The Cost of HIV Care

How much should multi-national drug companies charge for life-saving medicine in the world's poorest countries?

It is clear that pharmaceutical companies are not in the charity business. They need to recoup the billions invested in breakthrough drugs, and do this by acquiring a patent that protects their proprietary know-how for years, even decades. The patent allows them to reap the benefits of a virtual monopoly for an essential drug, and legally prevents cheap copycat versions from flooding the market and drastically bringing down prices.

Yet on the other hand, can we let millions in Africa and elsewhere suffer and die, when the medicine that could save them is available, but costs too much because of such patent protection?

Big Pharma vs. desperate need for HIV drugs

It's a debate that has been heating up in the run up to the G8 summit where the interests of multinational pharmaceuticals are pitted against the desperate health needs of a poverty stricken continent.

Africa will once again top the agenda on June 6-8 at the Baltic seaside resort of Heiligendamm, where leaders of the world's richest industrial nations, hosted by German Chancellor Angela Merkel, are expected to renew their pledges to increase aid to the developing world.

The biggest scourge in sub-Saharan Africa is AIDS. Even though a cure for the disease is a long way off, a new generation of antiretroviral drugs has made living with HIV at least manageable in the West. But these treatments are far less available where they are needed most.

The vast majority of the 40 million worldwide who test HIV positive, live in sub-Saharan Africa. Due to the time delay in the onset of AIDS, an estimated 7 million currently require therapy, but only 28 percent are getting any treatment at all, meaning a premature death sentence for the rest, including millions of babies who are born with the virus, transmitted by their mothers.

Producing generic drugs more cheaply and legally

Since the AIDS virus keeps mutating and more resistant strains keep cropping up, what is at issue is access to "second line" antiretroviral therapy, which costs at least ten times as much as the older drugs.

"After five years of treatment, some 20 percent of our patients need to switch to second line drugs, so we are seeing a doubling of drug costs in the next two years if prices remain at the current level," Dr. Tido von Schön-Angerer, a German paediatrician who heads the campaign for Access to Essential Medicines at Doctors Without Borders (MSF), told DW-WORLD.DE.

And in spite of deep discounts, those price levels are still way too high for the developing world, so von Schön-Angerer has strongly backed Thailand's decision earlier this month to defy patents through a legal mechanism called compulsory licencing that was established by the World Trade Organization in 2001.

The WTO ruling allows governments to circumvent international patent laws to ensure the public health of its citizens. That means either producing their own cheaper generic versions or importing them from India, which has been the biggest supplier of HIV drugs.

Diseases of poverty not profitable

Until a month ago, the sticker price for Kaletra, the patented antiretroviral drug produced by US based Abbott Laboratories was $2,200 (1,635 euros) per patient for a year's supply in developing countries defined as "middle tier," such as Thailand. Abbott has since lowered its price to $1,000.

In comparison Kaletra costs $7,000 in the United States and $500 for the least developed nations in Africa, with the huge profit margins from the rich industrial nations cross-subsidizing the poorest countries.

"We believe in differential pricing," said Abbott spokesman Dirk van Eeden. "Our approach is to charge the lowest possible price where the need is greatest in the least developed countries. We are making no profit whatsoever in Africa." Eeden also pointed out that the lowest generic price at $695 for the same drug is even higher than the original Kaletra brand.

"Generics have not matched Kaletra's prices in Africa," countered Dr. von Schön-Angerer. "At least not yet, but once we see much greater generic competition, Abbott's prices will be undercut even further."

Logistic problems and lack of healthcare workers

Although tremendous public pressure has led to lower prices for life-saving drugs, Africa's vulnerability to AIDS cannot be explained away by the lack of access to affordable medicine alone, according to Markus Preissner, head of the Research Division for Pharmaceutical Distribution at the University of Cologne.

"Even if governments in Africa could guarantee fully stocked pharmacies at rock bottom prices, there is still the problem of whether essential medicines and vaccines wind up with the end users—the patients who need them," he said.

The logistics of delivering supplies to patients in remote areas, the overwhelming lack of doctors and health workers to administer the medicines, and even the huge price differential between the same pill sold in Africa and Europe are massive problems.

"There need to be control mechanisms in place, so that life-saving medication that has been sold cheaply in Africa does not wind up being resold in Europe at a much higher price, with only the profiteers benefiting," said Preissner.