U.S. GOVERNMENT PRINTING OFFICE

65–308 CC WASHINGTON : 2000

WHAT IS THE U.S. ROLE IN COMBATING THE

GLOBAL HIV/AIDS EPIDEMIC?

HEARING

BEFORE THE

SUBCOMMITTEE ON CRIMINAL JUSTICE,

DRUG POLICY, AND HUMAN RESOURCES

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

FIRST SESSION

JULY 22, 1999

Serial No. 106–126

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpo.gov/congress/house

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

DAVID M. MCINTOSH, Indiana

MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

STEVEN C. LATOURETTE, Ohio

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

BOB BARR, Georgia

DAN MILLER, Florida

ASA HUTCHINSON, Arkansas

LEE TERRY, Nebraska

JUDY BIGGERT, Illinois

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

HELEN CHENOWETH, Idaho

DAVID VITTER, Louisiana

HENRY A. WAXMAN, California

TOM LANTOS, California

ROBERT E. WISE, JR., West Virginia

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

CHAKA FATTAH, Pennsylvania

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

HAROLD E. FORD, JR., Tennessee

JANICE D. SCHAKOWSKY, Illinois

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

DAVID A. KASS, Deputy Counsel and Parliamentarian

CARLA J. MARTIN, Chief Clerk

PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON CRIMINAL JUSTICE, DRUG POLICY, AND HUMAN RESOURCES

JOHN L. MICA, Florida, Chairman

BOB BARR, Georgia

BENJAMIN A. GILMAN, New York

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

ASA HUTCHINSON, Arkansas

DOUG OSE, California

PATSY T. MINK, Hawaii

EDOLPHUS TOWNS, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

SHARON PINKERTON, Deputy Staff Director

STEVEN DILLINGHAM, Professional Staff Member

MASON ALINGER, Professional Staff Member

CHERRI BRANSON, Minority Counsel

(III)

C O N T E N T S

Page

Hearing held on July 22, 1999 ............................................................................... 1

Statement of:

Berry, Hon. Marion, a Representative in Congress from the State of

Arkansas ........................................................................................................ 71

Herman, Allen, dean of public health, Medical University of Southern

Africa; James Love, director, Consumer Project on Technology; Peter

Lurie, medical director, Public Citizen’s Health Research Group; Eric

Sawyer, executive director of HIV Human Rights Project, Act Up, New

York; and John Siegfried, senior medical officer, Pharmaceutical Research and Manufacturers of America ........................................................ 139

Jackson, Hon. Jesse, Jr., a Representative in Congress from the State

of Illinois ........................................................................................................ 22

Nkhoma, Chatinka C., Malawi citizen ............................................................ 76

Thurman, Sandra, Director, Office of National AIDS Policy, the White

House; Joseph Papovich, Assistant U.S. Trade Representative, Services,

Investment & Intellectual Property, U.S. Trade Representative; John

Killen, Director, Division of AIDS, National Institute of Allergy and

Infectious Diseases, National Institutes of Health; and Timothy

Dondero, Chief of the International Activities Branch, Division of HIV/

AIDS Prevention, Centers for Disease Control and Prevention ................ 92

Letters, statements, et cetera, submitted for the record by:

Berry, Hon. Marion, a Representative in Congress from the State of

Arkansas, prepared statement of ................................................................ 73

Cummings, Hon. Elijah E., a Representative in Congress from the State

of Maryland, prepared statement of ............................................................ 19

Dondero, Timothy, Chief of the International Activities Branch, Division

of HIV/AIDS Prevention, Centers for Disease Control and Prevention,

prepared statement of ................................................................................... 125

Herman, Allen, dean of public health, Medical University of Southern

Africa, prepared statement of ...................................................................... 143

Jackson, Hon. Jesse, Jr., a Representative in Congress from the State

of Illinois, prepared statement of ................................................................ 26

Killen, John, Director, Division of AIDS, National Institute of Allergy

and Infectious Diseases, National Institutes of Health, prepared statement of ........................................................................................................... 114

Kucinich, Hon. Dennis J., a Representative in Congress from the State

of Ohio, prepared statement of .................................................................... 15

Love, James, director, Consumer Project on Technology, prepared statement of ........................................................................................................... 150

Lurie, Peter, medical director, Public Citizen’s Health Research Group,

prepared statement of ................................................................................... 177

McDermott, Hon. Jim, a Representative in Congress from the State of

Washington, prepared statement of ............................................................ 219

Mica, Hon. John L., a Representative in Congress from the State of

Florida:

Prepared statement of ............................................................................... 6

Prepared statement of Mrs. Christenson ................................................ 221

Prepared statement of Doctors without Borders .................................... 223

Nkhoma, Chatinka C., Malawi citizen, prepared statement of .................... 79

Papovich, Joseph, Assistant U.S. Trade Representative, Services, Investment & Intellectual Property, U.S. Trade Representative, prepared

statement of ................................................................................................... 108

Sanders, Hon. Bernard, a Representative in Congress from the State

of Vermont, prepared statement of .............................................................. 233

Page

IV

Letters, statements, et cetera, submitted for the record by—Continued

Sawyer, Eric, executive director of HIV Human Rights Project, Act Up,

New York, prepared statement of ................................................................ 186

Siegfried, John, senior medical officer, Pharmaceutical Research and

Manufacturers of America, prepared statement of .................................... 193

Thurman, Sandra, Director, Office of National AIDS Policy, the White

House, prepared statement of ...................................................................... 95

Waxman, Hon. Henry A., a Representative in Congress from the State

of California, prepared statement of ........................................................... 235

(1)

WHAT IS THE U.S. ROLE IN COMBATING THE

GLOBAL HIV/AIDS EPIDEMIC?

THURSDAY, JULY 22, 1999

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON CRIMINAL JUSTICE, DRUG POLICY, AND HUMAN RESOURCES, COMMITTEE ON GOVERNMENT REFORM, Washington, DC.

The subcommittee met, pursuant to notice, at 11:30 a.m., in room

2154, Rayburn House Office Building, Hon. John L. Mica (chairman of the subcommittee) presiding.

Present: Representatives Mica, Gilman, Mink, Cummings, and

Kucinich.

Also present: Representatives Lantos, Norton, Schakowsky, and

Sanders.

Staff present: Sharon Pinkerton, deputy staff director; Steven

Dillingham and Mason Alinger, professional staff members; Cherri

Branson, minority counsel; and Jean Gosa, minority staff assistant.

Mr. MICA. Good morning, I would like to call this meeting of the

Subcommittee on Criminal Justice, Drug Policy, and Human Resources to order.

Today’s hearing is entitled, What Is the U.S. Role in Combating

the Global HIV/AIDS Epidemic?

We will start this morning’s hearing, as usual, with opening

statements. I will give my opening statement, present a brief video,

and then yield to members on our panel. We will then hear from

our first panel of witnesses.

We will be joined shortly by our ranking member, but we would

like to proceed, because we have a full schedule today.

Today, this subcommittee will address an issue that is

unequalled in both its complexity and its urgency. That is, the

global HIV/AIDS epidemic, and the role of the United States in

combating this terrible affliction. This growing problem is both a

trade issue, a health issue, and most certainly a humanitarian

issue that we cannot ignore.

Our subcommittee was recently reconstituted and vested with

oversight of health and trade issues. We are committed to understanding both the nature and magnitude of this epidemic, and also

to ensure the proper role of the U.S. Government in combating this

disease.

Recently, we held a hearing on another terrible infectious disease, hepatitis B, and the importance of vaccines and properly designated vaccination policies in combating infections and meeting

the health concerns of our citizens.

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Today and in the future, this subcommittee will perform its oversight responsibility, examining health-related programs and practices that are both promising and also that will save lives.

As we will hear today, the AIDS epidemic is global and horrific.

It continues to spread across the globe unabated. We will learn

that no area of the world has been harder hit than the continent

of Africa, particularly sub-Saharan Africa, where two-thirds of the

world’s infected population resides.

Other continents and regions are also at risk today. Witnesses

will tell us firsthand of the devastating impact of the epidemic in

Africa, including economic, health, and humanitarian consequences. They will reveal some of the terrible consequences to

themselves and their loved ones.

We will also hear about recent developments in vaccine research

and its hopefully not-so-distant potential for preventing the spread

and transmission of HIV/AIDS. Recent studies show that women

are now being infected at a greater rate than men. I am encouraged by recent press accounts that a new, more affordable drug is

being developed which may significantly reduce the incidence of

AIDS transmission from an infected mother to her unborn child.

But a question still remains: What are we going to do to make

certain these new drugs are available to developing countries that

need them? Tragically, there are nearly 600,000 African babies

newly infected each year; 9 out of every 10 infants infected with

HIV at birth or through breast-feeding live in sub-Saharan Africa.

This hearing will also focus on the critical and complicated issues

of drug treatment for HIV and AIDS. How can we treat such a

large and growing population? The World Health Organization and

affiliated organizations recently announced that AIDS kills more

people worldwide than any other infectious disease. Imagine, in

less than two decades, AIDS has become the leading killer out of

all known infectious diseases.

As you can see in the chart we have prepared, and I think it is

right over here, more than 33.4 million adults and children are estimated to be infected with HIV/AIDS. This disease has already

killed 14 million people. Of those, approximately 12 million, almost

all are African.

Today, more than 22.5 million Africans are living with HIV/

AIDS. Reportedly, 95 percent of Africans with AIDS have not been

tested, and 90 percent are unaware that they even have the disease. The tragedy resulting from this killer disease in Africa is almost inconceivable.

Zambia, for instance, has one of Africa’s largest orphan populations. In 1990, it was home to approximately 20,000 orphans. By

next year, the number is estimated to reach a staggering 500,000.

Zimbabwe, a nation of 12 million citizens, reports 600,000 orphans,

most being supported by grandparents or other relatives. Uganda,

with a population of 20 million people, 10 percent of whom are now

HIV-positive, also reports 600,000 children having lost at least one

parent, and about a quarter of a million children having already

lost both parents.

Today, we will hear testimony from a mother in an African nation, Malawi, where 20 percent of the population is HIV-positive,

and life expectancy has dropped to below 40 years of age.

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These numbers are devastating, and the personal tragedies unimaginable. AIDS now infects 6 million people annually around the

world, and the number continues to climb. This Nation, which

leads the world in science and technology, as well as world trade,

must address two important issues: What are we doing about this

global epidemic, and what should we do about it? Part of that is

linked to our trade policy, and part of that is also linked to our

health policy.

First, what actions are we now taking to combat the international spread of this disease? From all appearances, not nearly

enough. The administration’s AIDS czar has acknowledged that the

epidemic has been met with indifference by Americans and also by

their government. We cannot afford to let this indifference continue.

I am heartened to learn that some in the administration are now

speaking out on the issue, even though our trade policies to date

have been unclear on this matter, sometimes even contradictory.

Should we, through the office of our United States Trade Representative, apply economic pressure or withhold assistance to nations such as South Africa when that nation attempts to engage in

self-help to combat its national health emergency?

Can we identify better approaches to expanding HIV and AIDS

prevention and treatment in developing nations, rather than imposing rigid licensing and import practices?

Is it necessary for AIDS-stricken developing nations to rely on

periodic pronouncements of intentions to provide limited foreign aid

from the United States? And I wrote this before, I guess, the announcement recently of $100 million, I believe, being offered by the

Vice President and the administration.

Can nations in need and the pharmaceutical industry negotiate

a solution that meets the growing health and humanitarian needs,

while also ensuring that a reasonable profit is made to support future drug development?

These are all tough questions that this Nation and this Congress

must address, as we are, in fact, the world’s foremost economic

power; a world leader in science, technology and trade.

The second question is what should we do about the epidemic?

In answering this question, let me share with you one description

of a crisis and possible response that was highlighted recently in

a national television news segment. This takes several minutes,

but I think it is worth our time. It is not a scientific piece, but it

does show us, firsthand, the situation.

With Members’ forbearance, I would like to show it.

We will play that tape.

[Videotape played.]

Mr. MICA. I would say that this news video is very short and superficial. It illustrates the tragedy of the epidemic, raises a number

of questions, and also presents us with a dilemma: Does drug treatment delivery in developing countries pose significant risks of new

strains of AIDS?

I hope we will learn more about this issue today, and about some

of the trade and health implications mentioned. I am convinced

that we cannot leave ourselves to do nothing to help these nations

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and these people, and I cannot believe that there is no other recourse for us but to watch millions of people die without treatment.

Here in the United States, while AIDS continues to spread, AIDS

deaths have dropped recently by 47 percent, primarily due to new

drug treatments that prolong lives and allow people to remain productive, and the availability within our market of these treatments.

I hope that we can do much more for other nations and our trading

partners who are now in need. It is clear that many developing nations cannot progress economically until solutions to this crisis are

found.

In a recent survey of American citizens, almost 90 percent of

those surveyed nationwide say that it is safest and cheapest to

fight infectious diseases at their source, which is most often in the

developing world. In fact, today, we will hear from a witness who

is in our country because she cannot acquire the drug treatment

in her native Africa that she needs.

The survey also found that more than 80 percent of Americans

see AIDS as a bigger problem today than they did 10 years ago,

despite advances in treatments. The United States plays a vital

role in the global economy, and we also remain a Nation at risk.

Recent data indicates that the infection rate among American

women is increasing more rapidly than among males. As I said at

the beginning, African Americans are six times more likely to contract HIV/AIDS than others.

These are some of the reasons that the solution to combating the

global HIV/AIDS epidemic is complex and will not be achieved as

quickly as we all hope. Yet I am convinced that through a better

understanding of this international health crisis, we can improve

our treatment and prevention efforts both domestically and internationally.

It is imperative that vaccine research proceed expeditiously. We

also should assist, not hinder, developing nations and our trading

partners in their efforts. I cannot fathom that we simply wait while

the epidemic reaches the multiples of the 14 million AIDS casualties who have already died from this horrible disease. The millions

of infected babies, orphaned children, new infections each year, and

deaths that occur internationally without treatment are simply unacceptable. This crisis demands our immediate attention from this

government, and more than a Band-Aid approach.

Today, it is my hope that as we learn more about the crisis, we

can begin to formulate a more effective response. It confounds me

that we can dedicate substantial government resources to learn

whether we have problems with global warming while tens of millions are facing certain death from an immediate and growing crisis where real science can save lives.

I look forward to the testimony of our witnesses, and we have

many of them today. This is a topic that has raised a great deal

of interest and attention, rightfully so, because it is the greatest

health threat facing the world.

I wish to thank my colleagues in Congress for sharing their ideas

with the subcommittee on this topic. I also want to commend those

witnesses with this disease who have the courage to discuss publicly this most sensitive and pressing health issue.

5

Finally, I believe that we have a moral and humanitarian responsibility to publicly air this incredible human tragedy, and our

response should be done both as a Congress and as a civilized Nation. Years from now, and millions of deaths later, we must not be

accused of turning our backs on this great holocaust.

[The prepared statement of Hon. John L. Mica follows:]

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Mr. MICA. I am pleased at this time to yield to our distinguished

ranking member, the gentlewoman from Hawaii, Mrs. Mink.

Mrs. MINK. Thank you, Mr. Chairman. I do not have an opening

statement, but I do want to join you in your remarks, and certainly

lend my support to this inquiry, and to join you in expressing hope

that as a result of the hearings and the testimony today, we can

be guided to a policy for this country that can adequately meet this

terrible need.

