December 2001
They Can't Even Give It Away: Misguided Charities and the HIV/AIDS Crisis
by John R. Graham
The length to which some critics of brand-name pharmaceutical companies go to attack them is depressingly impressive. Britain's Princess Anne recently condemned these companies for donating HIV/AIDS drugs to developing countries. "Drug donations may raise a company's public profile and share price, but the transport, distribution, training and administration costs are usually not covered by the donor." She claimed that this could place an heavy extra burden on health systems and take money away from other important health programs (Dalton, 2001).
One of the gravest crises in the world today is that of citizens of developing countries who suffer from HIV. Thirty-six million people have the virus, of which only 1.5 million live in industrialized countries (UNAIDS, 2001, pp. 6, 9). Before Princess Anne's criticism, two well-known charities, Oxfam and Medicins Sans Frontieres, had long accused research-based drug companies of prolonging the HIV/AIDS crisis by abusing patents. Oxfam Great Britain, for example, published a 49-page corporate analysis of Pfizer Inc., Preventing the Cure (2001).
The title of the report betrays the flawed thinking behind the accusation. Pfizer has not prevented anyone from finding cures to HIV-related illness. Indeed, Oxfam GB is attacking the company because Pfizer makes a medicine to alleviate the suffering of HIV/AIDS.
The idea that patents block access to HIV/AIDS drugs was recently rebutted in the Journal of the American Medical Association by two authors developing an argument that one of them had previously laid out in Fraser Forum. Even though many necessary drugs are not patented in sub-Saharan Africa, they are nevertheless not available due to the extreme poverty and dysfunctional health care systems in that region (Attaran and Gillespie-White, 2001; Gillespie-White, 2001). These conditions are not caused by brand-name drug companies.
The erroneous idea that patents prevent access to drugs is not new. Eleven years ago, Fraser Forum carried a comment on the actions of protesters at the offices of Burroughs Wellcome Co., manufacturer of AZT (RetrovirTM, or zidovudine), a drug that the author described as "the only drug so far known which gives any measure of relief to AIDS sufferers" (Block, 1990). Costing US$7,000 per year at the time, AZT was created by a company operating under the assumption that patent laws would protect its invention.
Such was the case, and the results have been impressive. If the price of AZT had increased since 1990 at the same rate as the US Consumer Price Index, it would now cost about $9,550 today for a year's treatment. In fact, an annual course of AZT treatment in the US now costs less than $4,000.1 The drug is still patented in the US, but competition from subsequent patented drugs developed by other companies forced Burroughs Wellcome to developing new, innovative compounds and sell them for lower real prices. CombivirTM, for example, is a compound of AZT and a more recent product, lamivudine, which costs about US$5,800 per year.2 So, even the more advanced HIV/AIDS therapy costs little more than half the real price of the original product.
In 1990 Professor Block argued, "Denigrating the drug company is like killing the goose that laid the golden eggs," which is what happened. Despite the success of AZT, Burroughs Wellcome no longer exists. It joined with Glaxo, becoming Glaxo Wellcome, which itself has vanished into another merger with SmithKline Beecham. Medicins Sans Frontieres argues that current international rules guiding patent laws are unbalanced in favour of the brand- name drug companies (2001a). However, this position is inconsistent with the fact that capital is flowing out of, not into, these companies.
Even if the brand-name drug companies were attracting capital, they would be under no moral obligation to put "people before profits." In the same speech in which she attacked them for their charitable donations, Princess Anne encouraged the managers of the drug companies to steal from their employers, the millions of ordinary citizens and others who have entrusted part of their hard-earned savings to those corporate managers. Of course, she did not put it quite like that, but said that the companies should conduct more research into neglected (that is, unprofitable) areas.
Princess Anne is free to invest her capital in a non-profit laboratory to develop new therapies for HIV/AIDS, malaria, or whatever disease she wishes most to cure. Many wealthy people, including Bill and Melinda Gates, who have invested billions in medical services and research, do exactly that. So do many less affluent individuals, such as the 25.5 percent of Canadians who donate to charities, including Oxfam Canada and Medicins Sans Frontieres (Clemens and Emes, 2001). However, those individuals also commit their savings to profit-seeking corporations, and the managers of those corporations have no more right to spend that money on charitable causes than have the managers of Oxfam or Medicins Sans Frontieres to direct their donations into biotech start-ups.
These charities spend their income responsibly in the course of the mission entrusted to them by their donors. According to their annual reports, Oxfam Canada, Oxfam Great Britain, and Oxfam America combined spent about US$100 million on programs in their 2000 fiscal years.3 This was neither invested in researching new medicines, nor buying current ones. AIDS therapy now costs as little as US$295 per year in developing countries (Medicins Sans Frontieres, 2001b). If Oxfam had used this money to buy HIV/AIDS drugs, it could have paid for annual treatment for over 300,000 victims of the virus. Instead, Oxfam Canada delivered food to drought victims in the Horn of Africa, distributed seeds to farmers in Mozambique, and supported house building in Nicaragua, assigning these services a higher priority than HIV/AIDS drugs (2001). These noble actions speak more for the morality of its mission than does its "advocacy" against the drug companies.
Notes
1 Costco's online pharmacy (Costco.com) charges US$166.97 for 100 tablets of 100mg dosage. If the usual recommended adult daily does is 600mg, the annual cost is US$3,659.
2 US$16 per day, as reported in Oxfam GB (2001), p. 47.
3 Oxfam Canada: $14,326,325 for the year ending September 30, 2000. Oxfam GB: GBP46,141,000 for the year ending April 30, 2000. Oxfam America: 81.9 percent of total costs of US$27,322,796, or US$22,350,047.
References
Attaran, Amir, and Lee Gillespie-White (2001). "Do Patents for Antiretroviral Drugs Constrain Access to AIDS Treatment in Africa?" Journal of the American Medical Association 286, 15 (October 17): 1886-1892.
Block, Walter (1990). "The AIDS Protest Against the Drug Companies." Fraser Forum (June): 28-29.
Clemens, Jason, and Joel Emes with Karina Wood (2001). "2001 Generosity Index: Comparing Canadian and US Generosity." Fraser Forum (December).
Dalton, Alastair (2001). "Princess Royal Berates Drug Firms Over Prices." The Scotsman (September 26).
Gillespie-White, Lee (2001). "Patent Protection and Patients' Access to HIV/AIDS Drugs in Sub-Saharan Africa." Fraser Forum (February): 12-14.
Medicins Sans Frontieres (2001a). A Matter of Life and Death: The Role of Patents in Access to Essential Medicines. Geneva, Switzerland: Medicins Sans Frontieres.
Medicins Sans Frontieres (2001b). Campaign for Access to Essential Medicines: Target Diseases–HIV/AIDS. (Electronic document available at www.accessmed-msf/org/campaign/hiv01.shtm, as of November 13). Geneva, Switzerland: Medicins Sans Frontieres.
Oxfam Canada (2001). Annual Report 2000. Ottawa, ON: Oxfam Canada.
Oxfam GB (2001). "Oxfam Company Briefing Paper on Pfizer." Preventing the Cure: Corporate lobbying and fair access to medicines (a.k.a. Formula for Fairness: patient rights before patent rights). Oxford, UK: Oxfam GB.
UNAIDS (2001). Together We Can. Geneva, Switzerland: UNAIDS (Joint United Nations Programme on HIV/AIDS).
John R. Graham (johng@fraserinstitute.ca) is Director of Pharmaceutical Policy Research at The Fraser Institute. He earned his B.A. (Hons) in Economics and Commerce at the Royal Military College of Canada and his MBA at the London Business School, University of London.
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