Affordable access to essential medication in developing countries: conflicts between ethical and economic imperatives

The scope of the epidemic and its likely devastating consequences for socio-economic development has made the issue of access to essential medications a particularly urgent one. Edwin Cameron, an openly HIV positive South African Appellate Court judge, sums up what the problem is:

Nearly 34 million people in our world are at this moment dying [of AIDS]. And they are dying because they don’t have the privilege that I have, of purchasing my health and life. … Now why should I have the privilege of purchasing my life and health when 34 million people in the resource poor world are falling ill, feeling sick to death, and are dying? That to me … seems a moral inequity of such fundamental proportions that no one can look at it and fail to be spurred to thought and action about it. That is something which we in Africa cannot accept. It is something that the developed world also cannot accept. (Cameron, 2000)

In South Africa, of an estimated more than 4 million HIV infected individuals only 10,000 are able to afford access to life-sustaining essential AIDS medication at current prices. In Malawi the reported figure is 30 out of 1 million infected Malawians. In Uganda about 1.2% of the estimated 820.000 people living with AIDS can afford any of the drugs used to treat the illness.(AFP, 2001) The same picture is repeated all over the developing world, except in a few countries that do not have restrictive patent laws. Brazil is one such country. It started producing generic copies of essential AIDS medications in the mid 1990s. The result is that the country’s AIDS mortality rate declined by about 50%.(Chequer, Sudo and Vitfria, 2000) What this suggests is that the pricing of essential AIDS medication is one of the key factors in bringing the AIDS mortality rate down in societies with functioning health care delivery infrastructures. This is not disputed even by the pharmaceutical industry’s lobby organization International Federation of Pharmaceutical Manufacturers Associations (IFPMA, 2000).

Our objective in this paper is to analyze problems related to the pricing of essential AIDS medications and the economic reasons for why the vast majority of patients in developing countries have no access to such life-saving drugs. We then develop a substantive argument in favor of compulsory licensing of essential AIDS medications in the current conditions of public health emergency. We argue on broadly consequentialist grounds that compulsory licensing is preferable both morally and pragmatically to the alternatives (notably the currently offered price cuts and drug donation schemes).

The regulatory frameworks

What factors control the level of availability of medications in a country? A product is available in a market if there is a manufacturer prepared to make the product, and willing to sell it in that market; and a purchaser who is able to pay for that product. All of these factors are variables, which are relevant to the access to HIV/AIDS medications in Africa. In many situations, for instance, the healthcare infrastructure needed to make use of these medications effective is simply lacking. But for the most part, and with most reason, critics have concentrated on supply side, rather than demand side, factors influencing the availability of HIV/AIDS drugs.

The two principal features on the supply side are the price of HIV/AIDS drugs in developing world markets, and the maintenance of barriers to entry into the manufacture of such drugs. Prices in markets are normally fixed by two factors – the willingness of the suppliers to supply goods at varying price levels, and the willingness of purchasers to buy the goods at varying price levels. However, where there are few, or only one, suppliers of a good, the purchasers will have relatively little influence over the price set, and the manufacturer will choose whatever level of price best reflects their ability to manufacture the goods in question and the level of profit they can expect at that price. In non-competitive markets, suppliers have freedom to choose the level of profit they take. And the level of manufacture they choose will vary according to the other alternative markets they can enter, the other goods they can manufacture, and the overall business requirement to maximize profits (or shareholder value). In these conditions, buyers have little economic power to vary the price, beyond threatening to withdraw from the market altogether, or to cut the quantity of goods they purchase dramatically. Where a good is “essential”, and where the purchaser is a state, acting as a proxy for a group of end-users, whose interests are in purchasing the good if at all possible, this threat is more formal than actual.

States can vary the quantity of drugs they purchase only within certain hard constraints, set by national income (taxes, trade and loan capital), and other claims on government expenditure. In many states in Africa, assuming the prices remain at current levels, making HIV/AIDS medication the highest budgetary priority would make some progress into universal coverage, but would still not get close to achieving that aim. An important factor influencing price and purchase of drugs are therefore the chosen level of profit of the drug companies, and the barriers to entry to drug manufacture. Amongst these are international regulatory standards on quality and purity of manufacture (which can be met as the examples of India and Brazil demonstrate) and the enforcement of intellectual property rights.