I want to particularly extend a welcome to our distinguished witnesses today, and look forward to their comments. Thank you, Mr.

Chairman.

Mr. MICA. Thank you.

I am also pleased that we are joined by the gentleman from California, Mr. Lantos, who is not a member of the subcommittee, but

the full committee. We are so pleased to have him join us for the

subcommittee hearing this morning.

Mr. LANTOS. Thank you very much, Mr. Chairman. Let me first

commend you for holding this extremely important hearing.

The other committee on which I serve, the House Committee on

International Relations, held a hearing on the spread of AIDS in

the developing world on September 18, 1998, and I would be grateful if my formal statement before that committee could be entered

in the record.

Mr. MICA. Without objection, so ordered.

Mr. LANTOS. Mr. Chairman, the word ‘‘historic’’ is often overused,

but it certainly is not overused in this instance.

I remember I was a young schoolboy studying European history

when I was first introduced to the concept of the bubonic plague.

The bubonic plague took place 652 years ago, in the year 1347 in

Europe, and it killed about 20 million innocent human beings. I recall as a boy the concept of 20 million people being killed by a disease was mind-boggling and incomprehensible.

More recently, in 1917, another 20 million innocent human

beings lost their lives because of the influenza epidemic, and today

we are facing the nightmarish impact of AIDS.

I truly believe that if there is any issue before the Congress that

deserves full bipartisan support, funding, and cooperation, it is the

AIDS epidemic. I want to commend the Clinton-Gore administration for proposing an additional $100 million to deal with this

issue.

I also want to commend the First Lady for convening a donors

conference earlier in September involving international organizations and other governments capable of making major contributions

in dealing with this issue.

The recently released report entitled ‘‘Report on the Presidential

Mission on Children Orphaned by AIDS in Sub-Saharan Africa,’’ is

one of the most sobering pieces of literature issued by any government agency in a long, long time.

We are dealing with millions and soon tens of millions of children in desperately poor countries in Africa who will be orphaned

because their parents died of AIDS. I could think of no nobler effort

on the part of the wealthy nations of this world than to combine

forces to try to mitigate the unspeakable human horror that will

be inflicted upon vast numbers of people.

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It is always easier to focus on the plight of a single individual

or a single family. In recent days, our Nation as a family has focused on the tragedy of the Kennedy family, and rightly so. I think

we need to multiply this by millions to begin comprehending the

scope of what AIDS is doing to millions and tens of millions of families, particularly in the less developed parts of the world.

I very much look forward to listening to our distinguished witnesses. Again, Mr. Chairman, I want to commend you.

Mr. MICA. Thank you.

Not in order of seniority, but in order of arrival, and she also

serves on the full committee, Mrs. Schakowsky from Illinois is recognized.

Mrs. SCHAKOWSKY. Thank you, Mr. Chairman. I wanted to thank

you and Representative Mink for allowing me to participate in this

very important hearing. I do not have a formal opening statement,

and just wanted to tell you that I am here because I am so concerned that the United States play a constructive role in addressing this worldwide pandemic, and I look forward to hearing from

all of our witnesses. Thank you.

Mr. MICA. Thank you so much.

Again, in order of arrival, I would like to recognize the very distinguished gentlewoman, the delegate from the District of Columbia, Ms. Norton.

Ms. NORTON. Thank you very much, Mr. Chairman. I appreciate

your indulgence. While on the full committee, I am not on the subcommittee, but I have a very special interest in this subject, as

does the Congressional Black Caucus, which has devoted a lot of

time, effort and energy because of our great concern about this subject, both as it relates to Africa and to the United States.

The video that you showed was a very important one, because it

showed what the absence of drugs and prevention can do, and it

drew our attention to the reality that there is no one approach that

will work here or in Africa.

I am particularly concerned with how we go about dealing with

this epidemic. I am interested in the way in which there has been

an emphasis on drugs and drug therapy.

I represent the District of Columbia, where there is a runaway

AIDS epidemic. You indicated that deaths from AIDS have gone

down. That does not include African Americans. Indeed, this disease has now transmitted itself such that whereas it was

stereotypically seen as a gay disease before, it could properly be

called a black and Hispanic disease today.

When it comes to drug therapy, one of the reasons that deaths

from AIDS are not going down, but, indeed, are going up in the African American community is that the drugs are so expensive.

Even if they were not, the regimen that it requires is something

to behold, the numbers of pills that must be taken, the order of

those pills.

Very importantly, the video indicated that we are finding that

some strains of AIDS may be resistant to drugs, because if not

taken in the proper manner in which they must be taken to be effective, not only do they not help, but they hurt in the worst possible way by perhaps creating a different and more powerful strain

of the disease that is even more resistant to drugs.

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That is, of course, why the country here and Africa needs to concentrate on prevention. Even if we were to get, as we must, more

drugs in Africa, who can believe that any but the elites will have

access to those drugs? If we are seriously interested in stamping

out AIDS in Africa, it is inconceivable to believe that the drugs

could be priced low enough so that anything but the rarest of the

upper classes would get them, including the government officials

and elites who have AIDS. More power to them. We must get those

drugs there. But for goodness sake, black people in this country

cannot get the drugs, and poor people do not have the lifestyle that

enables them to take the drugs in the order and in the rank and

with the regime that is required.

I am a little frustrated by the emphasis on drugs and with so little emphasis on preventing this disease, because I do not believe

that the drugs are the answer in the African American community

here; it is pitiful to think that the drugs will do anything for the

epidemic in Africa going on today.

It is very important that we are finally having a subcommittee

look at this issue, so that we can get the full range of the problems

out there. I would hope that we see a change on the House floor

this year, because there is a controversy that began in this House

with a provision of the foreign operations bill that cutoff all United

States aid to the central Government of South Africa. That aid was

not to be restored until the State Department submitted a report

describing what it was doing to force a change in the South African

Medicines Act. That is the act that would allow South Africa to import drugs at lower drug prices, making them available in that

country.

I am for that, as much as I think that is a drop in the ocean,

compared to what we think the epidemic means in South Africa

and in the rest of Africa today. That provision was put in the bill

by Representative Frelinghuysen from New Jersey, where many of

the pharmaceutical companies are based. He has threatened to

write a tougher provision in the law this year.

If we are serious about providing drugs and making them more

readily available in Africa, there is something that this committee

and this House can do this year, and that is to make sure that the

Frelinghuysen amendment no longer requires the State Department to fight the South African Medicines Act that would allow

them to import drugs at lower prices.

Thank you, Mr. Chairman.

Mr. MICA. I thank the gentlewoman.

I am pleased to recognize a member of our subcommittee, the

gentleman from Ohio, Mr. Kucinich.

Mr. KUCINICH. Thank you, Mr. Chairman, members of the committee, and Members of Congress who are participating in this. I

certainly want to welcome our colleagues, Mr. Berry and Mr. Jackson, as well as the gentlewoman who is participating from Malawi.

Mr. Chairman, when we look at some of the background materials which this committee was provided with in preparation for today’s hearing, some of the things that cannot help but jump out at

us are things such as: As goes Africa, so will go India, Southeast

Asia, and the newly independent states, and by 2005, more than

100 million people worldwide will be HIV-positive.

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This report from the White House states that

AIDS in sub-Saharan Africa, notes the United Nations, is the worst infectious diseases catastrophe since the bubonic plague. Deaths due to AIDS in the region will

soon surpass the 20 million people in Europe who died in the plague of 1347 and

more than 20 million people worldwide who died in the influenza academic of 1917.

Over the next decade AIDS will kill more people in sub-Saharan Africa than the

total number of casualties lost in all wars of the 20th century combined.

Mr. Chairman and fellow committee members and members of

the panel, I am very appreciative that the Chair has called this

meeting so that we can continue an inquiry into the horrific spread

of AIDS and HIV across Africa and Asia. At a time when 47 million

people around the globe are living with the epidemic of HIV affecting their lives, and perhaps, more tragically, one-quarter of all children in many sub-Saharan countries have lost both their parents

to this terrible disease, this hearing is timely and important in addressing this emergency.

The United States must do everything in its power to counter

this deadly disease by playing the leading role in helping to combat

the problem.

Appearing to be the hardest hit by the AIDS epidemic have been

the populations of the developing countries. Currently 95 percent

of those living with AIDS are in developing countries, and the disease tends to be most prevalent among those aged between 25 and

44 years. This has serious implications for the functioning of economic systems, in addition to the more obvious health and humanitarian consequences.

It is obvious that this situation will not be ignored, and therefore, it lends even greater importance to the work of our chairman

and the ranking member in seeing that this hearing has been facilitated.

Though 95 percent of new HIV infections occur in developing

countries, more than 90 percent of the resources spent on HIV and

AIDS prevention and care are devoted to people in industrialized

countries. The developing countries simply cannot afford the high

cost involved in the supply of these treatments, often lacking the

qualified physicians or infrastructure needed to bring the drugs to

those in need. Vital drugs are often kept artificially high in their

prices by the pharmaceutical industry, which, as we know, is a

very lucrative sector with average profits of close to 20 percent last

year.

However, there is an option which may avoid this problem and

enable countries in need to access these drugs vital to many of

their citizens. Parallel imports allow expensive patented drugs to

be sold through a third country at a more reasonable price. These

imports are not in violation of WTO rules, contrary to the drug

companies’ complaints, and are deemed legal transactions in the

world economy.

More effective awareness campaigns would be another solution.

For too long, we have seen governments involved closing their eyes

to the problem, ignoring the sheer scale of the problem, and failing

to initiate successful education and prevention programs, similar to

those that have proven successful in combating HIV infection in industrialized countries. Programs can be set up with minimum cost,

and the benefits reaped in return can far outweigh initial outlays.

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Mr. Chairman and the ranking member, I look forward to learning of the ways in which the United States can play a more active

role in alleviating this human tragedy. We have the opportunity

and the responsibility to make this a healthier world and to help

those less fortunate than ourselves. I believe this aim can be

achieved if we are willing to keep an open mind. Thank you very

much, Mr. Chairman.

Mr. MICA. I thank the gentleman.

[The prepared statement of Hon. Dennis J. Kucinich follows:]

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Mr. MICA. Now I recognize the gentleman from Maryland, Mr.

Cummings, for an opening statement.

Mr. CUMMINGS. Thank you very much, Mr. Chairman. I am glad

that we are taking this time to address our Nation’s role in combating the HIV/AIDS pandemic.

Just this past Tuesday, Congresswoman Nancy Pelosi and I held

an AIDS Task Force meeting, which she and I co-chair, to address

similar issues.

Since the early 1980’s, the AIDS virus has not only plagued and

crippled American society, but the global community as well. Just

back in December 1997, I visited Zambia, the Ivory Coast, Ghana,

and Uganda on behalf of Johns Hopkins University and Hospital,

which are located in my district, and had an opportunity to see

firsthand the crippling and devastating effects of AIDS.

Today, I want to make sure that we are all singing from the

same page. We are holding this hearing, and I think we can easily

argue on both sides that something should be done, but if it is politics as usual, I think that is almost criminal, because people are

dying as we speak.

As a matter of fact, when I was in Zambia in 1997, I had an opportunity to meet a number of people, some of whom, while I was

there, died from AIDS. As a matter of fact, in Zambia, what they

do is they have coffins; they sell coffins outside of the hospital. A

lot of people going in know that they won’t be walking out.

So when I look at the AIDS Action Council voting percentages,

I really wonder whether this is real or whether we are just sort of

going through some motions. Thirty-three million people worldwide

are infected with HIV and have full-blown AIDS, and 90 percent

of them live in Africa, Asia, and Latin America. Significantly, however, 90 percent of the resources spent on HIV/AIDS prevention

and care are devoted to people in industrialized countries.

AIDS and HIV prevention are topics of particular importance to

me, as I have seen firsthand the effects that these deadly viruses

have on communities, particularly in my home district of Baltimore, where AIDS is the No. 1 killer of our young people, aged 24

to 45, while in the prime of their productive years.

I am encouraged that this important issue is finally receiving the

attention by Congress that it deserves, but again, I want to make

sure that it is not something simply being politicized, but something that we are, all of us, doing something about.

The introduction of this virus and its incredible widespread

growth has caused unmatched devastation. Although we have

made great strides in the promotion of AIDS research, awareness,

and prevention in our country, we are facing an uphill battle on the

global front. That is why I believe efforts like the Vice President’s

new initiative to combat AIDS in sub-Saharan Africa are a step in

the right direction.

However, $100 million is not very much money when we are

talking about countries like Zambia, where there are 650,000 orphans, who have been orphaned because of AIDS, and in a country

like Zambia, where I personally witnessed people having their

teeth extracted with no kind of anesthesia because the country was

so poor.

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In a country like Zambia, we have people sitting in open-air clinics, sometimes waiting for as long as 2 or 3 days for a nurse practitioner to see them, only so often to be told that they do not even

have pills for children’s diarrhea. So $100 million is nice, but that

does not go very far. And I am just talking about one country.

Mr. Gore’s initiative serves to contain the AIDS pandemic on the

international level, provide home- and community-based care, offer

care for children orphaned by AIDS, and strengthen prevention and

treatment by supporting infrastructure, disease surveillance and

capacity development. But as I said before, it is a step in the right

direction, but it is simply not enough. I strongly believe that it is

important for us to critically examine the U.S. role in combating

this global epidemic.

In doing so, I look forward to the hearing today and the testimony from the witnesses to discover the best ways to develop initiatives to strengthen the fight against AIDS worldwide and help

some people in countries like the Ivory Coast, Zimbabwe, Zambia,

Ghana, Uganda address this dreadful disease.

With that, thank you.

Mr. MICA. I thank the gentleman.

[The prepared statement of Hon. Elijah E. Cummings follows:]

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Mr. MICA. I am now pleased to recognize another member of our

panel and subcommittee, and also the chairman of our Committee

on International Relations.

As the gentleman from California, Mr. Lantos, pointed out, I

think this is the second congressional hearing. He conducted the

first congressional hearing on this issue, so I am pleased to recognize the gentleman from New York, Mr. Gilman.

Mr. GILMAN. Thank you. I want to commend you for conducting

this hearing on such a critical issue facing not only nations in Africa, but throughout the world and our own Nation as well, and to

try to find the best way to combat the HIV/AIDS epidemic.

We still have a long way to go. I am pleased that we heard recently this week, as a matter of fact, that there will be more funds

from the administration contributed to this issue, but we have to

encourage the international community to work together on this

problem. It is a problem that has affected too many lives for too

long. We are beginning to see some scientific and medical improvements. Of course, we still have a long way to go it in that direction.

So I commend you for bringing this again to the attention of the

Congress. I commend our panelists who are here today, our Members of Congress, Mr. Berry, Mr. Jackson. It is good to have Ms.

Nkhoma here from Malawi. We look forward to having the additional panelists from our administration, and we all look forward

to working together to see what we can evolve by way of congressional assistance to combat this problem.

Thank you, Mr. Chairman.

Mr. MICA. I thank the gentleman.

I would like to now turn to our panel, they have been waiting

most patiently. We have two distinguished Members of the House

of Representatives who have joined us today and asked to provide

testimony: First, the Honorable Jesse Jackson, Jr., from Illinois,

and he is joined by Marion Berry of Arkansas.

