Look at Brazil

Patent laws are malleable. Patients are educable. Drug companies are vincible. The world’s AIDS crisis is solvable.

Someday, we may look back on the year 2001 with nostalgia for a time when AIDS was merely a health catastrophe. Soon, AIDS in Africa will be doing more than killing millions every year. It will destroy what there is of Africa’s economy and cause further instability and, perhaps, war. In the year 2010, the country of South Africa will be almost one-fifth poorer than it would have been had AIDS never existed. Throughout Africa, the disease has ravaged the young, urban and mobile. It has robbed schools of their teachers and hospitals of their doctors and nurses. Businesses are depleted by the need to cope with sick and dying employees. AIDS takes the breadwinner, leaving millions of destitute elderly and orphans who will grow up without going to school, many on the streets. As they lose their productive citizens, the nations themselves face collapse.
At the moment, however, AIDS in Africa is only a plague of a severity not seen since the Black Death killed at least a quarter of Europe in the 14th century. A 15-year-old in South Africa has a better than even chance of dying of AIDS. One in five adults is infected with H.I.V. Hospitals are filled with babies so shriveled by AIDS that nurses must shave their heads to find veins for intravenous tubes. Seventeen million people have died prolonged and miserable deaths from AIDS, and that number is dwarfed by what lies ahead.

While Africa is the region most ravaged, the disease is exploding elsewhere as well. India says it has four million infected; it may well have five times as many. Its AIDS epidemic bears a terrifying resemblance to South Africa’s a few years ago — AIDS is widespread in every risk group, and health care is inadequate. The Caribbean has the second-highest rate of infection after sub-Saharan Africa. More than one in 50 adults is H.I.V.-positive, and because the epidemic is primarily spread heterosexually there, most of the population is at risk. In Eastern Europe and the former Soviet Union, the number of infected nearly doubled in the last year.

Until a year ago, the triple therapy that has made AIDS a manageable disease in wealthy nations was considered realistic only for those who could afford to pay $10,000 to $15,000 a year or lived in societies that could. The most that poor countries could hope to do was prevent new cases of AIDS through educational programs and condom promotion or to cut mother-to-child transmission and, if they were very lucky, treat some of AIDS’s opportunistic infections. But the 32.5 million people with H.I.V. in the developing world had little hope of survival.

This was the conventional wisdom. Today, all of these statements are false.

The Raphael de Paula Souza hospital sits on the outskirts of Rio de Janeiro. It is a one-story plaster building with peeling blue paint and barefoot boys playing in the parking lot. Nothing in its appearance suggests that it might serve as a model for treating AIDS worldwide.

The AIDS clinic is run by Ademildes Navarini, who spends her days seeing patients like Rogério. He is 26, has tuberculosis as well as AIDS and suffers from an AIDS-related brain infection, toxoplasmosis. The infection has affected his speech, and now he gropes for words. He removes his T-shirt using only his left arm. His right arm and his right leg hang limp.

Rogério is followed by Jerdinete, a 46-year-old middle-class woman who came in for tests a year ago because of stomach problems — and was stunned to find she had AIDS. The only way she could have got it, she says, was from her husband, whom she had presumed faithful. When she told him that she was sick, he left her.

Jerdinete is followed by Maura, H.I.V.-positive but asymptomatic, and her 7-year-old son, Emerson, whose H.I.V. was diagnosed 10 months ago but has undoubtedly been infected since birth. Emerson, a handsome, curly-haired boy, kisses his mother’s cheek, puts his arm around her neck and caresses her face as she sits on a stool. A year ago, Emerson’s hair started to fall out. He got diarrhea and started losing weight. The family went in for testing, and their fears were confirmed. Maura, whose husband also has AIDS and tuberculosis, stopped working to stay home with Emerson. “He’s the reason for my life,” she says, squeezing her son.

If Rogério, Jerdinete and Emerson lived in any other poor nation, their future would be achingly foreseeable. But here’s the news from Raphael de Paula Souza hospital: each of these patients will walk out with a plastic bag filled with bottles of antiretrovirals — AZT and ddI and the protease inhibitors and other components of the triple cocktail that, for the lucky, have turned AIDS into a chronic disease. Rogério, who started taking triple therapy three weeks before I met him, has gotten much better. He will be scarred by toxoplasmosis, Navarini says, but will improve a little more. Jerdinete and Emerson, on triple therapy for months, are doing fine. And Ademildes Navarini is the happy exception in third-world medicine, an AIDS doctor who can make her patients healthy again instead of merely holding their hands and watching them die.

