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BUSINESS RESPECT
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Arguments against CSR and some answers
Definitions of Corporate Social Responsibility
Discussion
The Global Reporting Initiative - is it fit for purpose?
Translations
Companies in the News
Case studies of managing a crisis
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and Tylenol
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Emerging Issues
Drugs companies and AIDS
When to quit a bad country
Taking the poisoned pill - how should the drugs companies play their part in combating the AIDS catastrophe in Africa?
What are the issues?
In the words of Kofi Annan, Secretary General of the United Nations, the AIDS epidemic in the developing world has become "the greatest public health challenge of our times". 25.3 million people are estimated to have been infected with HIV in sub-Saharan Africa.
The fact that the drugs companies make money out of the drugs which provide some relief for AIDS victims - and which can extend life now for many years - has become one of the deeply abhorrent symptoms for some as to why capitalism just doesn't care.
The UK Chancellor of the Exchequer Gordon Brown recently joined the long list of politicians and journalists eager to preach responsibility to the industry. Speaking to The Observer newspaper he said "They [the drug companies] must show they are putting resources into resolving these issues. We are talking about preventable deaths ... Where the pharmaceutical companies have responsibilities, they've got to accept them."
What have the drugs companies to say for themselves?
Some would say they had already met Gordon Brown's exhortation before he even made it. The fact is that a number of the most significant companies have already reduced the price of drugs for Africa to what they describe as being "below cost price" Six of the companies met on April 5th with Kofi Annan to agree further steps that could be taken to improve access to better healthcare, HIV medicines and HIV-related medicines for developing countries as part of further action to combat AIDS, including prevention, education and research.
These companies were Abbott Laboratories, Boehringer Ingelheim, Bristol-Myers Squibb, Glaxo Smith Kline, Hoffman-La Roche, and Pfizer.
Following the meeting, Bristol-Myers Squibb announced that it was lowering the price of its drugs in Africa from $20 a day to less than $1. Crucially, it also announced that it would relax its approach to its patent rights. A spokeswoman for Bristol-Myers Squibb said: "Although we're not actually relinquishing our rights to Zerit, if somebody in South Africa infringes on the method of use in our patent, we're not going to object."
The company announced the following four components of its anti-AIDS strategy:
DRUGS BELOW COST -- The company will now make its two AIDS medicines, Videx® (didanosine) and Zerit® (stavudine), available in African countries at even lower prices -- below cost -- under its existing ACCESS partnership program with international agencies, including UNAIDS, World Health Organization, World Bank, UNICEF and U.N. Population Fund.
TRANSPARENT PRICING -- The prices of products offered under the ACCESS program will be fully public.
SECURE THE FUTURE -- The company has expanded its philanthropic SECURE THE FUTURE program by pledging an additional $15 million, raising the total level of commitment to $115 million. This will allow it to continue developing innovative ways to prevent and treat HIV/AIDS among women and children and to help communities deal with the crisis. This initiative works with African governments and communities to bring local solutions to the epidemic.
EMERGENCY PATENT RELIEF -- The company will ensure that its patents do not prevent inexpensive HIV/AIDS therapy in Africa. The patent for Zerit, rights to which are owned by Yale University and Bristol-Myers Squibb, will be made available at no cost to treat AIDS in South Africa under an agreement the company has recently concluded with Yale.
“This is not about profits and patents; it’s about poverty and a devastating disease,” said John L. McGoldrick, executive vice president, Bristol-Myers Squibb. “We seek no profits on AIDS drugs in Africa, and we will not let our patents be an obstacle.”
Why is Patent relief important?
This comes to the heart of the controversy - and the dilemma for the drugs companies. Up until the announcment by Bristol-Myers Squibb, the drugs companies had been clear about one thing - they might discount to below cost price, they might make donations, they might put in place health programmes, but they would not compromise the legal status of their patent rights to these drugs. This, more than anything else, has led to the siege of unfavourable publicity. In particular, the actions of companies to sue the South African government for preparing to bypass their patent protection led to all sorts of "drugs companies uphold their patents whilst millions die" type headlines. The eventual withdrawal of the companies from their action - amidst a blaze of global publicity - hardly counted after such a disastrous PR positioning.
The key question is this: if you are a company which has made a mission out of producing goods and services that are demonstrably to the benefit of humankind, are you less entitled to make a profit from your activities than if you are a company whose products are of little benefit, or even harmful? If the drugs companies have been willing to show that they care about the scale of the human tragedy in Africa, and that they will not seek to make a profit out of that, shouldn't there be a way of them doing this that doesn't then undermine the commercial basis for their very existence?
A spokesman for the Association of British Pharmaceutical Industries summed it up with the comment "It's not entirely our responsibility. We can't be an NHS for the whole of Africa"
Comment - where next?
The fact is that the scale of the AIDS epidemic takes us far beyond business as usual. The drug companies need to respond to this, and to a large extent, they have. This movement has actually proved a useful case study of how significant and united stakeholder pressure can move a company to adapt to new terms of operation they never would have contemplated before. Equally, the distance the companies have moved should be acknowledged a little more. Chancellor Brown's comments, standing in contrast to his Prime Minister's own statements previously, are particularly ungenerous in this regard - a standard politician's approach to bashing an easy target in a pre-election period.
Nevertheless, the fact that Bristol-Myers Squibb have shown that even the patent boundary can be crossed suggests there is still a little further the industry as a whole can go. The temporary relaxation of patent enforcement in specific countries of need could be a useful boost to dealing with a humanitarian crisis.
However - the drug companies should probably not do this in the absence of political and financial will from other players to make this a short-term concession. Without proper resources brought to bear - and political commitment from the relevant governments, the crisis will continue unabated. Cheaper drugs will still only bring treatment into the hands of a tiny minority of those affected. And without full programmes of treatment, the drugs programme can simply prove to be a breeding ground for drug resistant AIDS. The companies should be prepared to offer their concession if they can be satisfied that all other partners are determined to do at least as much to ensure this becomes part of a solution - not the beginning of the end for the drugs companies. Chancellor Brown has as deep pockets as anyone, in this regard.
Sources:
The Observer 15th April "Brown: Let Africa have cheap drugs"
Guardian Unlimited: Cheaper drugs for Africa, March 15th. http://www.guardian.co.uk/aids/story/0,7369,452113,00.html
Guardian Unlimited: Embarrassed firms slash drug prices
http://www.guardian.co.uk/Archive/Article/
0,4273,4150318,00.html
Bristol-Myers Squibb statement
http://www.securethefuture.com/program/data/031401.html
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