Also on the panel, we are pleased to introduce Chatinka

Nkhoma, a Malawi citizen, who will also testify.

I might say, just as a preface, that this is an investigations and

oversight subcommittee of Congress. We do not swear in other

Members of Congress, but we ask all others who testify to affirm

and swear that their testimony is truthful.

With that, Ms. Nkhoma, would you stand and be sworn, please?

Raise your right hand.

[Witness sworn.]

Mr. MICA. Thank you.

The other ground rule we have is that we try to limit our statements to 5 minutes, and we will be very glad to enter into the

record lengthy additional statements or documents that might refer

to your testimony.

With those comments, let me welcome our two Members and recognize first in the order of seniority our colleague Mr. Jackson from

Illinois. You are recognized and welcomed, sir.

STATEMENT OF HON. JESSE JACKSON, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

Mr. JACKSON. Thank you, Mr. Chairman, Chairman Mica, Ranking Member Mrs. Mink. I want to thank you for this opportunity

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to address the subcommittee during today’s hearings on the U.S.

role in combating the global HIV/AIDS epidemic, and the policies

and programs that are being pursued internationally.

I want to comment just briefly on the gentlewoman from Washington’s concern regarding the Frelinghuysen language. I offered

an alternative in the foreign operations subcommittee hearing to

the Frelinghuysen language. It was accepted by the committee, and

Mr. Frelinghuysen committed to me in full committee that he will

not offer it, so we have reversed the Frelinghuysen language, and

he has been most accommodating and understanding.

As you are surely aware, Mr. Chairman, HIV/AIDS are rampaging throughout sub-Saharan Africa. While sub-Saharan nations

comprise only 10 percent of the world’s population, they are bearing the tragic burden of 70 percent of the world’s new AIDS cases.

The World Health Organization reports that of the 14 million

people who have died of AIDS to date, 12 million have come from

this region. In the hardest hit countries, Botswana, Namibia, South

Africa, Zimbabwe and Swaziland, infection rates in the 15-to–49

age group are an astonishing 25 percent. In tourist areas, such as

Victoria Falls in Zimbabwe, the rates are even higher, 40 percent.

Please allow me to share an additional key finding from the Report on the Presidential Mission on Children Orphaned by AIDS in

Sub-Saharan Africa released by the White House on Monday.

Deaths resulting from AIDS in sub-Saharan Africa will soon surpass the 20 million people in Europe who died in the plague of

1347. Over the next decade, AIDS will kill more people in sub-Saharan Africa than the total number of casualties in all wars in the

20th century. Each day 5,500 in the region die of AIDS-related

causes. By 2005, the daily death toll will reach 13,000. There are

nearly 600,000 new infections each year among African babies; 9

of every 10 infants infected with HIV at birth or through breastfeeding live in sub-Saharan Africa.

In nine sub-Saharan countries, from one-fifth to one-third of children will lose one or both parents to AIDS this year. In Lusaka,

Zambia, 100,000 children are estimated to be living on the streets,

most of them orphaned by AIDS. By next year, 1 million children

in Zambia, or one out of three, will have lost one or both parents.

In large part, as a result of AIDS, infant mortality will double,

while child mortality will triple over the next decade in many areas

of sub-Saharan Africa. AIDS has reduced life expectancy in Zambia

to 37 years from 56. In the next few years, AIDS will reduce life

expectancy in South Africa by one-third, from 60 years, to 40.

Over the next 20 years, AIDS is estimated to reduce by onefourth the economies of sub-Saharan Africa. In Malawi and Zambia, 30 percent of teachers are HIV-positive. In Zambia, 1,500

teachers died of AIDS-related causes in 1998 alone.

By 2005, AIDS deaths in Asia will mirror those in Africa. Asia

will account for one out of every four infections worldwide by the

end of the year. In India, rates of infection are expected to double

every 14 months.

Finally, one in seven South Africans has HIV/AIDS, one in seven

Kenyans, one in four people in Zimbabwe. United States Surgeon

General David Satcher has likened the HIV/AIDS epidemic in Africa to the plague which decimated Europe in the 14th century.

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Existing treatments which enable many people with HIV/AIDS

in the United States and elsewhere to survive are unavailable to

all but a few people in Africa. Lifesaving HIV/AIDS drug cocktails

cost about $12,000 a year in many African countries, far out of

reach of all but a handful of the growing African population of people with HIV/AIDS. Mr. Chairman, per capita income in sub-Saharan Africa for 750 million people is $500 per year, while the drug

cocktails are $12,000 a year.

By comparison, Mr. Chairman, the top three officers in Microsoft have personal assets valued at $140 billion; 43 sub-Saharan Africa

countries and 600 million people.

Highlighting the difficulty of AIDS education, there are 1,500

sub-Saharan languages. Even myth, superstition, and rumor hamper the efforts. Most recently in Durbin, South Africa, and I quote

from a newspaper article issued in a CNN bulletin,

The rolling hills and fertile valleys in the province of 8.5 million have spawned

a myth of a terrible folk cure, a story that says having sex with a virgin will rid

sufferers of the disease. The widespread belief has parents, children, doctors and

courts struggling with a wave of rapes, frequently of young girls.

There is a crying need to make life-saving drugs and education

more affordable and available, and quickly. South Africa is seeking

to lower prices through the use of compulsory licensing and parallel

import policies. Both of these measures are consistent with South

Africa’s obligations under the World Trade Organization’s Agreement on Trade-Related Intellectual Property, or TRIPS.

Compulsory licensing would permit generic production of on-patent drugs with reasonable royalties paid to the patent owner. Market competition as a result of compulsory licensing would likely

lower pharmaceutical prices by 75 percent or more. Parallel imports would enable the government to shop on the world market for

low-priced pharmaceuticals.

Other countries are watching South Africa; if South African policies result in lower drug prices and help alleviate the AIDS epidemic, other African countries are likely to follow with similar lifesaving measures.

Mr. Chairman, I want to ask unanimous consent that all of my

remarks be entered into the record, but I do want to close on this

brief point.

The chairman in his opening statement said it is a trade issue.

The Congress continues to send mixed signals regarding the global

HIV/AIDS epidemic. Last week Congress passed by voice vote an

amendment, which expresses a sense that addressing the HIV/

AIDS crisis should be a central component of America’s foreign policy with respect to sub-Saharan Africa. It expresses the sense of

Congress that significant progress needs to be made in preventing

and treating HIV/AIDS before we can expect to sustain a mutually

beneficial trade relationship with sub-Saharan countries.

However, the Committee on Rules defeated a substantive amendment which I offered would have resolved this problem and put an

end to the misguided United States policy of bullying South Africa.

It would prevent the United States Trade Representative or other

agencies from interfering with African countries’ efforts to make

HIV/AIDS and other medicines available to the sick so long as

their intellectual property rules comply with TRIPS.

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The Committee on Rules said my AIDS amendment did not belong in a trade bill. However, a sense of Congress resolution did belong in a trade bill. Even the chairman in his opening statement

acknowledged that this issue is a trade issue.

Last week, with the Africa Growth and Opportunity Act amendment on HIV/AIDS, the House said its heart was in the right place

on this issue. But yesterday Bernie Sanders offered an amendment

to the State Department authorization bill that would have put our

heart and our policy in the same place, but it was overwhelmingly

defeated 307 to 117.

The Bible does not let us get away with mere good intentions.

It requires good law, good policy, and money for implementation.

The Bible has a different way and a more objective standard. It

says, ‘‘Where your treasury is, there will your heart be also,’’ Matthew 6:21.

If Congress is serious about addressing these problems, we have

the power to do so. We can either be politically correct and side

with pharmaceutical companies, or be morally correct and side with

the millions of afflicted people in South Africa, Kenya, Zimbabwe,

and beyond sub-Saharan Africa. The choice is ours.

Again, thank you, Mr. Chairman, for this opportunity to address

the subcommittee. I look forward to working with Members on

these critical issues.

Mr. MICA. Thank you, and without objection, your entire statement will be made part of the record.

[The prepared statement of Hon. Jesse Jackson, Jr., follows:]

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Mr. MICA. I am now pleased to recognize another individual who

has been active on this issue, Marion Berry from Arkansas. Welcome, and you are recognized, sir.

STATEMENT OF HON. MARION BERRY, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF ARKANSAS

Mr. BERRY. Thank you, Mr. Chairman. I applaud your efforts for

holding this hearing today concerning the HIV/AIDS epidemic.

As you have already heard, over 14 million people have died of

this disease. In many sub-Saharan Africa countries, 25 percent of

the population between the ages of 15 and 49 are infected. By 2005,

the death toll is projected to be 13,000 people a day.

The United States Surgeon General, David Satcher, recently

wrote for the Journal of the American Medical Association, comparing AIDS to the plague, as you have already heard, that decimated

the population of Europe in the 14th century.

I also agree with Surgeon General Satcher’s comment that perhaps the most important element in the battle against HIV/AIDS

is political commitment. Leaders at the national, provincial, and

local government level must speak out about HIV/AIDS and encourage businesses and nongovernment organizations to commit to

work against this disease.

I worked as a pharmacist and now serve as cochairman of the

House Prescription Drug Task Force that I founded, along with Jim

Turner and Tom Allen. I am familiar with the issues involving

costs and availability of prescription drugs in our country, and I believe that these same issues are critical to improving health care

and access to prescription drugs in developing nations. I am optimistic that 1 day a combination of government and private research will lead to a vaccine for HIV, and eventually a cure.

It is tremendously important that governments have policies in

place that encourage investment in preventing and treating the

disease. Successful government policies will encourage both research and development for funding new cures and provide access

to the technology for those who need it.

Developing a cure for AIDS would be a monumental breakthrough, but even that would not solve all the problems we face.

Modern treatments for AIDS have cut in half the number of patients dying from the disease in the United States. However, the

number of deaths resulting from the disease continues to rise rapidly in Africa. Additionally, almost three times as many people,

most of them living in tropical countries of the world, die of preventable, curable diseases as die of AIDS.

I welcome the administration’s proposal to increase the United

States investment in fighting HIV/AIDS in Africa by $100 million.

The new funding would go primarily to prevention, providing child

care for children whose parents have AIDS, and offering counseling

and support for those with AIDS. I am sure that the help will be

appreciated, but noticeably, it will not help one more patient get

lifesaving medicines that are now available.

It is important that we help developing countries have health

care systems in place that have the resources and infrastructure to

provide an adequate level of care. Countries will also be much better equipped to provide needed medications if they can be acquired

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in the marketplace at reasonable prices. The U.S. Government

could play a major role in helping countries obtain medicines at a

fair price if U.S. trade negotiators promoted free trade and played

by the rules of the international trade agreements. Over 3 million

South Africans are HIV-positive, including 45 percent of its military; one in five South African pregnant women test positive for

HIV.

Access to affordable medicine is also a critical issue for the elderly and others suffering from chronic diseases and medical conditions. In 1997, the per capita income of South Africa was estimated

to be $6,200 annually. Prescription drugs are not currently an option for many patients in South Africa, where they often cost more

than they do in the United States.

To address the problem, President Mandela and the South African Government enacted a law in 1997 to reform the country’s prescription drug marketplace. The law amends the South African

Medicines Act to allow prescription drugs to be purchased in the

international marketplace, where prices are lower. It would also

allow compulsory licensing in some cases.

Regulations implementing the law have not come forward while

the law is being constitutionally challenged in South African courts

by drugmakers in their country. However, the pharmaceutical industry has persuaded the United States Government to work to

have the South African law repealed.

In February, the United States Department of State released a

report describing the United States Government’s efforts to stop

South Africa from enacting the legislation. While special interest

groups have tried to convince Members of Congress and the administration that implementation of the South African Medicines Act

would cause violations of international intellectual property rights

agreements, I have seen no evidence that such violations are likely

to occur.

Compulsory licensing is not an assault on the intellectual property rights. Instead, it is a part of the copyright and patent system,

which enables the interests of the public to be served. Compulsory

licensing is permitted under article 31 of the WTO agreement on

trade-related aspects of intellectual property rights. In fact, French

law authorizes compulsory licensing when medicines are available

to the public in insufficient quantities or qualities, or at abnormally

high prices.

Only 3 months ago, the House voted 422 to 1 to continue the

practice of compulsory licensing for television broadcast signals as

part of the Satellite Home Viewer Act of 1999.

In addressing the global HIV/AIDS epidemic, it is imperative

that we examine the trade policies of our country to ensure that

we are promoting what is in everyone’s best interests.

Thank you, Mr. Chairman.

Mr. MICA. I thank the gentleman for his statement.

[The prepared statement of Hon. Marion Berry follows:]

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Mr. MICA. I am pleased to recognize the last member of the

panel, who talks from very firsthand experience about this terrible

disease, Chatinka Nkhoma. She is a Malawi citizen.

Welcome, and you are recognized, ma’am.

STATEMENT OF CHATINKA C. NKHOMA, MALAWI CITIZEN

Ms. NKHOMA. Thank you, Mr. Chairman.

Mr. Chairman and members of the committee, ladies and gentlemen, I am here today to represent the millions of people that you

have just heard of that are being infected with HIV/AIDS and have

no way out; millions of Africans who are dying and will continue

to die if nothing is done immediately.

I am their voice here to cry for help. We need access to the proper treatment of AIDS. I am a 37-year-old African woman, a single

woman living with AIDS. I come from Malawi, a very poor country

in Africa, actually the second poorest country in the whole world,

although I think last week they say we are No. 4, but I still think

we are the poorest.

Malawi has an estimated population of 11 million. Twenty percent, as we heard, is infected with the AIDS virus and is dying

from it. I now call myself living with AIDS, but just a couple of

months ago I was dying of AIDS. I do not think anybody in this

House can even begin to imagine what it is like to live in an environment like that.

These figures, the 20 percent, also include, Mr. Chairman, my

brother Michael and his wife, who died last year, leaving a 2-

month-old baby who had to be fed by a wet nurse; my sister, who

died in 1994. She was a widow. She left four children. I have lost

three brothers-in-law. I have lost 10 cousins. My mother, who right

now she should be enjoying the fruits of her labor, is burying her

children.

I have lost so many friends and neighbors and work colleagues;

so many relations. Many professional people, entertainers, and

local media people, even politicians; everybody is dying. We are either dying from the disease or the effects of it.

Saving the children and not the mothers is even worse, because

children are left vulnerable to abuse. I am supposed to have been

dead right now, but I can testify that I am here because of the

mercy of Christ. I am not here because I was treated for opportunistic diseases. I had a lot of antibiotics and many other stuff that

tried to cure the infections that I had. But, Mr. Chairman, if I had

not been one of the fortunate people, one of the people who had

God’s blessing to be able to access these drugs, I simply would not

have been here.

Mr. Chairman, we need these drugs to enable us to survive this

catastrophe. We need these drugs. We need the full and complete

AIDS treatment for the millions of people dying. That need cannot

be adequately emphasized in any way. A program that can test and

treat millions of us who are infected will also stop the virus from

spreading further. Right now that is the only available vaccine.

As we heard early on, Mr. Chairman, you say there has been a

significant reduction in the AIDS infection rate in America. That

started by the drugs. There have been so many statistics that have

been thrown around today Mr. Chairman. Whatever the source

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they came from, and whoever presented them, they are alarming,

and this trend will not change.