There are three issues to consider relating to the latter. Firstly, even if companies’ intellectual property rights are honored and enforced, this does not address whether the price they charge is fair, and what their responsibilities to set a fair price might be. We will return to this point below. Second, are there recognized exceptions or limits to intellectual property rights? Thirdly, if there are, why are these not in fact applied in the current international arena?

The World Trade Organization’s (WTO) division on Trade-Related Aspects of Intellectual Property Rights (TRIPS) oversees the national patent laws of the WTO national member nations. A great deal of criticism has been leveled by treatment access activists against the WTO and the TRIPS agreement.(Pollock and Price, 2000) They were seen as the reasons for why developing world governments refused to simply issue compulsory licenses in order to facilitate the local production of essential AIDS drugs (e.g. by producers of high-quality generic drugs, such as India’s CIPLA). On paper, it seems as if TRIPS does not actually prevent developing countries from issuing compulsory licenses. Article 31(b) provides that

Such use may only be permitted if, prior to such use, the proposed user has made efforts to obtain authorization from the right holder on reasonable commercial terms and conditions and that such efforts have not been successful within a reasonable period of time. This requirement may be waived by a Member in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use. (World Trade Organization)

Some speculated that the US government or the European Commission, succumbing to lobbyists sponsored for instance by IFPMA would declare a trade war against developing countries that would use TRIPS Article 31b. This does not seem to be true either. The European Commissions Trade Commissioner Pascale Lamy stated in September 2000 during a Roundtable on Communicable Diseases,

In the trade area, I am committed to do whatever is necessary in order to shape the right conditions so that the poorest of the poor will have access to the medicines they deserve at affordable prices. … In the area of intellectual property rights, it is acknowledged that TRIPS provides for the necessary flexibility to address public health concerns and emergency situations. (European Commission, 2000)

The US government wrote on January 27, 2000 to the Thai government through its Assistant Trade Representative for Services, Investment and Intellectual Property,

If the Thai government determines that issuing a compulsory license is required to address its health crisis, the United States will raise no objection, provided the compulsory license is issued in a manner fully consistent with the WTO Agreement on TRIPS. (IPI, 2000, 17)

So we can see that there are recognized exceptions to intellectual property rights, in situations of national emergency. The question we now turn to is why developing countries do not make use of the TRIPS provision to issue compulsory local licenses of essential AIDS drugs, and begin local production. There seem to be various reasons for this, not all of which are ‘hard’ reasons in the sense that they are technically plausible. Most of these reasons, but not all of them, are related to perceived economic types of punishment that could be meted out by various players against developing countries. Pharmaceutical companies threatened to close down operations in countries that decide to issue such licenses.(PhRMA, 1999) Invariably, the threat of job losses makes a substantial impact in countries with high unemployment rates. Indeed, various attempts by developing world governments to pass legislation designed to permit compulsory licensing have been met by vigorous legal responses by the pharmaceutical industry. For instance, in South Africa the government passed on November 23, 1997 a new law, the "Medicines and Related Substances Control Act Amendments," that, if implemented, would allow to issue compulsory local licenses for essential AIDS medications. Specifically, Article 15C of the new law states:

The Minister may prescribe conditions for the supply of more affordable medicines in certain circumstances so as to protect the health of the public, and in particular may – (a) notwithstanding anything to the contrary contained in the Patents Act, 1978 (Act No. 57 of 1978), determine that the rights with regard to any medicine under a patent granted in the Republic shall not extend to act in respect of such medicine which has been put onto the market by the owner of the medicine, or with his or her consent.

