Private Philanthropy Novartis

The British Prime Minister, Tony Blair, is busily flying around the world trying to get approval among G8 members for increased aid and debt cancellations in developing countries ahead of the Gleneagles Summit. Now is a good time to think again about whether the international group effort to help the poor and sick of the world really is the best model.

As Tony Blair also takes over the six month revolving Presidency of the EU, the twin aims for his watch are fighting climate change and making poverty history. But the Bjorn-Lomborg run Copenhagen Consensus classes Kyoto-type action as a ‘bad project’ in that it costs more than the good it does; and making poverty history (in six months?) only sounds convincing to aging rockstars and anti-Bush, anti-trade demonstrators.

However, good is being done. For those entrenched in the international aid paradigm, the realization that the delivery of medicines to the world’s poor is carried out mostly by private corporations will be an unwelcome surprise. Novartis, the Swiss chemical and pharmaceutical company, for example, has a long history of making its anti-malarial discoveries widely available on philanthropic grounds.

Back in the early 1940s, Paul Mueller, a chemist with Geigy (later Novartis) synthesized the insecticide dichloro-diphenyl-trichloroethane (DDT). It quickly became a life-saver for millions from malaria, as well as yellow fever, dengue, typhus and leishmaniasis. DDT’s record is well respected in professional circles, and has survived notoriety amongst environmentalists to remain a key weapon in the fight against malaria.

The less well known story, except to some legal and malaria historians, is that Geigy never fully enforced its patent for DDT since it saw the momentous life-saving potential for the chemical. Manufacturers were asked to pay only a nominal fee to produce insecticides that contained DDT. It was an act of generosity, and more remarkable when one considers the tremendous cost of the many years of development work by the company. Later, the fee was rarely even collected as DDT was produced in China, India, the Philippines, Indonesia, Mexico and elsewhere.

DDT helped eradicate malaria from Italy, Greece, the United States, and at least a dozen other nations. The eradication of yellow fever and other notable successes in numerous countries also owe a lot to DDT. Novartis is not alone in making real improvements in the lives of people who can’t afford their products. Merck has been donating Mectizan to treat river blindness for years; GlaxoSmithKline has granted a voluntary license agreement to Aspen Pharmaceutical of South Africa to produce its antiretroviral medicines at a very low royalty; Pfizer donates Diflucan all over Africa; and Bristol-Myers-Squibb’s Secure the Future AIDS program is providing a model for best practice in the field. Anyone who cares to look at company websites will see details of many such charitable actions and media searches can quickly show the accuracy of their claims.

By contrast, the World Health Organisation’s (WHO) Roll Back Malaria campaign, which aimed at halving incidence of disease in 12 years is half way through its course and has actually seen an increased incidence of 10% or more. Similarly, its campaign to get three million people on HIV antiretrovirals (ARVs) by the end of 2005 looks to be falling short by about 75%.

The snappily-named 3 by 5 Campaign was always ambitious, especially since the WHO doesn’t actually do health care itself. The campaign relied on other agencies and countries ramping up their efforts, with advice, encouragement, some funding and now it seems, hectoring, from the WHO.

South Africa, after some baffling prevarications on treatment for HIV/AIDS, now treats over 40,000 HIV patients, most in a responsible and sustainable manner, which is more than many other sub-Saharan countries can manage. However, it seems the World Health Organization was expecting more; hundreds of thousands more, in fact, by the end of the year. Not unreasonably, the country’s health minister, Mrs. Tshabalala-Msimang, is protesting: “It’s not about chasing numbers, it’s about the quality of health care we provide for our people,” she said.

However, action by international agencies is very often about chasing numbers, such as targets set by politicians for political reasons; they bear little relation to what can be achieved or even what is most desirable. The main criterion is to get agreement so that the international bandwagon can roll on to the next junket.

An editorial in a recent issue of the medical journal, The Lancet, blamed lack of political will in South Africa, Nigeria and India for the inevitable failure of 3 by 5, since only 720,000 people were on ARVs in the developing world in December 2004, and roughly 8% of the 4 million Africans targeted were being treated.

