Pharmaceutical Corporations and AIDS

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  • by Anup Shah
  • This Page Last Updated Sunday, June 02, 2002

"Solving the world AIDS crisis will require something that governments, international lending institutions and multinational companies -- the other flank of international governance -- often lack: compassion and the ability to see beyond profit. Racism also will have to be factored into such moral calculus."

Tamara Straus, The Moral Calculus of AIDS, AlterNet, April 10 2001

US Threatened Trade Sanctions on South Africa for Trying to Help its People

South Africa is now the epicentre of the global Aids quake.... The international community has been quick to respond to this catastrophe: the United States has threatened South Africa with sanctions for trying to prevent its citizens from catching the disease.

George Mobiot, Hanging on to the profits from Aids, The Guardian, August 5, 1999

In the middle of 1999, the interests of the pharmaceutical industry (via lobbying through Vice President Al Gore) had resulted in the US actually threatening South Africa with trade sanctions for trying to develop generic and cheaper drugs to fight AIDS etc.

An industry association, Pharmaceutical Research and Manufacturers of America (PhRMA) and companies like Bristol-Myers Squibb, Glaxo-Wellcome, and Pfizer, which make the most widely used AIDS drugs, had charged South Africa with violating the World Trade Organization's rules regarding patents and intellectual property.

However, there was nothing illegal about what South Africa was doing, and so the the actions of the pharmaceutical industry drew a lot of criticism that they were concerned mostly about the impacts to their sales. (While the World Trade Organization's Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement is controversial for many other aspects in its provisions, it still allows the ability for South Africa to produce cheaper drugs due to national emergencies and because it is for public, non-commercial use.)

Subsequent strong lobbying by Act Up-New York, James Love, Ralph Nader's Consumer Project on Technology and others seem to have managed to force Gore to back down, for now.

Of diseases in the Third World, AIDS is getting the most attention and focus. Not coincidentally, it is also one of the few diseases that remain a threat to First World countries.

Pharmaceutical companies but profits before needs, Project Censored (Seven Stories Press, 2000), P. 32

It has truly been incredible that such a motion was even considered in the first place. (Or is it, given that the underlying goal for most pharmaceutical companies is "profit at all costs"?, as charged by Delhi-based Centre for Science and Environment. The way that various international trade agreements are negotiated and dominated has not been atypical of this, either.)

Also, now that there is a possibility that the economy of various countries in Africa will be affected, the US will refrain from imposing sanctions on Sub-Saharan governments.

The possible implications of such a trade sanction would have been considerable when realizing that, according to UNICEF, more people in Africa have died from AIDS than from conflicts.

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But Pharmaceutical companies continue the pressure

However, that has not stopped the pharmaceutical industry continuing to pursue its interests. Some 40 such companies took South Africa to court beginning of March 2001, over language in the Medicines Act which would allow for generic production and parallel importing of affordable AIDS drugs.

The public outrage around the world that resulted from these companies trying to do such a thing while people were dying led to them drop their case in April, 2001.

In fact, while there have been a number of apparent successes by pressure groups crying for more justice, as Jamie Love suggests, a lot of the resulting actions by pharmaceutical companies and supportive governments has been "just slick humanitarian-flavored spin". For example, he points out that:

  • "the real issue is that the major pharmaceutical companies still maintain control over who can manufacture their patented drugs and how much they cost"
  • developing countries have not really been allowed in any major way to issue "compulsory licenses that would allow generic drug manufacturers to create cheap and ubiquitous versions of AIDS drugs" with which "developing nations would drive down the cost of raw materials, increase competition and make the drugs more widely available."
  • he is "unimpressed by the fact that pharmaceutical companies, pressured by public opinion and media coverage, have taken positive steps to make AIDS drugs cheaper and easier to get. In almost every case, as he points out, they are simply dropping prices or just giving the pills away rather than granting licenses for local manufacture. And he doesn't believe that corporate largess alone will be enough to stave off one of the worst epidemics in human history."

You can see the above points made by an article in Salon.com from Daryl Lindsey, called The AIDS-drug warrior, who talks about the outspoken AIDS-drug activist, mentioned above Jamie Love.

(The issue of maintaining control over who can manufacture the drugs and their costs, are forms of dependency that assure inequality. This is described more in the poverty section of this web site.)