Since 1997, virtually every AIDS patient in Brazil for whom it is medically indicated gets, free, the same triple cocktails that keep rich Americans healthy. (In Western Europe, no one who needs AIDS treatment is denied it because of cost. This is true in some American states, but not all.) Brazil has shredded all the excuses about why poor countries cannot treat AIDS. Health system too fragile? On the shaky foundation of its public health service, Brazil built a well-run network of AIDS clinics. Uneducated people can’t stick to the complicated regime of pills? Brazilian AIDS patients have proved just as able to take their medicine on time as patients in the United States.

Ah, but treating AIDS is too expensive! In fact, Brazil’s program almost certainly pays for itself. It has halved the death rate from AIDS, prevented hundreds of thousands of new hospitalizations, cut the transmission rate, helped to stabilize the epidemic and improved the overall state of public health in Brazil.

Brazil can afford to treat AIDS because it does not pay market prices for antiretroviral drugs — the most controversial aspect of the country’s plan. In 1998, the government began making copies of brand-name drugs, and the price of those medicines has fallen by an average of 79 percent. Brazil now produces some triple therapy for $3,000 a year and expects to do much better, and the price could potentially drop to $700 a year or even less.

Brazil is showing that no one who dies of AIDS dies of natural causes. Those who die have been failed — by feckless leaders who see weapons as more alluring purchases than medicines, by wealthy countries (notably the United States) that have threatened the livelihood of poor nations who seek to manufacture cheap medicine and by the multinational drug companies who have kept the price of antiretroviral drugs needlessly out of reach of the vast majority of the world’s population.

But one major reason that only Brazil offers free triple therapy is that, until now, there was no Brazil to show that it is possible. A year and a half ago, practically nobody was talking about using triple therapy in poor countries.

Today, it is rare to find a meeting of international leaders where this idea is not discussed. International organizations like the United Nations AIDS agency, Unaids, and nongovernment groups like Médecins Sans Frontières are starting to help countries try to replicate Brazil’s program. Brazil has offered to transfer all its technology and provide training in the practicalities of treating patients to other countries that want to make drugs and will supply them to patients free. Even the drug companies, hoping to head off more damaging assaults on their patent rights and improve their tattered image, have acknowledged the need to charge less for their products in poor nations. They have begun to make limited offers of cheap drugs.

In other words, the debate about whether poor countries can treat AIDS is over. The question is how.

Pharmaceutical manufacturers argue that many countries are very far from able to administer a program of triple therapy, and they are right. But Brazil shows that poor nations can do it. Others will be able to follow if they get substantial international help.

The drug companies are wrong, however, on how to make AIDS drugs affordable. Their solution — limited, negotiated price cuts — is slow, grudging and piecemeal. Brazil, by defying the pharmaceutical companies and threatening to break patents, among other actions, has made drugs available to everyone who needs them. Its experience shows that doing this requires something radical: an alteration of the basic social contract the pharmaceutical companies have enjoyed until now.

By the terms of that contract, manufacturers, in return for the risks of developing new drugs, receive a 20-year monopoly to sell them in some nations at whatever prices they choose. The industry has thrived under this contract. And so have we, the rich. The system has conquered an unimaginable range of diseases. But for billions of people the medicines have remained out of reach. Poor countries, it is now clear, must violate this contract if they are to save their people from AIDS.

Brazil has been able to treat AIDS because it had what everyone agrees is the single most important requirement for doing so: political commitment. At the beginning of 1999, Brazil’s economy was skidding into crisis. President Fernando Henrique Cardoso was under great pressure to cut the budget by abandoning the AIDS program. He rejected that advice, deciding that treating AIDS was a priority.

Such commitment has its roots in the gay community. Although AIDS is now a disease of the poor in Brazil, the first Brazilians infected were gay men. In a country famously open about matters sexual, gays were much more activist and better organized than in most other nations, and AIDS carried less of the stigma that has elsewhere led people simply to deny its existence.

Then the movement found an unlikely ally in José Sarney, Brazil’s first civilian president after the country emerged from military rule in 1985 and a conservative who led a pro-military party during the dictatorship. In 1996, scientists at the world AIDS conference in Vancouver announced that triple therapy with a protease inhibitor could reduce viral load to undetectable levels. Finally, there was a treatment for AIDS. “A doctor friend informed me about what was going on in Vancouver,” Sarney told me. “I saw that most of the medicine in the cocktail would not be available to the poor, and I felt that we were talking about the survival of the species.”

Sarney proposed a law that guaranteed every AIDS patient state-of-the-art treatment. It passed. At the same time, Brazil was carrying out an aggressive AIDS prevention program, financed by the World Bank. Activist groups were the keystone, distributing millions of free condoms.

