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The Global Epidemic

Affordable Drug Access for Developing Countries

Summer/Autumn 2001

A note from The field of medicine is constantly evolving. As a result, parts of this article may be outdated. Please keep this in mind, and be sure to visit other parts of our site for more recent information!

Over the past few years, the world has turned its attention to people with HIV/AIDS in poor countries. As effective new anti-HIV medications began to improve the health and prolong the lives of people with HIV/AIDS in wealthy countries, treatment advocates became increasingly concerned that these life-saving drugs were not available to everyone in the world who could benefit from them. According to the Joint United Nations Programme on AIDS (UNAIDS), an estimated 36 million people in the world have HIV or AIDS, over 90% of whom live in developing countries. Of these, it is estimated that only about 2% have access to anti-HIV drugs.

Drug access issues were a major theme at the 12th World AIDS Conference in Geneva, Switzerland, in 1998, and even more so at the XIII International AIDS Conference in Durban, South Africa, in July 2000 -- the first time the meeting was held in a developing country. In recent years, large protests of world trade agreements and financial institutions also have called attention to previously obscure entities and issues, prompting a new wave of activists to look at global poverty and unequal access to health care.

In early 1999 members of several organizations -- including ACT UP, the Consumer Project on Technology (CPT), South Africa's Treatment Action Campaign (TAC), and Médecins sans Frontières/Doctors without Borders (MSF) -- formed the Health Global Access Project (HealthGAP) Coalition, which has spearheaded the fight for affordable HIV/AIDS treatment. In April of that year, activists kicked off a global campaign for accessible medications with a demonstration in Washington, DC. Unlike the ACT UP protests of the late 1980s and early 1990s, this effort brought together a broad coalition of groups, including some -- such as the textile workers union and Rainforest Action Network -- that were not associated with AIDS, health or gay issues; this would prove to be a sign of things to come.

South Africa has been pivotal in the quest for access to anti-HIV drugs. In 1997 the country passed legislation allowing it to obtain generic (equivalent nonbrand) versions of patented drugs under two international trade provisions known as compulsory licensing and parallel importing. In 1998 a group of pharmaceutical companies sued to overturn the law. After three years -- and a great deal of negative publicity -- the companies withdrew the lawsuit in April 2001. In June 2001 the U.S. withdrew a complaint it had filed with the World Trade Organization (WTO) concerning a Brazilian law allowing generic drug production. But the matter of drug patents and affordable treatment access is far from resolved.

The World Trade Organization and TRIPS

Compulsory licensing allows a country to grant a local manufacturer a license to make a product that is patented by another company. Article 31 of the WTO's Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement allows for compulsory licensing with the payment of a royalty fee to the patent holder. Countries are supposed to seek authorization from the patent holder before granting a license, but this requirement may be waived in cases of "national emergency or other circumstances of extreme urgency."

Parallel importing allows a government to "shop around" and purchase a product from the cheapest available global source, which may not be the patent-holder. TRIPS neither prohibits nor explicitly permits parallel importing.

TRIPS, which was implemented on January 1, 1995, established 20-year patents on pharmaceutical products. Before TRIPS, there were no uniform international patent protection rules, and many countries excluded drugs from patent protection. In order to join the WTO, countries had to agree to abide by TRIPS. Developing countries were given until 2000 to comply, and the least developed countries (LDCs) were given until 2006. LDCs are the world's poorest and structurally weakest nations. The United Nations (UN) currently lists about 50 LDCs, many of which are located in sub-Saharan Africa.

Using TRIPS, governments can produce -- or contract with other companies to produce -- generic versions of patented products. Generic drugs contain the same active ingredients as their brand-name equivalents, but are cheaper because they do not include the costs (research, development, marketing, advertising, etc.) or profits associated with patented drugs. Generic versions of anti-HIV drugs produced in developing countries typically cost 5-25% of the market price of the brand-name equivalent. MSF estimates that the cost of highly active antiretroviral therapy (HAART) in the U.S. is $10,000-$15,000 per person per year. Treatment using generic equivalents costs about $500-$1,000 per person per year, which may be pushed lower with the use of new, simpler regimens using combination pills. Indian generic drug manufacturer Cipla has offered a triple combination regimen (d4T/3TC/nevirapine) to certain nongovernmental organizations (NGOs) and LDC governments for $350 per person per year.

Although the U.S. signed the TRIPS agreement, it generally does not look favorably on compulsory licensing and parallel importing. American intellectual property laws are more restrictive than those of the WTO, and the U.S. has insisted -- sometimes under the threat of trade sanctions -- that countries refrain from copying patented products.

International Pressure

In February 1998 a number of drug companies under the aegis of the Pharmaceutical Manufacturers Association of South Africa (PMA-SA) filed suit against an amendment to South Africa's Medicines and Related Substances Control Act of 1965. The amendment allowed the government to use compulsory licensing and parallel importing to obtain life-saving medications. An injunction was granted, and the law never took effect. In September 1999 PMA-SA suspended the lawsuit after South African health minister Manto Tshabalala-Msimang, M.D., agreed to review the law, but the suit was later reinstated.

The U.S. government pressured South Africa not to make use of compulsory licensing and parallel importing. In early 1999 activists obtained what they called "the smoking gun memo," a State Department memo to Congress describing actions taken by the administration in support of pharmaceutical companies, including the addition of South Africa to the "watch list" (a precursor to trade sanctions). As co-chair of the U.S./South African Bi-National Commission, Vice President Al Gore played a key role in negotiating U.S. trade relations with South Africa. Gore had made enforcement of drug patents a focus of an August 1998 meeting with South African president Thabo Mbeki. AIDS activists responded by targeting Gore during his presidential primary campaign.

Hounding Gore

Activists hounded Gore throughout the summer of 1999, from his kickoff in Tennessee through his first stops in New Hampshire and beyond. Many asserted that campaign contributions from the pharmaceutical industry influenced Gore's actions in relation to South Africa. In the words of columnist Arianna Huffington, the drug patent issue demonstrated "how our campaign finance system allows powerful special interests to secretly dictate policy, even when the lives of millions are at stake." In August, protesters from a group calling itself AIDS Drugs for Africa locked down the vice president's office building; firefighters had to be called to remove the activists' chains. Other demonstrations took place in New York City, Philadelphia, Oakland, San Francisco, and Johannesburg. Gore and his staff attempted to defuse the controversy, saying that activists had distorted his record. In July he submitted a letter to the Congressional Black Caucus stating, "I support South Africa's effort to provide AIDS drugs at reduced prices through compulsory licensing and parallel importing, so long as they are carried out in a way that is consistent with international agreements."

On September 17 the U.S. said it would not act to prevent South Africa from manufacturing or importing life-saving medications in accordance with TRIPS. In December the country was finally removed from the "watch list." But activists remained concerned that the U.S. was not doing enough to facilitate access to affordable drugs, and demanded that the administration refrain from sanctioning any developing country attempting to provide generic drugs. ACT UP/Philadelphia member John Bell said, "Saving lives in Thailand, Brazil, and India is just as vital as saving lives in South Africa."

