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Gerald R Ford School of Public Policy ** Integrated Policy Exercise ** January 2003

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U.N. Disease Fund Opens Way to Generics

October 16, 2002

By DONALD G. McNEIL Jr.

A $2 billion global fund to fight AIDS, tuberculosis and

malaria will encourage poor countries to buy cheap generic

medicines instead of expensive brand-name ones, its

director said yesterday.

The decision opens the way for makers of generic drugs in

India, Brazil and other countries to sell far more of their

products in the third world, undercutting the prices of

major American and European drug makers.

"It's a big step forward," said Dr. Richard G. A. Feachem,

executive director of the United Nations-initiated program,

the Global Fund to Fight Aids, Tuberculosis and Malaria,

explaining that it would let the fund's money go further.

The fund will require countries applying for grants to do

three things:

¶Buy the lowest-price drug.

¶Buy only drugs of guaranteed quality.

¶Comply with international law and their own national laws.

Any drug on the World Health Organization's new list of

approved drugs and drugmakers qualifies automatically, said

Anil Soni, a fund official. That list, begun in March,

includes drugs from companies like India's Cipla that copy

products patented in the West, which is legal under Indian

law.

The fund was started last year with great fanfare by the

United Nations secretary general, Kofi Annan, in the hope

that it would become the repository for Western donations

of $7 billion to $10 billion a year toward fighting

disease.

Thus far, Dr. Feachem said, it has received worthy requests

from poor countries totaling about $8 billion, but has

received only $2.1 billion in pledges. Advocates for the

poor have been particularly bitter that the United States

has not donated more. President Bush's first pledge was

$200 million.

Of the 30 million people with the AIDS virus in Africa, it

is estimated that only 30,000 are getting the

anti-retroviral drugs that are routinely prescribed for

American and European AIDS patients.

But there was positive reaction to Mr. Feachem's

announcement, including a surprising endorsement from the

pharmaceutical industry's trade group.

Shannon Herzfeld, a spokeswoman for the Pharmaceutical

Research and Manufacturers of America, said the group

supported the fund's decision. "We believe strongly that

there is room for bona fide generics as long as they are of

high quality."

William F. Haddad, a generics maker who helped create the

cheaper off-brand industry in the United States, called the

fund's decision "a big victory."

He contended that small countries in Africa, Latin America

and Eastern Europe are afraid that the United States will

punish them if they try to import generic medicines. "The

U.S. is like an octopus," he said. "It's continually

threatening to do `something' to countries who buy from

generics makers."

Mr. Haddad could not say which American officials had done

so. In the early days of the Clinton administration, the

Commerce Department aggressively threatened countries that

ignored American patents with trade sanctions, but it

changed its policy in December 1999 in the face of the AIDS

epidemic. The Bush administration has said it would

continue the latter policy.

A senior state department official who is familiar with the

Global Fund disputed Mr. Haddad's argument, saying: "From

my vantage point, there has been no such pressure. We've

been nothing but supportive of countries who submit

applications to the Global Fund."

The United States supports the right of poor countries to

buy generic drugs with Global Fund money, the official

said. "We don't have a bias for or against generics," he

said, "as long as they aren't deprived of the opportunity

of choosing brand names."