Merck wasted no time in making its choice. It launched a seven-year clinical trial to prove the drug safe for humans, then began distributing it free under the name Mectizan. Working with aid groups, Merck now treats 25 million people per year in 31 countries. Since 1987, the company has given away more than 600 million tablets of Mectizan, which it figures is worth $1.50 a pill. Merck says it has no estimate of how much the effort has cost, but the United Nations says river blindness may be eradicated by 2007. “Merck is really the pioneer,” says Jordan Kassalow, former director of river-blindness programs for Helen Keller Worldwide. “They did it because it was the right thing to do.”
Now, the dilemma Merck once confronted behind closed doors confronts the entire drug industry. For years, the growing anti-globalization movement has attacked drug companies for doing too little for the poor, while building fat profit margins on concerns of the rich: heart disease, obesity, erectile dysfunction. In recent months, however, poor nations began pressuring Western pharmaceutical firms to drop prices for AIDS drugs, and join the nonprofit fight against this deadly epidemic. Now developing nations are pushing this case even further, saying that Big Pharma should battle all life-threatening diseases in the Third World, a category that could cover everything from malaria to leprosy as well as river blindness. Drug companies are no longer under pressure to perform isolated acts of philanthropy. They are under pressure to be philanthropies.
Those are the stakes of the debate coming out of the World Trade Organization summit just finishing up in Doha, Qatar. The immediate issue is how to interpret a 1994 trade rule that allows countries to ignore drug patents in “a health-care crisis.” The poor nations want to broaden that language, which would free them to develop cheap generic versions of the expensive “AIDS cocktail.” In Doha, they are fighting efforts by the United States and Europe to broaden patent protection. But in a controversial new study, Harvard researcher Amir Attaran says patents aren’t blocking the poor from access to affordable drugs. In fact, companies rarely even bother to seek patents in Africa, so they can’t be a real obstacle. The reason Africans can’t buy drugs, says Attaran, is much more profound, and simple: “a lack of money.”
The drug industry is on the defensive. Under pressure from protesters, Western companies started last summer to back off efforts to defend patents in the Third World. Now it’s even tougher. In the wake of anthrax attacks in the United States, Canada and the United States threatened to violate patents themselves on an anthrax antidote in order to get an affordable price. For those same countries to continue defending patents on treatment for AIDS–which has killed far more than anthrax–looks to advocates for the poor like utter hypocrisy. In Doha last week, WTO Director-General Mike Moore warned that the patent debate threatened to be a “deal breaker.”
A new kind of Western philanthropy, the kind performed under duress, is increasingly common. Developing countries are demanding that big drug companies match generic prices, as Swiss drugmaker Roche discovered to its chagrin. After months of testy negotiations, Brazil threatened to break the patent on Roche’s AIDS drug, Nelfinavir. Facing this ultimatum, Roche dropped its price per dosage from $1.07 to 64 cents. The industry’s old pricing mechanisms, which gave companies power to charge every cent the market would bear for exclusively patented drugs, are breaking down.
Some companies are trying to reimpose order on the tumbling market. Last March Merck introduced a pricing policy for AIDS-fighting drugs, Crixivan and Stocrin, that is based on the United Nations Human Development Index: the less developed the country, the lower the price. A year’s supply of Crixivan sells for $6,010 to the rich, $600 to the poor. With only 15 percent of drug-industry revenues coming from less-developed countries, and just 1 percent from Africa, such concessions do not greatly affect Merck’s bottom line. Attaran says companies now need to practice a more “systematic” philanthropy, making available all kinds of drugs, not only for AIDS but also for malaria, tuberculosis and others, at no profit and no loss.
In this newly politicized market, companies are starting to launch preemptive discounts in the name of public health. Searching for drugs that Swiss giant Novartis could afford to offer in the developing world, CEO Daniel Vasella says he was shocked to find that just $30 million worth of a treatment in his portfolio could eradicate leprosy. So he is giving away the concoction, a combination of three drugs called MBT, through the the WTO. He has priced a new malaria drug as a travel medicine in Europe but will sell it at cost, or 20 times less, in the developing world. “I need to justify what I am doing to my shareholders,” says Vasella. “But if the company does well, you get some latitude.”
Only some. Advocates for the poor say that with profit margins averaging 30 percent or more, there is plenty of room for drug companies to move on price. Still, the firms can give away only so much before they become nonprofits. Since drugs account for a small fraction of health-care costs, reducing drug prices can have only a limited impact on killer diseases. “Companies can offer a discount, a donation, but let’s face it, it’s not their job to build clinics or train doctors,” says Attaran. “It is, however, what foreign-aid agencies are supposed to do. And they’re not doing it.”
The likely result is that corporations will be compelled to work more closely with public servants, not become public servants. Five U.N. agencies and five drug companies recently formed partnerships to cut prices of HIV drugs. Similar groupings are targeting malaria and tuberculosis. In an echo of the Mectizan story, the WHO recently teamed up with two drug companies, Aventis and Bristol-Myers Squibb, to roll out a drug that had failed as a cancer treatment before winning approval as a facial-hair remover. But its real calling is as an antidote to sleeping sickness. For the 60 million people who live in areas infested by the tsetse fly, which carries this fatal disease, the pedigree hardly matters. The only questions are: does it work, and how much will it cost to save a life?