Trouble in Thailand

Thailand also ran afoul of the U.S. on the issue of drug patents. In the pre-WTO era, Thailand had a Pharmaceutical Patent Review Board to study the local production of patented drugs, but the board was abolished in 1998 in the wake of threatened U.S. trade sanctions. In November 1999 Thailand's Government Pharmaceutical Organization (GPO) asked the country to consider compulsory licensing so that it could locally manufacture generic ddI. In December Thai AIDS activists demanding affordable drugs set up camp outside the Thai Health Ministry. The protest ended on Christmas Eve after health minister Korn Dabbaransi agreed to determine whether Thailand would be safe from legal action if it licensed the drug.

In January 2000, Dabbaransi announced that the country would produce a cheaper, powdered version of ddI using a process and ingredients different from those of the patented form. But activists were not satisfied, saying that compulsory licensing would allow for lower prices than the powdered form. Over 100 people protested outside the U.S. embassy in Bangkok, asking President Bill Clinton not to impose sanctions against the Thai government. On January 27 the U.S. sent a letter to Dabbaransi stating, "If the Thai government determines that issuing a compulsory license is required to address its health-care crisis, the U.S. will raise no objection."

U.S. Policy Changes

The battle for affordable drug access was fought on many fronts. In October 1999, nearly 500 protesters blocked traffic outside the office of U.S. trade representative (USTR) Charlene Barshefsky. In late November, ACT UP members from Philadelphia and New York held a sit-in inside Barshefsky's office, while five climbers chained themselves to her office balcony with a banner demanding "Essential Medications for All Nations." The action served as a send-off for Barshefsky, who would soon be on her way to Seattle to meet with fellow international trade negotiators.

On the eve of World AIDS Day, December 1, 1999, activists around the world held demonstrations in response to TAC's call for a "global day of shame" against opposition to generic drugs. These actions coincided with a meeting of the WTO to launch a new round of trade negotiations. An estimated 50,000 activists -- concerned with a wide range of issues from the environment to labor rights to trade issues to genetically modified food -- gathered in Seattle to oppose the organization and its policies, and the streets erupted in one of the largest and most militant protests seen in the U.S. since the 1960s. Police responded with tear gas and rubber bullets, the National Guard was called in, and the "Battle of Seattle" brought the WTO and the issue of international trade onto the nation's radar screen.

Addressing the WTO delegates on December 1, Clinton promised that the U.S. would stop pressuring poor countries attempting to access cheaper anti-HIV drugs. "Intellectual property protections are very important to a modern economy," he said, "but where the HIV and AIDS epidemics are involved . . . the U.S. will henceforth implement its health-care and trade policies in a manner that ensures people in the poorest countries won't have to go without medicine they so desperately need." The administration said it would develop a "flexible" method for deciding on a case-by-case basis whether to allow countries to access generic medications.

The pharmaceutical industry was not pleased with the new policy. Mark Grayson of the Pharmaceutical Research and Manufacturers of America (PhRMA) said, "We don't believe parallel importing is proper. A lot of parallel imports come from places like India, and half the time [the drugs have] no active ingredients. It's killing patients, causing drug resistance, and giving false hope."

Even as they were targeting Gore, AIDS activists had also spent the year opposing proposed legislation intended to promote development in Africa. The Africa Growth and Opportunities Act included sanctions against African countries that produce or import generic drugs. Senator Dianne Feinstein (D-CA) added an amendment allowing compulsory licensing, but it was stripped from the House-Senate compromise version of the legislation passed in May 2000. AIDS treatment advocates urged the administration to accomplish the same goal by means of an executive order. On May 11 Clinton issued an order making his December promise official policy, affirming that the U.S. "shall not seek, through negotiation or otherwise, the revocation or revision of any intellectual property law or policy" of sub-Saharan African countries that promote "access to HIV/AIDS pharmaceuticals or medical technologies for affected populations." In February 2001 newly inaugurated president George W. Bush agreed to retain his predecessor's executive order.

Price Cuts and Generic Offers

As the drug access issue received increasing international attention, pharmaceutical companies took steps to make AIDS medications more affordable to poor countries, and generic drug makers stepped in with reduced-price offers. At times, patent-holders and generic producers appeared to be competing with each other to offer the best deal.

In May 2000, five major pharmaceutical companies -- Boehringer Ingelheim, Bristol-Myers Squibb, Glaxo Wellcome, Merck & Co., and Roche -- agreed to reduce prices on several anti-HIV drugs by up to 80% for LDCs. The earliest price cuts were typically negotiated on a country-by-country and drug-by-drug basis.

Most poor countries, however, did not enter these negotiations. Although company offers were in some cases as low as available generic drug prices, LDC governments and activists continued to push for compulsory licensing, preferring a mechanism that was under local control and not reliant on corporate largesse. South African Health Ministry Director General Ayanda Ntsaluba said, "No government in the world wants to put itself perpetually in the position where their every move is always going to be dependent on gestures of goodwill from other people."

In the months leading up to the South African Medicines Act trial, there was a new wave of price reductions that applied to African LDCs on a more sweeping basis. GlaxoSmithKline led the pack in February 2001, offering to sell its combination AZT/3TC pill (Combivir) for approximately $700 per person per year. In March, Merck announced that it would sell indinavir (Crixivan) for $600 per person per year (compared with about $6,000 per year in the U.S.) and efavirenz (marketed as Sustiva in the U.S. and as Stocrin in several other countries) for $500 per year. The same month, Bristol-Myers Squibb agreed to sell d4T (Zerit) at just below cost for $500 (compared with about $3,500 in the U.S.). Abbott said it would reduce prices for ritonavir (Norvir) and lopinavir/ritonavir (Kaletra) to less than $1,000 per person per year (compared with $7,100 and $6,500, respectively, in the U.S.), prices the company said would yield no profit. In June, GlaxoSmithKline cut prices again for 63 poor countries, agreeing to sell abacavir (Ziagen) for approximately $1,400 per person per year, amprenavir (Agenerase) for approximately $3,200 per year, and its AZT/3TC/abacavir combination pill (Trizivir) for approximately $2,400 per year. In June, following sustained pressure from activists, Pfizer announced that it would provide its antifungal drug fluconazole (Diflucan) for free to several LDCs.

In the arena of low-cost generic drugs, India's Cipla was initially most active. Under Indian law, only manufacturing processes -- not products themselves -- are protected by patents. In February 2001 Cipla offered to sell a d4T/3TC/nevirapine regimen to MSF for $350 per person per year, and later extended the same offer to LDC governments. Cipla offered to pay a 5% royalty to the drugs' patent holders, but said it would manufacture the drugs whether or not the pharmaceutical companies accepted the deal. Another Indian company, Aurobindo, undercut Cipla in June, offering the same triple regimen to all potential purchasers for the "almost break-even" price of $295. Several companies in other middle-tier developing countries also produce generic drugs, and in March, Fidel Castro announced that Cuba too has the capacity to produce anti-HIV drugs.

As an added benefit, generic drug production introduces the possibility of developing new combination pills whose component drugs are patented by different companies; current combination pills like Combivir and Trizivir contain multiple drugs from a single manufacturer. In July, Cipla announced that it would introduce a d4T/3TC combination pill.

Yet overall, governments and NGOs did not leap to accept reduced-price offers from either patent-holding companies or generic producers. For many LDCs, even these reduced prices were far beyond their ability to pay. This reluctance was also an indication of just how difficult it would prove to be to set up the legal mechanisms, distribution systems, medical infrastructure, and ongoing monitoring and clinical care necessary to actually get drugs to the most needy potential recipients.

