AIDS Drugs for Africa
An uncertain victory
Z Magazine July/August 2000
By Scott McLarty
On Wednesday, May 10, President Clinton issued an Executive Order (EO) titled “Access to HIV/AIDS Pharmaceuticals and Medical Technologies.” The order reverses the White House’s earlier policy and says the U.S. will no longer challenge sub-Saharan African nations that seek to produce low-cost generic AIDS drugs (“compulsory licensing”) and buy low-cost drugs on the international market through comparison shopping (“parallel importing”).
It’s an important shift in policy, but deserves close scrutiny. In the past, the U.S., in the person of Trade Representative Charlene Barshefsky, has threatened non-white developing nations with economic sanctions for using these practices to help suffering populations. The threats were never leveled against white and wealthy North American and European nations that used compulsory licensing and parallel importing. There was little pretense that she did so on behalf of powerful U.S. pharmaceutical lobbies with close ties to both Clinton and Gore.
Vice-president Gore had also leveled these threats, during meetings of the U.S./South Africa Binational Commission (BNC), of which Gore and South African President Thabo Mbeki are co-chairs. Gore enjoys a cozy relationship with drug companies; his connections include David Beier (domestic policy advisor), former head lobbyist for Genentech; Tony Podesta (advisor), lobbyist for the Pharmaceutical Manufacturer’s Association; Tom Downey (confidant), lobbyist for Merck; and Peter Knight (fundraiser), former Schering-Plough lobbyist.
Clinton’s action, at this late date, has less to do with his own good will than with the embarrassing protests the Administration faced from AIDS activists at Gore campaign stops in 1999, from critics like Ralph Nader, and from outraged nations around the world. The Clinton administration finally caved in when Senators Dianne Feinstein (D-CA) and Russ Feingold (D-WI) threatened to filibuster Clinton’s “Africa Growth and Opportunity Act,” which would open up Africa to even more exploitation in the name of “free trade,” unless he alters the policy.
The EO is also a capitulation to the demands of the Health GAP (Global Access Project) Coalition at the April 12 meeting with Clinton officials, including the U.S. Trade Representative (USTR), Office of AIDS Policy, National Security Council, and Health and Human Services staffers. AIDS activists thus deserve the credit for the policy reversal, not Clinton or Gore.
The Clinton White House—especially Gore—thus repositions itself politically on a sensitive issue, especially in light of the role Nader played in exposing an atrocious trade policy—Nader’s run on the Green ticket may block Gore’s bid for the White House. This is an executive order, not a piece of legislation, and can be rescinded by any future executive. It’s therefore an incentive (“constraint” or “blackmail” are perhaps better words) for anyone who cares about the issue to vote for Gore, since Nader has no chance of winning the 2000 election.”
The EO also follows Clinton’s declaration in April that AIDS is an international security threat. The statement was motivated by a CIA report titled “The Global Infectious Disease Threat and Its Implications for the United States,” and dated January, 2000. (It can be read at www.cia.gov/cia/publications/nie/report/nie99-17d.html.) The report was released as a “National Intelligence Estimate” and analyzes in detail the global impact of HIV, its similarities and differences with numerous other epidemics, and current trends in the spread and efforts to contain it, with a list of “plausible scenarios” for the course of the disease.
Some of the most revealing sections of the report cover the economic and “macroeconomic” impact, such as likely trade disruptions, lowered life expectancy and population count, shattered family structure, and political destabilization. In developing countries, HIV “will hamper the development of a civil society and other underpinnings of democracy” as “infiltration of these diseases into the ruling political and military elites and middle classes...are likely to intensify the struggle for political power to control scarce state resources.”
The resulting risks to the U.S. include bioterrorist warfare and terrorism (the report doesn’t limit itself to HIV), the closing of borders to trade, drops in employee productivity, increases in employee benefit costs, and tolls on corporate profits and foreign investment. The report admits that “the negative impact on health care delivery of privatization and the transitions in former communist states is likely to be most heavily felt in the immediate future,” although the economic allegiances of those compiling the data are clear, despite the failure of corporate-based health coverage in the U.S, i.e.,: “Free market reforms eventually will improve health care delivery.”
Critics have noted that Clinton’s executive order does not cover South American and Asian countries, which, we can presume, remain under threat of sanctions. The EO does not cover drugs for diseases unrelated to HIV.
The EO also digresses from the main issue—access to medicine—and focuses on the need of sub-Saharan African nations to undertake prevention and education. But the steps many African countries have taken or will take towards prevention and education do not erase the fact that lots of Africans are already infected, and need medicine for AIDS and other ailments as soon as possible.
The EO never admits that compulsory licensing and parallel importing are already compliant with international trade law (TRIPS)—a point raised by protestors, by South Africa and other countries, and by the U.S. Patent and Trademark Office in March 1999. Instead, it sets up a review process that requires a sub-Saharan nation’s drug policy to win approval by the U.S., and ominously, requires confirmation from U.S. authorities—i.e., U.S. Trade Representatives, who have always acted in the service of pharmaceutical firms—that the nation’s policy is in compliance with the intellectual property rights agreements in TRIPS.
