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Dropping drug prices to stop cheap drugs

Big pharma companies will do anything to hold onto market share

What to make of this game of chicken between the big pharmaceutical companies and poor countries over cheap AIDS drugs?



The multinationals are slowly and conditionally beginning to make offers of cheaper medications. But some say their motives are aimed more at blocking the widespread use of generic drugs – and making a good impression – than helping people.



“Pharmaceuticals are reacting to public pressure,” says Richard Elliot of the HIV/AIDS Legal Network. “This gives them PR points.”



This week a court case in Pretoria, South Africa, resumes, with 39 drug companies trying to prevent the country from importing low-cost medicine. The firms argue the proposed legislation will infringe on their patent rights by allowing the health ministry to override patents by importing or manufacturing cheaper generic or copy-cat medicines. (Since the time the legislation was introduced in 1997, more than 400,000 South Africans have died form AIDS-related illnesses.)



Drug companies, in statements made in South African court, say that they prefer to provide lower cost drugs on their own terms. They claim generic knock-offs might actually injure people by being improperly manufactured and delivered.



And the companies say they can’t reduce prices too much, because they need to raise money for research and development needed for discovering new drugs.



South African AIDS activist Jonathan Berger says that drug companies don’t simply use their own money for research and development. It’s an issue bigger than R&D and patents.



“With HIV/AIDS, the amount of public money is huge,” Berger says. “Essentially, the whole story is about protection of a lucrative market.”



By reducing their drug prices for developing nations, they are merely maintaining their protection of patent and preventing cheaper generic producers from getting into the market.



“In India, for example, there is still, virtually no patent protection,” says Berger. “It is also getting increasingly difficult to justify high prices.”



In this light, the motives behind the price cuts of the industry biggies like Glaxo Smith Kline, Roche, Bristol Myers Squibbs and Abbot Merck becomes a little clearer.



“It’s a reaction to political pressure,” says Louise Biner of the Canadian Treatment Advocates’ Council.



“My understanding is that all of Africa amounts to 1.5 percent of the total drug market. Drug companies don’t do R&D for the Third World, because there is a fear about patent and protection of patent right…. Drug companies never say how much it costs to bring a drug to market, and people forget that companies factor in things like marketing when saying that drug development is so expensive. They also factor in the cost of all the drugs that failed, but that can be used for other things from which they end up making money, anyway.”



And the companies are trying other strategies to hold off generic competitors. The pharmaceutical giant Merck, for example, has entered into an agreement with the Brazilian government to train technicians and scientists to produce – according to Merck’s patent – local versions of anti-HIV medications. This may sound charitable, but it’s also strategic. Under international law, a country that is allowed to produce a medication under a foreign patent must have a licence to do so. However, that licence does not prevent that country from exporting the product to other places. With Merck directly involved, the prospect of exportation remains in Merck’s hands.



The concern of big pharma about covering its turf is not something new. Drug companies, worried about parallel importation and filtering of drugs back to developed countries, have a history of lobbying governments to impose tighter patent laws. For example, the 1992 Clinton-Gore campaign received a total of $582,945 from three of the biggies.



There are also control issues. The drug companies sometimes suggest they don’t trust poorer countries to handle cheap drugs in a responsible manner – that they might not get to those in need or that they may be sold back through underground markets to richer countries.



Some medical activists say that’s not a fair assessment. Especially when one is looking at a country like South African, where the government has insisted on having a say on the distribution of drugs.



“Given the amount of debate in South Africa for many years, since the end of Apartheid, the democratic process in South Africa has proven to be very participatory, but it takes a while before making a move,” says Marie Helen Bonin, co-ordinator of the Campaign For Access To Essential Medicines with Doctors Without Borders. “There is consensus behind legislation in South Africa, so I would – especially having lived there for many years – trust their judgment. These people are not twits.



“Some of the leaders of the NAC [National African Congress], including former health minister [Jacob] Zuma, advocated aggressively, even while in exile, around HIV/AIDS,” says Bonin. “Pharmaceuticals are deliberately introducing doubts about the South African government. They are interested in discrediting them…. One of the strengths of the South African government is that they don’t get stuck.”



Doctors Without Borders has set up an on-line petition (at www.msf.org) to try to get the companies to drop their case against the South African government. It’s at www.msf.org.