There are many arguments about what other things we do not

have. That is true, we do not have many things, but we cannot be

condemned to death because we are poor. There are some people

that have actually said we Africans are used to death and destruction. We are not; we are only human people living in fear every

day, every minute. We do not talk about AIDS because it provokes

that fear.

Some people react violently. We have heard about people being

killed. That is the only means of self-defense some people find. It

is unacceptable to discriminate against anybody, but who are we to

judge? If you cannot get to something, you cannot see and touch,

then people just use all sorts of ways to self-defend themselves.

Maybe by killing your neighbor you think you are going to save

yourself.

I know today there will probably be a lot more arguments as to

why we should not get the drugs; arguments that they are too costly and they are too dangerous to give to Africans; that it is better

for us to die because we do not have high-tech hospitals; that we

are not intelligent enough to administer them properly, that we do

not need them now. I do not know when we will need them; that

we only need aspirins and antibiotics now; that we are going to create a virus that will be resistant to all the newer drugs and probably have wasted scientists’ time in their research.

Mr. Chairman, we want to be alive to bring up our children.

Whatever it takes to make us live, it must be done. We are also

human. I know we are very poor humans, but not by choice. We

do not want to die. At this stage in medical advances, it should not

be accepted for anybody to be left to die because of the cost factors.

At the end of my studies here, I want to go back home. I want

to return to my family. I can only do this if we have access to drugs

in my country, because I do not want to die. At the same time, I

want to go home and be with my family, so I am begging you to

at least give us access to these drugs, whatever way. The pledges

that have been made, $100 million, or everything else, but not

drugs, this is not right. We should have—the pledges should include everything. If I do not have clothes on my shoulders, you cannot say you are not going to give me food. That is the only way

it is going to make a difference.

I know it is not easy to keep up with the treatment regimens.

Regardless of where you come from or how rich you are, they are

hard. But I know one thing for sure: Where this is a will, there is

a way. Africans have contributed to AIDS research. As we speak

now, we have institutions that are researching AIDS in Africa, and

most of the drugs that have been used now have been researched

on people in Africa. We have been used as guinea pigs in trials for

these drugs. I think we deserve the drugs, if not for anything else,

maybe just because we are humans. We should not be expendable.

We should not be punished for being poor.

More prevention, education, and better hospitals will not save

the situation. We need that and the drugs. I believe I was able to

learn foreign languages, several of them, I have learned foreign

technologies, and I believe it would not be true if you say that we

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cannot learn how to follow medical procedures that will save our

own lives. We can learn how to do that, and by shear will we will

make it. I know people who will and do travel 10 miles every day

to get an injection if the doctor tells them to do that, by foot.

These days we are no longer mourning our dead, Mr. Chairman,

we are just burying them. We do not have the time, the resources,

or the tears. The old are burying the young. This is not a good

thing for Africans, for we believe that young people do not make

good ancestors. They have not gathered enough wisdom and experience for this job of being an ancestor.

Following proper burial customs ensures that the dead lay at

rest and do not return to haunt us and bring bad omens upon the

community, which is exactly what is happening.

Mr. Chairman, in closing, I just want to say, we have three types

of brothers and sisters, Mr. Chairman, in my country. We have the

breast brothers and sisters, those that you share the same breast.

We have blood line brothers and sisters. Then we have brothers

who are people who have been there for us. I am sure you can be

our brothers and sisters. You have been there for us for many

times, and we need your help this time.

Mr. Chairman, we don’t want to die. At the same time, we have

what we also called Wantu. I believe in Yiddish, we call it mensch,

and in English it is probably humanity. It talks about humanness,

gentleness, and hospitality, putting yourself out on behalf of others,

being vulnerable. It recognizes that my humanity is bound in

yours. We can only be humans together. Bishop Desmond Tutu is

better than anyone at doing this.

Mr. Chairman, AIDS is affecting everything, every aspect of our

lives. It is leaving no stone unturned. It is cultural, socioeconomic,

a productivity degradation. Mr. Chairman, unless it is in one’s interest to see us Africans perish, immediate action needs to be

taken. Give us this gift of life!

The Greeks said that the last demon that came out of Pandora’s

box, called hope, was the most dangerous demon, because it looked

like an angel. Giving us anything else other than the complete

treatment is giving us this demon. Thank you very much, Mr.

Chairman, ladies and gentlemen.

Mr. MICA. Thank you for your testimony.

[The prepared statement of Ms. Nkhoma follows:]

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Mr. MICA. I also thank the Members who testified.

I will just ask a couple of quick questions. You gave some compelling testimony, Ms. Nkhoma. You did say, as I recall, in your

testimony that some people walk 10 miles a day to go and get an

injection. That indicates that there is some treatment available.

What percentage of the people in your country, and again, one

of the poorest of the countries, are able to get treatment?

Ms. NKHOMA. Mr. Chairman, in my country—it is different in all

the countries, but I have been in all the neighborhoods, and if you

may allow me, Mr. Chairman, in South Africa they have an infrastructure. Their medical facilities are very up-to-date. They have

really high standards. So an excuse that they cannot have the

medications because they do not have up-to-date facilities will not

really hold any water in this.

But in my country we have a lot of facilities, available now,

which are able to treat opportunistic diseases. We have a lot of

missionary hospitals which have spread all over Africa, the Catholic missionaries, and we have other denomination missionary hospitals which are in every little space and community in Africa.

These hospitals are being funded by the donors outside Africa,

and they are well-equipped, so they are able to administer, and to

make sure that people will be able to follow the regimen. Like I

say, in the end, it is up to the person. It does not matter where

you are.

Mr. MICA. My question really was referring to what percentage

of the people. How many that are afflicted with AIDS are able to

get treatment? Is it 10 percent, 20 percent, could you estimate? It

sounds like there is a regimented treatment available. But obviously you are here for treatment, you are not there, where many

people left behind.

We are interested in seeing what kind of unserved population

there is, since you have one of the poorest countries. Could you provide us with some estimate?

Ms. NKHOMA. Mr. Chairman, in my country I think there is nobody who will be able to get the medication, considering the fact

that it is not a one-time medication, but every month for the rest

of the time you are alive. So I can truly and honestly say here that

I do not believe there is anybody in my country who would be able

to take this medication at this moment. There are people who are

attempting to take part of it. That is probably 0.001 percent of the

population.

Mr. MICA. That was my question. You came here. Did you come

here as a student, and you were able to get treatment in the

United States? Did you pay for that, or is that provided?

Ms. NKHOMA. Mr. Chairman, I came here because I had a scholarship to come and get my master’s degree. I didn’t even know the

medication was available. All I knew is that there was AZT. At the

time I was going back to my country. AZT cost too much even at

that time for anybody. So I didn’t even know that things had gone

as far as they have. It was after I came here and talked to some

people about my condition, because I was still not very well, and

they took me to the clinic.

Mr. MICA. Thank you.

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Mr. Jackson, thank you for persisting in your interest in this,

and Mr. Berry and others. I have many Members of Congress contact me and express their concern. I had some people contact me

who did not want to conduct a hearing on this. I know it makes

people uncomfortable, both in Congress and in the administration,

with the pharmaceutical companies and the whole range.

But having been here, I have family on both sides of the aisle,

and I do not think it is our job to ignore problems of this proportion

and sweep them under the table. I think it is our job to hear them.

I have had requests from the minority and majority, I think they

should be treated equally, and particularly for something of such

significance. So I want to personally thank you, and also thank

Members for persisting in this hearing. I have had the cooperation

of our ranking member, and we did see some action from the administration this week, $100 million. As you say, it may be a drop

in the bucket, but at least we are focusing some attention and resources.

We need an examination of our policy, which is critical, and this

is not really a question but a comment. I thank both of you for your

involvement.

I yield to our ranking member for questions.

Mrs. MINK. Thank you very much, Mr. Chairman.

Certainly, Ms. Nkhoma, the description that you have given the

committee and the country about the conditions in your country

and the lack of adequate treatment and drugs that are available

in this country is certainly a pathetic comment on this Nation’s humanity.

I think the question that I really wanted to ask is to our colleague Mr. Jackson, who has been pursuing this issue for a long

time. Knowing the way this place works and how it works, and how

slowly it takes hold of some of these very, very important issues,

is there one particular thing that you feel we could do at the moment to break loose this barrier in this area, the policy of the

United States in sharing its medical technology and expertise in alleviating the conditions of suffering and disease in Africa that are

connected with HIV and AIDS?

Mr. JACKSON. Madam ranking member, I plan to offer next week

a piece of legislation that will make drugs, or pharmaceuticals,

much more available to the people of sub-Saharan Africa, and I certainly hope that it will be a bipartisan piece of legislation, and

those Members of Congress who have expressed interest in this

great issue, that they will manifest that great interest by becoming

cosponsors of this bill so that we can make these needed improvements in our relationships with many of these countries more substantive; not just a humanitarian gift by the administration that is

a discretionary gift by administrations, albeit Democrat or Republican, but make it the will of the American people in the form of

a law that if, in fact, we have access to new technologies, new

drugs, new pharmaceuticals, that we find ways to make them more

available to more people.

Much of the AIDS research, as Ms. Nkhoma has indicated, has

been tested on Africans. That is clearly, according to that map, the

center of the AIDS crisis globally. But the results of that research

are not making it back to Africa in the form of drugs and pharmaVerDate 11-MAY-2000 12:00 Sep 27, 2000 Jkt 000000 PO 00000 Frm 00090 Fmt 6633 Sfmt 6633 C:\DOCS\65308.TXT HGOVREF1 PsN: HGOVREF1
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ceuticals. They are being produced in our hospitals, in our labs, in

our research, with our taxpayer dollars. And it is my personal desire, and I certainly would suggest it is the personal desire of the

people that I represent, that their taxpayer dollars be used in such

a way, since they are going toward AIDS research. I do sit on the

Labor-Health-Human Services Committee, and I do have a sense of

what the NIH is doing; the end result of that research should benefit people who have the disease.

It is troubling. I think that Members of Congress are going to

have to wrestle with this, when the Office of the United States

Trade Representative and the United States Government continue

to pressure South Africans to abandon legal attempts to employ

compulsory licensing and parallel imports.

A State Department report, with which we are all too familiar

with now, explains how the United States Government agencies

have been engaged in a full court press with South African officials

from the Departments of Trade and Industry to pressure South Africa to change provisions of the Medicines Act that give the government the authority to pursue compulsory licensing and parallel import policies.

Why is South Africa so important? It is the largest sub-Saharan

economy. Most other nations will take their cues based upon how

our government relates to sub-Saharan Africa.

The United States has also threatened to withhold trade benefits

under the GSP program from South Africa and threatened trade

sanctions. Even in the report, for example, in July 1998, Assistant

United States Trade Representative for African Affairs Rosa Whittaker met with the South African Charge d’Affaires in Washington

to stress once again the United States Government’s concern about

pharmaceutical patent protection and parallel importation in South

Africa.

She also repeated the United States Government’s position that

South Africa’s request for preferential treatments would be held in

abeyance pending adequate research on intellectual property rights

protection. Unless we change this statutorily, this will be our Trade

Representative’s policy. And we cannot on the one hand be supportive of humanitarian concerns, which are purely discretionary, and

abdicate our responsibilities as representatives to make it the U.S.

Government’s policy to address this crisis and keep it from spreading.

I thank the gentlewoman.

Mrs. MINK. A followup question. The point that you made, that

Ms. Nkhoma also made reference to, the fact that Africa is basically the target location in this world for the testing of these drugs,

is it possible in our legislation, or maybe not in this legislation but

in other legislative efforts, that we could require that in situations

where a disease such as this reaches a pandemic proportion, that

the pharmaceutical companies that are testing drugs and exploring

the efficacies or lack thereof of the drug treatments, in large part

protected and funded by the United States, not be permitted unless

they make suitable arrangements for the distribution of the drugs

they have tested, and which have been proven efficacious; could we

not establish such a policy or requirement in our support and sancVerDate 11-MAY-2000 12:00 Sep 27, 2000 Jkt 000000 PO 00000 Frm 00091 Fmt 6633 Sfmt 6633 C:\DOCS\65308.TXT HGOVREF1 PsN: HGOVREF1
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tions of these trials in these countries with reference to this type

of epidemic?

Mr. JACKSON. I believe, Representative Mink, that it is possible

to accomplish this legislatively. But I would go one step further to

suggest that the World Trade Organization already allows for the

creation or the availability of these drugs when the crisis reaches

epidemic proportions.

Why the United States Government is pursuing sub-Saharan

countries in many instances inconsistent with internationally established understandings with respect to availability in the event

of epidemics is quite troubling.

But you touched upon something else that I think is critically important. Several of our colleagues today mentioned this idea of triple therapy against HIV viruses. Even Ms. Nkhoma indicated that

to question Africans’ intelligence about their ability to follow regular regimens, though complicated, was somewhat—this triple therapy, these drugs are expensive and very hard to take, but there are

drugs to treat illnesses that kill people with AIDS that are cheaper

and easier to take. A year’s supply of these drugs is about $70 per

year. Most are one pill of four drugs, once a day.

The point is, the kinds of combinations of therapies that some

men and women have access to are very difficult to administer and

supervise in the developing world’s conditions, but these treatments, in many activists’ views, are not the most important ones

we should be looking at.

The first priority for extending the lives of people living with

HIV/AIDS in the developing world should be providing access to

very inexpensive drugs that treat and prevent the development of

opportunistic infections that kill most people with AIDS. In this regard, I am specifically talking about pneumonia, fungal tuberculosis infections, dehydration due to diarrhea; these are diseases

that people subsequently die from who are infected in this area. So

it is not just the AIDS drugs which are being produced, which are

not making it in South Africa, but many sub-Saharan Africans are

dying from many other diseases that are complications of having

HIV/AIDS.

Mr. MICA. Ms. Schakowsky.

Ms. SCHAKOWSKY. Thank you, Mr. Chairman.

I want to say a particular thank you to Ms. Nkhoma. We are all

overwhelmed by the numbers and the breadth and extent of this

crisis. But hearing the name of your brother, I can barely say it

myself, somehow puts a different perspective on it, and your cousins, your sisters, and you.

I think it is so important for us to understand that these are not

faceless people, and in a real sense, as you made clear in your testimony, but these are our brothers and sisters for whom we do

have an obligation.

So in that regard, I was interested to know, when you go home,

which I know it is your hope to go home, should nothing else happen, that is, no circumstances change, what happens to you? What

are the circumstances in your country? What will you be facing?

Ms. NKHOMA. Thank you very much. I am normally asked that

question all the time, and I normally tell people what I want on

my tombstone. If I go home, I die. There is no any other way out

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of it. If I go home and I don’t take the drugs, unless probably by

taking them for the past 5 months I have developed like an immunity within myself, but I would die.

Ms. SCHAKOWSKY. So they are not accessible, they are too expensive? What exactly are you facing?

Ms. NKHOMA. Just recently, I think as early as the end of last

year, the Glaxco-Welcome representative came and saw some people. This I heard after I came here and went back home in November. That is when I was talking about the drugs here, and some

people said, yes, we had representatives from these companies who

are encouraging people to take double therapy, like two drugs.

From my being here, I have discovered that it is actually more

dangerous to even take only the two drugs. One, you are wasting

your money; and two, it is not really going to help that much.

