Global Lessons from the AIDS Pandemic: Economic, Financial, Legal and Political Implications

380 Pages·2008·1.659 MB·English

by  Dr. Bradly J. Condon, Dr. Tapen Sinha (auth.)

Global Lessons from the AIDS Pandemic
Bradly J. Condon Tapen Sinha
●
Global Lessons from the
AIDS Pandemic
Economic, Financial, Legal and Political
Implications
Dr. Bradly J. Condon Dr. Tapen Sinha
Departamento Académico de Departamento de Actuaría
Administración Instituto Tecnológico Autónomo de
Instituto Tecnológico Autónomo de México (ITAM)
México (ITAM) Rio Hondo No. 1
Rio Hondo No. 1 Col. Tizapán San Ángel
Col. Tizapán San Ángel Mexico, D.F., 01000
Mexico, D.F., 01000 [email protected]
[email protected]
ISBN 978-3-540-78391-6 e-ISBN 978-3-540-78392-3
DOI 10.1007/978-3-540-78392-3
Library of Congress Control Number: 2008927607
© 2008 Springer-Verlag Berlin Heidelberg
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We dedicate this book to the HIV-positive people of the world,
past, present and future. Faith, hope, love, compassion and courage.
The authors’ royalties will be donated to AIDS-related charities.
Preface
We began to research for this book in 2000, with the idea that we might
contribute to the search for solutions to the global HIV/AIDS pandemic by com-
bining perspectives from different disciplines. Much has happened in the interven-
ing years.
First, the severity of the HIV/AIDS pandemic in sub-Saharan Africa – and the
threat it posed for many others regions of the world – led to a movement among
several countries to correct the imbalance between producers and users of phar-
maceutical products. This effort produced a clarification of the right of govern-
ments to produce generic medicine under compulsory licenses and an amendment
of the World Trade Organization’s TRIPS Agreement to allow exports of generic
medicines from one WTO Member to another. In 2007, the amended rules were
put into practice, with Canada authorizing the export of generic antiretroviral drugs
to Rwanda. However, at the same time, global patent laws have been undermined
due to regulatory capture, most notably in free trade agreements and through
political pressure on countries like Thailand to not to exercise their right to issue
compulsory licenses for pharmaceutical products.
Second, the amount of money available for the treatment and prevention of
HIV/AIDS has increased dramatically, with the establishment of the World Bank
Multi-Country HIV/AIDS Program for Africa (MAP), the Global Fund to Fight
AIDS, Tuberculosis and Malaria and the US President’s Emergency Plan for
AIDS Relief (PEPFAR), among other funding initiatives. The increase in funding
has meant that many millions of people now have access to treatment compared
to the time when we began to work on this book. Yet, millions more still need
treatment and cannot afford it. In this regard, the US President’s effort in 2007 to
double the funding available under PEPFAR is a very encouraging sign. At the
same time, the proliferation of donors and programs for HIV/AIDS has created
new challenges – the need to coordinate donor policies to minimize the adminis-
trative burden for recipients and the need to ensure that donor policies are based
on science, not ideological or political interests.
Third, in 2007, UNAIDS began to use new methodologies to estimate the
number of individuals living with HIV/AIDS, the number of new infections and
the number of people who die each year. The new statistics are at once encouraging
and discouraging. It now appears that the percentage of infected adults in some
countries is lower than it was initially thought and that the epidemic has peaked
in some of the worst affected countries. Nevertheless, there are still over 30 million
people living with HIV/AIDS worldwide and new infections are on the rise in seve-
ral other countries. Therefore, hope must not give way to complacency, and pre-
vention efforts need to be scaled up globally if we are to bring the HIV/AIDS
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pandemic under control. Achieving this goal will require new and different ways
of thinking about where our economic and political interests lie.
Fourth, in the new millennium, some fast-moving infectious diseases with high
mortality rates appeared on the scene – severe acute respiratory syndrome (SARS)
and the H5N1 influenza virus. These new viruses led us to consider what lessons
we need to learn from our experience with the HIV/AIDS pandemic and have led
us to the conclusion that the significance of the world’s successes and failures
with respect to HIV/AIDS go far beyond addressing the human immunodeficiency
virus.
Fifth, path-breaking research has appeared in the past couple of years with
respect to the economics of HIV/AIDS and the economics of patents. An economic
boom can have the unintended consequence of increasing HIV/AIDS infection in
a given population. The new economics of patents show that the long-held belief
that granting patent protection is the only way to boost research and development
for new drugs may not be true after all.
