One in eight South Africans, one in seven Kenyans, and one in four Zimbabweans has HIV/AIDS. U.S. Surgeon General David Satcher has likened the HIV/AIDS epidemic in Africa to the plague that decimated Europe in the fourteenth century.
Existing treatments, which enable many people with HIV/AIDS in the U.S. and other industrialized countries to live relatively healthy lives, are unavailable to all but a few people in Africa. Life-saving HIV/AIDS drug cocktails cost about $12,000 a year in many African countries--vastly out of reach of all but a small handful of the growing African population with HIV/AIDS.
Addressing the HIV/AIDS crisis in Africa and around the world will require a massively accelerated prevention effort. It will also require revitalizing the decimated public health systems of developing countries and making quality health care much more widely available. This, in turn, will require major new investments in public health and the abandonment of structural adjustment requirements to collect "user fees" from people seeking health care. But for millions of people infected with the HIV virus, there is also a crying need to make life-saving drugs more available--and quickly.
Two ways to promote access to essential medicines involve compulsory licensing and parallel imports. The more important of these policy tools, compulsory licensing, enables any government to instruct a patent holder to license the right to use its patent to a company, government agency, or other party. Zimbabwe, for example, could issue a license to a local company for an HIV/AIDS drug manufactured by Bristol-Myers Squibb. The Zimbabwean firm would then manufacture the drug for sale in Zimbabwe under a generic name, and it would pay a reasonable royalty to Bristol-Myers Squibb on each sale.
Compulsory licensing lowers prices to consumers by creating competition in the market for the patented good. Its impact is similar to the introduction of generic competition at the end of a drug's patent term-prices come tumbling down. Compulsory licensing can lower the price of medicines by 75% or more.
Parallel imports involve imports of a product from one country and resale, without authorization of the original seller, in another, thereby allowing the buyer to search for the lowest world price. A Namibian company or government agency, for example, might purchase HIV/AIDS drugs in France--assuming they are sold for a lower price in France--and then resell them in Namibia. Since the price of medicines is sometimes lower in the United States and other industrialized countries, parallel imports can be a tool to enable developing countries to lower prices for consumers.
Both compulsory licensing and parallel imports are permitted under the international trade rules established by the General Agreement on Tariffs and Trade (GATT) and administered by the World Trade Organization (WTO). They are regularly used in industrialized countries, including the United States, Japan, and the European Union. One of the GATT agreements, the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), contains the international rules the WTO enforces on intellectual property (patents, copyrights, and trademarks). Industry, especially the pharmaceutical sector, exercised heavy influence over the TRIPS agreement negotiations, and many public interest advocates generally believe the TRIPS agreement inappropriately favors corporations.
In general, the TRIPS agreement requires countries to adopt U.S.-style patent systems, which apply both to products and processes and last for 20 years. This has compelled many developing countries--which had followed the lead of virtually every industrialized country in enacting weak patent rules while they were still industrializing (many European countries did not recognize patents until the 1970s)--to refashion their patent rules dramatically.
But whatever the TRIPS agreement's biases, and despite the requirements it imposes on signatory countries, it permits compulsory licensing and parallel imports. …