A Public Relations Nightmare

In the year leading up to the South African trial, a great deal of media attention focused on the global AIDS crisis, especially in sub-Saharan Africa. The Durban AIDS conference, the U.S. declaration that AIDS was a national security issue, and the impending twentieth anniversary of the first reports of AIDS all helped to keep the epidemic on the front pages and images of a ravaged continent on the developed world's television screens.

International sentiment began to turn against the pharmaceutical industry, creating what could only be called a public relations nightmare. According to UN secretary general Kofi Annan, "There has been a worldwide revolt of public opinion. People no longer accept that the sick and dying, simply because they are poor, should be denied drugs which have transformed the lives of others who are better off." In March 2001 the European Union (EU) asked the PMA-SA to drop the lawsuit, and a coalition of religious groups, legislators, human rights advocates, and other civil society organizations echoed the request, calling the suit "morally reprehensible and legally flawed." In April MSF presented a petition with 250,000 signatures making the same demand.

Even as the pharmaceutical companies slashed their prices, they drew more grief. By revealing the "at cost" prices of their drugs, the companies exposed their substantial markups in wealthy countries. Anti-HIV drug prices in the U.S. are as much as ten times the "at cost" prices offered to poor countries. Some activists suggested that drug companies were only lowering their prices as a public relations ploy, or to hold onto their patents by undercutting generic drugs. Drew Altman of the Kaiser Family Foundation said, "What a terrible dilemma for the companies. The more they do the right thing and lower the price of AIDS drugs in the rest of the world, the more it hurts them domestically."

AIDS activists -- who in the first decade and a half of the epidemic had devoted little effort to international social and economic justice issues -- were increasingly joined by activists from the growing movement against corporate globalization, who had heretofore paid little attention to HIV/AIDS. AIDS-related actions became more diverse, including a wider range of ages and ethnicities than seen in the early years of ACT UP. AIDS activists and anticorporate activists alike could not have hoped for a more favorable issue than affordable access to essential medications -- many felt that there could hardly be a more egregious example of putting the quest for profit before the lives of people.

Why Do Drugs Cost So Much?

Several issues came to the fore in the South African lawsuit. Pharmaceutical companies defended their high prices and their need for patent protection, claiming that without substantial profits, there would be no resources to develop new medications. They also pointed out that they assumed considerable risk when they invested in drug candidates that might never make it to market.

Treatment advocates countered that profits had little to do with drug development, contending that many drugs were largely developed with U.S. government money. This issue grabbed the attention of students, who argued that drugs developed through government-funded university research should remain in the public domain. In March 2001, student activists at Yale -- where d4T was discovered -- launched a petition drive and held demonstrations asking the university and licensee Bristol-Myers Squibb to allow off-patent production of the drug. Later that month, the company made the precedent-setting announcement that it would allow others to produce generic versions of d4T for sale in Africa. Bristol-Myers Squibb vice president John McGoldrick said, "This is not about profits and patents; it's about poverty and a devastating disease. We seek no profits on AIDS drugs in Africa, and we will not let our patents be an obstacle." Kate Krauss of ACT UP/Philadelphia called the move "groundbreaking," noting that it was "the first time that a U.S. drug company has acknowledged that generic drugs are the key to saving lives." In July, the company followed up by announcing an "immunity from suit" agreement that would formally allow South Africa's Aspen Pharmacare to produce and sell generic versions of its anti-HIV drugs in sub-Saharan Africa for five years. Encouraged by the Yale students' success, activists at the University of Minnesota in April asked their university to turn over its patent on abacavir.

Patient advocates also asserted that pharmaceutical companies spend considerably more on drug advertising and marketing than they do on research and development (R&D), and that the pharmaceutical industry is consistently one of the most profitable worldwide. According to PhRMA, R&D costs average 20% of company sales, while marketing costs average 30%. According to a report released this past July by the nonprofit health-care consumer group Families USA, eight of the nine major drug companies whose year 2000 annual reports were analyzed spent more than twice as much on advertising, marketing, and administration than they did on R&D; six of the nine made more in net profits than they devoted to R&D. A report released later the same month by the consumer advocacy group Public Citizen revealed that the pharmaceutical industry spent over $260 million in 1999-2000 on lobbying, issue advertising, and campaign contributions.

The Slippery Slope

In the poorest countries, neither the government nor many citizens have the resources to purchase market-rate brand-name drugs, and therefore drug company income in these markets tends to be very low. According to a widely quoted estimate, African countries account for about 1.5% of total worldwide pharmaceutical sales. Because pharmaceutical companies make little money selling drugs in LDCs, they are often willing to give away their drugs at cost or even for free. But unlike charitable programs, the patent battle raised the possibility that countries could gain access to drugs through a mechanism beyond the companies' control.

Many commentators have suggested that drug companies are concerned that licensing generic drugs in the poorest countries would spur attempts by middle-tier developing countries and wealthy countries to also manufacture and import cheaper versions of patented medications. Likewise, offering anti-HIV drugs at cost to LDCs could lead to demands for discounts in wealthier countries as well. And people with other life-threatening diseases are no less deserving of affordable medications than people with HIV/AIDS.

These fears are not unfounded. U.S. drug prices are the highest in the world, outstripping prices in Canada, Europe, and Australia. "All you have to do is look at how much they're selling drugs for in other countries to see how high they're jacking up prices in the U.S.," said Tim Fuller of the Gray Panthers, a senior advocacy group. Segments of the U.S. population -- especially the poor and the elderly -- often lack health-care coverage and cannot afford brand-name drugs. Some U.S. residents travel to Canada or Mexico to purchase less expensive prescription medications. Government programs such as Medicaid and the AIDS Drug Assistance Program (ADAP) could provide medications for many more people if they had access to generic or heavily discounted drugs. Legislators and activists are already talking about promoting drug-purchasing pools, generic drugs, and price controls in the U.S.

Clearly the drug companies are in a precarious position when they agree to offer discounts or permit compulsory licensing or parallel importing of drugs only for certain populations or for certain diseases. Alan Murray, in a March 2001 Wall Street Journal op-ed piece wrote that the pharmaceutical companies "correctly see the camel's nose nuzzling into their gold-trimmed tents."

Tiered Pricing and Cost Shifting

While pharmaceutical companies may be willing to donate or allow off-patent production of drugs for poor countries, they argue that drug prices must remain high in wealthy countries to provide resources for R&D. In effect, this "cost shifting" means that wealthier countries subsidize the price of drugs for poorer countries. As explained by GlaxoSmithKline CEO Jean-Pierre Garnier, "The developed world must be willing to pay reasonable prices for medicines in order to cover costs for developing countries. Essentially, we must be allowed to generate revenue for [R&D] in Europe and the United States, while transferring the benefit of this research, basically for free, to the developing world."

Experts have proposed various differential, or tiered, pricing systems that would allow poor and wealthy countries to pay for drugs in accordance with their means. While it may seem unfair that a person with HIV/AIDS in the U.S. should pay ten times as much as a person in South Africa for anti-HIV drugs, the average U.S. per capita income (approximately $30,000 in the year 2000) is about ten times the per capita income in South Africa.