Surveys show that there are about 530,000 H.I.V.-positive people in Brazil. Four-fifths do not know they are infected. Of those who have been identified as needing antiretroviral therapy, however (some 90,000 at the moment), virtually all can get it, even homeless people, even people in the middle of the Amazon, says Paulo Teixeira, who runs Brazil’s AIDS program. A slim, elegant man of 52, Teixeira has been an AIDS doctor since 1983 and director of the country’s AIDS efforts for a year.

The treatment and prevention programs complement each other — another powerful reason to begin treating AIDS in poor countries. Treating AIDS helps to limit its spread, as people with a lower viral load are less contagious. The availability of lifesaving treatment is also a powerful lure for people to get an AIDS test.

“Treatment brings people into the hospital, where you can talk to them,” says Serafim Armesto, a psychologist who works with AIDS patients at the General Hospital of Nova Iguaçu, a major hospital in a working-class town a short drive from Rio. “You can work with them to prevent the spread of AIDS and further disease.”

The programs have paid off. In 1994, the World Bank estimated that by 2000 Brazil would have 1.2 million H.I.V.-positive people. In fact it had half that many. The epidemic has stabilized, with some 20,000 new cases each year for the last three years. The treatment program has cut the AIDS death rate nationally by about 50 percent so far, and each AIDS patient is only a quarter as likely to be hospitalized as before.

Treating AIDS also fights other diseases. The incidence of tuberculosis in H.I.V.-positive patients has dropped by half. AIDS has also helped to mobilize people to fight for better health care. “In 1999, the Health Ministry had problems getting its budget passed for AIDS, TB and other diseases,” says Pedro Chequer, Teixeira’s predecessor as head of the AIDS program and now the Unaids director for the southern part of South America. “There are now 600 nongovernmental groups that work on AIDS. They demonstrated in the street for a higher budget for all diseases, not just for AIDS, and these protests were covered in the press.” The money was restored.

The Health Ministry spent $444 million on AIDS drugs in 2000 — 4 percent of its budget. The only study of the program’s benefits so far shows that the decline in hospitalizations from opportunistic infections from 1997 to 1999 saved the Health Ministry $422 million. But the tally of benefits should also take into account the savings from treatment’s contribution to a halving of the expected infection rates and the productivity of those who no longer need to stay home or care for the sick.

“When we started with triple therapy,” Teixeira says, “the main criticism from developed countries was that we didn’t have the conditions for antiretroviral treatment. They said it would be dangerous for other countries, that we would create resistance.”

Antiretrovirals, if taken incorrectly, can indeed create a more resistant strain of virus in the patient — and in anyone to whom it is transmitted. Patients must stick to a rigorous and complicated schedule of pills, some taken with food, some without, and they must keep to this program (at least this is the current thinking) every day for the rest of their lives.

Yet the worries of rich countries that the poor and uneducated will mess things up for the rest of us have proved unfounded. Any nation that provides its AIDS patients with antiretrovirals must also provide them with help and training to take the medicine correctly. Brazil is doing just this, although it has meant turning nurses into organizers of nature hikes and clinics into baby-formula warehouses.

In Ademildes Navarini’s clinic at Raphael de Paula Souza hospital, a nurse’s aide, Denise Feliciano, spends a large part of her day drawing suns and moons with a purple marker. Today she is preparing Rogério, the patient recovering from toxoplasmosis, to go home with a bag of medicine. Rogério has been taking antiretrovirals for three weeks, and he may or may not be taking them correctly. “What time do you take your pills?” she asks. She waits while he counts. He stops at 6, groping for the next number. Seven? she supplies. Eight?

Rogerio makes a noise at 8.

How many pills do you take at 8 at night?

“Three,” he says, but he is holding up two fingers. It is not clear whether Rogério is confused or merely has trouble expressing himself. The toxoplasmosis has also affected his eyesight; he knows how to read, but he can’t see.

Feliciano sits down next to him and takes out his bag of medicine, a sheet of paper and her marker. “O.K., how do you take Biovir?” she says.

They go through each drug, with Feliciano drawing suns and moons on the boxes of pills and making a list on a separate sheet in a large purple hand. She estimates that 30 percent of patients have trouble keeping to their schedules, the same figure I heard from doctors and health workers at other hospitals. Most patients, everyone agreed, eventually understand how to take their medicine.

But that doesn’t mean they take it. “Many don’t understand the need for treatment, and they abandon it at the first side effects,” says Armesto, the psychologist in Nova Iguaçu’s clinic. “It can become a vicious circle — no food, no money — so they can’t take their medicine properly, so they get opportunistic diseases, so they can’t work, they get depressed, and that leads them further away from treatment.”