Sixth, the concept of mortality bonds has evolved into a financially viable
product in the past three years. Without the epidemiological developments of HIV,
SARS and H5N1 influenza, these products would simply not exist today. There are
signs that they will become important financial instruments in the coming decades.
Seventh, the failure of “3 by 5” (the goal of expanding treatment to three million
AIDS patients in developing countries by 2005) has provided an impetus for scal-
ing up treatment around the world. In 2000, such a goal seemed a distant dream.
Today, the possibility of achieving universal access to treatment within a few
years seems very real. It will not avert the tragedy that HIV/AIDS has already
caused for millions of people, but it will stop the biggest killer of our times from
prematurely taking the lives of tens of millions of others.
Mexico City Bradly Condon
May 2008 Tapen Sinha
Acknowledgements
The authors acknowledge the help, support, and encouragement of the following
people: Enrique de Alba, Carlos Alcérreca, Rebecca Benedict, Michele Boldrin,
Ashok Chaudhuri, Cathy Condon, Kip Condon, Peter Doherty, Ali DuBose,
Sean Fay, Alberto Febronio, Arturo Fernández, Lorna Guinness, Stephen Heeney,
Diego Hernández, Bernard Hirschel, Georgina Jarquin, Jenny Lanjouw, David
Levine, Douglas Keir, Julio Montaner, Mark Nordman, Emily Oster, Mit Philips,
Suzanne Scotchmer, Dipendra Sinha, Kent Smetters, María de la Luz S. de Uriarte
and Duncan Wood.
We thank the Instituto Tecnológico Autónomo de México and the Asoci-
ación Mexicana de Cultura AC for their generous support of our research. We are
grateful to our publisher, Springer-Verlag, for seeing the value in this topic. We
deeply appreciate the diligent work of the editors at Springer-Verlag, in particular
Sundardevadoss Dharmendra, Katharina Wetzel-Vandai and Christiane Beisel.
ix
Contents
1 Introduction to the Economic, Financial, Political and Legal
Implications of Global Pandemics………………………………………..….1
1.1 The Threat of Global Pandemics…………………...………………....…1
1.2 The Origins of the HIV Virus………………………………………........6
1.3 The Nature of HIV/AIDS……………………………………………......7
1.4 HIV/AIDS Strategies in Developed and Developing Countries………....9
1.5 Insurance, Mortality, Treatment Costs and the Business Impact
of HIV/AIDS………………………………………...……………...…..11
1.6 The Economics of HIV/AIDS……………………………………..........13
1.7 The Political Economy of Patents and Global Health Threats………....15
1.8 Global Diseases, Global Patents and Developing Countries
in WTO Law…………………………………………………………....17
1.9 Bilateral and Multilateral Financing of HIV/AIDS Programs………….19
1.10 The Successes and Failures of Global Health Organizations…….…….20
1.11 Prevention, Treatment and Human Rights......................................…....21
1.12 Increasing the Effectiveness of Global Disease Management……....….23
References…………………………………...………………..........................24
2 HIV/AIDS Prevention and Treatment Strategies in Developed
and Developing Countries………………………………………......……....25
2.1 The Global Statistics……………………………..…………………......26
2.2 The African Epidemic: HIV/AIDS Becomes a Security Issue………....30
2.3 South Africa: International Politics and Lack of Political Leadership....31
2.4 AIDS Strategy in Brazil: Integrating Prevention, Treatment
and Human Rights…………….……………………………………......36
2.5 Thailand: Successful Prevention in the Sex Trade…………………......46
2.6 Japan: The Xenophobic Denial Strategy……………...………………..52
2.7 Australia: Nondiscriminatory Education and Prevention…………...….55
2.8 Implications for Other Global Diseases…………………………….......57
References………………………………………………........................….....59
Appendix..………………………………………………........................….....63
3 Insurance, Mortality, Treatment Costs and the Business Impact
of HIV/AIDS in Developed and Developing Countries……….……….......67
3.1 HIV/AIDS in Developed Countries……...………………………...…...67
3.1.1 The Insurance Industry and HIV/AIDS in Developed
Countries……………………………………………………...….68
3.1.2 Problems of Mortality Projections and Insurance………………..68
3.1.3 Problems for Insurance Companies in Pricing Risks….…...….....70
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3.1.4 Comparing HIV/AIDS with Diabetes….....……………….…......70
3.1.5 The Advent of Effective Treatment…...………………………....71
3.1.6 The Impact of Drugs on Survivability……………………….......73
3.1.7 Estimating the Cost of HIV/AIDS Treatment in the Developed
World……...…..……………………………………………........79
3.2 HIV/AIDS in Developing Countries………..…………………...….......80