This past April, delegates at a joint meeting of the WTO and the World Health Organization (WHO) in Norway supported differential pricing, as did the UN's annual Human Development Report released in July. In June, Yale economist Jean O. Lanjouw proposed a plan whereby drug companies would surrender patent rights in poor countries but enforce them in wealthier ones (click here to see the PDF version of this proposal). Under the plan, two parallel drug markets would exist. In poor countries, competition between generic drug makers would keep prices low, while in wealthier ones high prices would fund ongoing R&D.

Yet a tiered pricing system brings with it the risk that "gray markets" will develop to facilitate the sale of drugs across borders from poorer countries to wealthier ones. It is likely to prove very difficult to keep cheap drugs -- whether sold by patent-holding companies or generic producers -- confined within national borders. To address this issue, Pfizer has already produced a new tablet formulation of fluconazole, so that the free drug provided to poor countries can be distinguished from the original capsule formulation sold at market rate in developed countries.

Capitalism Still Rules

Despite humanitarian overtures, in a capitalist environment, drug companies exist to make money for their shareholders. As Pfizer executive vice president C.L. Clemente bluntly put it, "We're not the Red Cross . . . we are a for-profit company." According to GlaxoSmithKline's Garnier, "The pharmaceutical industry can play an important role, but it does not have the mandate, expertise, or resources to deliver health care unilaterally to developing countries." Already Trimeris, which is developing a new class of anti-HIV drugs, has warned potential investors that price reductions for African countries, pressure for lower-cost drugs from third-party payers in the U.S., compulsory licensing laws, and parallel importing "could have a material adverse effect on our business, financial condition, results of operations, and the market price of our stock."

Some treatment advocates in the U.S. have begun to express concern that recent events may prompt pharmaceutical companies to cut back on anti-HIV drug research, and perhaps exit the HIV/AIDS market altogether. According to widespread rumors, two major drug producers have already decided to do so. If such a trend were to accelerate, they fear, AIDS could become an "orphan" disease that receives little attention from drug companies because it is not profitable. Martin Delaney of Project Inform said, "If we pay back the industry for doing the right thing in developing nations by demanding reductions [in the U.S.], we're going to kill the goose that lays the golden egg." Although some activists argue that necessary goods and services -- including drugs and medical research -- should be provided by governments or by "society" outside the existing profit-based system, this can hardly be applied only to pharmaceutical companies.

The Trial Begins, and Ends

On March 5, 2001, the Pretoria High Court began hearings in the long-awaited South African Medicines Act lawsuit. The government argued that it should be allowed to produce or import generic drugs under TRIPS. According to Joanne Collinge of the South African Health Ministry, the contentious amendment to the Medicines Act "reflects the government's position that equal access to health care is a constitutionally protected right."

The PMA-SA, representing 39 drug companies, countered that the proposed amendment gave the health minister "unconstitutional and arbitrary power" to ignore patent laws. PMA-SA chief Mirryena Deeb said, "It's a fight about whether the South African government respects the rule of law. The act contravenes the country's constitution and its own patents act, and would do nothing for access to quality and affordable medicines."

The South African AIDS activist group TAC declared March 5 a "Global Day of Action to Stop Medical Apartheid," and demonstrations were held in cities around the world. In South Africa, thousands gathered outside the Pretoria High Court and the U.S. embassy, while similar protests unfolded in Durban and Cape Town. TAC chair Zackie Achmat said, "This is literally a matter of life and death for some, and more profits for others."

In the U.S., activists from ACT UP and other groups gathered in New York City and Washington, DC (although a major scheduled demonstration was postponed due to an unseasonable blizzard). In Berkeley, ACT UP/East Bay sponsored a protest at Bayer Laboratories (a party to the lawsuit) endorsed by over 50 organizations including the International Gay and Lesbian Human Rights Commission, Global Exchange, and the Gray Panthers. Berkeley vice mayor Maudelle Sherik, a veteran of the South African antiapartheid struggle, said, "We are not unreasonable people. We understand that research and development is underwritten by drug prices. . . . But we must stand with South Africa on this crucial issue. We can no longer accept profits being put before people."

On the second day of hearings, Judge Bernard Ngoepe ruled that TAC could join the case as a friend of the court. Hearings were delayed until April 18 to allow the PMA-SA to respond. In the interim, negative sentiment built against the drug companies, spurred by the remarks of respected former South African president Nelson Mandela who opined, "I think the pharmaceuticals are exploiting the situation that exists in countries like South Africa . . . because they charge exorbitant prices which are beyond the capacity of the ordinary HIV/AIDS person. . . . The government is perfectly entitled, in facing that situation, to resort to generic drugs, and it is a gross error for the companies to take the government to court."

Hearings resumed as scheduled, but had barely gotten underway when they were discontinued to allow the government and the drug companies to attempt to negotiate a settlement. On April 19 the PMA-SA announced that it was withdrawing the lawsuit. The South African government agreed to produce or purchase only generic versions of patented drugs in compliance with WTO rules; the pharmaceutical companies agreed to pay the government's trial expenses.

Reaction to the settlement was generally positive. "This settlement meets the objectives of both the South African government and the pharmaceutical industry, but it is my fervent hope that the real winners here will be patients," said Garnier of GlaxoSmithKline. In a joint statement, MSF, TAC, and Oxfam stated, "The outcome of the case signals a dramatic shift in the balance of power between developing countries and drug companies. . . . It sends a clear signal to the African heads of state that lives should and can take precedence over patents." Even The New York Times editorialized, "[The decision is] the latest in a series of deserved setbacks for the drug industry on the issue of AIDS in the third world," and called it "a long overdue bow to both public health needs and common sense."

But not everyone was pleased with the outcome. Robert Goldberg of the National Center for Policy Analysis wrote in the Wall Street Journal that the settlement was a "tragedy." By imposing price controls and limiting patent protection, "the settlement will help ensure that this current generation of AIDS drugs is the only one we have for a long time to come," he said. "Price controls and the wanton destruction of intellectual property will do little to improve public health. But they will reduce innovation. The lag in HIV research and treatment will condemn the African continent to deeper darkness and death. And for that, the AIDS activists, their uncritical followers in the media, and their monstrous certainty about the evil of the drug companies will largely be to blame."

Now What?

Many have questioned the South African government's ability and will to provide anti-HIV treatment. This suspicion has been bolstered by Mbeki's questioning of the cause of AIDS and his government's refusal to provide anti-HIV drugs to pregnant women. During the trial, the drug companies claimed that they were unfairly scapegoated as the major barrier to AIDS treatment and being blamed for the government's inability to combat the epidemic. Deeb of the PMA-SA said, "The South African government has shown no indication of wanting to treat HIV/AIDS. They started out saying the problem was cost. Then we offered to discount the drugs and they said they were toxic. Then they questioned the link between HIV and AIDS."

In the midst of the trial, Cipla had asked the South African government to issue compulsory licenses to allow the company to produce eight anti-HIV drugs in what would have been the first actual test of the law. But the government declined to declare the state of emergency that would have permitted compulsory licensing under TRIPS, fearing that doing so might raise questions about the country's stability, frighten off foreign investors, and curtail the country's bill of rights.