But the drugs now, to answer your question, I do not say they

are available, because nobody can get to them, but they are there,

we hear, in the pharmacies, but nobody can afford them. So we just

look at them and die.

I just wanted to make the point, which is an irony stemming out

of this that the few people that attempt to buy these drugs, spend

everything that they have, maybe sell a house, maybe sell a car,

and then say it is a father, is still going to die after he finishes his

source of money. That means he is going to leave his wife and children with absolutely nothing. It has domino effects.

Ms. SCHAKOWSKY. You referred to Africans being used as guinea

pigs. I presume during a certain period of time that those individuals who are being used to test the drugs are being given those

drugs, and then what happens? When the test is over, do they just

say, good-bye, thanks a lot, and you are gone?

Ms. NKHOMA. In all the tests, currently, until somebody blows

the whistle to the international community on what is happening,

nobody will ever get to know about it. I have talked to the Minister

of Health a little bit, and I know what has happened, and what has

been happening.

In Zimbabwe, currently AZT was being tested on mother-to-child

transmission. Some mothers were given placebos, and the others

were given AZT. After the trial, the researchers packed their bags

and came here. Neither did they attempt to continue treating the

mother, nor continue with maybe the other people who were given

placebos. I know of nobody who has actually been given this treatment who continued. I think I would have heard about it.

Ms. SCHAKOWSKY. What is remarkable to me about that testimony is that I well remember when it was announced in the U.S.

press that it was discovered how effective the use of AZT was in

preventing the birth of HIV-infected infants. So we all celebrated

the results of that experimentation. But as you point out, it appears that no one in Africa has subsequently benefited from it.

I have a number of other questions, but my time is up. Thank

you.

Mr. MICA. I thank the gentlewoman.

I now recognize the gentleman from Maryland, Mr. Cummings.

Mr. CUMMINGS. Thank you Mr. Chairman.

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I want to thank you, Mr. Jackson, for what you are doing, and

I certainly will join you in doing everything I can to address this

major, major problem.

And to Ms. Nkhoma, thank you also. I think it is quite accurate,

I think so often what happens here on the Hill is that sometimes

we divide policy from real people, and I think when we are able to

put the faces on the policy, it does make a difference.

I want to go to you, Mr. Jackson, and just ask you a few questions.

One of the things that we hear over and over again in this country is how do drug companies get their investments back? We constantly hear them talking about the research that they have done.

As a matter of fact, I have heard some folks at certain pharmaceutical companies say that even if they came up with a cure for

AIDS today, we might see a substantial delay in it actually hitting

the street.

One of the things they complain about is that they want their

money back for research. I am sure the same kinds of arguments

are made with regard to Africa and developing countries. What is

your answer to that?

Mr. JACKSON. Congressman Cummings, the present United

States policy, that which we are articulating before the subcommittee today, is to threaten sub-Saharan nations who support compulsory licensing and parallel imports, that is, on the open market, assuming free trading relationships, that they might be able to shop

around, produce, or find cheaper drugs to get them directly to their

people.

Any self-respecting government, including our own, under these

circumstances would find such a policy to be fair.

I personally believe medicine is a human right. I think if someone finds a cure to cancer, it is not something they can keep in

their basement and just hide. At some point in time we have to

make a decision as a government that we have enough people with

cancer that we need to make that cure available, to get them some

resources, to protect some of their legal patent rights, to compensate them accordingly; it is not a secret that you get to hide.

Medicine and its production is not purely for the availability of

profit. When we look at an epidemic of the magnitude of the AIDS

crisis, for which all of our charts are clearly available, we have

some obligation as a superpower, as one who has been economically

endowed by God to make certain judgments about our Nation’s

commitment to the human family, that we are not going to allow

millions of people to be decimated, not because they do not need

drugs, but because we simply recognize that they cannot afford

those drugs.

We have an obligation, on the question of their investment, to

find creative ways to protect their patents, to protect their intellectual property rights, but at the same time not threaten with trading embargoes or various provisions in our trading law, manipulated in various ways, to keep sub-Saharan Africans from finding

on the open market or producing more generic drugs at cheaper

costs, so they might create stability in their own countries.

If the infection rate in many of these countries continues, and

their governments are in a position where they cannot even fight

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to get lifesaving drugs for their people, inevitably it is going to create a level of government instability in those countries which is

going to affect our normalized trading relationships. Those governments will not be stable going into the future economically if, in

fact, there are various revolutions based on who gets access to medicine simply because they can afford it and those who cannot. We

have some obligations, Mr. Cummings.

Mr. CUMMINGS. One of the things that I could not help but think

about as you were talking was when the Kosovo issue came up,

this country responded quite rapidly and with quite a bit of money

and dealt with that issue. When I look at what is happening here,

when we have millions of people dying, it is interesting to look at

those two situations and how we are dealing with them.

Finally, let me say this. When we talk about putting a face on

this problem, Mr. Chairman, when I visited Zambia, I was on my

way, and I was about to leave the last day, and I had met a young

girl named Sakia, and I think you will appreciate this, Mr. Jackson; a little 10-year-old who was an orphan. As I was about to

leave, I had done several speeches about AIDS, this little girl,

Sakia, who I had met earlier that week, came up and said—pulled

me on the coat, and says, are you leaving? I said, yes, I am leaving.

She said, are you going to come back? Are you going to help our

people? Because, you know, my mommy and my daddy are dead,

and all my relatives are dead. And I said, yes, I am going to come

back. I am going to figure out a way to help you. We have to help

you, and we have got to help your people. And she says, well, when

are you going to come back? I said, I am going to come back soon.

She said, when you come back, she said, will you look for me? And

I said, sure. And I said, I will write you. She said, but if you can’t

find me, will you look for me in heaven?

And I will never forget that, never ever forget that, because she

saw her life sort of just disappearing, as she had seen so many

other people’s lives disappearing.

Mr. MICA. Thank you.

Mr. Lantos.

Mr. LANTOS. No, thank you.

Mr. MICA. You have both been most patient. We thank you. Your

coming forward today has helped provide us with reasons that we

should go forward, from your own personal experience. Hopefully it

will help make a difference as Congress decides its policy here, so

we particularly thank you for participating today, and also my colleague Mr. Jackson and my colleague Mr. Berry.

We will excuse this panel and thank you both again.

I would like to introduce and welcome our second panel.

The first participant witness is Ms. Sandra Thurman, Director of

the Office of National AIDS Policy of the White House; then Mr.

Joseph Papovich, Assistant U.S. Trade Representative under Services, Investment and Intellectual Property of the United States

Trade Representative’s Office. Then we have Dr. John Killen, the

Director of the Division of AIDS in the National Institute of Allergy

and Infectious Diseases in the National Institutes of Health. Then

we have Dr. Timothy Dondero, the Chief of International Activities

Branch, the Division of HIV/AIDS Prevention, with the Centers for

Disease Control and Prevention.

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I would like to welcome all of our panelists. Again, this is an investigations and oversight subcommittee of Congress. If you would

not mind, I would like to swear you in, if you would please stand.

[Witnesses sworn.]

Mr. MICA. The witnesses answered in the affirmative.

Again, welcome to our subcommittee. We appreciate your providing testimony.

As I said previously, if you have lengthy statements, we are

going to run the clock because we have another full panel after

you. If you have lengthy statements, we will make them part of the

record, or additional documentation, by unanimous consent.

First, I would like to recognize Ms. Sandra Thurman, the Director of the Office of National AIDS Policy for the White House. Welcome, and you are recognized.

STATEMENTS OF SANDRA THURMAN, DIRECTOR, OFFICE OF

NATIONAL AIDS POLICY, THE WHITE HOUSE; JOSEPH

PAPOVICH, ASSISTANT U.S. TRADE REPRESENTATIVE, SERVICES, INVESTMENT & INTELLECTUAL PROPERTY, U.S.

TRADE REPRESENTATIVE; JOHN KILLEN, DIRECTOR, DIVISION OF AIDS, NATIONAL INSTITUTE OF ALLERGY AND INFECTIOUS DISEASES, NATIONAL INSTITUTES OF HEALTH;

AND TIMOTHY DONDERO, CHIEF OF THE INTERNATIONAL

ACTIVITIES BRANCH, DIVISION OF HIV/AIDS PREVENTION,

CENTERS FOR DISEASE CONTROL AND PREVENTION

Ms. THURMAN. Thank you, Mr. Chairman. I knew I should not

have released my report before I came to this committee, because

most of you have already heard some of the statistics out of it.

I just want you to know how pleased I am to be with you here

today. Your interest in addressing this crisis is very much appreciated, and your help is very much needed.

My colleagues from the NIH and the CDC will again lay out for

you a very vivid picture of the depth of this tragedy and describe

for you some of the work that their agencies are doing to address

the many challenges before us. You have heard the statistics, but

you have also heard that these are not just numbers, but very real

people and real lives.

I would like to take this time to talk with you a little bit about

the human dimension of AIDS. AIDS truly is a plague of Biblical

proportions. While many of us have witnessed firsthand the devastation, it is almost impossible to describe the grip that AIDS has

on villages across Africa and on communities around the world.

Twelve million men, women, and children in Africa have already

died of AIDS, and yet the AIDS pandemic rages on.

In a host of different ways and from a variety of different vantage points, it is children who are caught in the cross-fire of this

relentless epidemic. In Africa, an entire generation is in jeopardy.

In many sub-Saharan countries, between one-fifth and one-third

of all children have already been orphaned by AIDS, and the worst

is yet to come. Within the next decade, more than 40 million children will have lost their parents to AIDS, 40 million. That is the

equivalent of every child in the United States living east of the

Mississippi.

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AIDS is wiping out decades of hard work and steady progress in

improving the lives and health of families throughout the developing world. For millions and millions of those families, and in some

cases entire nations, AIDS is the engine of destruction that is

pushing us toward the brink of disaster. Not only do precious lives

hang in the balance, but so, too, do the economic viability and the

political stability of their homelands. As the chairman has said,

AIDS is a trade and investment issue, not just a health issue. Both

in terms of exports and natural resources, Africa is a critical partner to the United States. A successful fight against AIDS is fundamentally important to our ability to sustain and improve our economic ties to Africa.

Skilled workers are taken in the prime of their lives, and in

many instances companies are having to hire two people for every

single skilled job they have, assuming one will die of AIDS.

AIDS is also a security and stability issue. The prevalence of HIV

in the armed forces of many African countries is staggeringly high.

The Economist has estimated that the HIV prevalence in the seven

armies engaged in the Congo is somewhere between 50 and 80 percent of all military personnel.

Other recent reports have projected that the South African military and police are also heavily impacted by HIV. More over, as

these troops participate in an increasing number of regional interventions and peacekeeping operations, the epidemic is very likely

to spread.

Yet my message here today to you is not one of hopelessness and

desolation. On the contrary, I hope to share with you a sense of optimism. For amidst all of this tragedy, there is great hope. Amidst

this terrible crisis, there is great opportunity. The opportunity is

for us, working together, to empower women to protect children,

and to support families and communities throughout Africa and

throughout the world in our shared struggle against AIDS.

The United States has been a leader in the struggle. The administration has taken an active role in sounding the alarm on the

AIDS crisis in Africa, and in marshalling support for African efforts

to combat this deadly disease. Since 1986, this Nation has contributed over $1 billion to the global fight against AIDS. More than 50

percent of those funds have been used to address the epidemic in

sub-Saharan Africa. Overall, nearly half of all the development assistance devoted to HIV care and prevention in the developing

world has come from the United States.

The United States has also been the leading supporter of the

United Nations Joint Program on AIDS, or UNAIDS, contributing

more than 25 percent of their budget. It is a strong record of engagement of which we can be proud, but unfortunately, it has not

kept pace with this terrible epidemic. We have done much, but

much more remains to be done by the United States and by the

world’s other developed nations.

In that spirit, on World AIDS Day in 1998, the President directed me to lead a fact-finding mission to sub-Saharan Africa and

to make recommendations for an enhanced United States battle in

our global fight against AIDS. I was pleased to lead that mission

during the Easter recess, accompanied by Members and staff from

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both parties and both Chambers to witness firsthand the tragedies

and triumphs of AIDS in Africa.

In response to that trip, as we all have heard, the President and

the Vice President agreed we need to do more. This week the administration announced a broad initiative to invest $100 million in

the fiscal year 2000 budget toward this effort. This initiative provides a series of steps to increase U.S. leadership through support

for effective community-based solutions and technical assistance to

developing nations.

This effort more than doubles our funding for programs of prevention and care in Africa, and challenges our G–8 partners and

other partners to increase their efforts as well. This initiative is the

largest increase in the U.S. Government’s investment in the global

battle against AIDS, and it begins to reflect the magnitude of this

rapidly escalating epidemic. Our commitment to seek an additional $100 million in fiscal year 2000 will help to support four key efforts: $48 million will be used

for prevention, $23 million will be used to support community and

home-based care, $10 million will go to take care of children who

have been orphaned as a result of AIDS, and $19 million will be

used to strengthen the infrastructure and to build the capacity that

we need to provide care to people who are infected throughout the

African world.

We hope this initiative will receive the broad-based bipartisan

support that it deserves. I greatly appreciate the favorable comments of the members of this committee about this initiative. AIDS

is not a Democratic or Republican issue, it is a devastating human

tragedy that cries out for all of us to help. I look forward to working with all of you.

On Monday, Bishop Tutu mentioned an African proverb which

says, ‘‘When one steps on a thorn and it goes into the toe, the

whole body bends down to pull it out.’’ We ask for your help in

doing that, in addressing this crisis of AIDS.

Thank you very much.

Mr. MICA. Thank you.

[The prepared statement of Ms. Thurman follows:]

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Mr. MICA. We would like to recognize now Mr. Joseph Papovich,

the Assistant U.S. Trade Representative with the USTR’s Office.

Thank you. Welcome, you are recognized.

Mr. PAPOVICH. Thank you, Mr. Chairman. Thank you very much

for inviting us to testify at today’s hearing. This hearing focuses on

a topic that is of crucial importance to the health and future of millions of people in Africa and elsewhere, the role of our policy in ensuring access to effective medicines for AIDS and other illnesses.

The administration, together with our partners in Africa and

around the globe, has developed a policy intended to ensure access

to current medicines to treat AIDS while preventing the incentives

that will speed the development of effective medicines that in the

future have the potential to occur and prevent disease.

In the so-called Uruguay Round negotiations that established the

World Trade Organization, a top priority for the United States, as

a leading exporter of creative and innovative products, was to secure adequate and effective protections for all forms of intellectual

property, including patent protection for American pharmaceuticals.

In this we have succeeded. All WTO members, over varying transition periods, committed to this, through the Agreement on TradeRelated Aspects of Intellectual Property Rights.

Another important component of the trade policy is the so-called

Special 301. Under those provisions of the Trade Act of 1974, Congress directed USTR annually to identify foreign countries that

deny adequate and effective protection of intellectual property

rights and to issue a public report to this effect at the end of each

April. In the report, countries are placed on lists, ranging from

most egregious, where trade sanctions may ultimately be involved

if significant problems are not resolved, to a priority watch list or

to a watch list, where we monitor the situation and urge improvements in protection.

Congress amended Special 301 in the Uruguay Round Agreements Act to clarify that a country can be found to deny adequate

and effective intellectual property protection, and thus placed on

one of these lists, even if the country is otherwise in compliance

with its obligations under the TRIPS agreement.