A coalition of 39 pharmaceutical multinationals took, and then dropped, court action against the South African government in order to prevent this law from coming into effect. Largely due to outrage voiced internationally across all ideological divides the multinationals withdrew the case. However, the US based pharmaceutical industry lobby organization Pharmaceutical Research and Manufacturers of America (PhRMA) asked the United States Trade Representative (USTR) to put South Africa on the watch list of countries suspected of breaching TRIPS.(PhRMA, 2001) In another incident, the Wall Street Journal reported,

In letters to a drug distributor in Ghana and an Indian generic-drug maker, Glaxo said sales of generic versions of its drug, Combivir, in Ghana would be illegal because they would be violating company patents. As a result, the Indian company, Cipla Ltd. of Bombay, has stopped selling its low-cost version in Ghana, a small country in west Africa. However, officials at the multilateral African agency that issued the Glaxo patents in question said they are either invalid in Ghana or don't apply. (Schoofs, 2001)

It is not the objective of this paper to analyze these legal battles exhaustively. Yet even this brief survey indicates how the pharmaceutical industry and its lobbyists inside and outside the US government and the European Commission threaten developing countries’ governments’ ability to facilitate local, cheap production of essential AIDS drugs, or the importation of drugs from producer countries of high-quality generics. The international Red Cross organization is sufficiently alarmed to issue a statement on the legal case in South Africa and a related one in Brazil. Its President, Astrid Heiberg states unequivocally that the current drug pricing for developing countries is “unacceptable”, and that “the public health emergency provisions of the World Trade Organization framework would be rendered useless if the (legal) cases against Brazil and South Africa succeeded.”(IFRC, 2001) At the time of writing the Brazil case is still pursued by the industry. To sum it up in the words of Peter Piot, UNAIDS’ Executive Director,

In the North, in return for innovation, intellectual property is protected and profits are made. This has benefited both Northern shareholders and society. But it doesn't work for the South, where 95 percent of the world's population of 36.1 million with HIV/AIDS lives.(Collins, 2001)

There is another possible reason why developing world governments have embarked on a major publicity campaign against pharmaceutical companies. This reason is related to the fact that even if drug prices would come down dramatically, and that even if local production would begin as a consequence of compulsory licensing, developing the necessary delivery infrastructure and financial resources to deliver the drugs would come at a high price-tag. We think it is possible that developing countries engage in high-profile campaigns against pharmaceutical companies in order to deflect from their own failure to put the necessary infrastructure in place to deliver the medication. Countries such as South Africa, for instance would be able to provide this infrastructure, if the political will existed to foot the bill. The South African government, for instance, did nothing to prepare its health care system for a possible court victory, giving thereby rise to the question of whether they are seriously intent delivering essential AIDS medication to its people. Companies have complained about the difficulty they face in getting access to governments in order to negotiate. In other words, much as it is correct that high drug prices are a major hindrance in attempts to deliver essential medication to the poor, they are not the only reason. It would be wrong to paint a simplistic picture of the evil industry versus the brave developing countries’ governments trying to save their suffering peoples’ lives.

Proposed solutions to the access problem

Given that access to medications is a real problem, and that part of its basis is in the price and barriers to entry constructed by international policy decisions and pharmaceutical industry business decisions, what solutions exist?

Arguably both pharmaceutical companies and developed world governments recognize that they have a moral responsibility to act to prevent the AIDS holocaust from happening. They do not seem to think that because they have not caused the HIV infection rates in developing countries, they are not responsible for preventing (some of the) preventable deaths from happening. We shall describe in the following brief, and incomplete survey how both industry and other developed country donors have responded to the moral challenges posed by AIDS. Essentially we have seen three types of responses: donation of drugs; price discounts; and compulsory licensing to bypass patent protection and permit production of generic versions of HIV/AIDS drugs.

1] Private donations made by pharmaceutical companies

Individual pharmaceutical companies have pledged by means of a panoply of schemes to donate essential AIDS medication free of charge to developing countries. Among these donations was Boehringer-Ingelheim’s offer to provide Nevirapene, a drug proven to reduce the mother-child transmission of HIV drastically, free for a limited period of time. Pfizer has agreed to provide free fluconazole to South Africans affected by cryptococcal meningitis. The problem with these handouts is, of course, that such offers are fraught with conditions, time and quantity based limitations and a continuing dependence of developing country’s health care planning on the generosity of commercial organizations. It is probably not unfair to suggest that this generosity could cease in an instant should the public interest move on to the latest CNN provided coverage of yet another worldwide catastrophe, or should some commercial contingency arise.

