189. In industrialised countries, the introduction
of Highly Active Anti-Retroviral Therapy (HAART) has caused the
numbers of people dying as a result of HIV infection to fall by
two-thirds since 1995.
Both length of life and quality of life of infected people has
improved dramatically in Northern countries. Since HAART is widely
available to all people with HIV, if these improvements continue,
HIV may come to be seen as a long-term chronic condition.
190. Where anti-retrovirals are available in a developing
country, it is only to a few wealthy individuals who can pay for
treatments or senior staff in private or government corporations
who have comprehensive health insurance. In their evidence to
the Committee, Standard Charter Bank and Anglo American plc discussed
levels of healthcare available to their employees. Dr Brian Brink
of Anglo American said that there is a health insurance scheme
which staff can join and which provides anti-retrovirals. However,
this is "an example which is at the top end of our health
insurance arrangements. The health care plans for the biggest
section of our workforce, which is the less-skilled section on
our mines generally, is through company-owned medical facilities
and services which are provided free of charge to the employees....I
would say at this stage as things currently are to offer anti-retroviral
therapy to the entire workforce would cost too much and would
not be affordable".
During the inquiry, newspapers reported that Members of the South
African Parliament who have HIV are receiving anti-retrovirals
through their parliamentary medical insurance system.
191. The issue of access to anti-retroviral drugs
for developing countries has become a major international political
issue and was discussed frequently during the inquiry. The current
case in South Africa where 39 pharmaceutical companies are taking
the South African Government to court over the provisions of the
Medicines and Related Substances Control Amendment Act 1997, which
they claim contravenes WTO rules, has added to the controversy.
We certainly do not intend to come to a view on the merits of
that case nor how in detail to interpret the TRIPs agreement of
the WTO (Trade Related Aspects of Intellectual Property Rights).
The question of concessional drugs pricing for the developing
world is a vast and extremely complex subject which could well
be considered by itself. We content ourselves with mapping out
some of the key issues of principle. It should be clear from the
rest of this Report that whilst we consider cheaper drugs to be
an important issue we do not believe that drugs pricing is the
only obstacle to an effective response to HIV/AIDS in the developing
world. Some of the recent media coverage of the issue has failed
to make this clear. It is too easy, faced with a multifaceted
and devastating phenomenon such as HIV/AIDS, to create a single
identifiable enemy (the pharmaceutical companies) and a single
identifiable solution (cheaper drugs). While we discuss below
the important issues of patents and pricing, it is important to
point out that no evidence to the inquiry called for the purchase
and donation of anti-retroviral drugs to be a priority for donor
funds. It was pointed out that the healthcare infrastructure to
deliver and monitor these complicated drug regimes does not exist
in most of the worst affected countries. The BMA Foundation for
AIDS state, "The issue is not solely one of cost. Anti-retroviral
therapy is complex and requires specialist monitoring. Health
service infrastructures in developing countries are inadequate
to deliver these treatments safely to large numbers of people".
192. Clare Short pointed out, "These drugs are
extremely expensive even after the drug companies have said they
will supply them at cost. They are something like three dollars
a day. There are a lot of countries in Africa that spend less
than ten dollars a head a year on health care. That is my biggest
worry, that the fashion will be access to anti-retrovirals. We
have not got primary health care, we are not even reaching people.
They have not got enough food, soap, water, very, very fundamental
care. Budgets could be sucked into a kind of fashionable campaign
to make anti-retrovirals available which again would necessarily
be in the cities and would not reach all the people".
We pointed out earlier that HIV/AIDS cannot be considered outside
the context of the larger disease burden of the developing world
and the epidemic is already affecting the quality of care available
to those not suffering from HIV/AIDS. It would be quite wrong
to spend what amounts to the greater part of health service budgets
on HIV/AIDS to the detriment of care for other illnesses. The
provision of anti-retroviral treatments to people with HIV in
the poorest developing world is clearly not a practical or sustainable
development intervention. Donor funds and activities should concentrate
on prevention of further infections, development of basic healthcare
systems, provision of palliative drugs and basic treatments of
193. There is, however, a wider issue of the pricing
of drugs in developing countries. Even if for many countries anti-retrovirals
appear at the moment to be out of the question, it is important
at least to have essential drugs at affordable prices and reliably
supplied. The TRIPs agreement, whilst protecting patent and intellectual
property regimes, does allow compulsory licensing and parallel
importing in certain circumstances. This would significantly reduce
the price of drugs still under patent, including certain antifungal
drugs and antibiotics which are crucial in the treatment of opportunistic
infections but which are at the moment beyond the reach of most
developing country budgets. Even putting aside the question of
anti-retrovirals, the debate over drugs pricing and the TRIPs
agreement remains a very relevant one.
