Millions deprived of HIV/AIDS treatment as Indian pharma industry amass huge profits abroad from drugs

By Dr Aseema Sinha*
India is home to one of the world’s largest populations living with HIV/AIDS after South Africa, the worst affected nation in the world. The first case was detected in 1986 and since then HIV/AIDS has rapidly spread throughout India. India’s infection rate is nearly twice that of Brazil and India is home to 2.5 to 3.8 million reported HIV cases, the highest in South Asia and, again, third, after South Africa and Nigeria.24 Given India’s population and its youthful character, the HIV/AIDS crisis, if unchecked, could have serious domestic consequences and gravely affect the global effort to curb the epidemic.Despite a fast brewing HIV/AIDS crisis, state capacity, as well as indigenous pharmaceutical capability, the Indian state’s response has been slow, fragmented, and ineffective.
While a national program was launched in 1987, followed by the establishment of the National AIDS Control Organization (NACO) in 1992, the coverage of people being treated with HAART (highly active antiretroviral therapy) remains quite low. Only 6 to 15 percent of patients have access to the regular dosage of antiretroviral drugs and availability of the cocktail drugs is quite limited. A report in The Hindu states that “[c]ompared to the universal programme of Brazil, the government of India’s attitude can only be described as criminal.” Joanne Csete, Director of the HIV/AIDS program at Human Rights Watch noted: “It is a sad irony that India is one of the biggest producers of the drugs that have transformed the lives of people with AIDS in wealthy countries. But, for millions of Indians, access to these medicines is a distant dream.” The Indian experience reveals that a state’s ability to produce medicines and its willingness and ability to provide reasonable and cheap access to HIV/AIDS medicines to patients need not go together.
In 2001, Cipla, an Indian-based pharmaceutical company, made a dramatic offer to sell a three-drug cocktail at $350 a year for one person to Medecins Sans Frontieres for free distribution in its AIDS programs in Africa (and at $600 to governments in Africa). In India, the same cocktail is priced from $1100 to $2000 a year (according to Cipla). Paradoxically, Cipla proposed prices for Viraday, its latest version of the HIV cocktail, were twice as high in India as in Africa. The owner of Cipla, however, blames the Indian government. In the 1990s, Cipla was asked by the Indian Council on Medical Research to create a generic version of Glaxo Wellcome’s AZT, the first AIDS medicine.

Weak government policies
After sinking resources into successfully replicating this drug, the Indian government announced it would spend its money on prevention not treatment. India’s incorporation of treatment as part of its domestic strategy was delayed and ineffective. In December 2003, the government requested that public sector hospitals provide treatment in six out of 28 states and in April 2004 India began distributing free ARV drugs to about 100,000 poor AIDS patients. Only in 2007 did the Indian government declare AIDS a national emergency and even then, a coherent state response in terms of ensuring access to affordable drugs and prevention programs was lacking. India did not have a treatment strategy until very recently. The Indian state has shown no desire to deploy the exceptions provided in the TRIPS agreement on behalf of its citizens. While India could not use the CL (compulsory license) provision in the same way given its internal capacity to produce drugs, the Indian state never negotiated with its pharmaceutical firms to lower prices, as did Brazil and Thailand. What is striking is that the same pharmaceutical firms sell the AIDS cocktail drugs within India at higher prices than they sell in Africa and even Brazil.
Around 800 million people in India live on less than $2 dollars a day and would surely benefit from having a lower price. Thus, Indian patients do not benefit from India’s late entry into TRIPS nor by the productive capacity of the firms to produce those drugs cheaply. Clearly, India continues to lack a comprehensive strategy and institutional response to the AIDS crisis while Brazil’s commitment has been strong since the early 1990s. It must be admitted that India’s health infrastructure is poor especially in the government sector. India’s health model is one of private and nongovernmental provision for health, with its attendant negative effects for any public health crisis such as lack of insurance, lack of comprehensive health management and a focus on family planning. Moreover, the continued presence of such common diseases such as gastroenteritis, tuberculosis, and malaria preoccupies the health infrastructure.
