Pharmaceutical Companies, Intellectual Property, and the Global Aids Epidemic

Case 1.2: Pharmaceutical Companies, Intellectual Property, and the Global AIDS Epidemic

Summary:

HIV/AIDS remains one of the leading causes of death in the world. Drugs are available to help combat this disease and prolong lives of those infected; however, these drugs are extremely expensive and therefore unavailable to developing countries. Pharmaceutical companies pursue opportunities with high-profit potential so they can continue to finance other research. Aids activist and NGOs believe drugs should be provided free or at lower costs to developing countries, as it is a moral responsibility to help the poor and suffering. Intellectual Property Rights grant investors rights for original creations. These rights, such as patents, prevent people from using inventor's creations without permission. NGOs along with others believed these laws should be relaxed in order to help increase access to drugs in developing countries. Pharmaceutical companies opposed these exceptions, as it would greatly hurt profits and cause distribution to be fewer and slower. In 1997, South Africa passed a law to permit compulsory licensing of essential drugs. Pharmaceutical companies sued the South African government in an attempt to delay implementation of the law. The U.S. threatened to place trade sanctions on South Africa if they didn't change their policies. NGOs and other activists swung into action and were able to get the U.S. to back off from these threats. The U.S. government began to show flexibility and allow countries to obtain cheaper drugs during health emergencies. In 2001, The Global Fund was created to combat AIDS. President George W. Bush announced $200 million in seed money for the fund. They hoped the seed money would generate billions more from all over the world. The Global Fund was very successful and in 2002 made its first awards totaling $616 million to programs in 40 countries. In 2002, WTO extended the transition period during which least-developed countries had to provide patent protection for pharmaceuticals and in 2003, South African government announced production of its first generic AIDS drug. Finally at the end of 2005, members of the WTO approved changes to the intellectual property agreement making permanent the August 2003 "waiver" which facilitated access for developing countries to cheaper, generic versions of patented medications. According to Doctor's Without Borders, prices for first line treatments have dropped from more than $10,000 to $150 a year since 2000. Brazil and Thailand were able to launch successful national AIDS programs because key pharmaceuticals were not patent protected and could be locally produced for very low costs. Problems still remain as generic drug manufacturers have lowered the cost of some much-needed drugs to developing countries, but often new drugs were priced much higher than old treatment, and