A Conflict of Health and Profit

By Barton Gellman
Washington Post Staff Writer
Sunday , May 21, 2000 ; A01

CAPE TOWN, South Africa ­­ In the seaside presidential suite of the Table Bay Hotel, Vice President Gore brought a warning last year for his counterpart that was about as pointed as diplomacy permits between friends.

"I want to make you aware of the strong and growing domestic pressure being brought to bear in Washington," Gore told Thabo Mbeki, then South Africa's deputy president, in the Feb. 17, 1999, meeting, which was conducted with note-takers present. Drug companies and their supporters, outraged by a new South African law that threatened lucrative patent rights, were encouraging Congress to take punitive measures. Already, U.S. trade officials had placed South Africa on a "watch list" of countries risking sanctions.

"I'm concerned that, without significant progress toward a resolution, a single trade issue could overshadow our bilateral relationship," Gore said, according to an authoritative U.S. account of the meeting.

What for South Africa was an exploding health emergency--with life-saving medicines priced out of reach of patients with AIDS, among other diseases--the United States treated mainly as a problem of trade. Pretoria wanted to import or manufacture inexpensive generics; a $343 billion global industry, backed by Washington, regarded that as theft of intellectual property. The issue would follow Mbeki and Gore as they deepened their relationship, and pursued common ambitions for higher office.

Today, as Mbeki begins his first state visit to Washington since succeeding Nelson Mandela as president, South Africa faces an AIDS catastrophe that U.S. intelligence predicts could kill a quarter of its 40 million inhabitants. Gore, after seeking common ground between South Africa and the drugmakers, has broken with the pharmaceutical lobby. The Clinton administration withdrew two years of objections to the new South African law in June, the same week that Gore declared his intent to run for president and AIDS activists began tormenting his campaign with showers of printed "blood money" and banners charging "Gore's Greed Kills."

Why AIDS has surged unchecked through sub-Saharan Africa, with a death toll across the continent that now appears certain to climb into the tens of millions, is a complex matter that specialists blame on multiple failures--in the afflicted communities and nations, in corporate boardrooms and in foreign governments that chose not to intervene.

The Clinton administration's campaign against South Africa's Medicines Act was not the only reason, or the biggest, why South Africans lack the AIDS drugs that are increasingly allowing Americans and Europeans to live indefinitely with the disease. South African officials fear that even cheaper AIDS drugs could break their budget, and they raise questions about effectiveness and risks. Nor do AIDS experts believe that medicine alone--absent vast improvements in prevention and in the infrastructure of hospitals and rural clinics--could halt the pandemic.

But the history of South Africa's drug law and the American response shows how traditional priorities of politics and commerce helped shape a global environment in which a public health calamity went largely unaddressed. As federal health authorities tracked the epidemic's course in Africa, senior government policymakers remained strikingly unaware of its exponential growth and projected toll. Inertia led trade regulators to treat generic AIDS medicine on the model they use for pirated music discs and computer games--as a threat to the profits of copyright-holders, to be suppressed.

"You mean the U.S. Trade Representative doesn't know the difference between Barbie dolls, tennis rackets and AIDS drugs?" one senior health official recalls asking incredulously during the interagency fight. "Well, the problem is, they didn't."

U.S. Trade Representative Charlene Barshefsky, in an interview, said much the same thing. "Largely it was the activities of ACT-UP and the AIDS activists that galvanized our attention [to the fact] that there was an absolute crisis," she said. Until then, "I was certainly not aware of this at all. . . . In years past, this [pharmaceutical] issue was treated purely as a trade issue and an intellectual property rights issue."

A Chance Encounter

James Love stewed early last June aboard a commercial jet bound for Los Angeles but stuck on the ground at Dulles Airport. A familiar blond head appeared over his magazine. Tipper Gore had walked back from the first-class cabin to speak with the man in the window seat
next to Love. The man turned out to be Clark Ray, her campaign chief of staff.

Love could hardly believe his luck. At the Consumer Project on Technology, which he ran for fellow Princetonian Ralph Nader, Love had been trying to get the vice president's attention for years. As early as July 29, 1997--in the first weeks of U.S. intervention against South Africa's generic drug law--he and Nader co-wrote a letter urging Gore to "subordinate commercial concerns to broader public health interests."

More than two years passed without a reply. Now Love had a captive audience.

"I started off by saying, 'Look, this is kind of a coincidence, but I'm working with a bunch of people who are going to be torturing her husband over the issue of access to medicines,' " Love recounted, referring to the planned campaign disruptions. "[Ray] said, 'What do you mean?' I said . . . we were really angry about it and we had tried everything else."

In truth, Gore was not indifferent to the problem. More than a month before Nader and Love wrote to him, and years before the protesters would dog his campaign, the vice president began sounding the alarm about AIDS to a reluctant South African government.