Other organizations donated funds to developing countries. Merck, for instance provided US$3 million to the Harvard AIDS Institute to develop and implement a care program in Senegal and Brazil, Bristol-Myers Squibb provided US$100 million to its own ‘Secure the Future’ program, which involves setting up a large number of programs in African countries, and training of African health care professionals at US tertiary institutions.

While these initiatives are commendable, question marks over the role of the pharmaceutical industry in sponsoring academic departments exist, particularly in the light of the recent scandals in Canada.(Spurgeon 1999, Boseley 2001) The philanthropic approaches discussed here are very important morally, in two opposed ways. On the one hand, they represent recognition by corporations that they do have the capacity to act morally, and possibly, a duty to aid those affected by disaster. To the extent that these donations link charity with a drive for a good public reputation and a strong negotiating position in regulatory or pricing discussions, we can grumble about their intentions. The positive features of such donations are that they occur, they are not coerced, and they represent an assumption of moral agency and moral responsibility by corporations. On the other hand, there is a moral distinction between charitable giving as voluntary and honorable, and acting on duty. Duty, in this case the duty to prevent preventable deaths where one can, is not optional but required. Charity involves the liberty to divert one’s giving elsewhere if it suits one, and to arrogate to oneself the right to desist if the recipient is “ungrateful” or “undeserving”.

A second argument against charity is the argument that dependence on charity morally degrades the individual, by fostering dependence, promoting an attitude of humility toward the giver, and relieving the recipient of the ability to set terms and negotiate the terms of receipt. This argument is difficult to use, because it risks proving that aid per se is wrong, rather than the specific form of aid which is supererogatory, discretionary, conditional charity. One might develop instead a theory of charity which appeals to principles of mutual aid, solidarity and reciprocity, and which overcomes the “nineteenth century” paternalism hinted at in charitable donation. More radically, we might argue that the donation of drugs is a partial fulfillment of a duty to the disaster-struck, or of a more general historical debt owed by the developed world to the developing. We have no space to develop these suggestions here, but they are familiar arguments in development studies. (Unger (1996), Rodney (1972))

Donation of drugs is thus an ad hoc solution, which may go part way to solving the problem, but is morally problematic. The reasons for this are aretaic (to do with the motives and character of donor and recipient) and consequentialist (the solution is not sustainable and overlooks the sense in which companies and states have an obligation to prevent avoidable deaths when they have the power to do so).

2] Price reductions

Pharmaceutical companies have also begun to reduce the prices of their patented essential drugs, in order to make them available to more people in need. Bristol-Myers Squibb announced to reduce the prices of two widely used AIDS drugs, ddI and d4T, to about US$500 in Senegal. Mark Harrington of New York based Treatment Action Group analyzed this offer as follows,

Senegal has 79,900 people living with HIV. If one quarter of them need antiretroviral therapy this would mean that about 20,000 Senegalese would need anti-HIV therapy. The BMS discount, when added to one by Merck would bring the cost of one year’s triple therapy to between US$950-1,850. The median income in Senegal is US$510 per year. (Harrington, 2000)

Merck is providing a US$50 million donation, primarily in the form of a price reduction (matched by another US$50 million by the Gates Foundation) to Botswana. The money is primarily given to develop a comprehensive infrastructure for dealing with HIV/AIDS. An unspecified percentage of the Merck donation comes in form of drug subsidies (i.e. subsidies for Merck drugs). Harrington comments, “If Merck and Gates together are giving US$10 million per year, this means that 50,000 (of 290,000) could be treated per year if the cost of antiretroviral therapy was US$200 per year. There would be no money left over for prevention, testing and counseling, health care clinics, treatment and prevention of opportunistic infections, and palliative care.”(Harrington 2000) Other companies, such as Hoffmann-LaRoche, have promised steep discounts that are yet to transpire. Effectively, the companies are moving towards a solution that encompasses differential prices in developed and developing countries. Strange as it may sound to the uninitiated observer, many patented drugs are substantially higher priced in developing countries then they are in some developed countries. Much of this has to do with the fact that many developed countries (such as, for instance, Australia, Norway and others) put price caps on patented drugs. Manufacturers are not permitted to sell drugs at a higher price or else governments withdraw the approval for the drug to be sold in the particular market.(Brody 1995)

