In recent years, humanitarians have been taking a similar approach toglobal public health. Shouldn't we be rushing medicine to people who need it, nomatter where they live and no matter how much money they have in their pockets?
Today, microbial plagues are devastating the developing world far more thanhunger is. Yet there is no rush to provide assistance. On the contrary,governments and activists have had to force drug companies to help people who aredying simply because they cannot afford the medicine that might save them.
The AIDS pandemic, which has killed 22 million people worldwide and hasinfected an estimated 36 million (including 26 million in Africa), is only themost notorious of these manageable global killers. According to Doctors withoutBorders--a group that won the Nobel Prize last year for its tireless efforts tosecure medicine for the world's diseased masses--research and development wouldgo a long way toward fighting tuberculosis, malaria, and leishmaniasis (blackfever) as well.
Tuberculosis, largely eliminated in the industrialized world since the 1950s,today infects eight million people a year, 77 percent of whom do not have accessto medicine. The result is two million deaths a year, many of which could beavoided with antibiotics that cost less than $100 per course of treatment.Pathogenic resistance to those drugs is growing, however, and few new medicineswill kill the most virulent strains of this age-old scourge.
Malaria infects more than 300 million people worldwide every year and kills anestimated one million to two million. Chloroquine, the standard treatment sincethe 1940s, is increasingly ineffective because of resistance; no new drugs formalaria are in the pipeline.
Leishmaniasis, an immune-system disease that is transmitted by sand flies, hasinfected more than 12 million people in 88 developing countries.Leishmaniasis-related conditions, including diarrhea and pneumonia, kill morethan 500,000 people a year. The standard course of treatment--a derivative of theheavy metal antimony--costs $150 and has nasty side effects. As with malaria, nonew drugs have been developed to combat this disease since the 1930s.
The escalating campaign to force the global pharmaceuticalindustry to provide affordable medicines to fight these plagues took another stepforward this November in Doha, Qatar, where the World Trade Organization met tolaunch the next round of trade negotiations. A coalition of more than 80developing nations and nongovernmental organizations (NGOs) pushed the WTO toreaffirm language that already exists in its charter. Every nation has the rightto void patent laws and grant licenses to generic manufacturers of essentialmedicines in order to meet public-health emergencies, the resolution read. U.S.Trade Representative Robert Zoellick, whose office usually acts on the industry'sbehalf when faced with intellectual-property issues, opposed the language untilthe last moment. The Clinton administration, with similar priorities, threatenedtrade sanctions against South Africa after it passed an essential-medicineslicensing law in 1997. The Bush administration did the same until April of thisyear, when 39 multinational drug companies finally dropped their suit against thelaw.
In the weeks leading up to Doha, the United States and Switzerland dideverything they could to water down the resolution that supports compulsorylicensing to meet public-health emergencies. They backed down only when itappeared that the issue might doom the Doha talks.
Listening to Cipro
By the time Doha rolled around, Big Pharma and its allies inthe U.S. government were already on shaky ground because of the anthrax crisis.As the government scrambled to acquire an adequate supply of antibiotics to treata worst-case bioterrorist attack, the Department of Health and Human Servicesasked Bayer AG, maker of ciprofloxacin (the one anti-anthrax drug that is stillon patent), to give the government a special deal. Those negotiations revealed toanyone paying attention--and that included virtually every health and trademinister in the developing world--that the global pharmaceutical industry and itsU.S. government allies were more concerned with protecting pill patents than withproviding affordable medicine to meet a crisis.
Within a week of NBC anchor and terror target Tom Brokaw's on-airdeclaration "In Cipro we trust," Health and Human Services Secretary TommyThompson, the glad-handing former Wisconsin governor best known for cracking downon his state's welfare mothers, began sounding like the minister in charge ofCanada's national health service. He threatened to void Bayer's patent for Ciprounless it delivered up to 300 million tablets at cut-rate prices. Senator CharlesSchumer of New York and Congressman Sherrod Brown of Ohio introduced legislationthat would have compelled the administration to seize Bayer's patent for genericproduction.
Thompson, feeling the heat, told Bayer to get out its sharp pencils and cutthe United States a better deal. At a hastily arranged meeting in Washington, thecompany delivered--but at twice the generic price. Three generic makers said they could make Cipro for 40 cents a pill, less than one-tenth of the pre-September11 average wholesale price--though their hands were hardly clean either: Genericmanufacturers have accepted more than $200 million from Bayer over the pastseveral years not to make Cipro. This arrangement, a common drug-industrypractice, is under investigation by the Federal Trade Commission. Trying to reinin its galloping public-relations fiasco, Bayer ran dozens of full-page ads inthe nation's leading papers as it sought to reassure Americans that the companystood by them.
Even the deal to purchase cut-rate Cipro was dubious public policy. Thompson'sbig purchase also ignored the fact that there were far cheaper alternatives, likegeneric doxycycline, that treat anthrax as well as Cipro does. The government'srush to stockpile Cipro ignored the potent antibiotic's serious side effects,which can include nausea, diarrhea, and potentially crippling damage to thecartilage of weight-bearing joints. The high-profile move encouraged doctors towrite prophylactic prescriptions, thus ignoring the warnings of the government'sown public-health experts that the drug's overuse might breed superbugs resistantto all strains of antibiotics.
By the time public-health officials had stuffed the cotton back into the Ciprobottle, developing-world health ministers, NGO activists, and generic-drugmanufacturers were having a public-relations field day. Weren't Thompson'sefforts to negotiate lower prices precisely what they'd been trying to do foryears--open up access to affordable HIV/AIDS medications? Hadn't the drugindustry and the U.S. government consistently thrown up legal roadblocks to theirefforts? Editorials supporting the Doha resolution popped up in almost everymajor U.S. newspaper. "Americans today can surely understand the need to givepoor countries every possible weapon to fight back," said The New YorkTimes.