In 1999, the AIDS program conducted a survey of more than 1,000 patients in Ṣo Paulo. It found that 69 percent achieved 80 percent adherence, which means they took their medicine properly 80 percent of the time. According to Margaret Chesney, a professor of medicine at the University of California at San Francisco who studies behavioral factors in AIDS treatment, this rate is not sufficient to control the virus Рwhich can kill even people who take their medicine faithfully Рbut it is no different from adherence rates in the United States. A study in San Diego showed that 72 percent of patients took their medicine 80 percent of the time.

The São Paulo study found that the most important factor in patient falloff was missing a doctor’s appointment. Next came the level of instruction and support available at the clinic, followed by a patient’s income and education. ”Patient adherence depends directly on the quality of the services provided,” Teixeira says. ”People in bad economic situations have more difficulties, but we can overcome them if we provide good service.”

The study reinforced Brazil’s attempt to offer patients more sustained and varied help. AIDS officials expanded their training programs for people who work with patients. AIDS sufferers get free bus passes. Clinics ask local churches and Lions Clubs for food and baby formula. They recruit patients to sit in the waiting room and talk with other patients about their problems and to run Alcoholics Anonymous-style groups. The nurse at Nova Igua&#u recently took one group on a nature hike to a waterfall, because the patients seemed to be getting depressed.

”When we realize the patient is no longer coming to appointments, we send a telegram to ask them to come in and tell us why they stopped,” says Rosa Maria Rezende, the social worker in Nova Iguaçu’s clinic. ”Then we try to overcome that. We want them to be more interested in the struggle to live. It is not their attitude toward medicine that matters; it is their attitude toward life.”

At first glance, it would seem that brazil has advantages that are hard to duplicate. It has a well-organized network of civic groups, which were essential to building support for the program, designing it and making it work. It is a big country, with a large market for drugs. It has a health care system, however patchy. And while it is a poor country, it is a rich poor country.

Some countries will be unable to follow – they are too corrupt or war-torn or venally governed or not governed at all. In many of the African nations most ravaged by AIDS, the annual health budget comes to less than $10 per capita. This reflects the twisted priorities of leaders, many of whom can find sufficient money when they need to buy weapons. And health care is worsening thanks to AIDS itself, as doctors and nurses are among those most ravaged by the disease. But millions and millions of AIDS patients live in countries that could emulate Brazil, although they would need international help. These include virtually all the countries of Latin America and Eastern Europe, most of Asia and the former Soviet Union and at least 10 countries in sub-Saharan Africa. Pilot programs in Ivory Coast and Uganda show that at well-run clinics, patients have the same rate of adherence as in Europe and the United States.

Brazil shows how a nation can create an AIDS infrastructure atop an unstable foundation. Fairly good in Brazil’s rich regions, health care is bad to nonexistent in poor ones. The country has one of the lowest rates of life expectancy and highest rates of infant mortality in Latin America. ”When we passed the bill, we had to rely on a distribution network that didn’t exist,” former President Sarney says.

It seems absurd to suggest that countries that will not spend 10 cents to cure an infant with diarrhea should spend thousands of dollars on her mother’s AIDS drugs. But in Brazil, there has been no trade-off. The program has very likely saved the Health Ministry money, improved the treatment of other diseases and – very important – fostered a vocal lobby for better health care. For countries with a poor health infrastructure, an internationally financed AIDS program could be a way to develop a network of clinics and trained workers who might also be able to cure diarrhea.

So why have other countries not done it? One reason is indifferent, or even hostile, leadership. Kenya’s president, Daniel Arap Moi, only very recently reversed his opposition to condom use. AIDS carries such a stigma that the response of some African leaders has been to deny there is a problem. Other governments are too corrupt or incompetent to organize prevention programs, much less treatment. But for most countries, even middle-income poor countries, the biggest hurdle is cost. Whether AIDS treatment eventually pays for itself is irrelevant; they cannot afford to get started.

Nowhere are the lost opportunities more tragic than in South Africa. According to Unaids, South Africa has more than four million infected, and the epidemic is growing geometrically. It is a wealthy country by African standards, with a relatively good health infrastructure and laboratories that could manufacture generic drugs.

But South Africa has done nothing to treat AIDS. The biggest obstacle is President Thabo Mbeki, in other ways a sane and responsible leader, who has inexplicably decided that he is not convinced H.I.V. causes AIDS. Absurdly, it has become politically incorrect to talk about treating AIDS in South Africa – because it would acknowledge that H.I.V. is the cause. Mbeki’s musings, as well as an intense political battle in South Africa about the country’s AIDS priorities, delayed the institution of even a program to cut mother-to-child transmission.

