IRIN FOCUS on drug pricing

As a benchmark of international solidarity there are few better examples than the billions of dollars spent and the years of work that went into minimising the impact of the Y2K bug. But for a far more lethal virus, the international community could only raise US $165 million in 1997 for AIDS prevention in the world’s most affected countries. For the African continent, where 70 percent of the world’s total HIV/AIDS cases occur, the affordability of drugs that can cut mother-to-child transmission and sustain lives is a pressing concern, African representatives to the UN Security Council meeting on AIDS said this week. But South Africa, with one of the fastest growing HIV/AIDS rates in the world, has been frustrated in an attempt to more cheaply source AIDS-therapy drugs by its own pharmaceutical industry, analysts told IRIN. HIV/AIDS drug-therapy cocktails cost about US $12,000 a year per patient in many African countries - beyond the reach of all but the most wealthy. South Africa has some 4 million HIV/AIDS survivors, and under current market prices providing them all with anti-retroviral treatment would cost 40 times the health ministry’s pharmaceutical budget. But there are measures that some studies show could produce substantial savings. Compulsory licensing enables governments to instruct a patent holder to license the right to use its patent to a company or government agency. Parallel importing allows importers to shop around for the cheapest source of drugs for resale without authorisation of the original seller. Both mechanisms are permitted under World Trade Organisation rules. A section of South Africa’s 1997 Medicines and Related Substances Amendment Act authorises the government to use compulsory licensing and parallel importing to increase accessibility and affordability of essential medicines. But a lawsuit by South Africa’s Pharmaceutical Manufacturers’ Association (PMA) over the issue of intellectual property rights has prevented its implementation. The PMA (comprising mainly subsidiaries of the drug multinationals that play an important role in US election campaign funding) had been backed by US Vice-President Al Gore. Following a storm of protest in the United States, Gore announced a change of heart, and late last year South Africa was taken off the US government’s “Special 301 Watch List” of countries receiving heightened trade scrutiny. Although the PMA “suspended” its lawsuit, according to Mark Haywood of the AIDS Law Project, in law “there is no such thing as a ‘suspension’ - the PMA can either withdraw the lawsuit or go ahead with it. Basically there is no point to the court action but they are standing by it and are preventing any type of active discussion or partnership on a treatment policy for HIV/AIDS.” PMA Chief Executive Mirryena Deeb denies parallel importing or compulsory licensing would mean cheaper HIV/AIDS drugs for South Africans. “That’s nonsense. There is nothing in the legislation that we’re challenging that would bring about affordable treatment for AIDS,” she told IRIN. Instead, she argued, if the government bought in bulk through a state tender system much more competitive prices could be offered. “No drugs fall that much in value through a tender system,” Ian Roberts, special adviser to the ministry of health told IRIN. “The solution is not to put it out to tender but to build sustainable policies to ensure affordability.” In truth, Haywood said, WTO rules make it so complicated to invoke compulsory licensing or parallel importing that they could only rarely be used: “The PMA is just being bloody-minded.” The aim of the government’s 1997 legislation - and subsequent but since withdrawn 1998 Medicines and Medical Devices Regulatory Act - was to bring down the price of medicine for South Africans in a country where pharmaceuticals represent roughly 22 percent of healthcare costs compared with Britain’s 8 percent. “I don’t know whether we could solve the problem of anti-retrovirals. But I do know it’s completely unproductive to take the South African government to court,” Roberts said. “That’s the first thing that’s not going to solve the AIDS problem in this country.”