The problem with the discount-based approach is, just as above, that such offers are fraught with conditions, time and quantity based limitations and a continuing dependence of developing country’s health care planning on the good-will of commercial organizations. Moreover, this is a solution which corporations are quick to criticize in other circumstances: parallel pricing is the classic revenue profit maximization method for monopolists and oligopolists, yet it is always at risk to undermining by market entrants and through “arbitrage”. Arbitrage is the buying of a good G at price p in one market M, and selling it at price q (q>p) in another market N where good G is priced at price r (r>q), so as to capture part or all of the market N for good G. The arbitrageur does not produce good G, but “steals” from the producer of G a good proportion of the producer’s profits. Bringing the price in N closer to that in M increases the social efficiency of the markets M and N, so everyone except the producer is happier. A classical way of blocking arbitrage is to enforce patent rights over G, use them to construct barriers to entry to markets, and to issue manufacture or sales licenses which ban arbitrage or make it uneconomic. It is precisely this strategy which pharmaceutical manufacturers use to ban parallel importing (as far as possible) in the developed world, and to block competition by generics manufacturers. The market mechanism is blocked from generating competitive prices. Note also that parallel pricing is “good” if the patent-holder does it, but “bad” if someone else tries to do so. And further, parallel pricing is not primarily about good will, but about revenue maximization. Even in low-price markets, price is still in excess of marginal cost. So the seller is making a sale it would not otherwise have made, and makes no loss on that sale.

The price reduction solution is therefore limited in its utility, in the form in which it has been applied to date, because formally it is similar to the donation solution. Like that, it represents as charitable what is actually sound business policy, and from a consequentialist point of view is suboptimal in both the avoidance of avoidable death and in terms of the sustainability of the policy and the recognition of the social responsibilities of companies and states.

3] Public-private partnerships

The latest buzzword among international UN agencies, governments such as the UK’s, and pharmaceutical companies is ‘public-private partnership’.(Price, Pollock and Shaoul 1998; Gaffney et al. 1999) This concept, too, does not question the industry’s control over prices through patents. Instead it proposes to work together with pharmaceutical companies and developing world governments to secure sustainable price reductions. The idea was, partly, to purchase huge quantities of essential drugs and thereby to achieve price reductions caused by the combined purchasing power of various countries and agencies. All countries in a UNAIDS pilot program (Chile, Ivory Coast, Uganda and Vietnam) established non-profit organizations designated to distribute the purchased drugs. This UNAIDS sponsored program was anything but successful. Dr Peter Mguyenyi of the Joint Clinical Research Center in Kampala, Uganda commented during the International AIDS Conference in Durban in a paper entitled ‘Market Failure in Uganda’,

The UNAIDS pilot treatment access initiative which has been carried out for the last two years in Cote d’Ivoire and Uganda has not been a success. It has resulted in no appreciable reduction in the cost of drugs. In some cases prices went up. It’s been a miserable failure. The UNAIDS/pharmaceutical company announcement this spring about ‘massive’ price reductions was more political than practical; it was done for the media.

Overall, it seems, at the end of 2000, about 4,000 people in developing countries received access to essential medication through the program. Considering that it took years to get to that stage, and considering the overall number of people worldwide who need access to such medications and do not have it, this strategy does not exactly constitute an overwhelming success. Arguably, however, 4,000 more people with access to essential drugs are better than none. In October 2000 WHO, UNICEF and UNAIDS put out a public tender to provide essential AIDS medications at a preferential price to developing countries. These organizations’ strategy clearly is to leave unquestioned the industry’s patents and to use the market mechanisms to achieve the desirable lower prices. Yet the role of patents is precisely to prevent the market mechanism from operating to reduce prices in the short run, and it is not clear why this strategy is supposed to work.