Could the weakness of its health structure have been responsible for India’s weak response to AIDS? Weak health capacity certainly played a part in India’s ability to scale up treatment options. In countries such as Thailand and Brazil, the government used its public health system to provide cheap treatment options. Even so, Brazil’s health infrastructure was also quite weak before the AIDS crisis. In 1995 Brazil spent 6.6 percent of its GDP on health while India spent 4.2 percent, which is not a significant variation. However, by 2010, Brazil expenditure had increased to 9 percent and India’s had declined to 4.0 percent. It is this expansion in health expenditure that reveals the story of variation across India and Brazil rather than the initial health base. In fact in Thailand and Brazil the urgency of the AIDS crisis led the government to build and strengthen its health system. Dr. Mauro Schechter, Chief of AIDS research at the Federal University in Rio notes "Brazil’s success is remarkable because it was built atop a shaky health system that wasn’t fully set up to deliver complex treatment.” In his view Brazil integrated treatment and prevention in a way that was not seen as a model before. In India, this did not happen.
Thus, while India’s weak health system may have been an obstacle to creating a coherent AIDS treatment model, the AIDS crisis could have served as a stimulant to its strengthening if other linkage such as a locally oriented pharmaceutical industry or a well-linked domestic social movement existed in India. In Brazil, AIDS activists demanded reform and renewal of the health infrastructure and the state responded with an expansion and improvement of its health infrastructure.

Indigenous pharmaceutical business
Capacity India’s pharmaceutical sector is uniquely capable of addressing India’s need for affordable medicines for the HIV/AIDS epidemic. Yet, with changing global rules and shifting interest linkages of the industry, its preferences moved away from responding to the domestic crisis and became oriented toward export markets and global supply chains both in terms of production and innovation. This global integration of domestic firms contributed to an indifferent domestic response in favor of cheap prices for AIDS drugs despite the possibility and the capacity for an aggressive pro-treatment strategy at home.
Equally as important, issue linkages with the state on behalf of AIDS patients were lacking, which contributed to an incoherent response toward the AIDS crisis. India’s pharmaceutical sector enjoys domestic strength and global preeminence. The domestic firms control 77 percent of the domestic market. It is one of the few industries able to produce the AIDS cocktail medicines cheaply and in such high quantity so as to provide them to African, Asian, and Latin American countries. Paradoxically, its strong global interest linkages—exporting power as the supplier of generic medicines to the rest of the world—transformed the pharmaceutical sector’s preferences in favor of stronger patent protection and requirements to secure export markets in regulated and unregulated markets. Its exports increased from $47.9 million to $3177.3 million in 2003-2004; and exports have grown at the rate of 20.8 percent since 1995-1996.
Moreover, stronger competition with multinational corporations in India and in export markets after the onset of patents, and a restrictive regulatory regime in India put greater pressure on margins and profits, increasing the incentive to capture new export markets. The US, with the toughest regulatory requirements, emerged as the largest export destination for Indian firms. In fact, the US market now accounts for sizeable revenues for Indian companies: 32 percent in the case of Dr. Reddy’s and 42 percent for Ranbaxy. After 2001, markets with extremely high HIV/AIDS infections—namely, Africa—also became significant. Indian firms began to target generic markets in the US and EU, both in terms of exports, manufacturing, as well as acquisitions, FDA approvals, and patent protection in regulated market. Indian pharmaceutical firms also began marketing and manufacturing in many regulated markets, the US and the EU, which led them to comply with the TRIPS within their own operations. Ranbaxy, for example, has 32 subsidiaries in nineteen countries; Dr. Reddy’s has 14 in nine countries; and Sun Pharma has four subsidiaries. Many of these companies also manufacture outside of India. By now, exports, regulatory issues in developed markets, and the need to secure new markets dominate the market and political strategies—and interest linkages—of Indian firms.
As such, their market strategies have catalyzed strategic alliances and linkages between domestic and foreign firms. Both private sector and some government officials became supporters of the patent system, creating new interests in favor of implementing TRIPS rather than using it to provide cheaper drugs domestically. Parvinder Singh, Ranbaxy’s CEO at that time, led a crusade in the 1990s to persuade the government and other industry actors to change their practices and accept the TRIPS regime. He noted: “We [Ranbaxy] realized that you can’t afford to isolate yourself if you want to globalize. To sell in the international market, Indian companies have to play according to the host country’s rules.” Similarly, Dr. Reddy's Laboratories learned to use the US patent system and play by globally consistent patent rules. In the early 2000s, a split within Indian pharmaceutical ranks led to the creation of an association of 11 large research-based national companies, which began to support the patent regime.
