South African Drug Patent Trial Postponed Again as Settlement Talks Continue

A "landmark" court case between the South African government and 39 pharmaceutical companies over a law that would allow the country to manufacture and import cheaper generic AIDS drugs was postponed today until 10 a.m. on Thursday in Pretoria (0800 GMT), Reuters reports (Reuters, 4/18). Agence France-Presse reports that the case was adjourned as discussions continued "with a view to finding an overall settlement in this matter." The case was originally scheduled to resume today after a six-week postponement. But the companies' lawyer, Fanie Cilliers, today said to Judge Bernard Ngoepe in the Pretoria High Court, "We wish to continue certain discussions that may shorten the need for further proceedings." According to the London Financial Times, the five international pharmaceutical companies spearheading the lawsuit -- Bristol Myers-Squibb, Merck, GlaxoSmithKline, Roche and Boehringer Ingelheim -- "were prepared to withdraw the case in return for assurances from the South African government that it will redraft legislation to be compliant with international law." The five companies were also "trying to persuade" the remaining 34 companies "to pull back from the brink," the Financial Times reports (Agence France-Presse, 4/18). Reuters reports that there is now "almost complete agreement" among the drug makers to drop the case, "but the details of the settlement needed to be worked on overnight, including the issue of legal costs" (Reuters, 4/18).

Bending Under Pressure
The Wall Street Journal reports that the drug companies "will now probably drop the suit ... hop[ing] to extricate themselves from a public-relations nightmare in which they have been vilified in recent months by AIDS activists." Under the "tentative agreement" between South Africa and the drug firms, South Africa's 1997 Medicines and Related Substances Act, which would enable South Africa to obtain AIDS drugs at reduced prices through parallel importing and compulsory licensing, "will stand, but the government will agree that it will only buy or make generic drugs of patented medicines in compliance with rules set out by the World Trade Organization," according to industry executives. The Journal reports that talks "intensified" after top executives at six drug firms met with U.N. Secretary General Kofi Annan in Amsterdam two weeks ago. Officials close to the talks said that Annan "took an active role in brokering the agreement" (Block, Wall Street Journal, 4/18). The drug firms are also under pressure from Medecins Sans Frontieres, which announced today that it has secured 250,000 signatures on a petition urging the companies to drop the suit. The New York Times reports that a settlement between the industry and South Africa would be a "startling turnabout," as drug industry officials "insist[ed]" yesterday "that they would not drop the case." Mirryena Deeb, the director of the Pharmaceutical Manufacturers Association of South Africa, a trade group spearheading the lawsuit, yesterday said, "The court case seeks to set aside law that we believe would give the [South African] health minister unfettered discretion to override patent rights for medicine in this country" (Swarns, New York Times, 4/18).

Debate Over Drug Offers
The drug industry yesterday said that South Africa's government "repeatedly spurned its offers" to provide discounted AIDS drugs and has filed an affidavit with the court "outlining repeated discount offers, which it said were met with 'general unresponsiveness.'" The Philadelphia Inquirer reports that drug companies over the past month have offered discounts of up to 90% on AIDS drugs to African countries. In light of the offers, Deeb said, "We could have done so much. Imagine if the government had accepted our offers. ... Imagine how many lives could have been saved." However, the Inquirer reports that AIDS activists "feared that drugmakers would raise prices once they had established a market with discounted drugs," saying the offers "came with too many conditions." AIDS activists also noted the discount offers pertain only to drugs sold through the government, not through private pharmacies, and that the discounted AIDS drugs would still cost three times more than drugs offered by Indian generic manufacturers (Maykuth, Philadelphia Inquirer, 4/18). Eric Goemaere, head of Medecins Sans Frontieres' mission in South Africa noted, "Clearly the offers that have been made are not serious. The best way to reach the bottom level (of cost) is to have generic competition" (Nessman, AP/Florida Times-Union, 4/18).

Settlement Could Be 'Win-Win'
Despite mounting frustration pertaining to donations. Merck spokesperson Greg Reaves said, "It's no secret that we'd prefer to find a solution to this rather than a trial. We would like to see a win-win situation. That's certainly our goal" (New York Times, 4/18). Deeb concurred, "We aren't looking for a great victory. We are looking for something that can move us forward and benefit the people of South Africa. We never closed the door on negotiation" (Wall Street Journal, 4/18). The South African Health Ministry had scheduled a news conference for today at 3 p.m. (1300 GMT) in Pretoria, but a spokesperson "declined to confirm" that it would be to announce a deal with the drug firms (Reuters, 4/18). To listen to a report on the trial from yesterday's "All Things Considered" on NPR, enter http://www.npr.org/ramfiles/atc/20010417.atc.17.ram into your Web browser. Note: You must have RealPlayer to listen to this report (Hamilton, "All Things Considered," NPR, 4/17).