David Resnik defends a different idea of public-private partnerships in biomedical research.(Resnik 2001, Brock 2001, Daniels 2001) He believes that developing countries have a moral obligation to contribute to research efforts just as much as commercial organizations do. That would then entitle them to a seat at the table, so to speak. In his paper Resnik uncritically repeats claims of the pharmaceutical manufacturers, such as “the plain truth is that a great deal of research would simply not be done without money from this industry.”(Resnik 2001, 14) It seems quite conceivable that non-profit operators such as universities, charities, and indeed governments would step in to fill this breach. One might argue that non-commercial actors would be less efficient in seeking new treatments or less able to bear the financial risk of developing new drugs. If this is so, we might question why so much primary research in highly applied disciplines such as biotechnology is actually based in the largely public university sector (but also why that sector is being privatized piecemeal as a means of raising money for universities). Some authors, in fact, have questioned whether it is acceptable that taxpayer funded research is exploited by pharmaceutical companies. These companies often buy such results for a paltry fee, patent them and effectively re-sell the product to the very same taxpayers that financed their development.(Arno and Davis, in press) Resnik’s argument appeals to an evidential claim about industrial policy, which requires him to produce evidence for it.

In any case, Resnik bases his arguments for patent protection and recognition on the industry’s need to make money. He ignores, however, that the profits necessary to sustain sufficient investment in research have never been made in developing countries. The pharmaceutical industry, by any standards among the most profitable industries,(Gerth and Stolnick, 2001; Resnik 2001, 13) makes its profits not in developing countries where the vast majority of people is unable to purchase its products, but in developed countries. IMS Health, a leading global provider of market research, business analysis, forecasting and sales management services to the global pharmaceutical industry predicts that the global pharmaceutical market is worth US$ 406 billion in 2002. Of this sum only US$ 5.3 billion is contributed from African countries.(IMS Health, 2000)

Analytically, we can also question the “need” to make money. The “essence” of firms, in some Aristotelian sense, might be the attempt to make money, although micro-economists such as Herbert Simon have been questioning whether real corporations are actually profit-maximizers in their behavior for a generation. They have legal obligations to their shareholders, and tough-minded “business ethicists” agree that the morality of business requires them to promote “shareholder value”. But these same thinkers require businesses and business people to act with common human decency.(Sternberg, 2000) Decency and common humanity require agents capable of preventing a death to do so, where possible, as a prima facie duty. So arguably Resnik’s appeal to business norms as prior to common norms for corporations is misgiven or at least incomplete.

In their respective replies to Resnik’s paper both Dan Brock and Norman Daniels point out that even if African countries ignored patents, either by breaking international trade agreements such as TRIPS, or by compulsory licensing, or by parallel importation of the required generic drugs, it would not make a significant difference to these organizations’ financial bottom lines.(Brock 2001, Daniels 2001) In Brock’s words

When developing countries choose not to respect product patents as their only effective means of making available pharmaceuticals necessary to save lives and protect the health of their citizens, doing so is arguably a step forward to greater justice between the developed and developing world; this may be a case where two wrongs make a right, that is where existing global; injustices make not respecting product patents, which in the absence of those injustices would be wrong, all things considered, morally justified.(Brock 2001, 37)

Public-private partnerships have not yet yielded the desired effect, that is to provide essential drugs (and we should not limits this unduly to the fashionable AIDS issue) to poor patients whose life is at stake. Arguably then, making use of the above mentioned TRIPS provision or even breaking international trade agreements might be a given developing country’s most effective means of providing life-saving medication time-efficiently to its people. What the description of the status quo above has shown, in our view, is that appeals to a given pharmaceutical company’s moral responsibilities, ethical corporate citizenship and so on and so forth, lead nowhere. There is a quite considerable amount of window-dressing, but no action has been forthcoming as yet that would bring us even close to what is required to save the millions of lives that are at stake.

4] Compulsory licensing

Compulsory licensing, to permit the manufacture of generic equivalents of patented drugs for HIV/AIDS at prices set in a competitive market is lawful (with respect to TRIPS) in situations of national emergency and when negotiations have failed to ensure a fair price which would enable parties to satisfy their objectives – of recouping investment costs and of maximally preventing avoidable deaths from HIV/AIDS. We note that there is an obligation on states to define “emergency” responsibly, and to take all reasonable steps to prevent such emergencies.