After the withdrawal of the lawsuit, South African treatment advocates made it clear that they now expected more action from their government. But Dr. Tshabalala-Msimang announced that the government did not have immediate plans to use the Medicines Act to obtain anti-HIV drugs, which she said were "still too expensive, too dangerous, and too difficult to manage for the government to incorporate them into its AIDS-fighting plans." Nevertheless, in June, the Health Ministry published legislation allowing it to import the cheapest available drugs. Government officials said they planned to focus on obtaining medications to treat AIDS-related opportunistic infections (OIs), tuberculosis (TB), malaria, and sexually transmitted diseases (STDs).

In the absence of action by the South African government, private companies may have to pick up some of the slack. In early May, Anglo American PLC, a large mining company, said it would provide anti-HIV drugs to about 50,000 miners and their spouses. In June, the South African subsidiary of automaker DaimlerChrysler established a program to pay for anti-HIV drugs for its employees and their dependents; the program will provide medications for about 23,000 people. Also in June, Coca-Cola and UNAIDS announced a partnership whereby the company would use its marketing and distribution resources to assist AIDS prevention and testing efforts in Africa; activists urged the company to also help expand access to HIV/AIDS treatment.

Trade Negotiations Continue

On the day the South African lawsuit was withdrawn, leaders of 34 Western hemisphere countries were gathering in Quebec City for the Summit of the Americas. The lead item on the agenda was the Free Trade Area of the Americas (FTAA) agreement, a proposal that would create a trading bloc similar to the North American Free Trade Agreement (NAFTA) encompassing all of North, Central, and South America except for Cuba. Tens of thousands of antiglobalization, anticapitalist, and fair trade activists descended on the historic city to protest the proposed agreement, which they claimed would favor corporations at the expense of poor and working people and the environment. The Quebec actions brought out many of the same groups and individuals that had demonstrated against the 1999 Seattle WTO meeting, and again they were met with tear gas and rubber bullets.

Before the new administration's trade representative, Robert Zoellick, headed off to Quebec, hundreds of activists held a demonstration in front of his Washington, DC, office. "We're sending off Robert Zoellick and the trade negotiators with the understanding that there is a price to pay if they interfere with poor countries that are manufacturing AIDS drugs," said ACT UP/Philadelphia's Paul Davis.

Although civil society representatives have not yet seen the draft agreement, activists are concerned that the FTAA will make it harder for poor countries to obtain affordable drugs. A draft of the intellectual property chapter released in July proposed the limitation of compulsory licensing to the public sector, extension of the length of patents, and exclusivity for patented products' safety data and other marketing information. (Generic drug producers usually use the safety data for brand-name equivalents rather than conducting their own clinical trials.)

At the request of African WTO members, the TRIPS Council held a special session on June 20, 2001, to discuss access to medicines. A group of developing country and LDC delegates emphasized that compulsory licensing is an essential tool, and asked for official clarification of an understanding that TRIPS must be implemented in a way that allows countries to protect public health and does not impede access to essential medications. European Community (EC) members generally supported the developing country position. The U.S reiterated its policy of "flexibility" put forth in the May 2000 executive order, but spoke out against parallel importing. The U.S. urged WTO members not to give in to the influence of NGOs and activists, while a group of NGOs issued a statement encouraging the members not to fall under the influence of the pharmaceutical companies. Even the Holy See weighed in, with Pope John Paul II stating, "The law of profit alone cannot be applied to that which is essential for the fight against hunger, disease, and poverty." Further discussion of TRIPS is expected at the WTO's ministerial conference in Doha, Qatar, in November 2001 -- the first to be held in a non-Western country that does not permit political demonstrations.

Brazil Wins a Round

With the South African case settled, the focus turned to Brazil as the next arena in the drug access battle. Brazil is often cited as a shining example of a middle-tier developing country that has used the TRIPS provisions to improve the health of its people. Its AIDS treatment and prevention program provides free anti-HIV drugs to some 100,000 people with HIV/AIDS in accordance with current treatment guidelines. Brazil's Farmanguinhos Laboratory produces generic versions of eight anti-HIV drugs. Brazil has reduced both projected HIV infections and AIDS deaths by half. HIV/AIDS program director Paulo Teixeira said the program has paid for itself by reducing hospitalizations and enabling workers with HIV/AIDS to remain employed.

Brazil began producing and importing generic anti-HIV drugs in 1996. Under pressure from the Clinton/Gore administration and the drug companies, it briefly stopped providing treatment, but resumed after protests by hundreds of Brazilian demonstrators. In January 2001, the U.S. government asked the WTO to review a complaint alleging that Brazil's Industrial Property Law illegally infringes on pharmaceutical company patents. Under the law, foreign companies forfeit their patent rights if they do not begin manufacturing their products in Brazil within three years of receiving patent protection. Brazilian minister of health Jose Serra said the law "adheres scrupulously" to TRIPS provisions. The U.S. specifically objected to the local manufacturing requirement, which it called "protectionist."

The war of words between Brazil and the U.S. heated up over the course of the spring. In April, 52 of the 53 members of the UN Human Rights Commission voted in favor of a Brazilian resolution calling on all nations to "refrain from taking measures which would deny or limit equal access for all persons to preventive, curative, or palliative pharmaceutical or medical technologies used to treat pandemics such as HIV/AIDS. . . ." The U.S. representative abstained from the vote. In early May, Zoellick released a report criticizing Brazil's patent law, provoking a harsh rebuttal from Brazilian president Fernando Henrique Cardoso. "We're not here to challenge and break patents at any price," he said. "But I want to affirm that if it is for the health of our people, we won't hesitate." Later in the month at the WHO's annual assembly in Geneva, Serra offered a resolution opposing the use of international trade agreements to restrict poor countries' access to drugs, but the delegates approved a milder statement, saying that trade issues should be handled by the WTO.

NGOs such as Oxfam and MSF pressured the U.S. to withdraw its complaint, and a coalition of Brazilian and Latin American AIDS organizations placed an ad in the Washington Post echoing the demand. A WTO Dispute Settlement Body -- a sort of international trade court -- was scheduled to rule on the U.S. complaint later this year. But on June 25, the U.S. announced that it would withdraw the case. Zoellick said that the U.S. would not pursue its complaint before the WTO, but would instead "hash out the dispute directly with Brazil." The countries agreed to set up a bilateral mechanism to discuss patent issues, and Brazil agreed to give the U.S. ten days' notice before it applies its patent forfeiture provision. Brazilian trade representative Jose Alfredo Graca Lima called the U.S. announcement "a victory for both sides, a victory for common sense." ACT UP/Philadelphia's Davis said, "This is a tremendous victory for the Brazilian people and for people with AIDS worldwide. . . . It will serve as an important precedent for other nations desperate for ways to make treatment more affordable to their populations."

Barriers Remain

In the wake of the South African trial and the withdrawal of the complaint against Brazil, theoretically the way is now clear for poor countries to begin providing low-cost generic drugs to their people. And some countries have begun to do so. In May, Nigeria announced that it would purchase $3.5 million worth of generic anti-HIV drugs from Cipla, enough to treat 10,000 people. On June 12 the Kenyan parliament voted unanimously to pass the Industrial Property Bill allowing the country to take advantage of the TRIPS provisions; the same day, a Kenyan orphanage received its first shipment of generic anti-HIV drugs.