I’ve recently been looking at the problems of HIV treatment in Africa and agree with The Lancet‘s assessment that: “Without SA on board, with its … leadership position within Africa, 3 by 5 is but a pipe dream,” and that only SA has the necessary infrastructure to speed up provision of AIDS drugs. The plain truth is that the target was always a pipe dream: there simply isn’t the infrastructure in place in most of Africa to treat that many people. Furthermore, the WHO cannot afford to provide South Africa with the funds to treat its arbitrary (it is certainly not science-based) target, so it has no right to feel aggrieved.

It’s also breathtakingly condescending to blame ‘lack of political will’ for not fulfilling preposterous and even risky targets. I was in Lesotho–South Africa’s incredibly poor neighbor–in March, when 2,000 people were receiving ARV treatment. Of these, perhaps 800 were on sustainable treatment, the rest on a far from ideal mix of single or dual therapy with frequent forced changes in drug regimens due to supply shortages (caused largely by poor local management rather than major procurement concerns). It takes specifically trained staff to deliver ARVs and, as in most of sub-Saharan Africa, they are thin on the ground in Lesotho. Against this background, the WHO set the target for this year at 28,000, which is absurd. I spoke with staff at an HIV clinic in the capital Maseru who were shocked by the target. They thought that if they had to treat patients with whatever drugs were in supply maybe 5,000 could be treated by the end of the year.

But there are other reasons, which I highlight in my paper, why the target of 3 by 5 won’t be hit. For example, there were not 720,000 people on sustainable treatment at the end of 2004 as claimed by The Lancet. The WHO claimed 700,000, but it is a matter of public record that this number is inflated by around 10%.

Furthermore, partly for budgetary and partly for political reasons, the WHO shuns branded drugs in favor of generics. Some drugs which WHO fast-tracked for use in 3 by 5 were subsequently withdrawn because questions of bio-equivalence and safety could not be satisfactorily answered by the manufacturers. Worse still, the generic drugs have turned out to be more expensive than assumed by the WHO, so current budgets are too low to hit their targets even under the best of circumstances.

Meanwhile, Novartis–still working against malaria 50 years after DDT–developed Coartem, a drug combining Lumefantrine and artemisin (the key component of the dual therapy derived from the Chinese sweet wormwood plant). This ACT (artemisinin combination therapy) has already saved many lives in Southern Africa, and is the most effective new malaria drug in decades.

Thanks from the international health community were neither forthcoming nor expected. Instead, pressure groups and even the WHO, show an equivocal attitude to Coartem. They complain of shortages and seem willing to blame Novartis for the lack of production capacity, despite few aid agencies actually supporting production with purchase orders for Coartem (or any other ACTs, which are noticeably absent in large scale production).

The bad faith shown to industry by the WHO was continued in 2003 when it demanded an audit by accountants Deloitte and Touche of Novartis’s production and delivery of Coartem. The audit found that the company was making a loss of 80 cents on each adult dose, and since they are now expected to sell over 100 million doses this year, that’s a big loss (it’s probable that the loss will be $40-60m, with economies of scale in production). Sadly, it’s a typical example of why western companies don’t get more involved in the diseases affecting poor countries. “No wonder they’re neglected diseases if companies put the effort in and get shit for it,” said one western non-Novartis industry researcher who preferred to remain nameless.

While the WHO badgers poor countries to pull their socks up when they’re already operating at their limit, less glamorous but more cost-effective interventions are being ignored in favor of what’s fashionable with the international aid community. Shifting medical staff away from immunization, anti-malarial, child health and other programs to treat HIV patients would be a misallocation. Compared with other life-saving public health measures available, HIV treatment has a high cost and a poor relative outcome. It is far more cost-effective and perhaps beneficial to treat patients with HIV for TB, which is commonly co-prevalent, or the other opportunistic infections of immunodeficiency. If left to decide for themselves, the Departments of Health in many poor countries would be justified in not allowing the switch to ARV.

Health and wealth are intimately co-dependent, and while the man on the street may misunderstand and mistrust free trade, the professionals have no excuse not to recognize its value, especially to developing countries. It makes no sense that poor countries’ exports are being blocked by first world protectionism or that donated drugs are being levied with import charges and taxes in the recipient countries. The international community does have a strong role to play, not only in removing such distortions, but in educating the public on the advantages of trade as the only truly sustainable way to make poverty history.

Roger Bate is a resident fellow at AEI.

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