Business Strategy and Access to Medicines in Developing Countries

Anne Roemer-Mahler

The availability of generic ARVs was important for the expansion of treatment in developing countries. This paper argues that it is therefore imperative to examine which factors have shaped generics companies’ decisions to supply these drugs. This will help us better understand the development of the global AIDS response in the past and how to address some of its future challenges. This paper illustrates the value of combining the investigation of political and economic dynamics with a focus on how they affect the commercial considerations of companies that supply products required by society. In doing so it contributes to the existing literature on business in global governance, which tends to focus on how business affects states’ decision-making but neglects how global governance influences companies’ decisions to produce some goods and not others. 

Introduction

A major challenge for the global community in the fight against HIV is how to fund treatment for millions of people living with HIV also living in poverty. At the end of 2009, only about 36 percent of people living with HIV in low- and middle-income countries received anti-retroviral therapy (ART).[i] Given that people living with HIV require lifelong treatment and annual new infection rates have varied between 2 and 3.5 million per year since 1990, the magnitude of the problem is evident.2 Against these daunting figures, however, stand more encouraging ones, namely that approximately 5.25 million people living with HIV in developing countries have gained access to antiretroviral drugs (ARVs) in the past decade.[ii] This represents a more than 20-fold increase since 2001, when only about 240,000 people living with HIV in developing countries were receiving treatment.[iii]  While the task ahead remains enormous, experience shows that expanding treatment on a large scale is possible.

In order to explain the progress achieved in the global AIDS response during the past decade, many authors have emphasised the increased political momentum, especially on the part of governments and international organizations, as manifest in the 2001 UN General Assembly Special Session on HIV/AIDS and the 2006 UN General Assembly High Level Meeting on AIDS; the creation of new intergovernmental organizations, including the Joint United Nations Programme on HIV/AIDS (UNAIDS) and the Global Fund to Fight AIDS, Tuberculosis and Malaria; and programmes within existing intergovernmental organizations, including the World Bank, the United Nations Children’s Fund (UNICEF) and the United Nations Population Fund (UNPFA), as well as programmes launched by individual governments, such as the US President's Emergency Plan for AIDS Relief (PEPFAR).[iv] Also the governments of some developing countries have forcefully responded to the pandemic, notably Thailand and Brazil.5 By the end of the decade, eight developing countries had achieved universal access to ART.6 Some authors have also pointed at the critical role played by people living with HIV as well as civil society organizations in national and global efforts to fight HIV.7

In addition, many studies mention the importance of low-cost generic ARVs becoming widely available in 2001 as a key factor enabling progress in the global AIDS response.8 Stephen Lewis, former UN Special Envoy for AIDS in Africa, stated that “we wouldn’t have this extraordinary run of treatment in Africa now if it weren’t for the generic drugs.”9 The availability of low-cost generic ARVs contributed to the progress of the global AIDS response both directly and indirectly. Generics contributed directly because they led to a drop in drug prices, which increased the affordability of treatment for poor people living with HIV. Initially, prices fell from approximately USD 12,000 to USD 350 per person per year.10  In 2009, the weighted median price of the six most widely used first-line regimens was USD 137 per person per year in low-income countries.11 A study on ARV supply in developing countries found that generics companies from India alone provided more than 80 percent of the donor-funded market.12 Indirectly, the availability of low-cost generic ARVs increased access to treatment because it fuelled the political momentum that was emerging at the time. The drop in drug prices enabled governments and donors to subsidize treatment on a much larger scale than before. As the then US President Bush explained at the launch of the PEPFAR in 2003: “the cost of [ARV] drugs has dropped from USD 12,000 a year to under USD 300 a year, which places a tremendous possibility within our grasp.”13

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