TCS Daily

When Activists Win

By Roger Bate - December 5, 2002 12:00 AM

Today data are released from PhRMA, the pharmaceutical lobby group, which show that AIDS drugs in development are in shocking decline, down by 33% over the past 5 years. What the industry is unwilling to admit is that drug activists have been successful in their campaign of demanding lower prices for AIDS drugs. The result is that in some drug company boardrooms, investment is obviously switching from AIDS research into areas where profits can still be made.

How can access to medicines for the poorest people with diseases such as AIDS, malaria and Tuberculosis be improved? This question has been at the top of numerous international meetings over the past year, and especially at the World Trade Organisation's TRIPS (trade related aspects of intellectual property) Council.

It has also been one of the most infuriating discussions to monitor because most of this year's focus (and indeed last year's as well) has been on drug patents, and the allegation that they are the cause of the inability of the poor to access drugs. Yet as has been admirably demonstrated in a paper by Dr Amir Attaran and Dr Lee Gillespie White in the Journal of the American Medical Association, most drugs are not patented in the majority of the poorest countries in the world. At most, patents have a tiny impact in some countries like South Africa. The real causes of lack of access to drugs are poverty, ignorance and stigmatism for those with disease (especially AIDS), and often a lack of political will in many African and some Asian countries.

For drug development it is essential for industry to be able to price discriminate to cover the massive research and development costs and the economies of scale in production. This is true for all drugs, but for AIDS drugs the discrepancy between a reasonable price differential between rich and poor and the income in the poorest countries is still huge. In other words, the activists are correct when they say 'the poor can't afford' the drugs. Why? Because the lowest price for AIDS drugs, diagnostics and delivery per person is at least $300 a year, which is far more than any but the richest African is capable of spending. In any event, when offers of free drugs are not taken up, as they are in Africa, one has to seriously question whether even the cheapest generic drugs will ever be delivered to those that need them.

The misguided attacks against pharmaceutical companies and drug patents have had an unintended, but potentially devastating, consequence. Data from the pharmaceutical research consultancy Pharmaprojects shows that there has been a significant drop off in the number of new AIDS drugs in development in recent years. The Pharmaprojects analysis, and my own analysis of PhRMA data (which is published today), shows a decline of over 30% since 1997 when products in development were at a peak.

There could be a number of reasons behind the drop off in research. Some senior pharma sector experts such as Trevor Jones, Director of the Association of British Pharmaceutical Associations, believe that the drug development drop off is because several research projects have been unsuccessful. This means that those anti-AIDS drugs that remain in development today are of higher quality, and are more likely to succeed in clinical trials. It could also be that the market may be reaching saturation point, with over 70 drugs approved by the Food and Drug Administration in America.

These reasons aside, the attacks against drug companies certainly does not make AIDS an attractive area to devote to research. Dr Des Martin, President of the South African HIV Clinicians Society, suspects that 'among several reasons, the threat of generic competition and attacks on multinational companies could be behind the recent decline in HIV anti-retroviral compounds'.

It is almost impossible to get industry executives to comment, but one who would actually discuss the topic, but did not wish to be identified, agreed that although he didn't like to admit it, 'we have lost the battle with the activists, and now the market is less profitable. The result is that we are spending less R&D time on anti-retrovirals. Why bother to innovate these products when any advance will not be profitable', he said.

Some of the large companies are continuing research, perhaps for historic reasons, and the need to stop activist attacks and not in the hope of future profits. For example, GSK and Merck are probably doing as much, if not more, research than before. The real and long-term damage in new research is at the margins. It is those companies whose reputations are not linked to AIDS research that are quietly slipping away from the field, and far fewer start ups (biotech and others) are coming into AIDS research than a few years ago. Roughly 25% fewer companies are involved in AIDS research than in the late 1990s.

In the past three years, activist groups like Doctors Without Borders, have been celebrating the numerous climb-downs from the industry. Companies have been giving AIDS drugs away for free, they have drastically lowered their prices and voluntarily licensed their drugs with generics manufacturers in South Africa. Meanwhile in numerous boardrooms, decisions have been made to steer research into other directions. It's ironic that activists have scared drug companies into action that will harm AIDS patients in the long run. For while government and activists can blame capitalism and the drug giants and profiteering, the latter actually develop solutions, the former just talk about them.

Dr Roger Bate is a Director of the International Policy Network, a public policy group in London and Washington.

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