E-drug: US at odds with Europe over rules on world drug pricing
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[Cross posted from the Pharm-policy forum. Thanks. HH]
http://www.nytimes.com/2001/07/20/international/20DRUG.html
July 20, 2001
By DONALD G. McNEIL Jr.
Before the United Nations has even raised up to $10 billion for its
new fund to fight AIDS, the Bush administration and the European
Union are engaged in a behind-the- scenes struggle over how that
money will be spent, particularly on pharmaceutical drugs.
Communications between the United States trade representative
and his European Union counterpart, obtained by The New York
Times, show starkly opposing views on several key issues.
The Bush administration, like the giant pharmaceutical companies,
opposes the creation of any system to regulate world drug prices,
or the creation of a database where prices could simply be posted.
The administration, while it has dropped moves against Brazil's
production of cheap generic drugs, emphasizes that patent rights
must be protected and wants the companies left alone to offer
discounts when they see fit.
The Europeans appear to be siding with poor countries and
campaigners for cheaper drugs.
No unified European position has yet been laid out, but different
leaders and European Council resolutions favor a "tiered pricing
system," endorse the right of poor countries to shop for cheap
generic drugs from countries that ignore Western patents, and favor
the creation of a worldwide database to show prices for all drugs
from any supplier and to indicate whether the supplier is considered
reliable.
While acknowledging that patents are important, the Europeans
often note that they are blamed for driving up the cost of health
care, and emphasize the exceptions to patent rights contained in
world trade treaties.
"Basically, the European Union is saying that it doesn't want the
fund to turn into a subsidy for Big Pharma, and the U.S. is saying
the reverse," said Ellen 't Hoen, a drug price specialist at Doctors
Without Borders, a medical charity that has led the fight for
lower-priced drugs.
The United Nations' global fund to fight AIDS was proposed by
Secretary General Kofi Annan at a special General Assembly in
June. He asked donors to contribute $7 billion to $10 billion a year.
So far, only about $1 billion has been committed.
The rules governing the new fund are expected to be one topic
discussed when President Bush meets the leaders of the world's
seven wealthiest nations and Russia this week in Genoa, Italy.
The Europeans � to the frustration of the Bush administration �
have not defined what they mean by a tiered pricing system,
although the assumption is that it would mean low prices for poor
countries, high prices for rich ones and some sort of system for
verifying that it was working.
Some leading members of the European Parliament appear to favor
a system like that used for getting vaccines and contraceptives to
the third world. For those, the pharmaceutical multinationals and
their generic competitors in countries like India submit bids to
international agencies like Unicef or the United Nations Population
Fund, which handle distribution costs. The vaccines or
contraceptives sell for a fraction � sometimes as little as one two-
hundredths � of their prices in developed countries, and the makers
still turn a small profit.
Price cuts by the multinational companies have been voluntary, in
response to public indignation and counteroffers from generic
producers.
The most obvious targets of the drive are anti-retroviral AIDS drugs,
which 18 months ago cost as much as $10,000 a year per patient,
and now are offered by generic makers for as little as $350 per
year.
But AIDS also makes the body susceptible to secondary diseases
like malaria, tuberculosis, pneumonia, meningitis, fungal infections
and cancer. Pressure on pharmaceutical companies to offer poor
countries discounts on virtually all therapeutic drugs is thus
expected to mount.
The extent of the European-American debate is outlined in a letter
sent in late June by Robert B. Zoellick, the United States trade
representative, to Pascal Lamy, his counterpart on the European
Commission.
In the letter, a copy of which was obtained by The Times, Mr.
Zoellick expressed his distress that the commission was endorsing a
tiered system. The Bush administration is "opposed to the creation
of an international institution or convention to regulate drug prices,"
Mr. Zoellick wrote. "I also would question establishment of a
verification process." Further, he stated that "we have practical and
legal concerns with the concept of maintaining a database on drug
prices."
The database, he wrote, would be "difficult to keep accurate" and
"the sharing of drug pricing information can at times present
problems under U.S. antitrust laws."
An official in Mr. Zoellick's office said the letter had two purposes.
"One, we're challenging them to be specific about what they mean
by a tiered pricing system," he said. "And, two, we're
communicating that we're pretty skeptical."
Mr. Zoellick wrote that he was troubled by the reasons that Mr.
Lamy's colleagues had offered for tiered pricing, including the
argument that cheap drugs were still not available in Africa.
Repeating an argument often made by spokesmen for the drug
industry, he wrote that it was "more likely the result of the
enormous infrastructure problems plaguing this region, rather than
drug prices."
Millions of AIDS-infected Africans live in cities with hospitals or
within walking distance of rural clinics, and have enough clean
water to take pills. Many African countries now treat tuberculosis,
which involves essentially the same regimen as AIDS requires � a
daily handful of pills and occasional lab tests. Standard "first-line"
tuberculosis drugs, however, are priced much lower than
anti-retrovirals; recently, drug companies began voluntarily lowering
the prices of their "second-line" tuberculosis drugs, which are
prescribed if other drugs are ineffective.
Mr. Zoellick's letter concluded by saying that the drug companies
ought to be trusted. "We should expect companies to sell at the
lowest possible prices," he wrote. "However, it appears to me that
many companies are now doing so; there is no indication that their
pricing commitments are short-term or of such limited quantity that
we should doubt their sincerity."
Doctors Without Borders argued at a drug price conference in April
that relying on the good will of pharmaceutical companies was not
a sound approach for battling AIDS. The companies, the charity
argued, deeply slashed their prices last year "only after immense
international public pressure began to jeopardize the industry's
image."
The official in Mr. Zoellick's office confirmed that the Bush
administration still backed the policy started under the Clinton
administration of not seeking trade sanctions on African countries
that legitimately used patent-nullifying provisions under World Trade
Organization treaties to get AIDS drugs. "And," he added, "about
three weeks ago, we settled our W.T.O. dispute with Brazil. That's
gone down fairly poorly with the pharmaceutical companies."