Profit Margins, Death Rates, Drug Patents and HIV/AIDS

Here are some numbers to consider: 14 million, 35.9 billion, and one.

The first figure is an estimate of the number of people who will die of AIDS and other treatable diseases over the course of the coming year, most of them in the poor countries of the developing world.

The second figure represents the combined 2002 profits, in dollars, of the ten biggest pharmaceutical companies, according to Fortune magazine's annual analysis of America's largest businesses.

The third figure corresponds to the number of countries that, last Wednesday, November 19, voted against a U.N. resolution on access to drugs in global epidemics such as HIV/AIDS, tuberculosis and malaria. The resolution emphasized that the failure to deliver lifesaving drugs to millions of people who are living with HIV/AIDS constitutes a global health emergency. 167 countries voted in favor of the resolution. The single vote against it was cast by the United States.

Sadly, these numbers are closely related. To protect their exorbitant profits, drug companies are fighting the production and distribution of cheap generic versions of patented drugs. Unable to afford the medicines necessary to save their lives, millions of poor people die of treatable illnesses every year.

And, as the recent U.N. vote exemplifies, the drug companies have a reliable ally. Not only does the U.S. government use its considerable economic power to bully developing countries into restricting access to low-cost generics, it continues to try to change the international rules that allow such generics to be produced in the first place

In their vulnerability to treatable diseases, the rich and the poor live in different worlds. Every year, millions of people in developing countries die of illnesses that they would likely have survived had they lived in Europe or the United States. A key factor in the enormous global disparities in death rates is poor people's lack of access to needed drugs.

Consider the case of HIV/AIDS. An estimated 42 million people are living with HIV/AIDS worldwide, 39 million of them in the developing world. India alone has at least 4.5 million people who are HIV-positive, and possibly many more. China, a country that has yet to act decisively to address the epidemic, has at least another 1.5 million people living with HIV. In sub-Saharan Africa, as is well known, the rate of HIV infection has reached crisis proportions.

In the United States and other rich countries, since the advent of effective anti-retroviral drug treatment, AIDS has become a manageable disease, not a death sentence. But for the millions living with HIV in the developing world, prospects for effective treatment remain dim.

At present, only a tiny minority of HIV-positive people in poor countries have access to anti-retroviral drugs. For most people in the developing world, as well as some marginalized populations in rich countries, the cost of treatment remains prohibitively high.

Nothing in the ingredients of anti-retroviral drug treatment makes it inherently expensive. Indeed, when a combination of generic drugs is used, treatment costs are about $600 per patient per year.

But low drug costs do not appeal to those who profit from drug sales. Unsurprisingly, therefore, the pharmaceutical companies that own the patents for anti-retroviral drugs bear an enormous share of the responsibility for keeping them beyond the reach of so many people with HIV. In the United States, the cost of anti-retroviral drugs is generally in the range of $10,000 to $15,000 per patient annually, and people with advanced cases of AIDS may pay far more. Relying on international patent protections, drug companies have been trying to maintain drug prices artificially high by restricting the production and distribution of low-cost generic substitutes.

Global protections on intellectual property are tied to global rules on trade, specifically, the rules of the World Trade Organization. Under the WTO's intellectual property rules -- known as the Agreement on Trade Related Aspects of Intellectual Property, or TRIPS -- countries belonging to the WTO must give pharmaceutical companies twenty years of protection for drug patents filed after 1995. Although the rules carve out exceptions for national health emergencies, they still go a long way toward limiting poor people's access to life-saving medicines.

And as Oxfam has shown in a paper titled "Patent Injustice," the problem extends beyond HIV/AIDS. Brand name drugs for a number of major diseases cost several times more than their generic equivalents. The increasing drug resistance of endemic diseases such as tuberculosis and malaria -- and the resulting need for access to new drugs -- mean that the WTO's monopolistic pricing rules threaten many millions of the world's poor.

Despite the WTO's restrictions, some developing countries have made important steps in meeting their people's drug treatment needs.

In Brazil, notably, extensive prevention efforts combined with state-funded anti-retroviral treatment have reduced AIDS-related deaths by more than half since 1996. The cornerstone of Brazil's treatment program has been the local production of generic equivalents of brand name anti-retroviral drugs, which has driven down the cost of treatment enormously.

But Brazil's successes, and those of countries like it, have been hard fought. The TRIPS rules have been a battleground on which Brazil and others have fought a series of high-stakes skirmishes with drug companies.

Backed by one of the world's richest and most politically influential industrial lobbies, the drug companies have had a crucial ally in their campaign against the spread of generics: the U.S government. Through the office of the U.S. Trade Representative, the United States has worked hard to advance the interests of the pharmaceutical industry, pressuring other governments on a bilateral basis and threatening to seek trade sanctions via the WTO.

Given the U.S. record, the vote last Wednesday in the Third Committee of the U.N. General Assembly was not too surprising. On a resolution introduced by Brazil that called for countries to promote the widespread availability of drugs necessary to combat global epidemics such as HIV/AIDS, tuberculosis and malaria, the U.S. was the lone dissenting vote.

The U.N. vote is a worrisome portent for the future. At present, the U.S. Trade Representative is negotiating a number of bilateral and multilateral trade agreements. Given U.S. advocacy on behalf of pharmaceutical companies' interests, these agreements are likely to go beyond the WTO's rules in protecting drug patents.

The largest and perhaps most significant of these agreements is the proposed Free Trade Area of the Americas. In a briefing paper issued last year, Human Rights Watch explained how the FTAA's draft provisions would elevate the protection of patents over the health needs of the public. The overall thrust of the treaty's restrictions would be to limit possibilities for generic competition with brand name drugs.

President George Bush, in a number of his most high-profile speeches, has expressed a rhetorical determination to assist in the fight against HIV/AIDS. By allowing U.S. officials to lead the world in protecting the interests of drug companies, he is betraying his public commitment to this cause.