Each year USTR, in consultation with other agencies, examines

the level of intellectual property protection afforded by our trading

partners. We analyze legislation, enforcement activity, and market

trends to arrive at our determination. We draw on the reporting

from our embassies and consulates overseas, but we also receive

input from industry associations, individuals, and even foreign governments.

In some instances we agree with the recommendations of those

outside of the government; in others we do not. For example, during this year’s Special 301 review, there were recommendations to

designate South Africa as a Priority Foreign Country, which could

have resulted in trade sanctions. We chose not to do so, however,

because we did not agree with their assessment of the magnitude

of the problem and because we had already developed a framework

to resolve our differences, which we are confident will work.

The objective of intellectual property protection is focused on ensuring incentives for research and development, so that new drugs

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can be developed and commercialized. Nevertheless, the application

of our intellectual property policy is sufficiently flexible to respond

to legitimate health care crises.

The administration’s approach to patent protection is to ensure

that the necessary incentives are provided to promote rapid innovation of new drug therapies, and to ensure the protection of medicines which now exist. Patent protection is essential to encourage

rapid development of new and more efficient drugs to treat AIDS

and other illnesses, and for the commercialization of these drugs.

To effectively remove patent protection for such treatments could

ultimately lead to a delay in the discovery, production, and distribution of medicines which could go beyond treatment, prevention, and cure.

Our goals in the area of patent policy for pharmaceuticals are

complemented by the administration’s efforts to address the HIV/

AIDS crisis around the world, including Africa, which my colleagues are describing. We are also seeking to help developing

countries create the public health infrastructure that will allow

AIDS treatments to be utilized effectively.

Finally, let me say a few words about the case of South Africa,

in which the committee has expressed some particular interest. We

acknowledge the serious health care crisis in South Africa. Moreover, we appreciate that the Government of South Africa has taken

measures to improve access to quality health care for all its people.

This is a goal we and the entire administration fully endorse and

support.

We believe this goal can be achieved while promoting adequate

and effective patent protection for pharmaceutical products. Our

goal is to chart a course that assists in improving access to affordable medicines, while not freezing the financial incentives that fuel

continued research and production of new products. With the

shared commitment to improve health care and provide intellectual

property protection, we are continuing our efforts with South Africans to find common ground.

That said, we have been working with South Africa to try to ensure that its new Medicines Act can achieve its intended goal while

being applied in a TRIPS-consistent manner. We believe both of

these goals are achievable, and we are working with South Africa

to ensure that the Medicines Act will be TRIPS-consistent. Indeed,

we have been fully engaged in trying to clarify these matters with

South Africa, with the goal of ensuring that the South African Government has the full ability to address AIDS and other health

issues in a manner consistent with its WTO obligations.

In August of last year, the administration proposed a framework

for resolution of our differences concerning South Africa’s Medicines Act. The intent of the proposal was to bring together a group

of experts, including all relevant decisionmakers, to reach our mutual goal of bringing better health care to the people of South Africa while assuring effective and adequate protection of intellectual

property.

Although neither government-to-government nor industry-to-government discussions have resulted in a resolution of the differences

that exist, we are encouraging continued dialog to find a solution

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that ensures that the health concerns of South Africa can be addressed in a TRIPS-consistent manner.

The TRIPS agreement has specific rules that govern compulsory

licensing expressed in Article 31, which allow for their use under

certain conditions. We realize that AIDS is a special case which

may require special measures. Thus, while we do not believe that

compromising intellectual property rights is the solution to the

greater problem, contrary to our general approach, we raised no objection to compulsory licensing or parallel importing of pharmaceuticals on the part of South Africa, as long as it is done in a way

that complies with TRIPS.

Of course, we are committed to working with South Africa to ensure the safety and efficacy of pharmaceutical imports; this is the

policy of the administration.

[The prepared statement of Mr. Papovich follows:]

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Mr. MICA. We now recognize Dr. John Killen, who is the Director

of the Division of AIDS for the National Institutes of Health’s National Institute of Allergy and Infectious Diseases.

Dr. KILLEN. Thank you, Mr. Chairman. I am pleased to have the

opportunity to discuss with you recent developments related to the

human immunodeficiency epidemic. As we have heard already

today, HIV is a looming tragedy, a global catastrophe to public

health and a threat to political stability. Overcoming it will require

a sustained commitment by public and private sector partners

working together in research and prevention.

Our remarks today will focus on progress in and challenges to

biomedical research relevant to the control of the epidemic.

AIDS diagnoses and deaths have dropped significantly in the

United States in the past 2 years. The same is true in other developed countries. Several factors are responsible, as we have heard,

especially through the increased use of potent, albeit expensive

combinations of anti-HIV drugs. Unfortunately, many HIV-infected

individuals have not responded adequately to the medications, cannot tolerate their side effects, or develop viral resistance to the current drugs, even in this country where we have virtually everything going for us.

In this context, the development of new and better therapies remains a priority. Research is focusing on new strategies, including

drugs that prevent the virus from entering a cell, and approaches

to boosting an infected person’s immune response. A number of

new agents are in various stages of preclinical and clinical testing.

We have also heard at length today how use of antiretroviral drugs

is simply not currently feasible in developing countries, where per

capita health care spending may be only a few dollars per year.

Therefore, the identification of effective, low-cost tools for preventing infection and disease caused by HIV is absolutely crucial to

slowing the epidemic.

I will highlight two examples of relevant NIH-supported research

in this important endeavor.

In early 1994, an NIH-funded clinical trial showed that passage

of HIV from an infected mother to her infant could be reduced by

as much as two-thirds when an intensive regimen of AZT is given

to a mother and her newborn baby. Unfortunately, costs and formidable logistical barriers prohibit the widespread application of

this proven regimen in most of the developing world. To surmount

these obstructions, a globally coordinated effort was launched to

identify simpler, less costly alternatives.

Several recently reported studies have shown that shorter regimens of AZT can also be beneficial, reducing transmission by as

much as 50 percent, but the same logistical and cost factors have

precluded widespread implementation of these drug regimens.

Last week, scientists from Uganda, Johns Hopkins University,

and the NIAID reported exciting results of an NIH-supported study

carried out in Uganda which demonstrated that just two doses of

the antiretroviral drug nevirapine, when administered to the mother at the onset of labor and one to the baby shortly after birth, reduced the instance of maternal-to-infant transmission of AIDS—reduced by nearly 50 percent when compared to a similar brief course

of AZT.

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This study could have profound implications for the epidemic of

HIV in children worldwide because nevirapine is extremely inexpensive and easy to administer. In fact, the regimen costs approximately $4, and is 70 times cheaper than the previously studied

regimens of the shorter course of AZT.

The development of a safe and effective vaccine for HIV remains

the Holy Grail of AIDS prevention research. To hasten HIV vaccine

discovery, many public and private agencies, including the NIH,

have dramatically increased the resources devoted to HIV vaccine

research.

At the NIH we’ve created new programs to foster innovative research on HIV vaccines and to expedite their development in clinical testing. In addition, the Dale and Betty Bumpers Vaccine Research Center has been established on the NIH campus in Bethesda. Since 1998, we have enrolled more than 3,000 healthy volunteers into 52 clinical trials involving 27 possible HIV vaccines.

The results with the combination vaccine approach have been especially encouraging. The vaccine appears safe and has invoked

several types of immune responses that may have an important

role to play in protection from HIV-associated disease. Additional

phase 2 trials will open later this year in Brazil, Haiti, Trinidad,

and Tobago.

A very important milestone in AIDS vaccine research was the

initiation this spring of the first AIDS vaccine study in Africa. This

NIH-supported clinical trial, which is being conducted in Uganda,

is designed to help determine whether it will be possible to design

universal vaccines that work against more than one strain of HIV.

Training and infrastructure are essential underpinnings of a robust biomedical enterprise, and part of NIH’s commitment to international AIDS research involves the Fogarty International Center’s

initiative to build HIV training and research capacity in developing

countries. This vitally important effort has expanded research capabilities in a number of countries and facilitated many NIH international AIDS research initiatives.

Two years ago, President Clinton set a national goal of developing a useful HIV vaccine within 10 years. We are well positioned

in our attempt to meet this goal with an extraordinarily strong program of basic and applied research that is now under way. As we

work to contain the global HIV/AIDS epidemic, it is essential that

public and private sector partners strengthen their commitment to

working together to speed HIV vaccine development, refine prevention efforts, and develop new treatments for those infected with the

virus.

Thank you for the opportunity to address the subcommittee.

Mr. MICA. Thank you.

[The prepared statement of Dr. Killen follows:]

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Mr. MICA. I would like to now recognize Dr. Timothy Dondero,

who is the Chief of International Activities Branch, Centers for

Disease Control and Prevention.

You are recognized, sir. Welcome.

Dr. DONDERO. Thank you, Mr. Chairman, and members of the

subcommittee.

The HIV epidemic continues to be a major challenge with over

33.4 million people estimated to be infected worldwide. Many horrifying statistics have already been cited in this hearing. For the

sake of time, I will not repeat those, but refer you to my written

testimony.

Unlike in the United States, most infections in the developing

world are transmitted through heterosexual intercourse. The second most common route of transmission is from infected mothers

to their children. I would like to draw your attention to the graph

over on the right. It shows the extremes to which the HIV epidemic

has reached the populations of the developing world.

These data are the percent of child-bearing women infected within countries. The lower group, the large, long bars, are in Africa,

predominantly east and southern Africa. What you see is the massive penetration of HIV into the general population, especially in

countries in eastern and southern Africa. Reports from four southern African countries, Botswana, Namibia, Botswana, and

Zimbabwe indicate from a fifth to a quarter of their entire adult

population age 15 to 49 are now infected with HIV, and in Botswana over 40 percent of the child-bearing women in cities are now

infected.

Countries in other parts of the world, including Thailand, Cambodia, and India, have also been heavily impacted, although not on

a proportional basis yet anywhere near the impact in southern and

eastern Africa.

Global trends in HIV/AIDS indicate that women are at greater

risk than men from heterosexual transmission. Women then can

pass the infection to their babies. Without interventions, roughly

one-quarter of the babies will become infected by the time of birth,

and an additional 5 to 15 percent will get infection through breastfeeding.

It is also important to note the interaction between HIV and

other diseases, specifically tuberculosis and sexually transmitted

diseases. Worldwide, 8 million cases of TB and 3 million deaths

occur each year. Ninety-five percent of these occur in countries

with low per capita income. Tuberculosis kills more adolescents

and adults in the world than any other single infectious disease,

although part of this is, in fact, due to AIDS. The HIV epidemic

has significantly increased the TB epidemic.

People who have latent or inactive TB from exposure earlier in

their lives run a high risk of developing active TB if they become

infected with HIV, a risk 100 times greater than for someone without HIV infection. Increased TB in AIDS patients enhances the potential for the spread of drug-resistant TB organisms, both locally

and globally.

Also linked to the HIV are sexually transmitted diseases. STDs

cause a two to fivefold increased risk for HIV transmission. STDs

facilitate HIV transmission by increasing shedding of the virus,

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and also they enhance the susceptibility to HIV through increased

likelihood of penetration of the virus into the body. STD treatment

is part of prevention of HIV.

But there are actually some glimmers of hope. Several countries

have shown improvements, including Uganda, Tanzania, Cote

d’Ivoire, Senegal, and Thailand.

As a quick example, in the country of Uganda, over the past 4

to 5 years there has been significant and encouraging reductions in

HIV infection in its population. Young women attending antenatal

clinics have had a one-third reduction in HIV prevalence between

the early 1990’s and 1997. Behavioral studies have shown a 2-ormore-year increase in the age of first sexual intercourse for youths,

a 9 percent reduction in casual sex, and a 30 to 40 percent increase

in condom use.

An important element of Uganda’s AIDS control is a very intensive HIV counseling and testing program fiscally supported by

USAID with CDC technical expertise. This has provided HIV testing and counseling to upwards of one-half million people since 1990

through the AIDS Information Center, a nongovernment organization.

Very important has been the strong political leadership in the

country as well, with the President and First Lady of Uganda

themselves frequently addressing HIV-related issues, making these

acceptable for public discussion.

Because the epidemic in much of the world is expanding, the

most critical public health approach is prevention, for a number of

the reasons which have been discussed here. For the sake of time,

I will not present again the arguments of concern about treatment

as opposed to prevention.

The CDC’s role, in brief, has been focused in international efforts

offering assistance to countries with great public health needs who

seek assistance conducting collaborative research and training on

prevention interventions and serving as partners in global initiatives.

Although our geographic focus is limited, we assist in the application of U.S. scientific advances within other countries, such as

rapid HIV testing, prevention of mother-to-child transmission, refinement and installation of HIV diagnostics and research techniques, and a variety of other things described in my testimony.

The CDC has a strong existing international field station structure in Cote d’Ivoire, Uganda, Kenya, Thailand, and Asia, as well

as a long history of providing technical assistance. We also have

resident advisors knowledgable in HIV in a number of countries.

I appear not to have time to go through some of the key elements

of prevention. I would note that in the President’s recently submitted budget amendment, under this initiative, the CDC would expand its role internationally by assisting with the establishment of

surveillance systems to understand the health impact of the disease, and by providing additional technical assistance and training

to both improve and expand prevention and treatment programs.

I will not describe the other elements key in my verbal testimony

for prevention. I would just note in conclusion that while there are

a few countries we can point to demonstrating improvement in the

HIV/AIDS epidemic, continued leadership within the countries and

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international expertise and resources are necessary to implement

effective prevention and treatment programs. Without these, the

outlook for the global AIDS epidemic remains grim.

Thank you for allowing me this opportunity.

Mr. MICA. Thank you, Dr. Dondero. Would you like us to make

that entire statement part of the record, so it is complete?

Dr. DONDERO. Yes, sir.

Mr. MICA. Without objection, so ordered.

[The prepared statement of Dr. Dondero follows:]

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Mr. MICA. Unfortunately, we have a series of votes coming up.

I am going to ask just a couple of quick questions.

I see the chart here, Ms. Thurman, about how the money is being

expended. The bulk of it is for prevention, which is recommended

by Congressman Berry and others, and we heard Ms. Nkhoma talk

about people who are infected now. I do not see any money for

treatment now. There is no money for treatment?

Ms. THURMAN. No, sir, there is money for treatment in the homebased and community care piece. There will be some money provided for medicines for opportunistic infections.

Mr. MICA. This says $23 million to deliver counseling, support,

and basic medical care.

Ms. THURMAN. Those medicines are included in the basic medical

care.

Mr. MICA. That, again, is a concern.

Also my second part of this quick question to Mr. Papovich is

that getting low-cost drugs available is a problem. It appears that

it has not been our trade policy to encourage that actually. We

have worked against that, as far as our policy in South Africa,

which Mr. Jackson said should be the focus of our attention, because it sort of sets the pattern.

I will tell you what, I am not going to ask you to respond now.

That is my quick question. I am going to submit to each of you

questions in writing.

I yield to the gentlewoman from Hawaii.

Mrs. MINK. Thank you. I have a whole host of questions, too.

While I appreciate the importance of prevention and education,

I think the course of these hearings is really to investigate the

issue of treatment and to what extent the U.S. policies have related

to this issue.