India, the country that probably has the largest epidemic, is another dismaying example. India does not recognize patents on medicine, and world trade rules do not require it do so until 2005. Indian firms lead the world in the manufacture of generic AIDS drugs. The managing director of Cipla Ltd., an Indian generic manufacturer that meets international quality standards, told me in December that he could make a triple therapy for $500 per year, plus another $200 in packaging costs, ”and prices are likely to come down as we improve our techniques.” Does India provide its sick with free AIDS treatment? It does not.

But treating AIDS is gradually creeping into the realm of the possible for many countries. AIDS is now bad for business in Africa, and African leaders are hearing a clamor for treatment from the middle class. Several African countries have good prevention programs, which was all they believed possible to do. Now they are starting to think about treatment as well.

While Brazil’s ability to reach patients encourages other nations, far more important is its success in lowering the cost of medicine. This is the news that can now allow other countries to dream about treating AIDS.

Eloan Pinheiro is a soft-spoken, ever-smiling 55-year-old chemist who spent the first part of her career as chief of formulation for the Brazilian subsidiaries of two multinational drug companies. Now Pinheiro is tormenting her former colleagues. She is the director of Far-Manguinhos, a government pharmaceutical research lab and factory named for the industrial neighborhood of Rio where it is located. In 1998, with the costs of importing brand-name drugs mounting, Brazil’s health minister asked Pinheiro to analyze and copy the world’s major AIDS drugs. Far-Manguinhos and Brazil’s six other state pharmaceutical factories now make seven of the 12 antiretrovirals taken by Brazilians with AIDS. Pinheiro buys raw materials from India and Korea.

From the drug companies’ point of view, the assembly lines below Pinheiro’s second-floor office are humming with the violation of intellectual property rights, 40,000 times an hour. Brazil’s 1996 law recognizing patents on medicine, passed to comply with the rules of the World Trade Organization, specifies that anything commercialized anywhere in the world by May 14, 1997, would forever remain unpatented in Brazil. That covers a lot – all the first-generation antiretrovirals like AZT, ddI, d4T, 3TC. It covers nevirapine, one of the nonnucleoside reverse transcriptase inhibitors, which, like protease inhibitors, make up the third drug in the triple cocktail. And by a few weeks, it covers the protease inhibitor indinavir. And at the end of last year, Brazil was causing tremors in the pharmaceutical industry by preparing to produce copies of Stocrin, a Merck antiretroviral that came out after 1996, which is patented in Brazil. Since Brazil started making generics of AIDS drugs, their cost has plummeted. The price of AIDS drugs with no Brazilian generic equivalent dropped 9 percent from 1996 to 2000. The price of those that compete with generics from Brazilian labs dropped 79 percent. But just the credible threat of generic competition is enough to get manufacturers to lower their prices.

There is no legal reason that other countries cannot do the same. Most drugs, including antiretrovirals, have never been patented in most sub-Saharan African countries, so those countries are free to make or import generics. Even countries that do respect patents on medicines have this possibility. This is important, because every country joining the World Trade Organization must pass laws respecting medical patents – the reason Brazil did. But there is a W.T.O. loophole that allows countries to make copies of patented items in certain situations, including that of a national emergency. According to a W.T.O. official, governments could also choose to import generic drugs instead of making them. They can get what is called a compulsory license – in effect, they seize a patent – and manufacture or import a generic copy of a drug, paying the patentholder a reasonable royalty. Of all the tools available to poor countries, compulsory licensing is what the drug companies fear the most, since it represents the most direct assault on control of their patents. The United States has issued compulsory licenses in situations far less dire than those of AIDS-ravaged poor nations. Recent ones have been for tow trucks, stainless-steel wheels and corn seeds. Such licenses are common remedies in antitrust cases.

But although trade rules provide legal ways for poor nations to get cheap medicine, there are other obstacles. Many do not even know it is legal. Countries that have tried to manufacture generic medicine have fallen under debilitating pressure from pharmaceutical companies and from Washington.

In Thailand, such pressure kept the government from making cheap antiretrovirals until last year. Thailand has long made zidovudine, the knockoff of Glaxo Wellcome’s AZT. But two drugs are needed to slow AIDS, and Thailand was blocked from making the other components of dual therapy – ddI, d4T and 3TC. Bristol-Myers Squibb sells ddI and d4T under the brand names Videx and Zerit. Glaxo sells 3TC under the name Epivir. None of the three were patented in Thailand because they came out before 1992, when the nation passed patent protections for medicine. Thailand’s state drug factory was preparing to produce generic ddI when Bristol obtained a patent on the antacid buffer used to pack Videx into pill form. Krisana Kraisintu, the head of the factory, told me that Bristol also prevented the producers of the raw materials for ddI from selling to her. She was only able to make a generic ddI – in powder form – recently. (Bristol failed to respond to questions despite repeated requests over the course of a month.)