Up to this point, the USTR and the Clinton administration usually ignored or misrepresented the TRIPS intellectual property rights guarantees, which is why the U.S. has threatened African nations for the past few years for trying to use compulsory licensing and parallel importing to get low-cost AIDS drugs to their people. In a June 25, 1999 letter to James Clyburn of the Congressional Black Caucus, Vice-president Gore said he supports “South Africa’s effort to enhance health care for its people, including efforts to engage in compulsory licensing and parallel importing of pharmaceuticals—so long as they are done in a way consistent with international agreements.” Gore thus obfuscated the fact that the practices are already compliant.
Congress colluded with the policy. The House of Representatives rejected the Sanders Amendment to a state department appropriations bill, in a 307 to 117 vote on July 21, 1999, which would have blocked the state department from pressuring Asian and African nations to drop practices necessary to make essential drugs available when the practices comply with TRIPS. Seven members of the Black Caucus and 110 Democrats voted to eliminate the Sanders Amendment.
Clinton’s EO is therefore a dramatic reversal in policy, but its effect will be limited. A May 11 press statement by Medecins Sans Frontieres (Doctors Without Borders) said “While the Executive Order is a step in the right direction, Doctors Without Borders is concerned with its restriction to only HIV/AIDS drugs in ‘beneficiary’ sub-Saharan African countries. This falls short of the statement made by President Clinton in Seattle on December 1, 1999, in which he broadly stated that the United States will, ‘henceforward implement its health care and trade policies in a manner that ensures that people in the poorest countries won’t have to go without medicine they so desperately need’.”
The EO doesn’t set up a program or direct money toward any program, but it establishes a policy on which U.S. Trade Representatives may negotiate in the future, preventing them, we hope, from bullying African nations for taking steps to help sick citizens.
In another arena, however, the U.S. maintained the earlier pro-corporate policy. At the 53rd World Health Assembly in Geneva, Switzerland on May 17, 2000, the U.S. delegation, headed by Dr. Tom Novotny, led the opposition to an amendment to the World Health Organization’s HIV/AIDS resolution. The amendment, proposed by Brazil, would have established a worldwide database of medicines and prices that would have given countries a certain amount of leverage in negotiating purchases from drug companies. The database would serve as proof that the ability of generic drugs in any given country pulls down all drug prices.
At one point, Dr. Novotny lied to delegates that compulsory licensing is illegal in the U.S. In fact, the U.S. issues hundreds of compulsory licenses every year. Finally, on May 20, WHA voted for a compromised version of the proposed amendment, after the U.S. and other western nations debated a coalition that included Zimbabwe, Swaziland, Mozambique, and other developing nations. Ministers from these nations insisted that their national public health policies could not depend on bargains with multinational drug companies. The compromise blocked Swaziland’s recommendation to advocate parallel importing.
“The fierce insistence by African delegations that access to affordable medication take priority over the interest of drug companies was a wake-up call to the industry-besotted U.S. delegation,” said Asia Russell in a press release from ACT UP. “In spite of strong opposition, developing nations successfully changed the mandate of the WHO on the crucial issue of affordable medications for HIV.”
“The actions of the U.S. representatives caused some delegates to question the sincerity of the Clinton [executive] order,” added Sharon Ann Lynch of ACT UP Philadelphia.
In response to Clinton’s executive order, five U.S. drug companies, in an agreement with WHO’s UNAIDS office, announced on May 11 that they will offer huge discounts on AIDS drugs in several African countries. Bristol-Myers Squibb, Glaxo Wellcome PLC, Merck, Roche Holding AG, and Boehringer Ingelheim GmbH said they’ll reduce some of their prices to as little as 10 to 15 percent of American prices.
This has little to do with “commitment” to helping the sick. The motivation is fear that generic drug production, now less likely to be challenged by the U.S., will cost these companies their monopolies on many drugs. Activists worry that nations accepting these discounts may be required to cease generic drug production. What looks like charity is a useful strategy to defend high prices and maintain monopolies, instead of allowing national governments a measure of medical self-reliance and, ironically, the kind of capitalist competition that would reduce prices.
ACT UP Philadelphia released a statement on May 12 charging that “the prohibition against compulsory licensing ties the hands of poor nations seeking self sufficiency, and imposes a remedy dependant on the generosity of multinational corporations.” ACT UP also notes that the price reductions offered by industry would not be sufficient to ensure widespread access in poor countries.
According to the May 11 analysis by Doctors Without Borders, “The net effect of implementing this type of program could lead to a further consolidation of the AIDS drug market in the hands of a small number of multinational drug companies. It will likely discourage the growth of manufacturing capacity in developing countries.”
