The Cost of Patents in South Africa

 

With over 5,000,000 people infected, South Africa is home to more HIV/AIDS positive people than any other country.  South Africa also has strong patent protection laws that protect pharmaceutical products.  Most HIV/AIDS medications are patent protected under the South African legal system.[1]

 

International pressure has lead to recent price-cutting by pharmaceutical companies[2], but the price of pharmaceuticals from originator companies remains above the lowest price generics available in countries without patent protection for HIV/AIDS drugs.[3]

 

In South Africa, pharmaceuticals are priced so that they are available to the rich, in some cases because they can afford to pay out-of-pocket for the medicines or, more commonly, because South Africa has a developed health insurance industry that covers a significant portion of wealthy South Africans.  Because 25% of South Africans earns less than $1000 per year and 50% earns less than $2500 per year, the cost of HIV/AIDS medications, even at $700 or $800 per year, remain far out of reach for most of the population.

 

HIV/AIDS drug prices in South Africa remain significantly higher than lowest world prices.  However, even at the lowest world prices, currently close to $300/per year, the medications would remain out of reach of a significant portion of the infected population. 

 

Estimates, released by the Treatment Access Campaign, South Africa’s largest civil society organization working on the HIV/AIDS issue, estimated that the government could provide antiretroviral treatment, including drugs, distribution, testing, and monitoring of treatment to the entire infected population using generic pharmaceuticals for $14 billion dollars in the most expensive year of the program.  The cost, if name brand pharmaceuticals were used, would be $24 billion, an increase of over 70%[4] and close to 10% of South Africa’s 113 billion GDP.[5]

 

On August 8, 2003 the South African government announced plans to implement a national HIV/AIDS drug plan that will provide HIV/AIDS drugs free of charge.[6]  The announcement followed shortly after an announcement by Aspen Pharmacare, a South African generic pharmaceutical company that it would being production of Zerit, an HIV/AIDS medication.  Aspen also announced plans to begin producing 4 other HIV/AIDS medications.[7]  While generic competition may be necessary on order to achieve lowest possible prices,[8] the introduction of generic pharmaceutical production in South Africa and plans to provide HIV/AIDS drugs free of charge have the prospect to dramatically improve the lives of millions of people in the country.

 

The South African government's announcement was particularly striking in light of its prior denial of any connection between HIV and AIDS.  This denial led the government to largely ignore the problem and likely contributed to South Africa's status as the world's most HIV infected country.

 

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