With Zerit and Epivir, Bristol and Glaxo took advantage of a controversial safety monitoring period passed in 1993 at American urging. It gives drugs up to five or six years of market exclusivity while generics undergo special safety tests – a law the World Health Organization and Unaids says ”unnecessarily delays generic competition.” Thailand was able to make generic d4T only when Zerit exited the program last year and is only now beginning to make generic 3TC.

The drug companies’ actions are particularly distasteful because neither Bristol nor Glaxo invented these drugs or discovered their use in AIDS therapy. Glaxo’s 3TC was discovered and patented for AIDS use by BioChem Pharma, a Canadian company, which licensed the drug to Glaxo. d4T was synthesized by the Michigan Cancer Foundation in 1966, using public funds. Its application for AIDS was discovered at Yale University, which holds the patent, using grants from the federal government and Bristol. In the United States, Bristol’s Zerit sells for $4.50 for 40 milligrams. Pharmaceutical manufacturers never disclose their costs, but one indication of Bristol’s markup is that Pinheiro can sell her version for 30 cents – and it is possible her costs are higher than Bristol’s, since the multinationals have access to cheaper raw materials.

The National Institutes of Health discovered ddI’s use as an AIDS therapy. The N.I.H. then licensed the drug to Bristol for a 5 percent royalty, with the stipulation that Bristol’s pricing take into account the health and safety needs of the public. But Bristol sells Videx for $1.80 in the United States for a 100-milligram tablet, while Far-Manguinhos in Brazil can sell the generic equivalent for 50 cents. The contract has a fair-pricing clause, but it has never been enforced.

The drug companies’ influence has been greatly magnified because the United States trade officials have put the full weight of American trade pressures to work on their behalf. And one official told me that until very recently, ”it was pretty rare” that his agency ever considered the health consequences. The statements in the trade representative’s annual reports and trade watch lists document a shameful history of successful American efforts to get Thailand to pass patents on medicine, to abolish the pharmaceutical review board that monitored drug prices, to pass the safety monitoring period of market exclusivity and to refrain from issuing compulsory licenses. Here is one example from the trade representative’s 1997 national trade estimate for Thailand: ”The Thai legislature is expected in 1997 to consider a bill abolishing the pharmaceutical review board. This measure would advance objectives of American manufacturers.”

Numerous countries have been placed on the trade representative’s Special 301 Watch List because of pharmaceutical patent disagreements. The list is a precursor to trade sanctions, but simply appearing on it is a form of sanction because it discourages investment. It turns a country’s business sector and commerce ministry against generic production – and with such powerful opposition, local health officials lose. ”When I wanted to produce generics, I was told, ‘Don’t move, because we’re afraid of trade retaliation,”’ Kraisintu says. ”All of us know that the reason for all these things is pressure from the United States and multinational companies.” Thailand sells a fifth of its exports to the United States.

The drug industry’s dominance over American trade policy on pharmaceuticals finally crashed over South Africa. In 1997, South Africa, which does respect pharmaceutical patents, amended its laws to allow compulsory licensing of essential medicines, including AIDS drugs. Pharmaceutical companies sued. The suit is still going on.

Although Clinton administration officials acknowledged that what South Africa proposed was legal under the World Trade Organization, it declared war. President Clinton and Vice President Gore lobbied their counterparts, Nelson Mandela and Thabo Mbeki, then the deputy president. Friends of the drug companies in Congress passed a requirement that the State Department report on Washington’s efforts to stop South Africa before the country could receive American aid. It reported in February 1999, that ”all relevant agencies of the U.S. government . . . have been engaged in an assiduous, concerted campaign to persuade the government of South Africa to withdraw or modify” the relevant parts of the law.

This was a bizarre policy for an administration that claimed a special relationship with South Africa. But there was no role in the process of decisions about trade pressures for voices that countered those of industry. This resulted in egregious blind spots. In August 1998, I talked with an American trade official who worked on South Africa’s medicines act. He told me that until a few months before I spoke to him, he was unaware of the dimensions of South Africa’s AIDS problem. ”Nobody brought it to my attention that it was a major health crisis,” he said.

