The collapse of the 39 pharmaceutical companies’ court action against the government this week has created the false impression that South Africa will suddenly be awash with cheap AIDS drugs.
But the disputed law does not tackle international drug companies’ patent rights, which gives them a 20-year monopoly to produce and set the prices of drugs they have developed. Most anti-retroviral drugs are relatively new so their patents still have many years to run.
The Medicines and Related Substances Control Amendment Act does not allow either generic versions of medicines still protected by patents to be imported (called parallel importation), or enable South African pharmaceutical companies to make cheap local generic versions of patented drugs (compulsory licensing).
Instead, all it allows is four new practices:
- the parallel importation of medicines sold cheaper in another country by its manufacturing company or its licensee;
- generic substitutions for medicines no longer protected by patents;
- the establishment of a pricing committee to ensure transparent pricing mechanisms and to compel pharmaceutical companies to justify the prices they charge;
- international tendering for medicines used in the public sector.
Under the new Act, if the government wanted to buy the anti-retroviral drug, AZT, for example, it would have to buy GlaxoSmithKline’s version of the drug rather than a generic — but it could import it from another country if GlaxoSmithKline was selling it cheaper elsewhere.
South Africa could not buy Indian drug manufacturer Cipla’s generic version of the patent-protected AZT for a tenth of Glaxo’s price, as Cipla is violating the World Trade Organisation’s (WTO) agreement on trade-related intellectual property rights (TRIPS).
South Africa is party to TRIPS so bound by its conditions. But Brazil is using a loophole in TRIPS – which allows the suspension of intellectual property rights in times of emergency – to manufacture cheap, generic anti-retrovirals which is it dispensing free to citizens.
However, South Africa’s victory is important as it represents the power of mass action to make even huge multinational corporations back down. In addition, certain generics of drugs no longer protected by patents are 20 times cheaper than patented versions, so this will ensure saving for consumers. For people with HIV, this may mean relief in terms of cheaper drugs to treat common, opportunistic infections.
Health department spokepserson Jo-Anne Collinge said the withdrawal of the case had also “changed the situation of talks with the pharmaceutical companies”.
“The minister of health is meeting the companies in early May and, while it is premature to pre-empt the agenda, it may be possible to find new ways to address the problems [of drug access] instead of resorting to the tired old ways of doing things,” said Collinge.
She added that there was an international trend towards government partnerships with international agencies, and such a partnership may be possible with the drug companies.
“What we need to do now is identify priority drugs, set up pricing committees and begin to look at how to get access to these drugs,” added Collinge. “The talks [with the companies] may offer new opportunities, but if not we need to see what we can get with our own resources and contacts. In this regard, the department is also visiting India very soon and will meet with drug manufacturers there. “
While the court case has been a public relations disaster for the pharmaceutical companies, they used the space created by the five-week court adjournment to launch a massive public relations and lobbying campaign to entrench their patent rights globally.
Their message to the United Nations, World Health Organisation and governments was simple: we’ll cut the prices of HIV/AIDS drugs to the developing world if you support our patent rights and keep out generic manufacturers.
Their campaign seems to have worked. UN Secretary General Kofi Annan, widely credited with brokering the court withdrawal, appears to have softened his support for generic medicines after meeting six major drug companies barely two weeks ago.
After the meeting, Annan said: “The pharmaceutical industry is playing a crucial role. We need to combine incentive for research with access to medication for the poor. Intellectual property protection is key to bringing forward new medicines, vaccines and diagnostics urgently needed for the health of the world’s poorest people.”
While the UNAIDS representative in South Africa, Richard Delate, said the UN ‘s commitment to ensuring access to essential drugs for African countries “has not changed”, AIDS activist organisation Act-Up Paris described Annan’s statement as a “turn around” from his earlier support for generic medicines.
Last week, at a closed meeting in Norway between drug companies, the WHO and WTO, a key WHO official, Jeffrey Sachs, allegedly appealed to activists to stop supporting illegal generics, and said that developing governments should buy from patent holders as they had dropped their prices substantially.
Drug companies argue that patents are important, as they need some guaranteed return for investing in the research and development of new drugs. While this is valid, it usually takes far less than 20 years for them to recover costs.
In addition, an analysis of the top 12 US drug manufacturers’ costs in 1999 revealed that they only spent 12,4% of revenue on research and development of new drugs, according to the South African Health Review 2000. They spent more than three times that amount – 37,3% — on marketing their drugs.
But so desperate are the world’s drug companies to keep generic manufacturers out that they may decide to donate certain drugs to African countries, as Pfizer has done with fluconozole and Boehringer Ingleheim has with nevirapine.
And they could afford to do this as a PR campaign as sub-Saharan Africa only accounts for 1,3% of global drug sales.