Life, Death, and Property Rights: The Pharmaceutical Industry Faces AIDS in Africa

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Life, Death, and Property RightsThe
Pharmaceutical Industry Faces AIDS in Africa

• Brennen Phippen and Sue Ma

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Background (AIDS)

• AIDS was first discovered 20 years ago, and since
  then, there have been 24.4 million deaths from it
  and 40 million people infected
• 95 of infections were in developing countries
• Treatments came in the form of drugs. However,
  they were complicated to administer and extremely
  expensive, roughly 10,000 to 15,000 per person,
  per year

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Background (Pharmaceuticals)

• Started as small, low-profile firms that only
  supplied pharmacists with bulk chemicals
• Eventually companies such as Merck and Pfizer
  became corporate giants and committed themselves
  to research and development
• Estimated cost of producing one drug was reported
  to be between 500 million and 880 million.
• However according to research by Ralph Nader,
  costs were somewhere between 57-71 million in the
  90s

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Development of 152 Global Drugs by Country of
Origin, 19751994
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First Wave (AIDS)

• Concentrated in the United States
• Healthy gay men began in the early 1980s to
  develop a rare form of cancer
• Suspecting links to a virus, more research was
  necessary
• Scientists realized this strange new disease
  traveled through direct physical contact blood
  transfusions, sharing needles, perinatility, and
  sexual contact, both homosexual and heterosexual

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International Rates of HIV/AIDS among Adults, 2000
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Second Wave (AIDS)

• Infection rates in much of the rest of the world
  began spinning out of control
• 25.3 million people with HIV/AIDS lived in
  Africa, while South and Southeast Asia and Latin
  America hosted 6.1 million and 1.4 million

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International Intellectual Property Rights

• The pharmaceutical lobby labored to include
  intellectual rights on the World Trade
  Organizations agenda
• U.S. officials successfully added intellectual
  property rights to the slate of new requirements.
  Under a provision known as TRIPS (for
  trade-related intellectual property rights)
• All countries that wanted to join the WTO would
  be required to grant a minimum of 20-year patent
  protection

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Profitability of Fortune 500 Drug Industry
Compared with Fortune 500 Average,19702000
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View from Africa

• African AIDS activists spread a wide net at
  first, persuading governments and the media to
  take notice of their plight
• Eventually setting aim at the pharmaceuticals
• They argued prices were consciously held above
  the reach of Africans
• World Health Assembly passed a resolution that
  declared public health concerns paramount to
  profits
• Under attack from public criticism, Clinton
  announced in 1999 that the United States would no
  longer impose sanctions on developing countries
  seeking cheaper AIDS treatment.

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Comparison of Annual AIDS-Related Deaths,
19822000
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View from Pharmaceuticals

• The problem of AIDS in Africa was a problem for
  governments and society
• It meant spending moneypublic moneyin places
  where funds were scarce
• None of these tasks were the responsibility of
  the worlds pharmaceutical firms.

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The Stakes of AIDS in Africa

• If Pharmaceutical companies
• Do Nothing
• Risked the lives of millions and a massive blow
  to their global standing and reputation.
• Lowered Prices
• They risked weakening the patent system and
  destroying that which sustained them.