3.2.1 Errors in Measuring the Prevalence of HIV/AIDS in India……...81
3.2.2 Problems with Estimating Prevalence Using Antenatal
Clinic Data………..………………………...………………........83
3.2.3 Insurance Companies’ Problem with HIV/AIDS..........................85
3.2.4 The South African Life Insurance Business and HIV/AIDS…….86
3.3 Public and Private Sector Health Care Strategies in Developing
Countries………………………………………………………………..90
3.3.1 The Cost of Treatment in a Middle Income Country: Mexico .....91
3.3.2 Viatical Settlements: A Financial Byproduct of HIV/AIDS….....93
3.3.3 Economic Incentives for Companies to Pay for Prevention
and Treatment……………………………………………………99
3.3.4 Business Strategies in High Prevalence Countries…………......103
3.4 Implications for Other Global Diseases…………………………….....106
References………………………………………………...………………....107
4 The Economics of HIV/AIDS………………...…………………………....111
4.1 Sexually Transmitted Infections and HIV/AIDS…………………..….111
4.2 Social Capital and HIV/AIDS……………………………………........112
4.3 Relationships Between HIV/AIDS and Poverty, Inequality
and Social Capital Using Global Data………………………………....113
4.4 The Economic Impact of HIV/AIDS in a Macroeconomic Growth
Model………………………………………..………………………...115
4.5 Macroeconomic Models: HIV/AIDS and Economic Growth…………116
4.5.1 The Impact of HIV/AIDS on Per Capita Income.........................117
4.5.2 The Role of Human Capital………………………………….....117
4.5.3 The Transmission of Human Capital…………………………...121
4.5.4 Fertility, HIV/AIDS and Economic Growth…………………....123
4.5.5 Fertility and Human Capital Accumulation……….……………124
4.5.6 Summary of Reviewed Literature on Fertilityand Human
Capital………………………………………………………......127
4.6 Microeconomic and Epidemiological Models of Behavior………..….128
4.6.1 Do Ugandans Behave Differently?..............................................128
4.6.2 An Epidemiological Interpretation of the Ugandan Results…....132
4.6.3 Do Africans Behave Differently?................................................134
4.6.4 An Economic Explanation of Why UgandanResults Differ…...136
4.7 The Cost of Scaling Up Prevention and Treatment in Developing
Countries……………………………………………………………....140
Contents xiii
4.8 Economic Tradeoffs………………………………..………………….142
4.8.1 The Zambian Dilemma…………..………………………...…...142
4.8.2 The Tradeoff Among Competing Needs……………..…...….…143
4.9 The Economics of SARS……………………………………..….....…144
4.10 Implications for Other Global Diseases……………………….…........147
References………………………………………………...………………....149
5 The Political Economy of Patents and Global Health Threats………….153
5.1 The Political Economy of Compulsory Licensing………………….....154
5.1.1 The Case of Anthrax……………………………………………154
5.1.2 The WTO Declaration on the TRIPS Agreement and Public
Health…………………………………………………………...156
5.1.3 The Problem Identified in Paragraph 6 of the TRIPS
Declaration…………………………………....................……...157
5.1.4 Abbott in Thailand……………………………………………...161
5.1.5 Foreign Aid, Foreign AIDS and Regulatory Capture………......162
5.1.6 Undermining TRIPS in Free Trade Agreements……..…….......165
5.2 Regulatory Capture of the Patent System……………………………..166
5.2.1 Regulatory Capture of National Patent Law………………........167
5.2.2 Regulatory Capture of International Patent Law……………….168
5.3 The New Economics of Patents……………………......................…...170
5.3.1 Two Centuries of Patent Protection in Europe and the United
States……………………………………………………………171
5.3.2 Innovation and Patents…......………………………………......172
5.4 Implications for Other Global Diseases……..………………………...182
References…………………………………………...……………………....183
6 Global Diseases, Global Patents and Developing Countries
in WTO Law………………....………...…………………………………...187
6.1 Key TRIPS Exceptions Relating to Patents…………..……………….188
6.1.1 TRIPS Article 30…………………………………………..…....189
6.1.2 TRIPS Article 31……………..………………………………....191
6.1.3 The Paragraph 6 Decision…….………………....................…...192
6.1.4 Implementation and Use of the Paragraph 6 Decision
by WTO Members…………………………………………........194
6.2 Special and Differential Treatment in WTO Law………………...…...196
6.3 The Economic Impact of Patents and their Effect on Development
Needs…………………………………………………………………..202
6.3.1 Are Global Patents Necessary to Provide ResearchIncentives
for Neglected Diseases?...............................................................203
6.3.2 Are Global Patents Necessary to Provide Research Incentives
for Global Diseases?....................................................................204