AIDS drug incentive dilemma

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President Bush wants to spend $15 billion for a good cause: treating 2 million Africans who suffer from AIDS. But if the incentives for drug companies aren't improved, half of them may continue to suffer.

According to recent reports, notably in the British Medical Journal, viral resistance is making existing AIDS drugs less effective and others totally useless. Meanwhile, the development of new AIDS drugs is in shocking decline, down by 33 percent over the past five years. The Bush administration seems to be unaware, and big pharma is unwilling to admit, that this decreased development is a nasty consequence of drug activists succeeding in their campaign to demand lower prices for AIDS drugs.

Dr. Des Martin, president of the South African HIV Clinicians Society, suspects that "among several reasons, the threat of generic competition and attacks on multinational companies could be behind the recent decline in HIV anti-retroviral compounds." Some drug company boardrooms are certainly switching investment from AIDS research into areas where they can still make profits, such as erectile dysfunction and baldness.

As drug prices have fallen more than 90 percent in poor countries, treatment of the afflicted has risen, but not by much. Why? Prices are a small factor in creating access to AIDS drugs. However, the price fixation of left-leaning health nongovernmental organizations (NGOs) has led them to concentrate on this issue at the expense of more important matters such as building health infrastructure and training medical personnel. While the Bush team commendably plans to spend money on these essential components, it seems to be unaware of the long-term harm of the anti-pharma campaigns. It may even compound the problem as it announced that the Bush program will purchase generics from Indian producers.

The problem is stark. Over the past five years, global AIDS sufferers have increased from 9 million to 42 million, while the number of companies developing drugs has declined 27 percent and the number of drugs in development has declined 33 percent. Yet in the past five years, the numbers of newly developed antibiotics, anti-fungals, vaccines, antivirals and other biologics to treat other communicable and infectious diseases have increased by more than 40 percent. If one includes the development of responses to bioterrorism threats, this area has grown even more vigorously.

Because the major companies such as Merck, Bristol-Myers Squibb and GSK are spending more money on AIDS research than before, people may not be aware the number of new AIDS drugs is declining. But smaller companies, often biotech start-ups, are no longer interested in developing drugs and assuming the risk of clinical trials without the possibility of an eventual monetary reward. Ask yourself this question: If you were the head of a biotech start-up (or its venture capital backer) would you invest your money in AIDS research (where your research may make you famous but will probably not make you rich) or in erectile dysfunction (where the market is secure)? Those companies whose reputations are not currently linked to AIDS research are quietly slipping away from the field, and far fewer start-ups will even consider AIDS research.

Industry executives don't like to talk about this. One who did though, but did not wish to be identified, agreed that although he didn't like to admit it, "we have lost the battle with the activists, and now the market is less profitable. The result is that we are spending less R&D time on anti-retrovirals. Why bother to innovate these products when any advance will not be profitable?"

Another possible explanation for the decline in the AIDS drug pipeline is that AIDS is rapidly becoming a poor-country disease, much like malaria and cholera. Since poor-country diseases have such tiny profitable markets, companies develop few new drugs for them. Given this reality, one would expect activists to praise the companies that are still working on AIDS drugs, encourage them to do even more and attack those companies slipping away from the field.

But in the past three years, activist groups like Doctors Without Borders, have continued to attack the companies that are developing new drugs, even though these companies have given AIDS drugs away for free, drastically lowered their prices, and voluntarily licensed their drugs with generics manufacturers in South Africa.

Not surprisingly, as the attacks continue, numerous boardrooms have decided to steer research into other directions. It's ironic that activists have scared drug companies into action that will harm AIDS patients in the long run. For while government and activists can blame capitalism and the drug giants and profiteering, the latter actually develop solutions; the former just talk about them.

Roger Bate is director of the D.C.-based health advocacy group Africa Fighting Malaria.