HIV/AIDS is mostly a tragedy of the developing world. Forty-two million people are infected with HIV, of which only 1.6 million are in North America, Western Europe, Australia, or New Zealand. Of 5 million newly infected in 2002, only 75,500 are from those developed countries, while 3.5 million were from Africa alone.
Recently, there have been two significant steps in the battle against AIDS in the developing world. First, Congress approved President George W. Bush’s request for $15 billion to fund anti-HIV, malaria, and tuberculosis programs for the next five years. This is a big increase in spending and a huge change for a Republican Congress that previously had not been very optimistic about the success of foreign aid.
Second, GlaxoSmithKline, the world’s largest inventor of drugs to counter HIV/AIDS, announced further price cuts for those drugs that it sells to Africa: from 38 percent to 47 percent off the previously already steep discount.
The President hopes to prevent 7 million new infections (60 percent of the projected new infections in the target countries), treat 2 million HIV-infected people, and care for 10 million HIV-infected individuals and AIDS orphans. A lot of the money will be invested in developing hospitals and satellite clinics to deliver services. Importantly, the President claims he will ensure accountability for results. This is a very important criterion, that, to date, has been lacking in much of the foreign aid to Africa.
Illegal Diversion of Drugs
The lack of good governance in health care systems has resulted in a huge diversion of medicines from sub-Saharan Africa back to Europe, where they are sold for much higher prices. Last year, Belgian customs authorities found that at least three million doses of GlaxoSmithKline’s Combivir® (zidovudine), scheduled for sale in Africa at about EU0.80 per dose, had found their way onto European pharmacists’ shelves, where they sold for about EU6.00 per dose. Quantities of GlaxoSmithKline’s antiretroviral drugs Epivir® (lamivudine) and Trizivir® (abacavir) also have been illegally diverted back to Europe.
The drugs were supposed to go to HIV/AIDS clinics in Senegal, the Ivory Coast, the Republic of Congo, Togo, and Guinea-Bissau. An estimated 28 shipments, with a retail value of EU29m, came back to Antwerp through Paris and Brussels. A spokesman for GlaxoSmithKline estimated that about a quarter of the drugs it had exported to Africa had come back to Europe.
This makes Glaxo’s offer of a further price cut remarkable. Why do brand name companies offer their drugs at a discount in sub-Saharan Africa at all, if unethical traders simply ship those drugs back to Europe, denying them to Africans and cutting the manufacturers’ profits in Europe?
Unfortunately, some lesser-developed countries prefer bullying, rather than negotiation, as a tactic to get the medicines their residents need. They have threatened to disregard patents and allow generic manufacturers to compete against the companies that invented the medicines.
Presumably, brand name drug makers figure that having their own drugs diverted to higher-priced markets is the lesser of two evils. At least when they ship their own drugs, they have some influence over their distribution in the target country. If they completely abandoned those countries to generic competitors, they would have no idea if those generic drugs were being relabeled and exported to European countries where the prices for them would be higher. As well, the willingness of European customs authorities to confiscate medicines that are inappropriately diverted back to Europe must give the manufacturers some comfort.
Holding Hospitals Accountable
If some of the new U.S. money will develop good governance of African health care systems that prevent these shenanigans, it will be money well spent. However, the idea of the U.S. government “holding accountable” hospitals and clinics in Africa tends to stretch credulity. Even at home, the U.S. government does not have a good track record at regulating hospitals. Increasing regulation of U.S. hospitals has led to collusion and barriers to building new ones.
Furthermore, new research indicates that hospitals and clinics may be part of the problem in Africa, rather than the solution. In a series of three articles, a group of scientists recently challenged the consensus that 90 percent of HIV infections in Africa were caused by sexual contact. This belief always has been a bit of a puzzle, because heterosexual transmission is not a big factor in developed countries.
The researchers note the “sexual” consensus emerged in 1988 and has subsequently suppressed inquiry and dissent. In a literature review, they claim that medical transmission of the virus–that is, through re-using needles in health facilities–led to 48 percent of HIV infections through 1988, when the “sexual” consensus emerged. Currently, they estimate that only 25 to 35 percent of the HIV incidence in Africa is attributable to sexual transmission. Although most experts still hold that unsafe sex is the main mode of transmission, this new research demonstrates uncertainty about what is causing the AIDS epidemic in Africa.
At best, we should probably be cautiously optimistic about Bush’s ability to achieve his stated goals with $15 billion of his taxpayers’ money. The obstacles to success are many, and money alone will not address them.
John R. Graham is director of pharmaceutical policy research at The Fraser Institute. His email address is [email protected]. A longer version of this article, including references, was published in the June 2003 issue of Fraser Forum, available online at http://www.fraserinstitute.ca.