While, as the French paper, Le Monde reports, Pfizer and 10 others have promised to give the US Congress General Accounting Office all the data it needs to check drug prices, another issue has also emerged, which is the benefits that some universities get from the patents:

The world's largest pharmaceuticals company, Pfizer, and 10 others have promised to give the US Congress General Accounting Office all the data it needs to check drug prices. Like Europe, the US is concerned about the massive profits made by the pharmaceuticals industry. In rich countries, the laboratories' pricing policies are a scam; in poor countries, they are preventing most people from getting treatment. Stavudine, used to treat Aids, is the perfect demonstration of what is wrong with the system. It hugely profits its makers - and Yale University, where it was researched.

... Patenting an invention means nothing without sales. In 1988, two years after filing its patent (4), Yale granted pharmaceuticals giant Bristol-Myers Squibb (BMS) exclusive rights to exploit its invention. This "exclusive licence" gave BMS a monopoly in every country where Yale filed its patent: the US, Europe, Canada, Australia, South Africa. It means the company is free to set prices as it likes; a 40 mg tablet costs $4.28 (5) on average (the dose is two tablets a day).

Philippe Demenet, The high cost of living; Yale Shares Profits from AIDS Drugs, Le Monde Diplomatique, February 2002

The same article above continues to point out about Yale University activists commenting on the decision to lower drug prices. Those activists point out that "What we really wanted is a shift in the whole balance of power about the issue, until the decision-making process about health care is really in the hands of people who need that health care. They don't actually give up the patent itself in South Africa. Anything that affects the relationship between the university and a drug company is a very touchy subject because the university made a big amount of money out of there."

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Some economic causes and impacts of AIDS

Ninety-five percent of people with HIV in the world live in developing countries, which also see almost all of deaths from AIDS. But they have the poorest access to drugs that are developed in the industrialised world.

Johanna Son, Developing Nations See Trade Battle on HIV Drugs, Inter Press Service, October 27, 1999

Consider the following:

  • The AIDS epidemic is so devastating that the World Bank and UNAIDS eventually launched a new partnership in 1999 to raise the level of response as people began to realize the seriousness of it.
  • Debt "relief" policies promoted by the World Bank, IMF and the wealthy nations that finance them are also believed to be creating an environment that would not help tackle the AIDS crisis effectively and that debt actually exacerbates AIDS, according to a report from the World Development Movement.
  • Structural Adjustment policies from the IMF and World Bank are seen by some as a fancy word for enforcing cutbacks. It means that resources that could have been used to help tackle this issue (and many other issues that affect the developing nations) are being cut back.
  • "It is no coincidence that the AIDS crisis has exploded most dramatically in highly indebted countries", according to Jubilee 2000. (For more about how structural adjustment policies can affect entire peoples and make situations worse, check out this site's Structural Adjustment section.)

Africa Action, an organization looking into political, economic and social justice for Africa has an article on the impacts of IMF and World Bank structural adjustments and its impacts on health in Africa, and is worth quoting at length:

Health status is influenced by socioeconomic factors as well as by the state of health care delivery systems. The policies prescribed by the World Bank and IMF have increased poverty in African countries and mandated cutbacks in the health sector. Combined, this has caused a massive deterioration in the continent's health status.

The health care systems inherited by most African states after the colonial era were unevenly weighted toward privileged elites and urban centers. In the 1960s and 1970s, substantial progress was made in improving the reach of health care services in many African countries. Most African governments increased spending on the health sector during this period. They endeavored to extend primary health care and to emphasize the development of a public health system to redress the inequalities of the colonial era. The World Health Organization (WHO) emphasized the importance of primary healthcare at the historic Alma Ata Conference in 1978. The Declaration of Alma Ata focused on a community-based approach to health care and resolved that comprehensive health care was a basic right and a responsibility of government.

These efforts undertaken by African governments after independence were quite successful....

While the progress across the African continent was uneven, it was significant, not only because of its positive effects on the health of African populations. It also illustrated a commitment by African leaders to the principle of building and developing their health care systems.

With the economic crisis of the 1980s, much of Africa's economic and social progress over the previous two decades began to come undone. As African governments became clients of the World Bank and IMF, they forfeited control over their domestic spending priorities. The loan conditions of these institutions forced contraction in government spending on health and other social services....

The relationship between poverty and ill-health is well established. The economic austerity policies attached to World Bank and IMF loans led to intensified poverty in many African countries in the 1980s and 1990s. This increased the vulnerability of African populations to the spread of diseases and to other health problems....

