In his annual Lenten message, promulgated in advance of the upcoming season of preparation for Easter, Pope John Paul II stressed how devastating AIDS has been to the African continent. Victims are counted in millions. “Humanity cannot close its eyes in the face of so appalling a tragedy,” he wrote, putting his moral authority, once more, at the service of the most needy.
On the occasion of the presentation to the press of the papal message, however, his words were given an unfortunate spin by Father Angelo D’Agostino, a Jesuit priest who runs an orphanage in Nairobi, Kenya. Fr. D’Agostino appealed for more public pressure to convince drug companies to lower the prices of AIDS drugs. He argued that, if AIDS remains a fatal disease in Africa while it no longer is so in developed nations, it is because of “the genocidal action of the drug cartels who refuse to make the drugs affordable in Africa even after they reported a $517 billion profit in 2002.”
This statement, invoking the crime of genocide, is deplorable. First and foremost, it should be clear that treatments of any illness in Africa and in the developed world cannot be easily compared. Lacking the prosperity enjoyed by more developed regions, Africa spends only $10-$12 per capita on health care. Every year, one million Africans die of malaria, a disease which is easily preventable with access to medicines that cost less than two dollars.
Second, the profit figure supplied by Fr. D’Agostino is fantastic. Total 2002 global drug sales (generics and branded originals in all countries) were approximately $451 billion. How could profits exceed revenue?
Far from being “genocidal,” pharmaceutical companies are engaged in many humanitarian programs across Africa. Estimates place the level of donations, in products and cash, to the continent from the “pharmaceutical cartel” at some $2 billion since 1998. This is, as Center for New Europe Senior Fellow Stephen Pollard noted, “more than many African states’ entire health care budget.”
Throughout Africa, companies are offering HIV drugs by donation or at considerable discounts. In Kenya, for instance, Boehringer Ingelheim supplies nevirapine free of charge to prevent mother-to-child transmission and Pfizer is donating Diflucan to treat HIV-related disorders. Discount prices are typically below the best bargains found anywhere else in the world, including those offered by generic/copycat companies. Merck, for example, offers Stocrin at a “no profit” price that is 30 percent below the lowest copycat offer.
Pharmaceutical companies are also undertaking other efforts, such as direct assistance programs. As of January 2004, Pfizer, through its “Diflucan Partnership Program,” had donated more than $100 million in medicine to 20 countries and 915 sites in Africa and the Caribbean, and treated more than 35,000 patients. Merck/Gates collaborates with the government of Botswana in what is now the largest HIV treatment program in Africa. There are many other similar initiatives.
Fr. D’Agostino’s press declarations not only ignored the extent of the philanthropic efforts of the multinationals; they also failed to account for the importance of innovation and the role of profits in the drug industry.
Innovation entails enormous costs. In 2001 alone, the pharmaceutical industry spent $30.5 billion on research, with average development costs for a single drug reaching $802 million. Our hopes to cure AIDS depend on the effectiveness of research.
The profit motive, moreover, is at the heart of the structure of incentives that brings companies to invest in research and innovation. Far from being “genocidal,” profit is what loads the spring of economic growth, and is the immediate motive behind the right of economic initiative that, as the pope has written, is indissolubly linked with human creativity. “In today's world,” John Paul wrote in Sollicitudo Rei Socialis , “among other rights, the right of economic initiative is often suppressed. Yet it is a right which is important not only for the individual but also for the common good. Experience shows us that the denial of this right, or its limitation in the name of an alleged ‘equality’ of everyone in society, diminishes, or in practice absolutely destroys the spirit of initiative, that is to say the creative subjectivity of the citizen.”
In addition, critics should look at actors other than profit-seeking companies in assessing blame for high drug prices. Government protectionism and fiscal voracity contribute to limiting access to treatment. For example, the government of South Africa (which has recently slashed its AIDS budget by two-thirds) continues to impose a 14 percent value-added tax (VAT) on all medicines, including AIDS medicines, increasing the cost of those drugs significantly. Argentina levies a 17 percent VAT on medicines. Ghana and Senegal impose 10 percent customs on imported medicines, as does Tanzania.
Pushing pharmaceuticals to lower drug prices for the needy by means of persuasion is certainly legitimate. But we shouldn’t derogate the value of what such companies already do, nor forget the economic realities of the industry. Undermining the right of economic initiative will do nothing to promote the common good, in Africa or anywhere else.