"South Africa is in the beginning stages of a full-blown AIDS crisis," he told Mbeki in June 1997, according to officials familiar with records of their talk. The United States had "waited too long" to address its own AIDS problem and it grew "beyond effective containment." South Africa could avoid that fate, Gore said, and Health and Human Services Secretary Donna E. Shalala had traveled with him to offer assistance.

Gore and Mbeki were co-chairs of a "binational commission" intended to boost the new South African government's transition from apartheid to democracy. Contemporary government accounts of their annual meetings portray leaders who bantered easily and used the forum to air proposals, not grievances.

But for all Gore's concern about AIDS, the administration he represented was lining up hard against the South African effort to obtain generic, cheaper medicine. Beginning in May 1997, drug industry heavyweights--Aldridge Cooper of Johnson & Johnson and Harvey Bale of the Pharmaceutical Research and Manufacturers of America, or PhRMA, the industry lobby--began writing to Barshefsky's office and Commerce Secretary William Daley to denounce Pretoria's proposed amendments to the Medicines Act.

Gore shared some of the drug industry's concerns. The fruits of intellectual property are America's major global export, and Gore had several close associates--former chiefs of staff Peter Knight and Roy Neel, and adviser Anthony Podesta--who earned substantial fees from the pharmaceutical lobby.

Although Gore would raise less campaign money from drug companies than either of his opponents this year, former senator Bill Bradley and Texas Gov. George W. Bush, he mined the industry for cash with some success. In 1997 and 1998, Gore's political action committee raised $51,000 in direct contributions from drug companies and PhRMA contributed another $276,850 in hard and soft money to Democratic Party committees.

'An Influential Voice'

By the fall of 1997, Gore weighed in on the generics law with Mbeki. The South African leader complained in a working dinner at Blair House on Sept. 22 that drug companies often charged South Africans prices many times greater than those elsewhere, a legacy of an apartheid economy in which the wealthy white population was their only meaningful market. The companies admitted, Mbeki said, that their "real problem is that what South Africa does in this area is a precedent for other developing countries." Gore, according to the U.S. government account, urged Mbeki's continued "cooperation with concerned U.S. pharmaceutical companies" to modify the new law.

The following summer, he spelled out why.

"You know, Thabo," he said in his West Wing office on Aug. 5, 1998, according to an authoritative account, "the American pharmaceutical industry . . . exerts an influential voice in political circles."

"Yes," Mbeki interjected. "All over the world."

Gore told Mbeki he was "prepared to discuss parallel importing of medicines by South Africa," the term of art for buying a product in a country where its manufacturer sells it at lower cost. That practice, permitted under world trade rules, had been vigorously denounced by drug companies whose profits depended in part on setting widely disparate prices market by market. In return, Gore said, Washington would insist on the right of approval of such purchases.

"This is a tough one," Gore said, adding: "This issue has the potential to become a serious problem. . . . We know the agreement we are proposing sets the stage for a difficult sale to PhRMA. We are prepared to enter that fray and mix it up with them because we believe strongly that this proposal best addresses their needs for patent protections and people's needs for affordable medicines."

In the year that followed, Gore's office and other federal agencies exerted far more leverage on the South Africans than on the drug industry. Early in 1998, the industry's local umbrella group filed suit against the Medicines Act in South African courts. The principal U.S. interlocutor to the drug industry, who declined to be quoted by name, said he asked PhRMA representatives what conditions would allow them to accept parallel imports.

"They said no, we really just want you to hold the line and continue to pressure South Africa to terminate this law altogether," the trade official said. Government policy toward the industry, he said, entered a holding pattern of "watching the litigation" and "hoping it would settle."

As for Mbeki, he did not reply to Gore on the spot. His government eventually rejected the offer.

"Politically our view was, the [courts and the World Trade Organization] can resolve this issue," Frank Chikane, director general of Mbeki's office and his note-taker in the one-on-one meetings, said in an interview. "We said, 'No, no, no, we believe we are correct. You sell medicines to us here, the same product, labeled by the same company, but it's two times more here than in Botswana. Why should we not go in and pluck up the cheapest medicines we can?' The pharmaceuticals really wanted to strangle us on this, but we maintained our position."

Growing U.S. Pressure

Congress, always sensitive to pharmaceutical concerns, pressed the Clinton administration for still more action. Rep. Rodney P. Frelinghuysen (R-N.J.) sponsored a successful effort to cut off aid to South Africa until the State Department submitted a Feb. 5, 1999, report on the government's "assiduous, concerted campaign" to repeal the South African law.

Less than two weeks later came Gore's Cape Town warning to Mbeki about "strong and growing domestic pressure."

"He was presenting the U.S. concern because there is a substantive issue involved," said Gore's national security adviser, Leon Fuerth. "It was never presented with an attached threat. Mbeki knew there could be difficulties with this because of the way U.S. laws are structured and the way Congress works."

Some senior members of Mbeki's government felt otherwise.

"We put together a piece of legislation, and of course the pharmaceuticals take us to court," Health Minister Manto Tshabala-Msimang said in an interview in Pretoria. "What does America do? America puts us on the blacklist, saying we are not responsible trading partners."

