Africans Find U.S. put Catch-22 in Deal for Cheap AIDS Drugs

Greg Palast

By Gregor Palast for The Observer/Guardian UK

It would give me great pleasure to report, as did the New York Times earlier this month, that Bill Clinton has saved Africa. That big-hearted lug will lend African nations a billion dollars a year for AIDS drugs which — more joy! — the pharmaceutical companies have agreed to just give away at 75 percent off list price.

But just when I thought I could announce Christmas in July, the Observer came into possession of a 12-page document from Argentina. It appears to have originated in the Office of the United States Trade Representative in Geneva (which does not deny the document’s authenticity). The official missive threatens Argentina for opening its borders to the drugs trade — not the fun stuff, but sales of legal, licensed medicines. If Argentina does not end its commitment to free cross-border trade in pharmaceuticals, said the U.S. Trade Rep, America would keep the nation on the “Section 301 Watch List,” a kind of Death Row for trading partners.

If you read the gospels of globalization apostles Paul Krugman or Thomas Friedman, you might get the impression that the World Trade Organization is all about doing away with tariffs and trade barriers. Only in your dreams. In the real world, the WTO is the mechanism for privatizing the tariff system. Once, countries protected their workers and local industry behind taxes at national borders. In the new World Trade Order, global corporations may demand levies against nations which sell or buy products outside the zones they have marked out by brand names and market segments. The WTO’s penal system for prohibited importing and exporting goes under the psychedelic title TRIPS (for Trade-Related Intellectual Property Rights).

TRIP-ing, Argentina and Africa — it all fits together. The story begins with this un-fun fact: one in four people in Black Africa are going to die of AIDS unless medicine arrives now. Luckily, Brazil, India, and most aggressively Argentina, can make the drugs dirt cheap and ship them to the dying. But U.S., British and Swiss pharmaceuticals giants howled about the proposed cross-shipments. The U.S. trade cops, led by Vice-President Al Gore, backed by Big Pharma, halted the life-saving plan — Nelson Mandela’s pleas, Nobel Prize and flowered shirts notwithstanding.

Unfortunately for Gore, his let-them-eat-aspirin policies resulted in his every campaign stop attracting packs of enraged Gay-mericans who hollered about his killing more Africans than Michael Caine in Zulu. This did not make for good TV for Al. So his good buddy President Bill found a few billion to quell the restless natives.

However, the billions come with strings attached or, more accurately, chains and manacles. South Africa must buy 100 percent of the medicine from the USA and pay back all the cash at “commercial interest rates.”

The U.S. Trade Rep’s billet-doux to Argentina is the supply side of this scheme to stop South Africa breaking the de-facto embargo on free trade in pharmaceuticals. South Africa hoped to use a loophole in TRIPS which permits importing of patent drugs in extreme emergencies, even without the patent-holders approval. Initially, the U.S. retaliated against South Africa by taxing some of its imports to the States — until the anti-Gore demos. The U.S.TR document suggests that the Clinton Administration will re-aim the sanctions missiles at Argentina, thereby avoiding the impolitic Mandela imagery while cutting off South Africa’s supply at the source. After an expected WTO show trial, Argentina’s economy will be hung from a pole in Geneva as an example for India and Brazil, other potential exporters.

Maybe I’m not being fair. After all, TRIPS seeks to protect and compensate manufacturers for their risky investments and inventiveness in creating medicines like AZT, Glaxo-Wellcome’s anti-AIDS drug.

Glaxo was inventive, all right, but not in discovering AZT. A professor Jerome Horowitz synthesized the drug in 1964, under a grant from the U.S. government’s National Institutes of Health (NIH). A Glaxo unit bought the formula to use on pet cats.

In 1984, an NIH lab discovered the HIV virus. The government lab urgently asked drug makers to send samples of every anti-retrovirus drug on their shelves. NIH spent millions inventing a method to test these compounds. When the tests showed AZT killed the virus, the government asked Glaxo, as the compound’s owner, to conduct lab tests.

Glaxo refused. You can’t blame them. HIV could contaminate labs, even kill researchers. So the NIH’s Dr. Hiroaki Mitsuya, combining brilliance, bravery and loads of public cash, performed the difficult proofs on live virus. In February 1985, NIH told Glaxo the good news and asked the company to conduct human trials.

Glaxo refused again. Here’s where Glaxo got inventive: Within days of the notice, the company filed a patent in Britain for its “discovery.” Glaxo failed to mention the U.S. government work.

But Glaxo has a heart. The Americo-British behemoth announced it would sell South Africa an AZT-based drug for only $2 a day per patient, more than 75 percent off the price charged in America and Europe. I called Glaxo USA to say thanks but, after a few questions, it became clear that the $2 price merely matched the Brazilian/Argentine prices, still about triple the cost of production.

Think about that. If $2 is the free-market price, then Europeans and Americans pay 400 percent over the odds, price discrimination explicitly protected by TRIPS. That’s the funny thing about the WTO’s expansion of so-called intellectual property rights. TRIPS trade barriers are sold in the West on the slick line that those people — the dark, unindustrious tribes of the southern hemisphere — are trying to steal our inventions. In fact, says expert Jamie Love of the Consumer Project on Technology in Washington, Western patients have as much to lose as Africans under the new regime of thought ownership.

This came to Love graphically in 1997 when Maude Jones, a 30-year-old London woman, called him begging help to obtain Taxol. The drug could have cured her breast cancer, but her NHS region did not prescribe it because of its stratospheric cost.

There is no patent on Taxol. The U.S. government discovered it. But Bristol-Myers, because it performed minor work calculating dosage levels, holds the intellectual property rights on dose-related data, even though the data was originally collected by government. Even without a patent, Britain’s data protection laws give Bristol-Myers lock-up control on Taxol in the UK for ten years.

Bristol-Myers takes no chances with its cancer monopoly. Taxol comes from the yew tree. While Western drug companies have long argued that rainforest plants are theirs for the taking without paying royalties, Bristol-Myers obtained from Congress the exclusive right to harvest yew trees on U.S. government lands, about the only place it grows on the planet. For these public assets, B-M paid nothing.

But Maude Jones paid. Ultimately, the company was shamed into offering her the medicine for free — if she moved to America. However, doctors concluded the offer was probably too late. As her family already faced bankruptcy, Maude (not her real name) phoned Love to say she had chosen to die.

From her death, Love hoped South Africans, Americans and Europeans would discover, “a helpful solidarity.” In AIDS and breast cancer, the stricken North and South share a horrific commonality as the new landless peasantry in the apartheid of intellectual property rights.

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Gregory Palast writes the award-winning column, “Inside Corporate America” fortnightly in Britain’s Sunday Newspaper, The Observer, part of the Guardian Media Group, where this first appeared. For comments or request to reprint, contact us.