TCS Daily

War on Profit

By Duane D. Freese - May 15, 2003 12:00 AM

Nothing could benefit more from the economic adage that profits are the price we pay today for the products we need tomorrow than the AIDS fight in Africa and the developing world.

At a packed forum in the Speaker's room at the U.S. Capitol on Wednesday, TCS Host James Glassman and contributors Dr. Roger Bate of the International Policy Network and Richard Tren of Africa Fighting Malaria said plainly that the anti-profit approach taken in many parts of the developing world in combating AIDS wasn't working.

With President Bush's promotion of a $15 billion aid package to Africa and the Caribbean to battle an AIDS epidemic afflicting 26 million in poor developing nations, the importance of getting the approach right is a matter of life and death.

Glassman proposed a high-tech agenda with eight components, including free markets, patent protections, government support of basic research but not drug development and more charitable involvement, as the best way to proceed in the fight against AIDS.

But as Tren noted, only Botswana, spurred perhaps by its 36 percent AIDS/HIV adult infection rate - the highest in Africa - has sought a partnership among government, the pharmaceutical industry and charities. He said it is starting to build the basic health infrastructure to deliver comprehensive HIV care, getting more and more people into treatment.

The rest of Africa, and most of the rest of the developing world, is not. Instead, countries such as Nigeria, South Africa and Zimbabwe have pursued an approach undercutting the developers of AIDS drugs, favoring generic drug makers. Zimbabwe, for example, declared an AIDS emergency about a year ago to allow importation of generics rather than deal with infrastructure problems to deliver treatment. Result: no drugs and no treatment. Nigeria's dramatic program to treat 15,000 of its approximately 3 million AIDS/HIV sufferers has delivered aid to fewer than 1,000 after nearly two years. South Africa, with the most advanced economy in sub-Saharan Africa, has stalled agreements despite its emergency situation, letting $41 million in aid languish.

All have seemingly adopted the late Indian Prime Minister Indira Ghandi's approach to the health issues: "No profit from health care." That approach led to most drug companies in India that create new drugs closing down. Now, it is a land of drug copiers, trying to profit in Africa from the genius of research and development minded drug companies, and that is producing a deadly bottom line.

In his presentation, Bate pointed to a chart demonstrating a decline since 1997 in the number of new drugs under development to combat AIDS. The decline corresponds with the attack upon profit-making by pharmaceutical companies on the AIDS drugs they develop and the promotion of generic alternatives by both some AIDS activists and government officials in developing nations.

While there may be benign reasons for the decline - more emphasis on quality drugs and a switch from traditional chemistry to biotechnological approaches for drug development - Bate concluded, "It seems more likely that the lack of potential profitability is driving industry away from research."

And that is dangerous for all AIDS sufferers, even those in the developed world. As Bate noted, resistance to AIDS drugs remains a formidable problem, and mutation of the virus requires development of new anti-virals to help AIDS victims fight the disease.

Ultimately, the only way African nations will really get a handle on the AIDS epidemic and their other health problems is, as Glassman said, to become richer. But the only way to do that is to recognize that profit is not the enemy of development or of better health care, it is essential to it.

Follow the money: Where but from profit can drug companies pay for the kind of investment dollars from public and private pension funds as well as individual investors that are needed to pay $900 million or so needed to develop a new AIDS drug? Where but from profit of businesses will charitable endowments get the money to devote to new drug regimes? And where but from profit can government draw the tax dollars necessary to fund basic research?

In all those ways, the anti-profit posture of many developing nations is what stands in the way of their development and of their ability to combat AIDS and other infectious disease epidemics. And their people are paying the price with higher rates of poverty and death from AIDS.

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