Drug Companies and AIDS in Africa

Over the last 20 years, 22 million people have died from AIDS. The United Nations predicts that without a drastic change in treatment and prevention efforts, 68 million more people will die from AIDS over the next two decades, a number equivalent to the combined populations of Florida, California and New York.

Ground zero for this pandemic is sub-Saharan Africa, where 83 percent of AIDS deaths and 71 percent of H.I.V. infections have occurred. Five thousand people die every day from the disease in Africa. Millions of children are losing one or both parents to AIDS. Elderly parents can no longer rely on their sick sons or daughters to care for them. Farmers, teachers and soldiers are dying faster than they can be replaced, further undermining essential governmental services. Because of the AIDS pandemic, economic growth and labor productivity are plummeting.

As the number of people dying and living with AIDS soars, few people have access to life-prolonging antiretroviral (A.R.V.) drug therapy. The reason for this lack of access is cost. A yearlong regime of brand-name A.R.V.’s costs a patient in the United States from $12,000 to $15,000. Even with deep discounts, the drugs remain inaccessible to most patients in the developing world. The annual budget of many sub-Saharan African families is between $300 to $400.

The ripple effects of the pandemic extend far beyond its epicenter in Africa. In today’s global economy, an economic disaster in Africa can easily disrupt world markets. But the threat is not only economic. To survive, those orphaned by AIDS today often become the soldiers of tomorrow, fighting as adolescents in the variety of paramilitary groups that wreak havoc on the subcontinent. Poor, unstable nations are also fertile ground for terrorist groups. Unless a concerted effort is made to stop this present devastation in Africa and what is looming in India, China and the Russian Federation, our economic future—not to mention the delicate political balance of the world—will be placed in serious jeopardy

Faced with human suffering on such a massive scale, governments, international agencies and the private sector have committed to spend $3 billion to combat AIDS in 2002 alone. While this recent increase in funding is encouraging, it is still inadequate to stem the deadly tide of the pandemic. Kofi Annan, secretary general of the United Nations, insists that as much as $10 billion will be needed annually to effectively fight AIDS globally, with a quarter of that sum coming from the United States.

Pivotal in the fight against AIDS is access to antiretroviral medications. Until prevention and education programs are 100 percent effective, A.R.V.’s are needed to save lives, and the drug companies have them. The major American manufacturers of A.R.V.’s—Merck, Abbott, Bristol-Myers Squibb, Pfizer and Glaxo Smith Kline—have dedicated millions of dollars to the fight against AIDS in developing nations. The assistance has taken various forms: donating A.R.V.’s, reducing their price to cost, investing in medical infrastructure and education programs and voluntarily waiving patent rights so that generic, less costly versions of their drugs can be sold.

While these efforts are commendable, we may still ask whether drug companies (much less governments of wealthier nations) are doing enough to ensure access to A.R.V.’s. Most sub-Saharan African families simply cannot afford the drugs, even at discounted prices. Price reductions and other relief measures are inadequate when compared to the astronomical profit margins of drug companies. In 2001, for example, Abbott Laboratories posted $16.3 billion in sales and $2.9 billion in net earnings. Those who defend the current pricing practices of drug companies argue that profits are needed for the research and development of new drugs. They also remind critics that corporations are not charities: they exist primarily to make money.

Under this limited view of corporate practice, executives must do no more than follow the law as they try to earn maximum profits for stockholders. Their job is to respond to market forces by providing products and services that people need or want. In this way, everyone is happy, at least in theory: jobs are created, salaries are elevated, and income is generated in the economy. Any action that the corporation takes to benefit society, beyond what the law and market demand, is simply philanthropy—laudable but not required.

In recent decades, this free-market view of corporate social responsibility has been challenged, especially as corporations have become multinational. In many ways, the largest corporations resemble small governments in the influence they wield over people’s lives. Moreover, advances in technology, communications and travel have made the world a much smaller place. Today, a corporation’s business decisions can have far-reaching effects. For these reasons, many ethicists conclude that corporations must exercise their power in a socially responsible manner. They assert that executives have a duty beyond earning profits and following the letter of the law. While corporate managers may justifiably aim to make a profit, they do not need to make the maximum possible profit. Stockholders should settle for less-than-maximum profits, so that some earnings can be used for other ends, such as helping the community and assisting people in dire need.

This contemporary view of corporate social responsibility rests on certain ethical principles:

Principle of Human Dignity. All people, regardless of where they live or who they are or what they look like, enjoy a special dignity simply because they are members of the human race. In Catholic social teaching, the principle of human dignity rests on the conviction that each person is uniquely created in the image of God. With this dignity come certain fundamental rights, which are both political and economic. These rights are articulated not only in Catholic social teaching, but also in the United Nations’ Universal Declaration of Human Rights. Among these rights is the right to an adequate standard of living, including food, housing and health care.