Former ambassador to Washington Franklin Sonn, who left the South African foreign service in 1999, said there was "a lot of emotion" in the argument between the two governments. Sonn said he chaired a meeting requested by U.S. officials that brought pharmaceutical representatives to his embassy with then-Health Minister Nkosazana Zuma. "She was saying, 'I cannot afford this, and if you don't want to talk about prices we will buy elsewhere.' "

The Americans replied with such bluster, he said, that "I had to say, 'Don't! Don't speak to me like that in my own embassy. You are not scaring me.' "

The Showdown

Spring of 1999 brought a collision between the two-year-old U.S. trade policy and growing opposition on two fronts.

Inside government, senior policymakers--Fuerth and Gore among the earliest--began to focus in earnest on the stunning growth in AIDS in the developing world. For the first time, internal debates broke out on the implications of pricing anti-retroviral drugs out of reach of a country where more than one citizen in five is infected with HIV and the rate of transmission has not yet peaked. Outside government, African American political leaders and AIDS activists converged on the issue.

In its annual review of intellectual property violators, the U.S. trade office--backed by the Commerce and State departments--proposed in March 1999 to escalate the dispute with South Africa to the "priority watch list." A step closer to formal sanctions, that designation is regarded as punitive in itself because it sends a no-confidence signal to foreign investors.

Gore's office combined forces with the National Security Council staff and public health authorities to quash that proposal.

By late May, Gore staff member James Babbitt, a career Army officer specializing in African affairs, had entered negotiations with South African embassy officials to find a formula for settling the dispute.

On June 10, Assistant U.S. Trade Representative Joseph S. Papovich met with pharmaceutical representatives in a final effort to reach compromise language. They held firm against any compromise on generics.

Four days later, Fuerth's office presented to Barshefsky a settlement deal under which South Africa would "reaffirm" its commitment to international patent laws, and the United States would withdraw objections to the Medicines Act.

The proposal sat unsigned in Barshefsky's office, with opponents still lobbying her to reject it.

June 16 brought Gore's carefully managed speech in Carthage, Tenn., announcing his run for the presidency. In guerrilla tactics that "blindsided us completely," according to one senior campaign official, AIDS activists infiltrated the crowd with noisemakers and banners concealed in their clothing. They hooted their derision for live television, and they repeated the performance the next day, and the next.

"We let them know we were going to keep coming, in very, very explicit ways," said Paul Davis of ACT-UP Philadelphia, who previewed the activists' theme of "medical apartheid" for campaign and government officials. By the time the disruptions reached the Hesser College gymnasium in New Hampshire, future Gore campaign manager Donna Brazile plunged into the crowd and asked Davis for his telephone number.

The same day, the long interagency trade battle came to a halt. Barshefsky signed the settlement proposal, and on June 21 Fuerth's office called the South African embassy seeking an appointment with Ambassador Sheila Sisulu "as a matter of urgency," according to diplomats there. Informed that the ambassador was out of town, Fuerth summoned the political and economic counselors in her place.

Fuerth, citing Gore's long efforts to settle the dispute, said in an interview that "we jolly well engaged in this long before the vice president was criticized" on the campaign trail. Those efforts were "moving towards closure at the same point the demonstrations began," he said. "You could draw the conclusion that it was the demonstrations that brought us to closure, and I'm not sure I can disprove that, but it is simply not true. We did this for the right reasons."

When campaign officials asked what was going on, "I told them what the situation was," he said. "Nobody leaned on me to hustle this thing along."

Damage Control

On June 22, the activists--including Davis, Love and Asia Russell of ACT-UP Philadelphia--had back-to-back meetings at the White House and at Gore 2000 headquarters, then on K Street.

Davis and Russell said Brazile took charge of political damage control, orchestrating an exchange of letters--completed in the next three days--in which Gore announced the change of policy to Rep. James E. Clyburn (D-S.C.) of the Congressional Black Caucus. Brazile declined to speak on the record for this article, but a campaign official speaking on her behalf said she did no more than point out to the activists that they should seek their answers from congressional allies such as Clyburn and the White House.

"You saw the pressure that Vice President Gore was under in this election year," Sisulu said. "It worked. The resolution, if it came as a result of that pressure, was good regardless."

Earlier this month, Clinton signed an executive order broadening and formalizing the agreement with South Africa to include any country in sub-Saharan Africa that attempts to regulate AIDS drugs as long as it meets the minimum requirements of the World Trade Organization.

No such law is yet in effect in South Africa, where the drug industry case remains before the courts and generic AIDS drugs remain unavailable. The health minister, Tshabala-Msimang, said of Washington's change of policy: "That's what they say. I think they're not putting enough pressure on the pharmaceuticals."

Gore's subordinates complain of the bitter irony that they are blamed for a problem they took the lead to solve. Asked whether he had any regrets about two years lost to the dispute, Fuerth replied: "I try to look back as little as possible because of the necessity to look for enlightenment in its own time."

The Washington Post


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