Pharma companies cut prices during epidemics, nations can undercut corporations, and the perm doesn’t crowd out the alt.

In desperation, the South African government passed the Medicine and Related Substances Control Act. The law permitted “parallel importing,” so that South Africa could import pharmaceuticals from any source, including generic manufacturers, without the patent holder’s permission. But Western drug companies quickly filed a lawsuit, claiming that the law infringed on their patents, by allowing the importation and manufacture of generic drugs supplied by drug manufacturers like India’s Cipla. Cipla’s president, Yusef Hamied, offered to make low cost generic drugs available to South Africans by breaking patents if necessary. Cipla had re-engineered patented AIDS drugs to make its own cocktail, and the company asked the South African government for a compulsory license to start selling its generic version of the drug. The company was prepared to sell its three-drug cocktail for $350 a year. With Cipla’s offer pending and public pressure intensifying, the pharmaceutical companies were forced to drop their contentious lawsuit. These companies were vanquished by a powerful coalition of American advocates for AIDS patients, European doctors, African officials, and aggressive lawyers.51 The industry’s swift retreat was accompanied by steep drops in AIDS medicine prices. Cipla’s actions had set off a price war for supplying these antiviral drugs to Africa. Initially, in 2000 the Western drug companies had struck a deal to sell AIDS drugs with an 80 percent price cut but insisted that countries had to demonstrate they had an adequate infrastructure before getting the price break. But a year later, with no conditions attached, Merck agreed to sell Crixivan for $600 a year per patient, and Stocrin for $500; both are critical components of its cocktail therapy. These figures, Merck claimed, represented “no profit” for the company. The total wholesale price of Crixivan and Stocrin was $11,700. Glaxo offered to sell an annual dose of the Combivir cocktail for $1,330, well below its $10,880 price tag in the United States. Merck President Raymond Gilmartin spoke at the time about his company’s “evolving stance:” a refusal to discount prices, initial price reductions with strings attached, and then steeper price reductions. This is all part of “gaining experience” for how to handle such complex issues.52 These bold and dramatic price reductions, however, failed to bring the crisis to closure or to mute the criticisms of activists and African country officials. Observers complained that the drug manufacturers were still making money. Cipla had revealed, for example, that the active ingredients for making an annual dose of Combivir could be purchased on the international generic market for only $240.53 Also, despite the apparent magnanimity of providing these “break-even” prices, many Africans still could not afford the product. AIDS activists continued to demand lower prices, but over time a concerted world effort had begun to address the African AIDS crisis more comprehensively. In the wake of the AIDS crisis, the “Doha Declaration” was signed by WTO signatories in 2001, limiting the rights granted under TRIPS. The Declaration clarified the TRIPS provision on compulsory licensing. “The TRIPS agreement does not and should not prevent members from taking measures to protect public health. We affirm . . . WTO members’ right to protect public health, and, in particular, to promote access to medicine for all.”54 In cases of national emergency, countries have the latitude to manufacture their own generic version of medicine or import generic copies from other countries.