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Newsletter Issue 2 March - April 2001 |
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Pharming Crisis 39 of the world's biggest pharmaceutical companies are taking the South African government to court to stop South Africans receiving cheap drugs. If they win, thousands more people will die unecessarily. Is this malice or just market madness? Corporate Watch investigates... The central issue is a law which allows the health service to buy cheaper generic versions of patented drugs if there is a health emergency or the drugs are 'unaf-fordable'. Generic drugs can be 95% or more cheaper than the brand-name versions - the difference is mostly made up of drug company profits. The court case centres on AIDS drugs for the 10% of South Africans who are HIV-positive - at present, very few patients or healthcare providers can afford the drugs, which the director of the health ministry claims are actually more expensive than they would be in Europe. The law would also cover treatments for other killer diseases such as TB and malaria, and (to the disgust of the corporations) includes a ban on the practice of bribing doctors to prescribe brand-name medicines rather than cheaper alternatives. According to the companies bringing the case, banning such 'commission' is an interference with free trade, though this is unlikely to cut much ice with those dying for lack of affordable treatment. The court case began in Pretoria on 5th March, amid protests against pharma-ceutical companies around the world, but was adjourned two days later when the judge ordered the companies to reveal their pricing policies, giving them six weeks to collect evidence. The manufact-urers allege that excessive mark-ups by retailers are responsible for the high cost of drugs in South Africa, so the judge has called their bluff. It is not yet clear whether they will comply with the request. In the mean time, the case is turning into a public relations disaster. For once, the situation is so clear-cut, and the inter-national reaction so strong, even Western governments are getting attacks of conscience - the EU, after initially backing the drug companies' case, has now pulled out, and even the US, under the new Bush administration, has admitted that South Africa is probably acting legally. At the time of going to press, the drug companies are falling over each other in a rush to launch PR initiatives to preserve their fading public image: Merck and Glaxo-SmithKline have dropped prices (in places) while Bristol-Myers-Squibb, responding mainly to pressure from students at Yale University, has announced it will not pursue patent breaches by South African companies producing the AIDS drug d4T, which BMS licence from Yale. This is less significant than it sounds as the company offering to produce a cheap generic version of d4T is based in India. It's not even as if the pharmaceutical companies stand to gain a large amount of money, or are at risk of being unable to fund further research. The markets in question are tiny - for example in 1999 only around 3% of Glaxo Wellcome's turnover came from the whole of Africa and the Middle East - South Africa itself is thus a financially insignificant market. In any case, drug companies don't actually do all that much research: much of the work is done in universities and other public institutions who then licence companies to produce their discoveries commercially, giving the university a share of the profits. The major pharmaceutical companies now spend around twice as much on marketing as research and development. The AIDS drugs at issue in South Africa are relatively old and their development costs already paid off - the only remaining cost for the companies is the relatively small one of actually producing the drugs, so their profit per unit is enormous. The patents issue means this isn't even an everyday story of the free market killing poor people - rather, the patent system restricts the free market in such a way as to increase prices. While originally designed to encourage research and development by protecting inventors' rights to market their discoveries, current international patent law, under the terms of Trade Related Intellectual Property Rights (TRIPs) allows companies to keep exclusive rights over drugs long after the start-up costs have been paid for. This allows them to keep charging high prices when even a free market (let alone a sense of social justice) would have let cheaper competitors in to sell the now-established product. The drug companies, in other words, are trying to protect a privileged market position which permits them abnormal profits at the cost of thousands of lives. To add to the irony, if the big companies sold their drugs at the prices charged by generic producers, their total turnover and profits in Africa would probably increase as so many more people would be able to afford them. Of course, it is not the small Southern markets that bother them, but the prospect of the legal precedent losing them their privileged market position in the North. It will not surprise regular Corporate Watch readers to learn that some of the main movers behind TRIPs were the biggest drug companies, including Merck, Pfizer, Glaxo Wellcome, SmithKline Beecham and Eli Lilly. Again, these are some of the companies who formed lobby group Pharmaceutical Research and Manufacturers of America (PhRMA) to push the US government to threaten trade sanctions against countries which produce or import cheaper drugs. Contact: Action for South Africa, ACTSA Freepost, NW 4464, N1 9BR www.actsa.org/HIV_action.html See Corporate Watch 10, 'Toxic Drugs are good for you' for more on GlaxoSmith-Kline's contempt for patients. |
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