It's unfortunate that it took an anthrax-bioterrorism crisis forthe majority of Americans to finally get it. Only in the past year haveorganizations like Doctors without Borders, the Consumer Project on Technology,and the United Nations' agency UNAIDS succeeded in convincing the drug industry'sgiants to sell AIDS medicines at reduced prices.
And why have the drug companies finally come around? Mounting mediascrutiny of the affordable-AIDS-medicines issue surely played a part. But in theend, industry leaders voluntarily established cheap-treatment programs to avoidwhat in their eyes was a worse fate: widespread adoption of the Brazilianprecedent.
Free Trade, Free Drug Production
In Brazil, health authorities have one of the best recordsin the developing world when it comes to providing drugs for their HIV-positivepopulation. They've used existing international trade law to issue compulsorylicenses to generic-drug manufacturers for the production of inexpensive AIDSdrugs. And when they haven't contracted with generic manufacturers directly,they've threatened to do so in order to wrest lower prices from globalpharmaceutical firms. Last August, Swiss-based Roche reduced the price of theAIDS drug nelfinavir to 30 percent of its U.S. wholesale price after theBrazilian health ministry threatened to seize the patent and award it to astate-owned manufacturer.
According to many activists, the Doha resolution didn't go far enough. TheTRIPS agreement, the WTO's protocol governing trade-related aspects ofintellectual property, still prohibits consumers from directly buying so-calledparallel imports, which are cheaper generics from countries with low-costproduction facilities. Many developing countries don't have the manufacturingcapacity to produce complex chemicals like pharmaceuticals. A reasonableparallel-import clause would allow health officials in one country to ask ageneric manufacturer in another to produce the critical medicines it needs tomeet a national health emergency.
Despite the limited nature of the Doha resolution, Big Pharma reacted to thesetback with the usual complaints. Allowing generic manufacturers in developingcountries to produce branded products would lead to first-world gray markets. Thewily generic makers in India, Brazil, and South Africa would inevitably exporttheir low-cost medicines to Europe, the United States, and Japan at prices farbelow the first-world patent holders' rates. Only by maintaining high prices formedicines would industry have sufficient incentive to come up with new cures fordisease. Indeed, medical progress itself depends on maintaining the sanctity ofthe global patent system. "This is a defeat for drug companies doing research inAIDS, tuberculosis, and the like," said Harvey Bale, a lobbyist for theInternational Federation of Pharmaceutical Manufacturers Associations.
Again, the Cipro case effectively debunked those claims. Ciprofloxacin,Bayer's best-selling drug, is the top-selling antibiotic in the world. Itgenerated over $1.6 billion in sales last year, largely because it sold wholesalefor $4.67 a pill. Since generic manufacturers can make the drug for a tenth ofthat price, Bayer no doubt was already earning enough from the markup to fund itsR-and-D labs, cover its marketing costs, and still make money. So when theanthrax attack triggered unanticipated demand from the U.S. and Canadiangovernments, any price set at more than production costs would have representedpure profit to the firm.
Drugs for HIV-infected patients around the world follow a similar dynamic.Pharmaceutical companies set their prices for AIDS drugs based on first-worldmarket conditions. A decade ago, there was a huge uproar over the price of theinitial AIDS drugs, which were largely the product of government research andlicensed to Glaxo Wellcome--now GlaxoSmithKline--and Bristol-Myers Squibb. Thosecomplaints died down once insurance companies and government agencies beganpicking up the tab. We certainly don't hear many complaints these days from thedrug companies, although they occasionally grouse that profits on AIDS drugs havenot been as high as they had hoped.
The third world's desperate need for AIDS drugs can be compared to theCipro affair in that it represents a form of unanticipated demand. Most of the 30million people in developing countries who have the disease can spare little orno money to pay for drugs. And where there's no money, there's no market. Theirgovernments can make a market, but only by spending scarce public-health funds.(Only recently have many governments, especially in Africa, been willing to takethat step.) Buying those drugs at the marginal cost of production would notchange the underlying research incentives for industry.
Indeed, if the global South's poor were the only people in the world who wereHIV-positive, there would be no industry R and D aimed at AIDS, just as there hasbeen precious little R and D--and virtually no new drugs--for tuberculosis,malaria, and leishmaniasis. A recent Doctors without Borders survey of theworld's 11 largest pharmaceutical firms found that of the 1,393 new drugsintroduced over the past quarter-century, only 13 were aimed at tropicaldiseases.
Governments are the only parties that can fill the public-health gap.Bioterrorism again provides a convenient example. A few weeks into the anthraxcrisis, several leading industry players called on the government to treat themlike defense contractors by giving out "cost-plus" contracts for research anddevelopment of new antibiotics to counter germ-warfare agents. Given theuncertainty about the size of the market and the demonstrated government concernabout price, they said, it would be the only way to keep the industry's hand inthe game.
Cost-plus R-and-D contracts to produce drugs for diseases that have no market?Now there's a thought. But why stop at bioterrorism agents? Why not malaria? Whynot tuberculosis? And why not allow public-sector labs to compete with theindustry labs for those contracts, so the patents could stay in the publicdomain? Any drugs that came out of such government-funded research should betreated as a social good, both domestically and globally, and broadly distributedbased on need. Such a government-funded program might even lessen anti-Americanhostility in the developing world.