It seems like a long time since there's been an example as good as Nortel to trot out in response to the boneheaded assertion that the private sector always does things better. But in fact, one didn't need to wait for Nortel's near-death experience to make the point; there's long been the African AIDS crisis.
Among other things, the catastrophic African situation highlights what could politely be called the inadequacy of the market in meeting certain basic human needs, like staying alive. As Gro Harlem Bundtland, director general of the World Health Organization, put it: "Let us be frank about it: essential and life-saving drugs exist while millions and millions of people cannot afford them. This amounts to a moral problem, a political problem and a problem of credibility for the global market system."
We should be frank about another thing: setting up a global fund - agreed to at last week's UN conference on the AIDS crisis - won't make a serious dent in the problem as long as we continue to rely so heavily on the big pharmaceutical companies to supply the drugs.
Fortunately, there is an alternative - allowing low-cost generic copies of brand-name drugs to be sold for a fraction of the price in poor countries, with a small royalty paid to the brand-name company that invented the drug.
Brazil has already shown how effective a generic system can be. The Brazilian government now produces generic copies of drugs used to treat AIDS - which cost roughly US$15,000 a year in the United States - for a fraction of that cost. This has enabled Brazil to offer free universal treatment for AIDS. As a result, in three years, Brazil has managed to cut its AIDS death rate in half.
The multinational drug industry has fought the generic drug licensing system just about everywhere it has surfaced. Thirty-nine major drug companies jointly launched a lawsuit against South Africa in 1998 to block legislation aimed at increasing access to generic drugs for its many poor AIDS victims.
The optics of that lawsuit proved bad and, after growing outrage around the world, the companies finally withdrew it a few months ago.
Worldwide pressure has also pushed the brand-name companies to cut their own prices significantly in poor countries. Of course, when the price is US$15,000, you can reduce it a lot and still leave it well beyond the reach of desperately poor people whose spending on medicine is often in the range of US$2 to US$5 a year.
The price-cutting became more serious when Cipla, an Indian generic producer, recently began offering a year's supply of AIDS drugs for US$350. At that rate, a global fund to assist countries with the cost of treating AIDS starts to seem like a possible solution.
So ensuring access to generic drugs is essential. But the multinationals remain hostile to generics, and have long been able to rely on the aggressive support of Washington. (At their behest, Washington even launched a legal challenge to Brazil's successful AIDS program, only withdrawing the challenge early last week as the UN conference threatened to focus new levels of world outrage against attempts to prevent dying people from getting low-cost treatment.)
Canada, while less overtly servile to the multinational drug industry than Washington, has tended to side with Big Pharma, and appears poised to do so again on the crucial question of getting affordable drugs to Africans.
Canada has so far declined to support a recent initiative by the European Union calling for clarification of international trade rules to ensure poor nations have access to cheap generics. Canadian officials say they welcome the European proposal, but won't commit themselves to supporting it.
This isn't surprising. Canada has long knuckled under to pressure from the drug industry, most notably in the early nineties, when Ottawa abandoned our own highly effective generic licensing system. (Drug prices have been climbing here ever since. They are now the fastest growing component in our rising health costs, with the prescription cost of new patented drugs increasing at about 20 per cent a year, according to Toronto emergency room physician Dr. Joel Lexchin, who has studied the drug industry.)
The AIDS crisis is simply a high-profile example of the problem of relying too heavily on the private drug industry. The market responds to money, not human need. So where there is no money, needs are often neglected. Take the case of "sleeping sickness" - not the kind cured here by Immovane - but the African disease that leaves its victims in a coma. A drug called eflomithine effectively treats sleeping sickness, but drug companies stopped producing it in 1995, because it was no longer profitable. The drug was still desperately needed, but only by people without money. So, following modern market practices, these people were simply left in a coma.
Interestingly, the active ingredient in the drug was later introduced for the Western market in a facial hair removal product.
It's true that the private sector has produced some wonderful medical breakthroughs, although a significant amount of the basic research for these breakthroughs was funded by governments. It's also true that the drug industry spends billions in research on new drugs, but much of this goes toward developing vanity products for the rich world, with its insatiable appetite for drugs that stop or start hair growth or make body parts perform sexual functions more effectively. Furthermore, a French study found that 63% of new prescription drugs introduced there over the past two decades were minor variants of existing medications, with little clinical benefit.
If we're going to tackle the AIDS epidemic in Africa we're going to have to stop putting the interests of the private drug industry above sick people.
We're going to have to rely more on public sector input and control to correct the woeful inadequacies of the market in this crucial area. If that sounds troubling, imagine a worse solution: We could hand the problem over to Nortel.
Originally published by the National Post. Linda McQuaig's column appears every second Monday.
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