“The African initiative also helps penetrate one of the darkest secrets of the pharmaceutical industry: how they set prices, said David Paltiel, an associate professor of health policy and administration at the Yale Medical School. The fact that prices for AIDS drugs can be reduced 90 percent without producing losses for the companies shows that drug prices are largely set by determining what the market will bear, not what the price of the product is, he said. Sidney Wolfe, director of Public Citizen, an advocacy group in Washington, DC, said that drug makers’ contention that they are selling their drugs at near-cost when they slash the price by 85 percent to 90 percent simply isn’t accurate. The cost of producing the drugs, Dr. Wolfe said, is far less than 10 percent of their American prices” (“AIDS Drug Plan Spurs Call To Cut Prices Elsewhere,” Wall Street Journal, May 12, 2000).
(American prices for drugs are much higher than prices for the same drugs in European nations and Canada, because government officials who administer their respective national health coverage plans negotiate the prices in those nations. The U.S. does not provide guaranteed national health insurance, so drug prices are negotiated by competing HMOs. One of the results is that older Americans, especially folks on Medicare, which doesn’t cover prescription drugs, often pay prohibitive prices that push many into poverty.)
“At world trade conferences like the one in Seattle in December that attracted many protesters, drug companies have been portrayed as racking up record profits by concentrating on drugs to cure relatively minor problems like obesity, baldness and impotence among rich Americans, Western Europeans and Japanese, who make up 80 percent of the world drug market, while ignoring dire suffering in places like Africa, which buys 1 percent of the world’s drugs” (“Companies to Cut Cost of AIDS Drugs for Poor Nations,” the New York Times, May 12, 2000).
Doctors Without Borders notes that initiatives designed under the advice of pharmaceutical firms have resulted in minimal price reductions, and urges widespread generic competition, anathema to private corporations: “The solution to the access crisis should not be driven by protecting commercial interests.”
The organization contrasts corporate-friendly initiatives with Brazil’s national health policy: “By the end of the year 2000, by using more cost-effective, locally produced generic drugs, Brazil will be able to offer combination anti-retroviral therapy to its citizens at approximately U.S. $1,000 per year compared to a global price of $10,000 to $15,000. Political commitment plus high quality local production has already led to a dramatic increase in access to AIDS drugs in Brazil.”
Among ACT UP activists, the reaction was skeptical. “While price reductions are a positive step, the recent drug company announcement is also a public relations move. Industry is busy planting news stories in the Financial Times and other outlets claiming that pricing is no longer the problem, and that African nations are unwilling or too corrupt or incompetent to take advantage of this offer,” said Abdul Hakim of ACT UP. “But at this year’s World Health Assembly, PhRMA’s fear moved closer to reality: empowered developing nations demanded and won unfettered rights to pursue creating autonomous, sustainable programs for affordable medication access.”
In response to both the President’s EO and the announcement by the drug companies, ACT UP reasserted several demands:
1. Deep price reductions for people with HIV in developing nations
2. Agreement from firms that hold patents to grant voluntary licenses for alternative drug production and importation by poor countries
3. Reduced corporate drug prices must not require an agreement by a country to abandon compulsory licensing and parallel importing
4. Significant price reduction must cover all drugs used to treat HIV, not only anti-viral drugs
5. An open and transparent development of policy, involving local representatives and consumers at all levels
6. Suspension of lawsuits against nations that use strategies like compulsory licensing and parallel importing
ACT UP’s role continues to be crucial in challenging administration policy and corporate profiteering, and it reveals a sea change within the organization itself. In the late 1980s and much of the 1990s, ACT UP New York served as a model for chapters that sprang up around the U.S., and New York led the movement for access to AIDS drugs, housing for people with HIV, sane education and prevention policies, and universal health care. As members began to fall away, through death, burn-out, attraction to other activist venues, the smothering effect of a president who claimed to “feel our pain” while offering some access and a few concessions, and many other reasons, ACT UP New York’s presence faded.
By the end of the 1990s, Philadelphia had become the center of ACT UP activity. ACT UP Philly took the lead on the crisis of drug access in developing nations. Its membership displays the changing demographic of AIDS. At a major demonstration on October 8, 1999 at the office of USTR Charlene Barshefsky in Washington, DC, the overwhelming majority of participants were bused in from Philadelphia, and out of over 500 protestors, at least 90 percent were African American, a fact ignored by both mainstream and gay media.
Fourteen people were arrested for lying down in the street in an act of civil disobedience. ACT UP Philly also organized protests to coincide with World AIDS Day and the WTO summit in Seattle on November 30 and December 1, and sent buses to the mid-April protests at the World Bank and International Monetary Fund in Washington, DC. Some ACT UP members and others reported severe abuse by DC police and U.S. Marshals.
ACT UP Philadelphia suffered a tremendous blow on May 10 with the death of Kiyoshi Kuromiya, a long-time activist for the rights and well being of queers and people with HIV. Kiyoshi founded and published the Critical Path AIDS Project newsletter and source of information on access to aggressive HIV treatments. Philadelphia FIGHT, its fiscal sponsor, said it would continue the work of Critical Path, under the interim leadership of Julie Davids, founder of Project TEACH (Treatment Education Activists Combating HIV). Z
Scott McLarty is active in the DC Statehood Green Party and has participated in ACT UP.