But barriers still remain. Many poor countries lack a well-developed health-care infrastructure. With an average per capita income of $500 per year in sub-Saharan Africa, even the cheapest generic drugs remain out of reach. Addressing an Organization of African Unity (OAU) AIDS summit in Abuja, Nigeria, in late April, the UN's Annan said, "Cheaper antiretroviral drugs, however vital, will not by themselves provide the answer. Without proper health care, they may even do more harm than good." Some experts argue that trained medical professionals and facilities are needed to properly administer anti-HIV medications. In the absence of careful management, they say, drug-resistant strains of HIV could evolve that would render the epidemic even more devastating.

Others are concerned about drug distribution, theft and diversion, and sale of medications on the black market. Another potential problem is the quality of generic drugs. Paul Volberding, M.D., of the San Francisco Veterans Affairs Medical Center, said that with generic drugs "potency could be diminished, which would harm both the patient and the community." However, Stefano Vella, M.D., president of the International AIDS Society, stated, "I feel a little uneasy talking about quality. There is such a desperate need for drugs. . . . This is like saying 'We need bread. Is it fresh enough?' We need the drugs. From wherever they come they're welcome."

Focusing on anti-HIV drugs could draw resources away from other desperately needed public health efforts. Although Mbeki was criticized last year for suggesting that AIDS is caused by poverty rather than HIV, the role poverty plays in exacerbating the epidemic is obvious. Annan said, "Africans are vulnerable to [HIV/AIDS, TB, and other infectious diseases] because they are poor, undernourished, and too often uninformed of basic precautions, or unwilling to take them. Many are vulnerable because they have neither safe drinking water nor access to basic health care. They are vulnerable, in short, because their countries are underdeveloped. And therefore the best cure for all these diseases is economic growth and broad-based development." Noting that some African health budgets are as little as $10 per person per year, Roger Bate of the NGO Africa Fighting Malaria expressed concern that "AIDS programs are expensive and will divert funding from child immunization, oral rehydration therapy for dysentery, removal of malaria mosquito breeding grounds, and delivery of clean water, all of which save many more lives at much lower cost than AIDS prevention, let alone treatment, which only delays death and does not cure."

Can It Be Done?

While these barriers are undeniable, AIDS treatment advocates argue that anti-HIV drugs can be used successfully in resource-poor settings. Inadequate facilities in rural areas and inner cities, poor health care (especially in the U.S., with its lack of universal health insurance), and the risk of drug-resistant HIV are issues in wealthier countries too, but are not used as an excuse to deny treatment.

ACT UP points out that the often-repeated references to "dozens" of pills per day and complex dietary requirements apply to obsolete regimens that are rarely used today. The combination regimens recommended by the latest U.S. treatment guidelines involve 2-15 pills per day, thanks in part to new drug formulations and combination pills that contain 2-3 different drugs. Millions of Africans live in cities with hospitals or within walking distance of a rural clinic. Trials of over 750 participants conducted from 1998 to 2000 in Johannesburg and Cape Town, South Africa, showed that anti-HIV therapy can be used successfully by persons in the poorest settings.

Indeed, some reservations about providing anti-HIV therapy in poor countries may be based on little more than stereotypes. In June, Andrew Natsios, the newly appointed director of the U.S. Agency for International Development (USAID), provoked accusations of racism when he suggested that Africans might have trouble adhering to complex regimens because they do not understand Western concepts of time. "Many people in Africa have never seen a clock or a watch in their entire lives," he said. "If you say one o'clock in the afternoon, they do not know what you are talking about. They know morning, they know noon, they know evening, they know the darkness at night." Amidst the storm of controversy generated by Natsios' remarks, National Security Council senior director of African affairs Jendayi Frazer emphasized that the statement does not reflect official U.S. policy. [Ed. note: While Natsios' intention may have been to acknowledge real cultural and lifestyle differences between people with HIV in the West and their African counterparts, an unfortunate consequence of such statements is that they may be construed as a justification for inaction. As Justice Edwin Cameron of South Africa told BETA during a June 2001 visit to San Francisco, "The legitimization of inaction by people preoccupied with how to reach the toughest cases is a real threat. And it is an utter myth that people without formal education or financial resources cannot make self-interested decisions -- the rise of successful South African trade unions clearly proved that that notion is not accurate."]

Innovative Mechanisms

Despite the barriers, efforts are underway to find innovative mechanisms for providing AIDS treatment and improving overall health care in resource-poor settings.

In early April, a group of Harvard University faculty presented a plan for making HIV/AIDS treatment widely available in Africa. The group suggested that a completely new infrastructure need not be developed, but rather that anti-HIV drugs could be distributed through the same mechanisms currently used for TB. Others remain skeptical; cheap generic drugs to treat TB are widely available, but the WHO recently reported that worldwide TB cases and deaths are at their highest level ever.

MSF recently launched a pilot program in which a small group of people in the South African township of Khayelitsha are receiving a simplified anti-HIV regimen with less frequent blood monitoring. The program is intended to assess the feasibility of providing anti-HIV treatment through primary health-care centers operated by local governments. MSF's Toby Kasper said, "Our patients take two pills in the morning and two pills in the evening. That's it." In June, Pfizer announced that it would build an $11 million, state-of-the-art AIDS clinic in Kampala, Uganda, in conjunction with the Academic Alliance for AIDS Care and Prevention in Africa. The clinic will treat as many as 50,000 people, train medical professionals from throughout Africa in the diagnosis and treatment of HIV/AIDS, and study simpler and cheaper ways of using anti-HIV therapy.

Others are exploring the development of bulk drug purchasing plans and the establishment of databases of lowest drug prices and generic providers. In June, Barry Bloom, dean of the Harvard School of Public Health, proposed the establishment of an "AIDS drugstore" to buy, warehouse, and distribute medications. The same month, AIDS Empowerment and Treatment International (AIDSETI) -- an international network of PWA (people with AIDS) organizations that provides treatment for people in poor countries using donated surplus or "recycled" drugs -- advocated the use of compulsory licensing to lower the price of AIDS drugs. This would allow more people in poor countries who have health insurance or can afford to pay something to access treatment through the private sector, thus freeing up public health resources for the most needy. According to AIDSETI, "The most important obligation of governments now is to get out of the way of those able to pay, and instead facilitate their access."

What Will It Cost?

Providing HIV/AIDS treatment to people in the developing world will certainly entail a heavy expense. Yet many believe the cost is within the realm of possibility if the political will can be mustered.

At the OAU AIDS summit in April, Annan proposed the establishment of a $7-10 billion global AIDS fund. He called on wealthy countries, international organizations, and private donors to finance the proposed fund, noting that the sum was "little more than 1% of the world's annual military spending." As envisioned by Annan, the fund would pay for AIDS education, HIV testing, care for orphaned children, and overall health-care infrastructure, in addition to anti-HIV drugs.

In their April report, Harvard Center for International Development director Jeffrey Sachs, Ph.D., and coauthors estimated that over five years, anti-HIV treatment for three million people with HIV/AIDS in sub-Saharan Africa -- along with other AIDS relief including prevention programs, treatments for OIs, and care for orphans -- would cost $5-10 billion per year. Sachs suggested that the U.S. should contribute one-third of this amount, which works out to about $6-10 per person in the U.S. Critics of the proposal argued that the money would go much further if cheaper generic drugs were used instead of patented medications, but Sachs acknowledged that protecting intellectual property rights was a subsidiary goal of the plan. "Vilifying the American pharmaceutical industry," he said, would be a "tragic mistake."

