Fund to Allow Sales of Generic Drugs

The board of the Global Fund to Fight AIDS, Tuberculosis and Malaria decided Friday night to allow poor countries to buy generic drugs -- as long as the drugs meet quality standards. The cost of a generic drug cocktail is as low as $300 a year, while brand-name drugs are several times higher for low-income countries. The fund is poised to give its first disbursements in about a week.

"Recipients of Global Fund money will be encouraged to buy at the lowest price, and required to publish those prices, which is a significant element," said Executive Director Richard G.A. Feachem. Publishing the prices and quantities of purchases, officials believe, could reduce corruption. To ensure high quality, the board said the generic drugs must be approved by the World Health Organization. The purchasing country can give its OK as long as the WHO tests the medicine afterward. "The purchases have to be consistent with national and international law," Feachem said. "We can't incite our recipients to break the law, obviously."

The US government has in the past tried to block purchases of generic drugs in cases that appeared to violate international patent law. That created a chilling effect on many poor countries, which were unwilling to purchase generic drugs even when patents did not exist. Health and Human Services Secretary Tommy Thompson, who attended the closed board meeting, said the United States remains "cautious about the procurement procedures." He said, "We will expect the fund grantees not to compromise on the quality of pharmaceuticals and medical devices, while recognizing the need to obtain low prices through open, competitive bidding that respects international law. Any scandals involving stolen, diverted, or poor-quality products will have an immediate negative effect on the credibility of the fund," Thompson said.

The board also decided to scale back future rounds of funding. Instead of approving three rounds for next year, the board agreed to two. Instead of asking for $3.6 billion in 2003, as recommended by the fund's secretariat, the board said it needed $2 billion.

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