194. We heard many criticisms of the pharmaceutical
industry for only making their products both anti-retrovirals
and other drugs which treat opportunistic infections available
at Western price levels. An article in "The Lancet"
points out that many anti-retrovirals were developed and tested
in public laboratories with public funding but have been given
to private companies for exclusive marketing. "Nothing explains
why companies charge so much except that they were initially put
on the market in the USA, a rich country without price controls".
James Cochrane said that Glaxo Wellcome "would be seeking
to recover the investment in research and development through
our sales in the United States, through our sales in Europe, and
through our sales in sophisticated markets."
Given that Glaxo Wellcome said that current sales in sub-Saharan
Africa are "extremely low; very, very low indeed", the
failure to establish preferential pricing systems in any significant
scale is difficult to understand. Pharmaceuticals are no doubt
fearful that cheaper versions may make their way back onto Northern
markets. We were told in evidence, however, of the Accelerated
Access Initiative, established between five UN agencies and five
pharmaceutical companies under the auspices of the International
Partnership Against AIDS in Africa "to find practical and
specific ways of working together more closely to make HIV/AIDS
care and treatment available and affordable to significantly greater
numbers of people in need in developing countries".
195. Countries which have signed the World Trade
Organisation's TRIPs Agreement are committed to respect medical
patents. However, as the patents are not retroactive, generic
versions of anti-retrovirals are produced in India, Thailand and
Brazil countries which only signed the agreement after
production had begun. In Brazil, 90,000 people with HIV are receiving
HAART . Furthermore, the TRIPs agreement allows that a national
emergency entitles a country to issue compulsory licences for
local production or to import generic products. South Africa is
unusual, in that it believes it could produce generic versions
and make them available to many more of its population than can
currently have them.
196. Giving evidence to the Committee, Dr Peter Piot
said, "I think the contracts that have existed between the
pharmaceutical industry and western nations and governments...is
now reaching its limits when it comes to access to these goods
in medicines for the poor. The contract is based on the fact that
through patent protection and giving a monopoly of certain products
for x period of time, the efficiency of that has been very
high, high for shareholders and high for western society, because
new products were developed. The poor countries have really not
benefited from that, that is not new. With AIDS that has become
and overwhelmingly publicised, moral issue."
Referring to the fact that the full TRIPs provisions are due to
be in place in 2006, Dr Piot said, "We need to look into
that because if the full TRIPs agreements are going to be put
into practice this is going to restrict even further what developing
countries will benefit from in terms of innovation."
197. In its Globalisation White Paper,
DFID announced that it will set up a Commission on Intellectual
Property Rights to look at how rules can be designed to benefit
developing countries and in particular access to generic resources.
We welcome this important step in the consideration of how both
to ensure appropriate respect for patents and the encouragement
of further research and development, whilst also aiming to maximise
the access of the developing world to affordable drugs. It has
been striking how the pharmaceutical companies, faced with mounting
discontent at their pricing policies in poorer countries, have
begun at last to offer significantly discounted prices for their
products. Preferential pricing agreements, particularly for drugs
to treat opportunistic infections, need to be agreed and implemented
without delay. We criticise the slow progress being made under
the Accelerated Access Initiative.
198. The UK-based Action for Southern Africa submitted
evidence critical of the use of TRIPs to prevent South Africa
from producing generic versions of anti-retrovirals or importing
cheaper or generic versions.
They claimed that the United States Government, the European Union
and the UK Government intervened to try to persuade South Africa
to drop its challenge to TRIPs. As we mentioned earlier, the court
case brought by local offices of international pharmaceuticals
against the South African government is now being heard. The
provisions of TRIPs under which a country can use parallel importing
or compulsory licensing in a national emergency were put in for
a purpose. Progress in agreeing concessional prices with the pharmaceutical
companies is to be encouraged. This should not be at the expense
of developing countries also pursuing alternative solutions permissible
under WTO rules. We do not believe the United Kingdom Government,
the European Union or any other developed country should put pressure
on developing countries not to make use of available TRIPs provisions.
Technical assistance should rather be given both to identify what
can be done within the WTO agreement, how affordable any cheaper
drugs are to the health department budget, and whether they will
genuinely reach the poor, rather than an elite.