Ms. Thurman, could we have a 10-year listing of the efforts on

treatment by the U.S. Government to African countries, and exactly, over the total budget, what percentage went to the treatment

component?

Ms. THURMAN. Yes.

Mrs. MINK. And then to Mr. Papovich, on the intellectual property question, you said that it was important to create public

health infrastructure in order to provide the AIDS treatment. My

question is if we are going to spend efforts in improving the infrastructure, how does that go along with access to the drugs themselves? Is that part of the policy inference when you talk about infrastructure?

Also, the question of the WHO, if you recognize AIDS in Africa

as a national emergency, is this going to allow you to distribute the

drugs without the patent owner’s consent? Because that is the

basic question that we are investigating.

And to Dr. Killen, when you talked about these new discoveries

that have been made by NIAID and the Health Ministry with respect to less expensive drugs, are we talking about less expensive

drugs that can be distributed without patent applications and barriers? I think that really is the question. Those are the questions

I have.

Mr. MICA. We will get those in detail.

I yield briefly to my colleague.

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Ms. SCHAKOWSKY. I have one sentence because we have to go

vote.

I wanted to ask Mr. Papovich if you would provide us with the

language that would be TRIPS-compliant and not subject any country to any Special 301 designation and still allow for compulsory

licensing and parallel importing. It seems as if in these negotiations we clearly have something in mind, and I, for one, would certainly like to know what that language is and would appreciate

getting that.

Mr. MICA. Thank you. We will have additional questions. I apologize, but we are going to have three votes, and it is going to be 45

minutes to an hour. We will recess this hearing until quarter of the

next hour. We will excuse you, and we will have the next panel at

that time. We will have a break for lunch. But you will have additional questions submitted.

[Recess.]

Mr. MICA. I would like to call this subcommittee meeting back

to order.

And our next order of business is to hear from our third panel

of witnesses. Our third panel of witnesses I will introduce. Dr.

Allen Herman, dean of public health of the Medical University of

Southern Africa. We have Mr. James Love, director of Consumer

Project on Technology; Dr. Peter Lurie, medical director of the Public Citizen’s Health Research Group; Mr. Eric Sawyer, executive director of the HIV Human Rights Project, also associated, I guess,

with ACT UP in New York; and Dr. John Siegfried, senior medical

officer of the Pharmaceutical Research and Manufacturers of America.

I would like to welcome all of our panelists. As I’ve said in the

past, this is an investigations and oversight subcommittee. If you

would stand, please, and be sworn in.

[Witnesses sworn.]

Mr. MICA. The witnesses all indicated—answered in the affirmative.

I would like to welcome each of you. We’re going to run our little

timer here. If you have a lengthy statement, we would like you to

summarize it, and we will put the entire statement in. If you have

additional information and/or data, we will also include that as

part of the record. And we will run the timer on that; then we will

have an opportunity for questions.

First, I will recognize Dr. Allen Herman, with the Medical University of Southern Africa.

STATEMENTS OF ALLEN HERMAN, DEAN OF PUBLIC HEALTH,

MEDICAL UNIVERSITY OF SOUTHERN AFRICA; JAMES LOVE,

DIRECTOR, CONSUMER PROJECT ON TECHNOLOGY; PETER

LURIE, MEDICAL DIRECTOR, PUBLIC CITIZEN’S HEALTH RESEARCH GROUP; ERIC SAWYER, EXECUTIVE DIRECTOR OF

HIV HUMAN RIGHTS PROJECT, ACT UP, NEW YORK; AND

JOHN SIEGFRIED, SENIOR MEDICAL OFFICER, PHARMACEUTICAL RESEARCH AND MANUFACTURERS OF AMERICA

Dr. HERMAN. Good afternoon, Chairman Mica and distinguished

members of the committee. It’s a privilege for me to testify before

you on the subject of such fundamental importance to the people

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of Africa. The pandemic of HIV/AIDS has been adequately described to all of us this morning. And there is a tendency sometimes in this description that one is left slightly stunned by the

magnitude of the problem.

So what I would like to talk to you about today are some specific

incidences where this epidemic has particular influence on the society in South Africa, and then to talk a little bit about what we are

doing at the National School of Public Health, which is associated

with the Medical University of Southern Africa.

By way of introduction, I am the dean of South Africa’s National

School of Public Health. This is a school that was one of the new

schools that was formed by President Mandela’s Cabinet in 1997,

and I was asked by my old classmate, then Minister of Health,

Nkosazana Dlamini Zuma, to be the first dean.

The School of Public Health has a particular interest in the issue

of AIDS, and for us, we have become convinced that we have to

spend most of our time dealing with this epidemic in a very practical fashion. Unfortunately, HIV/AIDS has a grave effect on the

middle class and on the leadership of countries in Africa. In fact,

in Africa, AIDS has truly been a disease with no class distinction.

This reality could and will lead to the destruction of invaluable

human resources needed to continue the development in African

countries.

Let me give you an example, a stark one. If I chair a faculty

meeting, it is probably highly likely that a member of my faculty

will be dead in a few years from HIV/AIDS. To replace a faculty

member is an expensive proposition. You have to train a person up

to a doctor level so that they can teach and do research in the

country. If I go to my students, and my students are the largest

number of public health students in South Africa at the moment,

at least a quarter of them will die from AIDS in the next few years.

So for us it’s a fairly real problem that both the people who are

attempting to do something about the epidemic and the communities in which we work are very stretched by this epidemic.

President Mandela said in his February 1997 address to the

World Economic Forum that the pandemic is a threat that puts in

the balance the future of nations. AIDS kills those of whom society

relies to grow the crops, work in the mines and the factories, run

the schools and the hospitals and govern countries. It creates new

pockets of poverty where parents and breadwinners die, and children leave school earlier to support the remaining children.

The problem of access to adequate health care for individuals infected and affected by HIV/AIDS is a very complex one. There are

a number of barriers to adequate health care for individuals like

this. These include the costs of providing supportive health and social services essential for safe use and compliance, the setting up

and/or strengthening of treatment units, laboratory facilities, drug

delivery systems and the training of health care professionals, and

the cost of drugs.

An interesting example; I had a conversation last week on my

way back to the United States with the Minister of Health, the Secretary of Health for the province of Gauteng. Gauteng means a

place of gold, and it’s the province where Johannesburg is, and the

Minister of Health for that province, Dr. Gwen Ramakgopa, is a

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2nd-year student in the School of Public Health; she called me up

to talk about the problem that she had, a budgetary problem.

The health budget for that province is 5.6 million rand, which is around a billion—around $1 billion, and she has a 300-million rand

shortfall. And as we’re talking about this, she indicated that HIV/

AIDS was the biggest problem in two of her largest hospitals. One

is the Chris Hani Baragwanath Hospital, south of Johannesburg in

the township of Soweto, and the other is the Johannesburg General

Hospital. And both of these hospitals had accumulated a 300-million rand deficit, about a $60 million deficit.

As I was speaking to Dr. Ramakgopa, she said to me that it was

not a problem of access to drugs that she was dealing with, but it

was a problem of a broken-down health care system that needed

fixing. So part of our work in the next few months with the Department of Health for the province of Gauteng, we will be bringing

consultants from the National School of Public Health to the Ministry of Health to help them sort through the management problems that they have.

At a smaller level, one of my other students who runs a small

hospital in the eastern province that both President Mandela and

President Mbeki come from, have a budget of about 5 million rand

a month, and that’s just about under $1 million a month, and

about 10 percent of the patients who come into the hospital die.

They leave the hospital through the way—by way of the morgue.

Most of these patients are dying from HIV/AIDS.

The problem that we face is that most of these patients are

young, and the students asked the question as to how he could best

use his resources which he thought were relatively ample to deal

with the problem of managing the health care of a specific district

in the eastern province. Those are the kinds of problems that students bring to us in our university.

I would like to talk a little bit about what we think are adequate

or appropriate approaches to the pandemic. I see my time is up. So

I will go through this fairly quickly. First, there’s a need to train

health professionals in public health skills of screening and surveillance; that is what we are doing at the moment. We’re training

about 150 people every year to the level of a master’s degree in

public health.

There’s a need to train health professionals to treat patients with

HIV/AIDS. There’s a need to develop infrastructure, which is laboratory support for this epidemic. And there’s a need to deal with

the cost of resources.

I will conclude by just making a very short story about this issue.

My older brother, who works in one of the most devastated communities, works in a hospice that cares for babies dying of AIDS, and

he tells me that it takes about 5 hospital visits before the baby dies

of AIDS. He lives in a very poor community, and this is what he

spends most of his free time doing as a volunteer in a hospice that

cares for babies dying of AIDS.

And he tells me that part of his free time he spends working in

a hospice caring for adolescents dying of AIDS. His request to me

as the dean of the National School of Public Health, is not to deal

with the cost of drug issues, but his request to me has always been

quite specific: How do you prevent young people in South Africa

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from getting the disease in the first place? He sees this as the real

devastation in the country, and not the issue of costs. He does not

underplay the issue of costs, but he sees this as the more critical

problem.

Thank you very much.

Mr. MICA. Thank you for your testimony.

[The prepared statement of Dr. Herman follows:]

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Mr. MICA. I would like to now recognize James Love, the director

of the Consumer Project on Technology.

Mr. LOVE. Thank you. My name is Jamie Love. I work in Washington, DC, for a consumer group. I’ve been working on disputes involving intellectual property and health care since 1991, when I

was asked by a subcommittee of the Government Reform Committee to take a look at a contract between Bristol-Myers Squibb and

the National Institutes of Health on the development of tax law,

the government-funded invention.

I have subsequently not only done a lot of work in the United

States on issues relating to the research and development and patent issues, but I’ve done a lot of work internationally with governments, with public health groups, and with international organizations in different parts of the world. I will be attending meetings

in Pakistan next week about trade policy and patent policy and

health care. And I’ve been working a lot in the last couple of years

about issues relating to access to AIDS drugs.

My testimony has been submitted really in two different parts.

One is a prepared statement, and the other one is marked additional materials. The additional materials have five appendixes

that contain certain documents or information I may refer to. I’m

not going to read my statement, but I would like to highlight a few

points.

First of all, the issue about whether or not you can do things like

compulsory licensing or parallel imports is something that people

involved in U.S. trade policy have held out as some complicated

area or some controversial areas as though there’s some mystery

about whether or not these countries, like Thailand or South Africa, or places like that, have to find some magic formula to be able

to accomplish things like this.

In fact, the legal issues, at least from a point of view of international law, are really not complicated. In the case of parallel imports, for the benefit of the committee, which is if you, for example,

go to Canada and buy Claritin for $61 instead of $218 in the

United States, and import it back here; that would be called a parallel import.

That’s clearly permitted under the international agreements,

under the WTO agreements. There’s an Article 6 that says whatever a country does—whatever it does in that area is up to the

country; that there’s nothing in the WTO agreement that would

ever stop a country from doing it. And, in fact, England does it; the

Netherlands, the Danes do it. This happens in areas outside of

pharmaceuticals as well.

We don’t have trade sanctions against England about it. We don’t

have trade sanctions against Germany about it. We don’t have

trade sanctions against Denmark or the Netherlands. We do have

trade pressures against South Africa on this. We do have trade

pressures against Thailand on this. We have a lot of trade pressures on poor countries on compulsory—rather on parallel imports;

it’s legal, everybody knows it’s legal, and the basis of U.S. policy

is what they call TRIPS plus, which is to take what’s in the WTO

agreement as a starting opening statement, and then see what you

can get up on top of that.

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So when Mr. Papovich from USTR gets up before this committee

and says USTR, after 2 years of negotiations with the Health Ministry and the government and the President of the country are trying to figure out whether or not South Africa has our permission

to pass a law in their own Parliament to do parallel imports, if

we’re grandiose enough to permit them to actually do that, we’re

still trying to figure it out, whether it’s legal or not. I would represent that that’s not a truthful statement about the nature of the

dispute; that everybody from the Vice President, to the Trade Representative, to the Department of State, to the Patent and the

Trademark Office, and throughout the government understands as

we do, as the LPO does, as the WTO does, as every expert in the

field knows that parallel imports are not barred by trade agreements, and your own legislative counsel in Congress will tell you

it is not even barred under U.S. patent laws.

It’s not a question of patent rights of the United States. So on

the area of parallel imports, it’s crystal clear that the governments

have the right to do it, and the only thing that is stopping South

Africa, other than the litigation by drug companies under their own

laws, just like big corporations sue the United States Government

under our laws, and we try to pass like the Telecom Act, it always

has to do with the domestic litigation, but politically it’s pressure

from the United States. And it’s not just been in South Africa, it’s

been in many, many countries.

No. 2, compulsory licensing. Does the WTO permit compulsory licensing? Of course, it does. And how do we know that? Well, because the U.S. Government wrote most of the provisions about

compulsory licensing, and we wrote them because we have compulsory licensing under the Clean Air Act. And we have compulsory

licensing of patents for nuclear power. And we have compulsory licensing for public health purposes under the Bayh-Dole Act. And

we have compulsory licensing in the United States for government

use under eminent domain statutes. If the government wants to

use patents in the United States, it can deputize Lockheed or General Motors or any private corporation to use any patent that it

wants or any copyright that it wants and just do it.

And all you can do as the patent owner is seek compensation

from the government. You can’t even get an injunction against the

U.S. Government if they want to use your patent. That is the law

in the United States of America. And we can also do it on antitrust

laws. There’s 5 separate laws, ways that we do compulsory licensing in the United States of America. The government does it a fair

amount.

Now, the Government in South Africa through the Public Health

Service would like to do compulsory licensing, because they know

they can bring the prices down of many different drugs, in some

cases 90, 95 percent. It’s a difference of life or death in a wide

range of areas.

If we oppose it, it’s not based on legal grounds, it’s based upon

policy. It’s our decision, it’s our public policy decision, not to let

them do it.

Does that mean my time is up, the red thing there?

Mr. MICA. If you can try to wind up.

Mr. LOVE. I will, I apologize.

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Now, there’s another issue that I think people recently have been

trying to call attention to, and that is the U.S. Government pays

for a lot of research on the pharmaceutical drugs. The U.S. Government developed on its own ddI and ddC, a couple of AIDS drugs.

There’s a d4T, which is an important one that was invented at

Yale. The U.S. Government has grants that—there are patents on

3TC, which is another important AIDS drug; Norvir, which is the

first protease inhibitor, which was developed by Abbott Laboratories in a government grant.

All of these cases, and there are many more, the U.S. Government has patent rights that they have alienated and they cannot

alienate by government regulations and statutes. And the law in

the United States says the following on these interventions: It says

that the U.S. Government has a right to practice and have practiced the invention on behalf of the United States and on behalf of

any foreign government or international organization pursuant to

any existing or future treaty or agreement with the United States.

What does that mean in practical terms? It means we could, by

the stroke of a pen, without an appropriation, without a law, just

by doing it, give the World Health Organization the permission to

use patents on inventions, paid for by the taxpayers and use that

to get medicine out to people who are sick and who are dying.

Our decision not to do it is a deliberate thing, it’s a policy. It’s

our policy that the World Health Organization cannot use our patents. Why do we do it? We do it to protect the domestic drug industry. We don’t do it to protect patients.

The World Health Organization wants this authority. They’ve

asked for this authority. There’s discussions about this. We’ve

asked, and many groups have asked, the United States to do this.