Today, this official is better informed. The administration changed its policy after activist groups began heckling Vice President Gore at his campaign appearances. When reporters, and later Gore aides, began to take notice, the administration told South Africa it could issue compulsory licenses for essential medicines as long as it stayed within world trade rules. Over the next year, the administration announced that health officials would participate in decisions about pharmaceutical disputes and pledged not to block compulsory licenses in the rest of sub-Saharan Africa and Thailand and in other countries on a case-by-case basis.

But pressure from other parts of the administration continued. In February 2000, William Daley, then the commerce secretary, traveled to Brazil and Argentina with Raymond Gilmartin, the C.E.O. of Merck, and a vice president of Pfizer in tow. Before he went, Daley told students that one purpose of his trip to Brazil was to talk about ”serious concerns our companies have” with medical patent laws. In Argentina, he threatened trade sanctions over the issue.

Overall, however, the Clinton administration went through a real conversion. Countries that displease American pharmaceutical manufacturers no longer land on a trade watch list if the trade representative believes they have a health emergency. But this could be reversed in five minutes by President Bush – and probably will be, since the industry is likely to be even more influential in the Bush administration than it has been under President Clinton. Pharmaceutical manufacturers give money to both political parties – $23 million in the last election cycle, according to the Center for Responsive Politics – but 69 percent of it went to Republicans. The drug industry also spends $75 million or so on lobbying every year.

From the beginning of the aids epidemic, the major drug makers clung to the idea of one planet, one price. Or worse – some drugs cost more in Kenya than in Norway. The strategy has earned them a public image almost as malignant as that of tobacco companies. By last year, they were also facing the growing threat of generics and the loss of Washington’s automatic trade support. Early in 2000, several companies began to discuss the idea of lowering their prices in the third world.

In May 2000, Glaxo Wellcome, Merck, Boehringer-Ingelheim, F. Hoffmann-La Roche and Bristol announced a program called Accelerating Access, promising to sell drugs at deep discounts to poor countries that met certain standards. The price cuts the drug companies fought until last year have now become their solution to the world’s AIDS crisis.

The companies have restricted their discounts, demanding that recipient countries properly administer the medicine. But the restrictions also keep the program small, controlled and largely secret. Each price cut for each drug in each country is negotiated separately. Glaxo was the only company to specify a price reduction publicly, announcing it would cut Combivir from $16 to $2 a day. And while about 20 countries are talking to the drug companies, only Senegal and Uganda have so far signed agreements to receive cut-price antiretrovirals. The discounts are impressive – Senegal will be able to buy triple therapy for as low as $1,000 per year per person. But just a few hundred people will benefit, most of them rich enough to pay themselves. In Uganda, about a thousand people will get the drugs, but they will all pay for them.

The pharmaceutical industry argues that collaborative efforts like this one are the way to make AIDS medicine affordable in the third world. But the program is too crabbed. ”Why don’t they just lower their prices in poor countries?” asks Ellen ‘t Hoen, who works in the Médecins Sans Frontières campaign to help poor countries get needed medicines. ”Having country-by-country confidential negotiations is not justified. This way, it stays in the charity corner and it hampers the development of more sustainable ways to get medicines to people.” The industry’s control over the program serves another purpose: the companies can use it to head off the practices they fear most, chiefly compulsory licensing. The document announcing the plan calls on the recipients of their largess to ”respect intellectual property” – code for ”stay away from compulsory licensing.” And countries are complying, many of them out of ignorance.

Every single drug company executive I spoke with argued that if countries turn to compulsory licensing, new discoveries could eventually slow. ”If we are to continue with research and development, then countries that participate in the program must provide conditions basic to innovation,” Tadeu Alves, the chief of Merck’s Brazil subsidiary, said during a panel at an AIDS conference in Rio. Those conditions, he said, included a free market, price structures that provide incentive to innovation and respect for intellectual property.

The drug companies’ argument is in essence a defense of high profits. Even in the United States, the cost of drugs is provoking questions about whether continued research and development really depends on giving companies a 20-year monopoly to charge whatever price they choose, especially since they are often marketing other people’s discoveries. The manufacturers generally spend twice as much on marketing and administration as they do on research and development. The real threat that third-world generics pose to pharmaceutical companies is that of blowback in rich nations. They worry that publicity about generic prices will fuel the American demand for cheap imports or price controls. They fear that patent seizures in the third world could loosen intellectual property rights in the first world.

Innovation would certainly suffer if pharmaceutical manufacturers could not charge high prices in their primary markets, although how high is open to debate. But applying this argument to Ukraine or Uganda is a scare tactic. No manufacturer depends on profits in Africa, which will account for 1.3 percent of worldwide drug sales next year, to motivate the search for new medicines. And companies can sell their AIDS drugs at very steep discounts – some at 90 percent or more off the American price – and still profit.