In June, UNAIDS released a report that put the combined figure for AIDS prevention and treatment at $9.2 billion by 2005. The report, authored by UNAIDS chief epidemiologist Bernhard Schwartländer and colleagues, was published in the June 29 issue of Science. It offered a financial blueprint for how money might be allocated to 135 LDCs and middle-tier developing countries; half the amount would go to sub-Saharan Africa. The plan proposed $4.8 billion for prevention and $4.4 billion for care, treatment, OI prophylaxis, and support for orphans. Over $1 billion would go toward anti-HIV drugs, assuming a cost of $400 per person per year. "What we estimate will be necessary is truly possible," said Schwartländer. "Just to give a comparison figure, the amount of money that the U.S. spends domestically on HIV prevention, care, and research exceeds $20 billion in a given year, which is much higher than what we calculate would be needed in the developing world altogether."

Storm Clouds at UN Meeting

Drug access and funding was discussed on a larger scale at the United Nations General Assembly Special Session on AIDS (UNGASS), held June 25-27 of this year in New York City. This was the first time a full UN body had met to discuss a specific health issue.

About two dozen heads of state attended, mostly from Africa. The 50-member U.S. delegation included Department of Health and Human Services secretary Tommy Thompson and Secretary of State Colin Powell. Activists criticized the inclusion of a pharmaceutical company representative, Pfizer CEO and PhRMA chair Henry McKinnell, in the U.S. delegation, calling it a "conflict of interest."

The meeting was not without controversy. Representatives from Muslim countries and the Vatican clashed with those from Europe, Canada, and Australia over whether specific vulnerable populations -- including men who have sex with men, sex workers and their clients, injection drug users, and prisoners -- should be explicitly mentioned in the final declaration. In the end, delegates agreed to alternative language referring to "sexual practices," "livelihood," and "institutional location," in return for strong language on women. The final declaration stated that countries should strive to "promote the advancement of women and women's full enjoyment of all human rights; promote shared responsibility of men and women to ensure safe sex; [and] empower women to have control over and decide freely and responsibly on matters related to their sexuality to increase their ability to protect themselves from HIV infection." Annan said, "Girl power is Africa's own vaccine against HIV. . . . If there is one idea that stands out clearly in the declaration, it is that women are in the forefront of this battle."

Although there was some discussion of the relative importance of prevention, care, support, and treatment, the general consensus was that all are necessary. The final declaration called prevention the "mainstay" of global AIDS relief efforts, but added that treatment and care are also "fundamental elements." It included a goal of reducing HIV prevalence among people aged 15-24 by 25% and reducing infant infection by 20% by the year 2005.

As delegates gathered in New York, over a thousand activists marched in the rain on June 23 to voice their three-pronged demands -- donate the dollars, drop the debt, and treat the people. In keeping with the recent trend in AIDS activism, organizers included not only U.S. AIDS treatment advocates, but also African AIDS organizations, religious groups, members of the Student Global AIDS Campaign, and the Jubilee USA Network (advocates of global debt relief). During the meeting, a group of activists managed to hold a press conference and a small demonstration in the UN building -- which is off-limits to protests -- resulting in the loss of some NGO delegates' credentials.

Who Will Pay?

Given that even discounted and generic drugs are too expensive for many LDCs, it is clear that price reductions alone are not the answer for people with HIV/AIDS in the developing world. To make widespread treatment access a reality, someone somewhere is going to have to pay.

In a show of international unity, much of the world heeded Annan's April call for a Global AIDS and Health Fund. Representatives from the UN, the WHO, NGOs, private foundations, and over 50 countries met in Geneva to discuss the proposed fund. They agreed that it should finance both treatment and prevention, and include efforts against TB and malaria in addition to AIDS. The representatives called for "transparency" in the allocation and spending of resources, and for mechanisms to ensure that funded efforts are effective.

On May 11 President George W. Bush was the first to announce a contribution to the global fund with a pledge of $200 million. Bush stressed the need to focus on AIDS prevention as well as treatment, and said that prevention programs should mention sexual abstinence. He also emphasized that the fund "must respect intellectual property rights as an incentive for vital research and development."

AIDS activists complained that the contribution was too small, and insisted that it not be taken from existing international development aid. David Bryden of the Global AIDS Alliance called the contribution "criminally small," and Dr. Peter Lurie of Public Citizen's Health Research Group called it "miserly." Nearly 100 activists staged a demonstration in Washington, DC, the Friday following the announcement to demand more funding. Noting that the U.S. contribution amounts to about $5 per person with AIDS in Africa, ACT UP/Philadelphia's Krauss said, "It may pay for lunch for a few days, but it's not going to buy AIDS drugs, and it won't keep anyone from dying." Other organizations, including the San Francisco AIDS Foundation, also said the U.S. pledge was insufficient.

Following Bush's announcement, Britain said it would donate $100 million, and France pledged $127 million. During the UNGASS meeting in late June, Canada pledged $73 million, Norway anted up $110 million, Sweden offered $60 million, and Britain upped its donation to $200 million. Even potential recipient countries chipped in, with Kenya offering $7,000, Nigeria pledging $10 million, Uganda offering $2 million, and Zimbabwe donating $1 million. Powell pledged to increase the U.S. contribution, saying, "I know of no enemy in war more insidious or vicious than AIDS, an enemy that poses a clear and present danger to the world."

Members of the U.S. Congress on both sides of the aisle support increased funding. Senator Patrick Leahy (D-VT) said the $200 million amount "falls far short of what the wealthiest nation in the world should be contributing." Bill Frist (R-TN) and Henry Hyde (R-IL) were among those sponsoring bills to increase international AIDS relief allocations. In June, the House International Relations Committee approved a plan by Hyde, Tom Lantos (D-CA), and Barbara Lee (D-CA) to devote $1.36 billion to international AIDS funding on top of Bush's initial pledge. Soon thereafter, the House Appropriations Committee proposed a $474 million allocation for international AIDS programs. In late July, the full Congress agreed on an additional $100 million in global AIDS funding for the remainder of the fiscal year.

Private donors also have a role in financing global AIDS efforts. Annan himself set an example by donating to the fund the $100,000 Philadelphia Liberty Medal prize he was awarded in July. In June, Credit Suisse financial group subsidiary Winterthur Insurance offered the first corporate donation: $1 million. On June 19 the Bill and Melinda Gates Foundation, which participated in discussions about the implementation of the Global AIDS and Health Fund, donated $100 million. Gates said, "As we reflect on twenty years of AIDS and the 22 million lives it already has claimed, we believe that there is no higher priority than stopping transmission of this deadly disease."

But not everyone immediately jumped on the bandwagon. European Union development commissioner Poul Nielson said that a global fund "cannot succeed and will not get our support without a commitment by industry to a global tiered pricing system." Australia also expressed its misgivings about how the fund would be spent, noting that it might instead concentrate its AIDS relief efforts in Asia.

On July 20 leaders of the world's wealthiest nations (Britain, Canada, France, Germany, Italy, Japan, and the U.S.) plus Russia -- the so-called Group of Eight, or G8 -- convened in Genoa, Italy, for their annual meeting. With Annan present, the leaders made a show of "formally launching" the Global AIDS and Health Fund, which they said would be operational by January 1, 2002. But other than contributions from Germany ($131 million), Japan ($200 million), and Russia ($20 million), the G8 did not make the large donations that many had hoped for. At the time of the meeting, the fund had reached a total of about $1.5 billion, well below the $7-10 billion requested by Annan. Any public relations boost the G8 might have hoped for was overshadowed by demonstrations involving an estimated 100,000 fair trade, anticapitalist, union, and other activists, and the shooting death by police of a young Italian protester, the first fatality in the developed world since the current battle against corporate globalization began two years ago.

