the argument that improper use of the drugs could result in resistant strains of the virus, or that African health-care workers do not know enough about the treatments to administer them. "To say we should be condemned to death is practicing the politics of genocide," Nkhoma said. "It is no secret that we are in need of many other things. But that is not a valid reason to allow millions of people to die because they are poor."

George Carter, a member of ACT UP New York, echoes Nkhoma's charges, though somewhat more cautiously. "The pharmaceutical association has basically been committing a form of genocide. What they're doing is specifically attacking countries who have a right to seek compulsory licensing," says Carter, who spoke at 1998's World AIDS Conference, in Geneva.

"When a group or individual commits an act they know the consequences of, which will be enormous hurt and pain . . . in my view this is genocide." Carter considers the drug companies' UN agreement "glib and sickening," although he acknowledges the validity in the argument that drugs should not be made more accessible without proper education.

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Some AIDS activists believe that drug companies are fighting the use of generic drugs in African countries because they fear those cheaper drugs will find their way into the US market. But that would never happen, says the Access Project's Jefferys.

"There's been generic versions of these drugs around in India for years now, and I don't think you bump into many people in the US that are on generic versions of 3TC from Cipla," Jefferys says, referring to the Indian manufacturer.

It's more likely that pharmaceutical companies are simply trying to protect what little profit they do get from the African market. The increased sales that will result from their decision to cut the prices of AIDS drugs in Africa will keep those profits from dwindling. The decision was just good public relations.

David Scondras, a former Boston city councilor who has become an expert on the AIDS crisis in Africa, calls the companies' price-cut decision "a con game." "It's absolutely outrageous," says Scondras, whom South African president Thabo Mbeki recently appointed to his presidential panel on HIV and AIDS. (Mbeki, incidentally, was the deputy president Gore visited in February of last year to lobby against a move toward compulsory licensing.)

The international organization Doctors Without Borders also expresses skepticism toward the drug companies' plan. "The fact that a serious discussion has begun among drug companies on dramatically reducing the price of AIDS drugs is a victory, but a small one, much like an elephant giving birth to a mouse," says physician Bernard Pecoul, director of Doctors Without Borders' Access to Essential Medicines Campaign.

It would have been much better if the drug companies had announced May 11 that they would stop blocking compulsory licensing of AIDS drugs in Africa and start helping African countries build their own pharmaceutical-manufacturing plants. Building these plants would not only make cheaper drugs available, but also create jobs and get more money into the people's hands -- thus, for the long-term visionary, creating a new potential market for other drugs. Of course, that's not likely to happen (see "By the Numbers," above).

"By permitting companies to manufacture cheap copies of products, you don't take anything away from companies, because they don't have a market there," says James Love, of the Washington, DC-based Consumer Project on Technology. "What you do is stop people from dying."

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Tom Witkowski can be reached at tomwitkows@aol.com.