Prima facie, the validity of this approach is established by elimination of the other alternatives – donation, ad hoc price reduction, and public-private partnership – on moral and pragmatic grounds. However, we believe that there are good intrinsic reasons to support the compulsory licensing approach. Firstly, intellectual property rights are designed to promote innovation in the public interest. However, where they contravene the public interest, the justification for their enforcement in that context is removed. Secondly, intellectual property rights have been used in this debate as a diversion from the real issue here, which is the unaffordability of essential medications in the situations where they are most needed. Thirdly, while intellectual property rights are important, and should be defended, and while parallel importing into high-price markets in the resource-rich world is a matter for legitimate concern in the industry, companies have been too quick to make airy allegations about the destruction of shareholder value and their ability to recover costs and pursue a full R&D program without setting out their evidence in the public domain. Their appeal to intellectual property rights is consequentialist in character, but few serious attempts have been made to give these arguments a foundation in evidence. In the absence of this, we argue that the effective prevention of avoidable deaths, the operation of efficient competitive markets through lowering of artificial barriers to entry, and the assertion of legitimate national sovereignty in the international arena are conclusive prima facie justifications of compulsory licensing.

Of course, prices set in a competitive market could still be unaffordable by states and citizens. Marginal costs could still be too high for sustainable purchase in many countries. Our argument here does not establish a duty on generic manufacturers to sell at below cost. There is still a major role for international aid, state investment, and, especially, primary prevention of infection and the construction of sustainable infrastructure. States parties to the various UN declarations and charters on human rights are obliged to develop health infrastructure.(Andreopoulos, 2000)

As good consequentialists should, we should note that the compulsory licensing approach is not without risk. Corporations may feel less able to assume R&D risks if their right to sell goods at a profit to regain investment costs is compromised by the risk of compulsory licensing. And this may also affect their choice of products to develop – for instance, they may concentrate on “luxury” high cost drugs for lifestyle conditions, rather than “essential” medications for life-threatening and chronic disease. However, we note that corporations are still at liberty to derive monopoly profits in markets where poverty and epidemic do not combine to create large scale health and development disasters, as with AIDS (and other endemic diseases) in Africa and elsewhere in the developing world. Parallel importing is still open to regulatory control. Even with the current liberal approach to trade, investment in diseases endemic in the developing world is low, so the argument from a need to maintain liberalism to continue such investment appears to rest on a false premise. Moreover, much R&D is actually public sector work, or supported in partnership with the public sector.

Conclusion

We have established the compelling need to address the HIV/AIDS health and development crisis in the resource poor countries of the world. We have also examined the commonly accepted approaches to addressing this need through charitable donation, price reduction, and public-private partnership, and the current evidence for their (lack of) effectiveness. We have seen that the WTO’s TRIPS regulations permit, in national emergencies, states to compulsorily license the production patented goods. We hold that for efficiency and moral reasons the conditions for using this clause exist, and that the alternatives, whatever their intrinsic moral merits, are less effective and less morally acceptable than compulsory licensing. Our arguments have aimed to show first, that there is an emergency; second, that corporations and states, no less than individuals, have a moral duty to maximize the prevention of preventable deaths by making AIDS drugs cheaply available; thirdly, that this is a matter of need and duty, rather than want and supererogatory charity; and fourthly, that evaluation of corporations’ motives, while an enjoyable pastime, is actually irrelevant from the points of view of law, economics and ethics.

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The authors wish to thank the anonymous referees of this journal as well as Loretta Kopelman and Anton van Niekerk for constructive criticism of earlier drafts of this paper. Joanna Taylor provided invaluable research assistance to Udo Schüklenk.

The moral reasons for this have, of course much to do with a rejection of the acts and omissions doctrine. (Glover, 1977)

Published in Journal of Medicine and Philosophy 2001; 27(2): 179-195.

Affordable access to essential medication in developing countries: conflicts between ethical and economic imperatives

Udo Schüklenk

University of the Witwatersrand Faculty of Health Sciences, Johannesburg, South Africa

Richard E Ashcroft

Imperial College of Science, Technology and Medicine, London, UK

Abstract

The importance of access to essential AIDS medication