In a letter addressed to US President Clinton, the Health GAP has denounced a recent move by the US Export-Import Bank to provide loans at commercial rates to African countries to purchase HIV/AIDS drugs. It urged the President to cancel the initiative and instead, implement the US administration's commitment not to interfere with developing countries' efforts to undertake compulsory licensing and parallel importing of HIV/AIDS drugs.

by Chakravarthi Raghavan

Geneva, 21 July 2000 -- The Health GAP, a coalition of non-governmental activists and organizations working to assure access to essential medicines for people with HIV/AIDS in the developing countries, have denounced the move of the US Export-Import (Ex-Im) bank to provide loans on commercial rates to African countries to purchase HIV/AIDS drugs.

In a letter addressed to US President Bill Clinton they have asked him to instruct the Ex-Im bank to cancel the initiative, and instead implement the administration’s commitment not to interfere with developing countries excerising their options under the WTO’s TRIPS agreement to compulsorily license production and/or authorize ‘parallel imports', disregarding the monopoly rights of the patent holder.

In the letter to President Clinton, the Health GAP coalition has expressed its strong opposition to the just-announced initiative from the Export-Import Bank to provide financing to African countries for AIDS drug purchases.

The letter reminds Clinton of the leading role played by the coalition in persuading the U.S. government to abandon its opposition to countries undertaking policies—known as compulsory licensing and parallel importing --- that could dramatically reduce the price of pharmaceuticals and would be compatible with country obligations under the World Trade Organization’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.

The Ex-Im Bank announcement, the Health Gap said, “represents a substantial and unacceptable step backwards from the administration’s commitment not to interfere with TRIPS-compliant compulsory licensing and parallel importing. It mocks the administration and G-7’s purported effort to provide debt relief to developing countries, and runs directly counter to the consensus at the just-completed world AIDS conference (at Durban, in South Africa) that the key to addressing the AIDS epidemic lies in ensuring poor countries gain access to medicines, not more debt.”

The Ex-Im Bank proposal, coming on the heels of the XIII International AIDS Conference in South Africa, “is a striking example of past and current policies clearly and forcefully repudiated by the public health, economic and political leaders in Durban last week.”

Peter Piot, General Secretary of UNAIDS, announced at that meeting that the most important factor in increasing drug access was competition between generic and patented drugs. He also cited heavy debt burden as a crucial impediment to effective action against the escalating African and Asian AIDS epidemics.

Additionally, the Durban conference brought together thousands of people with AIDS and activists from all continents who have united around calls for debt relief and full access to treatment, including access to quality generic medication.

“We demand,” said the Health Gap letter, “that the United States heed the growing consensus for policies of economic aid based on public health imperatives and not the profit-driven agenda of pharmaceutical corporations. We will not allow retrograde proposals such as this to pass without widespread condemnation.”

The coalition urged Clinton to take the necessary steps to cancel the Ex-Im Bank initiative.

While there had been a laudable increase in US contributions to combat the global AIDS epidemic, “we agree that billions, rather than millions of dollars a year are necessary to begin to significantly address this challenge.”

“However, rather than offering spurious loans that perpetuate the debt spiral, the United States must provide billions of dollars in grants for comprehensive treatment access programs, based in sound public health and scientific standards, including cost-effective bulk purchasing of generic medication; TRIPS-compliant mechanisms for generic production or parallel importation; and significant, structural-adjustment free debt relief. Such grants must be administered and overseen by an international public health organization, such as UNAIDS or WHO, not by a financial institution.”

The signatories to the letter said they opposed the Ex-Im Bank initiative primarily on three grounds:

1.   It would create a new debt burden for Africa. It made no sense to burden African countries with loans, when existing debt burdens were undermining their ability to prevent and treat HIV/AIDS (and to address other diseases, and other critical needs) and when the AIDS epidemic is itself already undermining their economic capacity. The Ex-Im loans would be made at commercial rates, meaning the debt burden would be very high.

The United States and the G-7, through their Cologne Initiative, are supposedly seeking to relieve poor countries of their presently unmanageable debt burdens.  If the intent of the initiative is to be taken seriously, (despite inappropriate structural adjustment conditions and an insufficient scale of debt relief), there is no plausible rationale for piling new commercial-rate loans on poor countries at the same time some of their debts are being forgiven.

2.   The treatment money for AIDS should not be used for corporate welfare. All indications are that the Ex-Im loans will be used to buy drugs from U.S. companies at a discounted rate similar to that which may be offered to the United Nations.

“Since money is clearly an enormous constraint in providing HIV/AIDS medication, funding for HIV/AIDS treatment must be well spent, and only on medicines at the lowest prices achievable. As reported, the industry offer to the UN does not come close to meeting this standard.”

Although there has been no distinct confirmation of the discount amounts since the non-specific announcements from five pharmaceutical companies in May, many published reports suggest the UN discounts will be in the 80-85 percent range. Such price levels, which are far above production and distribution costs, will enable the pharmaceutical companies to continue to profiteer from drug sales, yet still keep treatment unaffordable for the vast majority of people living with HIV.

Several well-researched studies, including a recent report from Medicins Sans Frontiers (Doctors Without Borders), have shown that the cost of HIV/AIDS medicines could decline an additional 90 percent from the estimated drug industry discounts, so that the cost of combination HIV/AIDS drug therapies would be on the order of $200 per person per year.

3.   No U.S. Government Initiative Should Interfere with African Efforts to Undertake Compulsory Licensing and Parallel Importing.  Linking the U.S. financing to purchases of U.S. or Western brand-name drugs appears to be a means to preempt efforts by African and other developing nations to lower prices through compulsory licensing and parallel importing.

As the New York Times reported Tuesday, “It seems unlikely that Brazil, India or other nations that produce such drugs for home consumption would have the export financing available to help African nations buy the goods. The American loans, along with a recent commitment by the World Bank to provide at least $500 million to help African nations set up anti-AIDS initiatives, give added incentive to African nations to treat many of their AIDS cases with Western medicine.”

Actually, the example of Brazil emphasizes the need for generic competition. Through the use of generic production, Brazil has provided combination anti-HIV treatments to over 90,000 people, and seen an over 50% drop in the AIDS death rate. The savings on hospitalizations and treatment avoided were US$472 million from 1997 -1999, and net cost per patient declined by 50% over the same period as savings were increasingly realized and use of generics became more widespread.

“We would have hoped,” said the letter to Clinton, “that by now the administration had abandoned the impulse to prioritize U.S. corporate commercial concerns over the public health imperatives of the African HIV/AIDS crisis. Such hope appears to be misplaced.

“As best we can tell from initial reports, the Ex-Im initiative is a plan to supply overpriced drugs to Africa while burdening African nations with new debt. That may be good corporate welfare policy, but it is disastrous public health policy.”-SUNS4714

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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