The deepening poverty across the continent has created fertile ground for the spread of infectious diseases. Declining living conditions and reduced access to basic services have led to decreased health status. In Africa today, almost half of the population lacks access to safe water and adequate sanitation services. As immune systems have become weakened, the susceptibility of Africa's people to infectious diseases has greatly increased....

Even as government spending on health was cut back, the amounts being paid by African governments to foreign creditors continued to increase. By the 1990s, most African countries were spending more repaying foreign debts than on health or education for their people. Health care services in African countries disintegrated, while desperately needed resources were siphoned off by foreign creditors. It was estimated in 1997 that sub-Saharan African governments were transferring to Northern creditors four times what they were spending on the health of their people. In 1998, Senegal spent five times as much repaying foreign debts as on health. Across Africa, debt repayments compete directly with spending on Africa's health care services.

The erosion of Africa's health care infrastructure has left many countries unable to cope with the impact of HIV/AIDS and other diseases. Efforts to address the health crisis have been undermined by the lack of available resources and the breakdown in health care delivery systems. The privatization of basic health care has further impeded the response to the health crisis....

The World Bank has recommended several forms of privatization in the health sector.... Throughout Africa, the privatization of health care has reduced access to necessary services. The introduction of market principles into health care delivery has transformed health care from a public service to a private commodity. The outcome has been the denial of access to the poor, who cannot afford to pay for private care.... For example ... user fees have actually succeeded in driving the poor away from health care [while] the promotion of insurance schemes as a means to defray the costs of private health care ... is inherently flawed in the African context. Less than 10% of Africa's labor force is employed in the formal job sector.

Beyond the issue of affordability, private health care is also inappropriate in responding to Africa's particular health needs. When infectious diseases constitute the greatest challenge to health in Africa, public health services are essential. Private health care cannot make the necessary interventions at the community level. Private care is less effective at prevention, and is less able to cope with epidemic situations. Successfully responding to the spread of HIV/AIDS and other diseases in Africa requires strong public health care services.

The privatization of health care in Africa has created a two-tier system which reinforces economic and social inequalities. As health care has become an expensive privilege, the poor have been unable to pay for essential services. The result has been reduced access and increased rates of illness and mortality. Despite these devastating consequences, the World Bank and IMF have continued to push for the privatization of public health services.

Ann-Louise Colgan, Hazardous to Health: The World Bank and IMF in Africa, Africa Action, April 18, 2002

The article also comments on recent increases in funds to tackle HIV/AIDS and other problems and concludes that because some underlying causes and issues are not addressed, these steps may not have much effective impact:

The World Bank has also increased its funding for health, and for HIV/AIDS programs in particular. While the shift in focus towards prioritizing social development and poverty eradication is welcome, fundamental problems remain. New lending for health and education can achieve little when the debt burden of most African countries is already unsustainable. Debt cancellation should be the first step in enabling African countries to tackle their social development challenges. Additional resources to support health and education programs should be conceived as public investment, not new loans. The new spin on the World Bank and IMF priorities fails to change the basic agenda and operations of these institutions. Indeed, it appears to be largely an exercise in public relations. The conditions attached to World Bank and IMF loans still reflect the same orientation prescribed over the past two decades. The recent moves towards promoting poverty reduction have actually permitted these institutions to increase the scope of their loan conditions to include social sector reforms and governance aspects. This allows an even greater intrusion into the domestic policies of African countries. It is highly inappropriate that external creditors should have such control over the priorities of African governments. And it is disingenuous for such creditors to proclaim concern with poverty reduction when they continue to drain desperately needed resources from the poorest countries....

The free market fundamentalism of the World Bank and IMF has had a disastrous impact on Africa's health. The all-out pursuit of market-led growth has undermined health and health care in African countries. It has forced governments to sacrifice social needs to meet macroeconomic goals.

This approach to development is fundamentally flawed. The failure to prioritize public health denies its significance in promoting long-term economic growth. As the WHO Commission on Macroeconomics and Health recently concluded, health is more than an outcome of development, it is a crucial means to achieving development.

Ann-Louise Colgan, Hazardous to Health: The World Bank and IMF in Africa, Africa Action, April 18, 2002

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Author and Page Information

  • by Anup Shah
  • Created: Sunday, August 01, 1999
  • Last Updated: Sunday, June 02, 2002

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