Pharmaceutical Companies, Intellectual Property, and the Global AIDS Epidemic

In depth integrative case 1.2 focuses on pharmaceutical companies, intellectual property, and global AIDS epidemic. The AIDS epidemic is most prevalent in the countries that rank as the most underdeveloped countries in the world. South Africa alone has an estimated 22.4 million people living with AIDS. The spread of HIV is happening at an alarming rate, and in the countries where outbreak is the heaviest, the people cannot afford to prevent or treat this disease. This global crisis raises question in the pharmaceutical world, and whether or not the price of drugs is too high. Pharmaceutical companies are faced with ethical decision making, while still trying to maintain a profitable business. Pharmaceutical drugs for AIDS in 2003, were mainly sold in more developed countries because they could afford it. The problem arises when LDC’s (lesser developed countries) can’t afford to pay for the drugs. Strict Intellectual Property rights, which required patents on drugs, disallowed AIDS medication from ever making it to countries of poverty. Pharmacies feared low no-profit cost on drugs would create drug-resistant HIV strands. On the other side of the spectrum non-governmental organizations fought to loosen the IPR restrictions, so that LDC’s could manufacture their own drugs. Pharmacies operate to make money, but due to the public pressure, they took new routes to raise money and increase development of AIDS medicine, so they could lower the cost of the drugs. Although helpful, the low cost unfortunately still didn’t allow LDC’s to have access to the drugs. Eventually the WTO, loosened the IPR restrictions for LDC’s and permanently allowed them to manufacture drugs that weren’t patented. This helped dramatically prevent and treat millions of people on a global scale. The advancement in medication today is still improving dramatically, and pharmacies are joining forces to make drugs that can be distributed cheaper.

1.) Do pharmaceutical companies have a responsibility to distribute drugs for free or at a low cost in developing countries? What are the main arguments for and against such an approach? What are the advantages and disadvantages of giving drugs for free versus offering them at low no-profit prices?

Pharmaceutical companies do not have the responsibility to distribute drugs for free or at low cost in developing countries. It is heavily frowned upon that in early stages of AIDs medication, companies were charging prices that only let more developed countries have access to drugs. From a pharmaceutical standpoint, like any other for-profit firm, they are looking for a market with high profit potential. Aventis says, “We can’t deny that we try to focus on top markets. But we’re an industry in a competitive environment. We have a commitment to deliver performance for shareholders. (Pg.96).” These companies are in business, and are in this market to make money. On the other hand, if administered at lower cost, this will allow less-developed countries to have access to the drugs. When offering the drugs for free you certainly will have the advantage of reaching more people, but concern on corruption and diversion of supplies is evident, “There’s no guarantee that the drugs will find its way to the people who need it most. (Pg.98)” When looking at low no-profit prices an advantage here again is having an exponential prevention and treatment rate. However, drug companies remain reluctant to provide these drugs in developing countries because of the risk factor involved. By distributing drugs in an unregulated and unreliable environment, the risk of creating strands of drug-resistant HIV exists.

2.) What are the principal arguments of pharmaceutical companies that oppose making exceptions to IPR laws for developing countries? What are the arguments by NGOs and others for relaxing IPR laws?

Pharmaceutical companies that oppose