Principle of the Common Good. As human beings, we necessarily live in society with other people. Without a well-ordered community, we would not be able to thrive as human beings. The common good calls us beyond our own self-interest (such as earning maximum profits) and demands that we consider the needs of others and of the community as a whole. In a world drawn more closely together by communications and technology, our notion of the common good encompasses more than our local community. It embraces the entire world. Only by caring for the common good can we function as a global society.

Principle of Justice. In human relationships, we must treat one another with fairness and equity, giving to others what they are entitled to as human persons. Justice is not only a question of establishing fair procedures by which everyone has an equal opportunity to participate in economic and social institutions. Equally important, justice demands that the end result of any distribution of goods, wealth or power must respect the dignity of each person. This means that the basic material needs of people must be met. Accordingly, Catholic social teaching proclaims a special obligation to help the poor and vulnerable. It is unjust that only those in wealthy countries have access to A.R.V.’s. That someone is poor or living in a developing country is not a good reason for the inequality of access.

Admittedly, asking managers and stockholders to look to the long term and to settle for less-than-maximum profits is a hard sell in many boardrooms—especially in recent months, when stock prices have tumbled and attorneys, analysts and auditors have scrutinized every business decision. Cost-benefit analysis still rules the day. In the cold, utilitarian calculus of the bottom line, adherents of the contemporary view persist in urging managers to consider moral principles.

If “doing the right thing” as a matter of principle is not enough reason to convince skeptical managers and stockholders, then one could argue that expanding access to AIDS drugs in Africa is good business. In a world where economies are so interconnected, economic disaster in Africa will surely affect corporate profits here. By saving lives and improving quality of life now, drug companies will support markets for the future. Moreover, the companies will benefit from the favorable public relations that will come with a substantial commitment to fighting AIDS. Pharmaceutical companies in recent years have been demonized by politicians and the media for the prices of their drugs and therefore are in need of good public relations. Saving lives can create in consumers the good will that all corporations seek to cultivate. Finally, governments can encourage drug companies to expand access to A.R.V.’s by offering various incentives in the form of tax breaks or reduced regulatory control, which will lower the cost of doing business.

During the last few years, advocacy groups, stockholders and voters have pressured drug companies and governments to respond more boldly to the AIDS crisis. The United Nations, by relying on its moral authority, has effectively mobilized public opinion around the plight of those suffering from H.I.V.-AIDS. While governments must respond to voters, corporations have a unique pressure point: directors and managers are answerable to stockholders. The Interfaith Center on Corporate Responsibility—an association of 275 religious institutional investors, such as religious orders and churches—has relied on this form of advocacy by supporting its members in filing shareholders’ resolutions that urge companies to make their A.R.V.’s more accessible. Recently, this has induced some drug companies to take concrete steps to ensure greater access to their life-saving A.R.V.’s.

In response to the almost incomprehensible scope of the AIDS pandemic in the developing world, people of good will are confronting their moral responsibility to help those suffering with AIDS. In the last six months, the U.S. Congress and the president promised hundreds of millions of dollars in additional funding to fight AIDS abroad this year. Regrettably, those commitments have since been reduced and delayed, and fall far below the $2.5 billion that the United Nations expects the United States to spend. In the private sector, the Bill and Melinda Gates Foundation and the Merck pharmaceutical company have each dedicated $50 million over five years for a joint program with the government of Botswana, the country with the highest rates of infection in the world. Under this program, doctors, nurses, professors and students from American universities are training health care professionals in Botswana to better detect H.I.V. and administer the essential A.R.V. therapy.

With such commitments and initiatives, ethical principles come to life. Though neatly defined in the abstract, these principles must be applied to the facts. And in business and politics, the facts are messy, the interests are varied, and the questions raised are multiple. How much profit is enough for executives to fulfill their duty to give shareholders a fair return on their investment? How much should be set aside for programs like the one in Botswana? Which method of ensuring access to A.R.V.’s is most effective: donating drugs, lowering prices or waiving enforcement of patents? What minimum level of health care infrastructure is necessary for any influx of A.R.V.’s to be effective? Of the many social needs, how much of a priority do we give to A.R.V. drugs, as opposed to other medications, and how much priority do we give to Africa, as opposed to another part of the globe?

While the answers are not easy to come by, the questions must be confronted head-on. Government leaders, relief agencies, religious groups, private foundations, medical professionals and corporate executives must present a unified front against the AIDS pandemic if lives are to be saved. Every voter and investor can join in this most worthy of battles, but there will be a cost—not in blood but in dollars. Reciting principles, such as those found in Catholic social teaching, is the easy part. Living by them is much harder, for great principles—like respect for human dignity, the common good and justice—sometimes require great sacrifice. With each day that goes by, more lives are claimed by the insidious virus, but so too, more people respond to the rallying cry to save a continent.

This article appears in November 25 2002.