Once they realized that Brazil was solidly behind its generic drug program, the pharmaceutical companies have made the best of it, and they have not suffered. In fact, the government is buying 20,000 daily doses of Crixivan (Merck’s brand of indinavir), a tenth of the drug’s worldwide sales. Merck had to meet Pinheiro’s price for indinavir, the generic. But the company can do this and still profit. ”The half-million infected today are patients of tomorrow,” Tadeu Alves told me.

The same thing may soon happen with Merck’s Stocrin, which is patented in Brazil. Pinheiro is threatening to get a compulsory license to make the generic. The threat will most likely force Merck to drop the price or voluntarily license Pinheiro to make the generic or sell Stocrin. And this arrangement will be profitable for Merck, which shows no sign of shutting its labs because of Brazil. Yet the pharmaceutical industry continues to paint the ongoing battle against generics in impoverished nations as Armageddon. Glaxo has even stopped the Indian generic manufacturer Cipla from selling a knockoff of a Glaxo AIDS drug in Ghana. Ghana’s share of the international antiretroviral market is virtually zero.

If wealthy countries and the united nations agencies they influence chose to make AIDS treatment available to every citizen of the earth in the most efficient and cost-effective manner possible, the program would look very much like Unicef’s global system of vaccination. When Unicef began a campaign to vaccinate the world’s children in the early 1980’s, many scoffed. But today vaccination rates top 80 percent, saving three million lives a year and preventing crippling diseases in tens of millions more. This is one of the world’s most significant public health victories.

Who pays to vaccinate a child in Angola? We do, without much complaint. Antiretrovirals, of course, do not cost pennies per dose. But they would be a lot cheaper than they are today if the World Health Organization or Unaids used a Unicef-like system, which has dropped the price of vaccines to a thirtieth of their American price in some cases. The W.H.O. could buy antiretrovirals for third-world use from reliable generic suppliers like Cipla in India or brand-name manufacturers if they were willing to lower their prices. The economies of scale and guaranteed markets could drop the price of a year’s triple therapy to below the $700 that Cipla could muster today.

This is a price many countries could afford, especially when balanced against the savings in hospitalizations. But everyone agrees that AIDS treatment will require North America and Europe to purchase the medicines and to help set up the necessary health care network. In my calculus, applying the Unicef system to AIDS would cost $3 billion a year in antiretrovirals alone, assuming five million patients at $600 a year. And the cost will increase as countries reach more patients. This is a large sum of money. It seems somewhat smaller, however, next to the wards of shaven-head babies – or the collapse of a continent.

It is difficult to imagine the Bush administration endorsing such a global plan. There are, however, smaller, worthwhile steps the administration could take if it were so inclined. At minimum, it should bury forever the bad old policy of intimidating countries that want to make or buy generics, especially through compulsory licensing. The administration should also encourage agencies like the World Health Organization and Unaids to facilitate these purchases and the necessary training to make them work.

There are also laws already on the books, which the Clinton administration chose not to carry out, that could promote the cheap production of at least some antiretrovirals. One such law allows the government to seize patents of drugs that were discovered at government labs or with substantial public funds if the patent holder is not meeting public health needs – for example, by charging too much. James Love, who runs the Consumer Project on Technology, a Ralph Nader-affiliated advocacy group, argues that it applies to five antiretrovirals. Love would like to see the government license them to a nonprofit corporation that would produce the drugs cheaply for both the first- and third-world markets.

But the Bush administration is unlikely to be so inclined, because the drug companies have other ideas. ”Merck and other companies appreciate that our products need to be more affordable in the developing world,” Jeffrey Sturchio, a Merck spokesman, told me, echoing every pharmaceutical maker. ”We are willing to sit down and be a constructive partner. Compulsory licensing is unnecessary.” But compulsory licensing seems very necessary. Merck would have little interest in constructive partnership in Brazil – or anywhere – if that threat did not exist.

This is the larger lesson of Brazil: AIDS can become a manageable disease in the third world, but it takes power, in addition to other things. The ability to pull the price of AIDS drugs within reach of those who need them may someday come from the backing of some international organization, or the pharmaceutical industry might find religion. But at the moment, it arises only from the threat to make or buy generic drugs. AIDS is turning the third world’s human landscape into a parched wasteland. Brazil has shown that, armed with the power of competition, a government can do more than sit and watch the desert encroach.


News Service: New York Times

URL: http://www.nytimes.com/library/magazine/home/20010128mag-aids.html

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