TCS Daily

The Real Obstacles

By James K. Glassman - May 17, 2004 12:00 AM

Editor's note: What follows are remarks delivered by James K. Glassman at a recent conference at the American Enterprise Institute.

Welcome to the American Enterprise and our conference on "The Real Obstacles to Treating AIDS, Malaria and Tuberculosis in Developing Countries."

My name is Jim Glassman. I am a resident fellow here at AEI, host of the website

The title of our conference suggests that the true obstacles to treating these pandemics, which kill millions each year, are not the obstacles -- or obstacle -- often portrayed in the press and by activist groups.

That obstacle is said to be the high cost of patented drugs developed by companies usually called innovators, or research-oriented pharmaceutical companies.

This is a simple story, and the press and political activists are fond of telling it, but it is not the right story.

Lately, the press and activists have been highly critical of a decision by the Bush administration to deny the use of U.S. government funds for anti-retroviral copycat drugs for HIV/AIDS delivered in fixed-dose combinations, or FDCs.

For example, The Boston Globe asked the U.S. Government to "relent in its opposition to generics" since they "cost far less than brand-name drugs." The Washington Post criticized the administration for its reluctance to use "unpatented 'generic' medicines made by foreigners." The Post also stated that "brand-name drugs in most cases are about three times the price of generics."

This conference will examine these criticisms and raise the question of whether lack of access to drugs is the only, or even the most important, obstacle to treatment for AIDS and other pandemic diseases.

I can tell you that, on my trip to Africa in a delegation last December under Secretary of HHS Tommy Thompson, I came away believing that infrastructure, not medicines, was the main obstacle to health in Africa. In most cases, there simply is no infrastructure -- there is not merely a lack of hospitals, but a lack of roads, of communications systems, of education, of doctors and nurses.

On the specific question of copy drugs, we are fortunate to have timed this conference as we have. Two very important studies have now been released on this very issue.

In the new issue of Health Affairs, out just a week ago, Amir Attaran has written an article titled, "How Do Patents and Economic Policies Affect Access to Essential Medicines in Developing Countries."

Dr. Attaran, a fellow of the Royal Institute of International Affairs, from whom you will hear shortly, concludes that "poverty, not patent policies, more often inhibits access to essential medicines in the developing world." In an extensive study, he found that, "in 65 low- and middle-income countries, where four billion people live, patenting is rare for 319 products on the World Health Organization's Model List of Essential Medicines. Only 17 essential medicines are patentable, although not actually patented, so the overall patent incidence is...1.4 percent and concentrated in larger markets."

This is not the impression we get from the media and from groups and politicians who are trying to exploit a dire situation for their own ends.

The second study is a Hudson Institute White Paper issued just yesterday by Carol Adelman, Jeremiah Norris and S. Jean Weicher. This study, titled "Myths and Realities on Prices of AIDS Drugs," used the Doctors Without Borders (MSF) pricing guide for the poorest countries and came to the conclusion that single-dose ARV patented drugs are actually cheaper than their copy-drug counterparts.

For example, the average price per person per year of 13 ARV drugs compared was $404 for patented drugs and at least $494 for their generic counterpart. In fact, only one copy drug was significantly cheaper -- Nevirapine, but, in fact, Nevirapine's German innovator-firm manufacturer offers its drug free to developing countries for use in mother-to-child transmission prevention programs.

Dr. Carol Adelman, a co-author of the Hudson study, will speak on our second panel this morning.

Why is it, then, that the Associated Press can report that "pills, produced by generics manufacturers, are considerably cheaper than the patented equivalent"?

In fact, the Hudson study shows that it is patented drugs that are cheaper. And, as Dr. Attaran's study shows, the issue of patented vs. generic drugs is not particularly relevant in most cases anyway.

The issue of FDCs is a little trickier. No regulatory agency in charge of approving drugs in any developed nation has approved the three-drug fixed-dose combinations, such as Cipla's Triomune, that have been proposed practically as the panacea for HIV/AIDS in Africa. Putting three drugs together creates a different medicine entirely, and the consequences of misuse could be dire -- mainly the creation of resistant strains that are either untreatable by the medicines we have today, or treatable at a far higher cost.

At a conference recently in Botswana, African health officials themselves insisted that FDCs used in their countries "be held to the same standard" as drugs used in developed countries. Africans, quite properly, do not want to be treated as guinea pigs or held hostage to political considerations.

We have heard over and over about FDCs that cost $140 per patient. This is a promotion of the Clinton Foundation, and it is, at this point, a fantasy. More typical is the average copy price found by the Hudson study of twice that figure or more.

We can only wonder about the Clinton Foundation's true motives here. "It was unclear yesterday," The New York Times reported on April 6, "whether the ambitious plan would be realized." That's an understatement.

In fact, it is politics that is driving much of the discussion about treatment for pandemic diseases in the developing world. That is a shame, and we hope that today's conference can set things right.

The Bush administration, says Doctors Without Borders, "is more interested in protecting the interests of the pharmaceutical industry than it is in expanding...treatment."

That is, on the evidence I have seen, flatly untrue. A year ago, President Bush committed $15 billion to Africa and the Caribbean to fight AIDS, Malaria and TB. This year, the U.S. will spend "approximately twice" as much internationally as "all other donor governments combined," according to Randall Tobias, who heads the President's Emergency Plan for AIDS Relief.

But this commitment sticks in the craw of activists who do not like the president (or Americans for that matter) and do not want him to be seen as compassionate.

Or perhaps some people are just misinformed. We aim to help that condition today.

Secretary of State Colin Powell told Haitians last month that AIDS is the "greatest weapon of mass destruction on earth today." He is right. But only if we can consider the facts about this disease, as well as malaria and TB, can we determine the true obstacles to treatment and eradication.

That is our charge here.

A word about the conference. Roger Bate will moderate the first panel, which will conclude around 10:45. I will moderate the second panel, which will end at noon.

Roger Bate is a visiting fellow here at AEI, where his focus includes endemic diseases in developing countries. He is also a member of the board of Africa Fighting Malaria and former director of the environmental unit of the Institute of Economic Affairs in London. He has a Ph.D. in economics from Cambridge University.


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