Thus, the Indian pharmaceutical sector has multiple global interest linkages driving their market and research strategies. These changing interests and strategies make Indian pharmaceuticals more supportive of the international system of patents, and moderate in their nationalist stance regarding national interventions on behalf of crises such as AIDS with the sole exception of Cipla’s Dr. Hameid. Moreover, Indian pharmaceutical companies prefer to sell AIDS drugs in countries with strong state intervention on behalf of AIDS patients (such as Brazil or Thailand), where the government or a NGO procures medicines from exporting or domestic companies and then distributes them through the public health system. This ensures a secure market and a large market share, a prerequisite for the low prices offered by Indian companies. In the absence of such state intervention for AIDS patients, Indian pharmaceutical majors have no interest in selling their products domestically. In India, the export and global interests of private firms are in line with the state’s lack of interest in addressing India’s HIV/AIDS crisis and weak state-private sector linkages. Prices of AIDS cocktail are much higher in India, the country that produces them, than in Africa and Latin America, where government commitment as well as generic competition has ensured a domestic strategy for expansion of treatment as well as affordable pharmaceuticals.

Indian social movements
Strong global interest linkages of India’s private sector (in terms of production, markets, and technological innovation) were complemented by a weak and delayed issue linkage of the social activism sector on behalf of AIDS. Most crucially, the social movement advocates for treatment for HIV/AIDS in India were fragmented, and largely focused on prevention and education rather than treatment. Internal issue linkages between NGOs and state actors are clearly lacking; in fact, the interactions were often distant and even hostile.77 In India, in contrast to Brazil, very few NGOs focused exclusively on AIDS work or access to healthcare and treatment. Moreover, civil society activism on the AIDS crisis started quite late, around 2001-2004, when international aid and money began to flow into local NGOs. By then, the battle for universal access of healthcare could not gain momentum. Indian AIDS activists focused on educating high-risk groups (sex workers and truckers) and cultural aspects of the disease (social taboos including talking about using condoms and sex), rather than uniting all aspects into one common and universal issue: the human right to access basic medicine. Without framing the issue as a human right to health, public health campaigns, while extremely courageous and important, lacked the ability to target the state for its failure to provide a basic right to its citizens.
In addition, activist groups failed to unify the diverse segments of the HIV/AIDS population. Under Indian law section 377 of the Indian penal code, known as the anti-sodomy law, gay men can be arrested for “unnatural acts.” This act criminalizes same-sex behavior. This stark fact, of course, limited the possibility of organizing among the gay community and delayed activism. Gay activism, in fact, developed in part over the AIDS crisis, when the Naz Foundation was founded in 1994 as an HIV/AIDS outreach organization and went on onto to focus on all aspects of gay life and discrimination. HIV has created the opportunity for this sector of the population to organize and mobilize. Yet, given the extreme social and cultural taboos in India, most gay organizations focus on the social aspects of the disease and do not target the government or the private sector for improved access to treatment. Gay organizations realized that, “to fight AIDS, activists found they had to fight homophobia, including section 377.” Despite this activism, gay activists have not been well received. In 2004, activists were arrested for distributing health related work on AIDS. As a result, universal health care for the gay community has not yet become an important issue.
Interestingly, AIDS activism among other high-risk communities—sex workers and truckers (a key group with a high prevalence of the disease)—has been more successful and focused on education, information and breaking cultural barriers, rather than on access to health care. In the Brazilian case, civil society’s focus on what a specific issue—the state’s responsibility toward health care and universal access to drugs—had the unintended effect of linking all actors behind a feasible and observable action, in the process achieving those goals. The Indian movement on behalf of AIDS, with notable victories and campaigns, has failed to unite different kinds of issues, programs, and communities affected by HIV/AIDS. This diversity, despite its partial though delayed, vibrancy is unable to solidify the same issue and carrier linkages that would allow a unified campaign against the state or to mobilize the state to put pressure on the private companies to ensure affordable access to drugs. Thus, in India, the indigenous social movement was fragmented, and weak, and lacked crucial issue and carrier linkages with both the national state and international organizations. Overall, India’s AIDS social movement activism came quite late and lacked strong domestic and global interactions and alliances.
---
Dr Sinha is Wagener Chair in South Asian Politics and George R. Roberts Fellow, Claremont Mckenna College, associate professor, Department of Government, Claremont McKenna College, Claremont, California, US. These are excerpts from her latest paper "The Trade-Off between Patents, Profits, and Patients: The Roots of Compliance, Autonomy, and Linkage in Emerging Powers (Brazil and India)"