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17 January 2000

Only westerners can afford to be ill

Pharmaceutical companies want to keep exclusive patents that force the price of medicines beyond the

By Isabel Hilton

Elizabeth Kumai sat in one of the two tiny rooms that, with a lavatory, constituted her home in the township of Zonkizizwe, outside Johannesburg.

A woman in her early 60s, Elizabeth has lived here with her aged mother since the death from Aids of her daughter last year. Now she’s anxious about her rebellious 14-year-old granddaughter. Since her mother’s illness and death, the teenager has been living with a migrant worker in the vast barracks-like hostel that Elizabeth can see from her front door. It’s only a matter of time, she fears, before her grand-daughter, too, is infected with the Aids virus. If she does get it, there will be nothing her grandmother can do to slow the girl’s swift passage through chronic illness to death. Neither Elizabeth nor her government can afford the drugs that, in New York or London, can make living with HIV almost as tolerable as living with diabetes. In South Africa the only way to postpone a swift death from Aids is to avoid getting the virus in the first place. For Elizabeth’s granddaughter it may already be too late.

There are an estimated 3.6 million HIV-positive South Africans. A schoolteacher today in South Africa can look at a high school class and know that one-third of the pupils will be dead within ten years. The Aids epidemic in South Africa is the more breathtaking for having emerged out of a long silence. Under apartheid, health activists complain, the steady growth of infection was ignored, and when Nelson Mandela came to power, the ANC ignored it, too. Over the past five years, that inaction has been fatal. Now, in some South African ante-natal clinics, an infection rate of one in three expectant mothers is reported.

We now recognise the connection between underdevelopment and ill-health: economists acknowledge that the chronic ill-health of the populations of tropical countries is a drag on development. Intervene there, and the economic pay-off could be dramatic. In South Africa, for instance, leaving aside the direct medical costs of the Aids epidemic, industry and commerce face a huge bill to replace personnel who have fallen victim to Aids.

This has become more than a health crisis. The South African government’s response to its Aids epidemic may become the first major test of the World Trade Organisation’s rules on intellectual property right. At issue is a question that is being posed with increasing urgency in the developing world: how can the governments of poor countries get the drugs they need for the diseases that destroy their populations and ravage their economies?

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Of the fatal diseases that strike people in developing countries, tropical diseases are by far the most numerous. Some, such as malaria, are well-known and widespread; others, such as leishmaniasis, are equally deadly but more localised. But because these are diseases of the poor, and the poor – like their governments – have low purchasing power, the multinational drug companies are not interested in developing or marketing drugs for these diseases.

Drugs have been developed for Aids for the western market, but because they are new and still protected by patent rules, they remain prohibitively expensive. The monthly cost of treating a patient with anti-retrovirals is nearly eight times the average household income in South Africa.

The drug companies’ response to the Aids crisis has been to offer limited drug-donation programmes, training and discounts on certain supplies. The South African government’s reaction has been to attempt to implement some provisions of the WTO rules that enable access to cheaper drugs as of right. The result is a ferocious dispute between the government of South Africa and its supporters on one side and the pharmaceutical companies, the governments of the United States and the European Union on the other.

The roots of the row lie in the WTO’s ambition to build a uniform system of patent protection. The Trade Related aspects of Intellectual Property Rights (Trips) agreement was one of the most fiercely negotiated parts of the WTO rules.

The agreement represented an attempt to mitigate the negative effects of worldwide patent protection, which renders pharmaceuticals more expensive in poor countries. Trips allows governments access to pharmaceuticals at a reduced price in three ways: through compulsory licensing, in which a government can license a manufacturer to produce a drug without the permission of the patent holder; parallel importing, in which a government can shop around for bargain supplies; and generic substitution – in other words, it uses, where it exists, the cheaper generic alternative to a patent medicine.

When the South African government brought in the amendments to the Medicines Act that would legalise these mechanisms in South Africa, the pharmaceutical industry reacted furiously. It raised a lawsuit with 40 South Africa-based drug companies to challenge the law. The industry lobbied for government support at an international level, too: the US government began to lean on the government of South Africa and, in April last year, South Africa was placed on the US Trade Department’s 301 watchlist – a status reserved for countries that are considered unsafe for US investors. To get off the list, South Africa would have to adopt even stricter rules on intellectual property right than those enforced by the WTO.

Mark Otten, director of the Intellectual Property Division of the WTO, was reluctant to comment on the South African case, but he made it clear that parallel imports and compulsory licensing were allowed under Trips, and that the agreement had not been to the liking of the US government.

Since the agreement the US has been using its muscle bilaterally to occupy some of the ground it failed to win in the multilateral negotiations – small countries are easier to bully individually – and if South Africa were to win a case in the WTO, other developing countries would be tempted to follow its example.

The issue is now hot politics in the US, where Aids activists accuse the drug companies of putting profits before humanity. The drug companies point out, with some justice, that sub-Saharan Africa, including rural South Africa, does not have the medical infrastructure to administer anti-retrovirals, even if the drug companies were to give them away free.

But the virulence of the industry’s reaction to the Medicines Act is a sign of its determination to tighten the Trips agreement in its favour. The legal case is now bogged down in the South African courts and the government has made no attempt to exercise its right of compulsory licensing. Whatever the outcome, though, the issue of medicines for the poor is inescapably on the agenda both of the drug companies and such international bodies as the World Bank and the World Health Organisation.

South Africa represents only 1 per cent of the worldwide drug market but, for all the industry’s charitable ventures, it still produces 2 per cent of the profits. This is due to the unusually high prices charged for drugs in South Africa. There are several proposals on the tables of think-tanks and international agencies that could help address what the economist Jeffrey Sachs calls the “market failure” which leaves millions of people without access to medicines, but the industry’s determination to extend intellectual property rights at all costs bodes ill for any of these initiatives. As far as the multinationals are concerned, there is more at stake than the lives of the world’s poor.

Isabel Hilton’s series “The Bitter Pill” concludes on Radio 4 on Tuesday 18 January at 8pm