Reducing the cost of AIDS drugs the Clinton way

Saturday, 22 September 2007

Reducing the cost of AIDS drugs the Clinton way

http://www.jonathanrauch.com/jrauch_articles/bill_clinton_reinvents_philanthropy/index.html

"What we tried to do," Clinton says, "was to get [the pharmaceutical companies] to go from what I call a 'jewelry-store model' - from a high-profit, low-volume, uncertain business-payment business to a low-margin, high volume, certain-payment business."

[. . . The Clinton] Foundation went to governments in Africa and the Caribbean and organized demand for AIDS drugs, obtaining intentions to place large orders if prices could be cut. It simultaneously went to drug companies, offering them a much larger and less-volatile market for AIDS drugs in return for lower prices based on the projected volume. Although the foundation asked for aggressive 'forward pricing' to kick-start demand, it pointedly did not ask for donations or charity.

[. . .] Brand-name pharmaceutical companies refused to play, but generic manufacturers in India and South Africa were interested. The foundation sent staff members to study the companies' cost structures and to act, in effect, as free consultants, helping find the efficiencies that higher volumes could afford. Then the foundation repeated the process back through the supply chain, with producers of raw materials and other inputs.

4 comments

Updated 2 hours ago

Snehal Shingavi (East Bay, CA) wrote at 2:01am Too funny ... now I guess it's my turn to do some research.

Snehal Shingavi (East Bay, CA) wrote at 2:02am http://www.socialistworker.org/2004-2/509/509_11_DrugProfits.shtml

Imad Uddin Ahmed wrote at 2:13am Actually, what I didn't understand from the article was whether or not the Clinton Foundation was circumventing patent laws by going to Indian and South African manufacturers. I'm confused as to whether those countries allow or disallow the infringement of patented HIV/AIDS drugs.

Imad Uddin Ahmed wrote
at 2:28am

Jeffrey Sachs, the economist, advocates a different approach.

He found that in 1998, the world was giving $70 million in aid to all of Africa to fight AIDS - far too little in his opinion. Far too little was being given to fight malaria in Africa as well.

Sachs chaired the WHO Commission on Macroeconomics and Health which published its report, Investing in Health for Economic Development in December 2001. The commission 'was deeply divided at the start about who was to 'blame' for Africa's roiling disease crisis: Africans for their mismanagement, the pharmaceutical industry for its greed, the rich world for its malign neglect,' writes Sachs.

Nevertheless, the commission concluded that donor aid from the rich world ought to rise from around $6 billion to $27 billion per year in health in the poor world. ($27 billion = 1/1000th of rich-world income.)