Drop the Debt

Over the past year, AIDS treatment advocates have increasingly looked to international debt relief as an element in ensuring access to anti-HIV drugs, and advocates for debt relief have joined AIDS activists in the effort to expand global treatment access.

In discussing the specifics of the Global AIDS and Health Fund, some have suggested that it should involve the World Bank and/or the International Monetary Fund (IMF). Although the World Bank already has its own Multi-Country HIV/AIDS Program, bank president James Wolfensohn has said he supported the new fund.

However, such proposals are controversial among some activists and NGOs. The two institutions -- which have been among the primary targets of the antiglobalization and fair trade movement -- are accused of exacerbating poverty through "neoliberal" structural adjustment policies that typically require poor countries to put in place various austerity measures and make changes to their economic systems. The World Bank typically administers low-interest or interest-free loans rather than grants for health-related programs. Several African countries have refused to accept such loans, even at interest rates of 1% or less, citing their already crushing international debt burden. Noting that external debt "substantially constrained" the ability of developing countries to finance the fight against AIDS, the UNGASS final declaration called for debt cancellation for highly indebted poor countries.

In the days preceding the G8 meeting, U.S. Treasury secretary Paul O'Neill suggested in a New York Times op-ed that the global financial institutions should make outright grants in addition to loans, saying, "Grants are the right way to help an already heavily indebted country provide education, health, nutrition, water, and sanitary needs for its poorest people and to help fight AIDS and other infectious diseases." Bush proposed that the World Bank should henceforth provide up to half of its financial assistance for health care and related programs in the form of grants. However, several European countries opposed the proposal, saying that in the absence of increased support -- especially from the U.S. -- the World Bank needed loan repayments in order to make future disbursements.

AIDS treatment activists and debt relief advocates have been among the protesters at all the large trade and anti-globalization demonstrations in the past two years, and Genoa was no exception. Members of HealthGAP, MSF, and the Jubilee Network criticized the G8's failure to donate more money to the fund and to take stronger action on debt relief. According to Julie Davids of ACT UP/Philadelphia, "With many of these developing countries already spending twice the amount on debt servicing as they do on health, these miserly donations will be gone almost before they are received." Earlier in the summer, Tim Atwater of Jubilee USA said that, "The $200 million which Bush has pledged [to the global fund] is the same amount as sub-Saharan Africa spends on debt payments in less than a week."

Controversies Remain

Some serious controversies remain concerning the administration of the Global AIDS and Health Fund. Among these is the question of whether the fund should purchase medications at market rate, rely on patent-holding companies to offer discounted drugs, or use compulsory licensing to obtain the cheapest drugs available. A recent Oxfam report urged that anti-HIV drugs be procured using an open bidding system that would include generic manufacturers as well as patent-holding pharmaceutical companies. The latter option could potentially provide more drugs for more people, but concerns about intellectual property and drug quality could shift the debate in favor of the pharmaceutical industry. PhRMA spokesperson Grayson made it known that his organization would "oppose any effort" that includes generic drugs. "The global fund should abide by intellectual property laws," he said.

A rift has developed between European countries and the U.S., with the former tending to favor tiered pricing systems, bulk purchasing, generic drugs, and a database of lowest drug prices. In contrast, the U.S. prefers strong intellectual property protections and reliance on drug companies to provide reduced prices on patented drugs. In a letter to EU trade representative Pascal Lamy, US trade representative Zoellick stated that the U.S. is "opposed to the creation of an international institution or convention to regulate drug prices." Ellen 't Hoen of MSF said, "Basically, the [EU] is saying that it doesn't want the fund to turn into a subsidy for Big Pharma, and the U.S. is saying the reverse."

In addition to concerns about generic drugs, some potential donors are worried that the global fund will not be spent effectively, a sentiment exacerbated by the UN's and the WHO's reputations for bureaucratic inefficiency. Others are concerned that fund administrators could favor government programs over more "grassroots" efforts. There also will surely be controversies related to issues such as condom promotion, prevention programs for vulnerable populations such as sex workers and injection drug users, and efforts to improve the status of women.

Another contentious issue is whether AIDS relief efforts in poor countries should focus on treatment or prevention. Some government, NGO, and private foundation representatives feel that prevention is a more cost-effective approach than treatment. USAID's Natsios has suggested that the UN fund should be "devoted almost solely to prevention."

But many treatment advocates argue that treatment and prevention must go hand-in-hand. The availability of treatment encourages people to be tested for HIV. "If the only thing you get out of prevention is testing, stigma, and a death sentence, why would you like to listen to a prevention pitch?" asked Davis of ACT UP/Philadelphia. Activists also question the practicality of prevention messages -- especially those stressing abstinence and monogamy -- in cultures where women have little control over sexual decision-making.

There appears to be a growing consensus that treatment and prevention are both crucial, and must both be included in any global AIDS effort. In the words of Peter Piot, M.D., of UNAIDS, "We feel very strongly that the response to AIDS has to be a balanced one: prevention and treatment. I'm really getting tired of the fact that a terribly complex problem of treatment and care for people having HIV is reduced to the price of antiretroviral drugs."

The Next Chapter

With or without cheap drugs, many questions remain about the best way to address what has come to be called "medical apartheid" -- how to provide widespread access to life-saving medications and health care more generally to the world's poorest people. Even heavily discounted and generic drugs remain out of reach for people in the least developed countries. Concerns about basic health-care infrastructure, sanitation and clean water, clinics and trained medical personnel, distribution channels, and ongoing monitoring and care remain strong.

Providing even the lowest-cost drugs will require a major commitment from governments, international agencies, NGOs, private funders, and corporations. With the new Global AIDS and Health Fund in place, so begins the long process of amassing the money and solving the logistical problems necessary to provide treatment, prevention, and other services to the most needy people with HIV/AIDS throughout the world. In the words of Annan, "It is only through a truly global partnership, bringing together governments, corporations, foundations, civil society, and individuals, that we can hope to pool the leadership and raise the resources needed to defeat this scourge."

Liz Highleyman ( is a freelance medical writer based in San Francisco.

Selected Sources

  1. Consumer Project on Technology's Health Care and Intellectual Property Resources. Online at Site includes information on international trade agreements, ongoing country disputes, drug companies, and current issues.

  2. Global Treatment Access Campaign. A global network for communication and organization towards access to essential medications for HIV/AIDS and other diseases. Online at

  3. Health Global Access Project (HealthGAP) Coalition. A network of advocates for greater AIDS treatment access. Online at

  4. Médecins sans Frontières/Doctors without Borders Access to Essential Medicines Campaign. Online at Site includes the May 2001 joint MSF/UNAIDS/WHO report "Sources and Prices of Selected Drugs and Diagnostics for People Living with HIV/AIDS."

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This article was provided by San Francisco AIDS Foundation. It is a part of the publication Bulletin of Experimental Treatments for AIDS. Visit San Francisco AIDS Foundation's Web site to find out more about their activities, publications and services.