You can help if you could encourage the administration to enter

into a memorandum with the World Health Organization to permit

these intellectual property rights be used.

I’ve exceeded my time. The rest of my statement is, I think, here,

and I would be happy to answer questions or respond to written

questions later. Thank you.

Mr. MICA. Without objection, what we will do is make your entire

statement part of the record.

[The prepared statement of Mr. Love follows:]

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Mr. MICA. And now we will recognize Dr. Peter Lurie, who is

with the Public Citizen’s Health Research Group.

Dr. LURIE. Good afternoon. My name is Peter Lurie, a person

born in South Africa who has done clinical work both in South Africa and elsewhere in the developing world. I’ve also done quite a bit

of international AIDS research both inside South Africa and elsewhere in Africa, Asia and South America.

What I want to do in my time is to address two arguments that

Dr. Siegfried is likely to raise in opposition to the arguments in

favor of compulsory licensing and parallel imports, and they are:

one, the argument of drug resistance made rather forcefully and inaccurately on the Peter Jennings clip that you showed; second, the

argument that somehow compulsory licensing or parallel imports

will reduce pharmaceutical profits to the point that they indeed

will dry up.

Let me talk about viral resistance first. Tom Bombelles, who is

with the Pharmaceutical Research and Manufacturers Association,

said—actually it might have been on that program—‘‘Just giving

people drugs without the proper treatment can create drug-resistant strains of HIV. It can make people sicker, not better. And that

threatens AIDS patients everywhere around the world.’’

Now, we agree that resistance is an important issue and something to be avoided if at all possible. Before I even address that,

though, I want to make two points about compulsory licensing and

parallel imports. The first is that compulsory licensing and parallel

imports do not require any country to do them. It is simply an opportunity that countries can choose to exercise or not. But if you

prevent compulsory licensing and parallel imports in blanket fashion, what you do is you rob the countries of their ability to choose

for themselves. We should not be making these arguments in paternalistic fashion and preventing governments in choosing for

themselves how they wish to spend their money.

Second, the viral resistance argument is actually being made

against the totality of compulsory licensing and parallel imports,

but many of the drugs that would be affected by this are not only

not AIDS drugs, but they’re not even for infectious diseases. Now

we have this resistant-strain argument being used in ways that

might prevent access to drugs for cancer or for heart disease.

Now let’s talk about HIV resistance directly. What the pharmaceutical industry seems to be arguing is the following: For a patient

to be worse off due to the development of viral resistance, one

would have to believe that a patient who is partially adherent or

compliant to anti-HIV therapy and, therefore, develops a resistant

HIV strain is worse off than if that same person had not been

treated at all.

There’s no scientific evidence for this assertion at all. First, many

patients who take anti-HIV drugs do not develop resistance even

if they’re noncompliant. Of course, the more compliant they are,

the better. Second, even for those who might develop resistance,

the change in the viral genetic material that results in resistance

is different than the part of the genome which is important for aggressiveness. And most of the time, mutant microorganisms reproduce less efficiently than nonmutants.

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A Review in the Journal of the American Medical Association—

we made this point in another article cited in my testimony—made

the point that HIV strains that are resistant to drugs are probably

more difficult to transmit to other people. So, if anything, the scientific evidence, which is not strong, suggests that the resistant

strains are less aggressive and more difficult to transmit than

those that are not resistant. So the argument is not based on any

science whatsoever.

Really, the decision of whether or not to treat a patient should

be something that is between a patient and their doctor. But to oppose compulsory licensing and parallel imports is a blunt instrument. Physicians and patients can no longer make that case-bycase assessment, and instead people will be denied drugs simply on

the basis of where they happen to live.

Assuming that all residents in developing countries are incapable

of adherence is both insulting and historically inaccurate. Developing countries are also not monolithic when it comes to public health

capacity, and it’s condescending to lump them together in order to

justify withholding effective treatments from them. There are enormous differences both between developing countries and within

them, and that needs to be taken into account.

Again, the countries should be allowed to choose for themselves.

The solution to the problem of lack of drug adherence to often complex AIDS regimes is not to withhold drugs from people. The solution is, as Dr. Herman said, to improve the infrastructure, and all

this needs to be done together.

Could anyone imagine turning to a developing country and saying to them, ‘‘You might develop resistant strains of malaria and

tuberculosis, and consequently you shouldn’t treat those patients

and just let those diseases remain untreated?’’ That’s the argument

that is being made here.

Lack of adherence to HIV drugs is a problem in the United

States as well. Will we, therefore, apply the same logic to populations in this country? Are we going to identify specific risk groups

or socio-economic sectors of this country and say, ‘‘Sorry, you are

not likely to be adherent, you cannot have these drugs?’’ The lack

of health care infrastructure is critical. It needs to be built up; to

use the lack of infrastructure as an excuse to not address the pricing mechanism seems to be completely inappropriate.

One of the reasons that the infrastructure in HIV is as bad as

it is is because there’s no particular reason to test people when

you’re not going to be able to provide them treatment at the end.

So to have treatment available will provide the incentive for people

to improve the infrastructure.

In sum, on both policy and virological grounds, the possible emergence of drug-resistant strains provides no support for arguments

against compulsory licensing and parallel imports.

I’m just going to briefly address what we call the R&D scare

card, the argument made by the pharmaceutical industry that research will dry up in the event that compulsory licensing and parallel imports—legal mechanisms, as Mr. Love pointed out—are implemented. This seems to argue that patients in developing countries would be better off right now without drugs while we wait paVerDate 11-MAY-2000 12:00 Sep 27, 2000 Jkt 000000 PO 00000 Frm 00179 Fmt 6633 Sfmt 6633 C:\DOCS\65308.TXT HGOVREF1 PsN: HGOVREF1
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tiently until later drugs are developed, which may or may not be

available after all.

And similarly, the history of international drug development

teaches us that waiting for the new, equally effective, but less expensive regimens is not something that really has shown a lot of

benefit over the years. Furthermore, pharmaceutical R&D expenditures have actually doubled between 1990 when Congress imposed

some price restraints on Medicaid drugs, and 1995; we heard the

R&D scare card brought out in full force in 1990.

The pharmaceutical industry is uniquely profitable; the most

profitable industry in this country, whether measured by sales, by

assets or by equity, and since 1989, pharmaceutical companies’ return on equity has been at least 1.7 times the median of all other

U.S. industries.

Given these extraordinary profits and the failure of the drug industry to make critical medications available for developing country patients, we urge you to call the R&D scare card bluff.

In conclusion, neither the viral resistance nor the R&D scare

card arguments provide support for closing these legal trade measures. As it happens, the sub-Saharan Africa market represents a

scant 1.4 percent of the global pharmaceutical market. An explanation for the pharmaceutical companies’ opposition to compulsory

licensing and parallel import is to be found elsewhere: in their desire to not have their irrational pricing practices exposed—we have

drugs available in Europe at often 50 percent lower than they are

here—and to maintain their high profit margins.

We suggest that providing potentially lifesaving drugs to residents of developing countries should have a higher priority. Thank

you.

Mr. MICA. Thank you for your testimony.

[The prepared statement of Dr. Lurie follows:]

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Mr. MICA. And now I would like to recognize Mr. Eric Sawyer,

executive director of the Human Rights Project. Welcome, and

you’re recognized, sir.

Mr. SAWYER. Thank you, Mr. Chairman, members of the committee and ladies and gentlemen. My name is Eric Sawyer. I’m the director of the HIV/AIDS Human Rights Project. I’m also one of the

founders of ACT UP NY, an activist group that was formed in 1987

to focus attention on the lack of governmental action with respect

to AIDS and to advocate for access to medical treatment for AIDS

and related opportunistic infections.

I also cofounded a housing group that houses more than 2,000

people with AIDS and have organized AIDS conferences in more

than eight countries, three of them in the developing world. I’m

also a person that has been living with AIDS for nearly 20 years,

thanks to my privileged access to a sophisticated and expensive regime known as salvage therapy. This regime includes daily doses

of five antiretroviral drugs. They include two protease inhibitors.

These drugs cost me $30,000 a year. But at present, my viral load

is undetectable. My T-cell count has risen to the highest level it

has been in a decade.

I’m more well today than I’ve been in 10 years, and I’m happy

to be alive and to be here today, but I’m also extremely sad because

I represent less than 2 percent of those with AIDS for whom HIV

has almost become a manageable disease. There are nearly 40 million men, women and children with HIV in the world today, and

98 percent of them have no access to these drugs.

For 98 percent of those 40 million people, this disease remains,

and there’s no other term for it, a death sentence. It certainly was

a death sentence for one of my heros, Auxcillia Chimusoro.

Auxcillia was a brilliant woman from Zimbabwe, full of life and energy. She had just found out she had HIV when I met her in 1992,

after her husband and infant child died of AIDS.

She quickly started the first support group in her country for

women living with HIV by coming out as HIV-positive and by opening her home to others. Her bravery was rewarded with a firebombing and with her children being beaten in school. Auxcillia responded by starting a sewing project to give AIDS widows in her

village an alternative to exchanges for sex, income, and food. Then

she went on to start a project to care for AIDS orphans.

To have access to health care, Auxcillia traveled overnight on

three different buses to reach a doctor who could treat her. Even

though Auxcillia developed her HIV infection 10 years after I became symptomatic, she’s dead today, and I’m alive. And that’s

wrong.

Auxcillia deserves to be alive and here with us today. The world

is a poorer place because of her loss and the loss of millions of others like her. And even if we were all—governments, NGO’s, researchers, activists, pharmaceutical companies—to come together

on this very day in pursuit of a common goal, there would be millions more like Auxcillia who will die before their time. Make no

mistake about it, we’re witnessing a global crisis of unprecedented

proportions. It will leave a fossile-like imprint on human civilization for decades to come.

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This very committee hearing, in my opinion, is of historic importance, and I urge you to listen to the testimony of everyone you

hear today with courage and compassion, but especially with a

sense of urgency.

During the few minutes that I have left, I’m going to zero in on

pricing issues for a few drugs to treat AIDS-related opportunistic

infections. My point is this: The kinds of combination therapies

that I have privilege to access are far beyond the resources of most

men and women in the developing world. They are somewhat difficult to administer and to supervise in those countries, but a lot

of these drugs are one tablespoon twice a day.

Combination therapies, in my view, are not the most important

drugs that we should be talking about, they’re a second-line priority. The first-line priority for extending the lives of people living

with HIV in the developing world should be access to very inexpensive drugs that exist to treat and prevent the development of opportunistic infections that kill most people with AIDS.

I’m especially troubled that the pharmaceutical industry focuses

all of this attention on these overpriced cash cows that they like

to point out are difficult to use. It would be far more important and

a far more immediate benefit to people with AIDS if they could

have access to these inexpensive, easy-to-use treatments that prevent the opportunistic infections that kill people with AIDS.

A few brief examples. Most people with AIDS die of preventable

illnesses like tuberculosis, pneumonia, fungal infection, or dehydration due to diarrhea. Prior to the advent of these triple therapies,

significant reductions in deaths for people with AIDS were

achieved here in this country by providing access, first, to these inexpensive easy-to-manage drugs for opportunistic infections.

What are the actual costs of these drugs I’m talking about? TB

prophylaxis, to prevent the development of TB, in a World Health

Organization program costs less than $15 a year per person. PCB

prophylaxis in HHS programs here in the United States, the most

expensive drug market, costs $24 a year. NTZ, a wide-spectrum

antiparasitic drug to treat diarrhea, and some of the older

antifungal drugs cost far less than that $15 for those Uganda TB

treatments.

For under $70 a year in U.S.-based costs, most of the related opportunistic infections that kill people with AIDS can be prevented,

delaying the deaths of those people for several years, perhaps long

enough for them to raise their children. Generic production of these

drugs and bulk buying by organizations like the World Health Organization could further reduce those prices.

Planned Parenthood-type programs in the developing world have

brought the cost of birth control pills down to 50 cents per month

in some developing worlds. These drugs are affordable. In other

words, a partial remedy to the global AIDS crisis in the form of

prolonging the lives of millions of people while we search for a vaccine, while we search for a cure, goes unused, and the importance

of implementing trade policies such as compulsory licensing and

parallel importing is that these policies can actually drive prices

down on these expensive drugs by introducing generic equivalents.

At the same time that we gear up our efforts to dramatically expand access to the drugs to treat opportunistic infections, we must

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start to investigate policies like parallel importing and compulsory

licensing or get the drug companies to introduce two-tier pricing

systems to reduce the price of these expensive combination therapies so that they’re affordable. Such efforts are already underway

in India, proof that it can and it must happen. In India, generic

AZT costs $34 for a month’s supply. The same drug, the same

quantities, are sold at $250 a month by Glaxco-Welcome in India.

For too long, in my view, the U.S. Government has allowed the

commercial interests of the pharmaceutical industry to drive trade

policy and, frankly, to avoid meaningful debate on what our public

policy should be with respect to global health issues like AIDS.

What is our responsibility as Americans? Now that we live in a

global village, do we really understand what it means to live or far

too often to die in a global village? What should our response be?

Should it be $100 million like Vice President Gore recently announced?

This is a welcome initiative, but it’s a drop in the vast ocean of

suffering created by AIDS and other infectious diseases, and it

amounts to only $3 for each of the world’s 34 million AIDS cases.

What I believe is required is a comprehensive and compassionate

policy that is driven by an informed vision of our responsibility as

Americans to a global society.

It’s time for us to realize that the public health of South Africa

is also the public health of the United States, and it’s time to act

accordingly. It’s time to challenge greed. It’s time to promote debate. It’s time to recognize that public health is never about them,

it’s about us.

The lesson that we can learn from AIDS, and I do believe that

there is a lesson, is that we must respond as one.

In conclusion, I would like this committee to consider the following: Please call for congressional hearings on the real costs of drug

development, to identify who actually pays for the research and development of the critical medicines. I believe that in many cases

you will find out it’s the U.S. taxpayers. Call for hearings on drug

pricing practices, and then really work to pass fair pricing legislation. Pass legislation that will make it illegal for the U.S. Government to use trade sanctions to bully the developing world to deny

its people access to affordable essential medicines.

Things like compulsory licensing are legal trade practices. Then

ask the President to license all U.S. taxpayer-funded medicines to

organizations like the World Health Organization. Jamie mentioned at least five drugs that we know that the U.S. Government

either holds the patent on, developed or significantly funded the

drugs, and therefore, retains ownership rights to. The U.S. Government can issue additional licenses by themselves and allow them

to be sold at whatever price they set.

Please also ask the world banking community to write off the developing countries debt and allow Africans to spend their money on

health, not on interest payments to banks. My mentor and hero,

Jonathan Mann, the architect of the World Health Organization’s

Global Program on AIDS, and his wife, Mary Lou, were tragically

killed last September on a crash on the way to Geneva, but he left

behind a global AIDS village and indeed, for all of us, the vision

of the inextricable link between health and human rights.

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I would like to end my remarks with a statement that Jonathan

made at last year’s international AIDS conference in Geneva. Jonathan said, ‘‘our responsibility is historic, for when the history of

AIDS and the global response to it is written, our most precious

contribution may well be that at a time of plague we did not flee,

we did not hide, and we did not separate ourselves; in this spirit

may we all not separate ourselves, but, instead, work together to

provide every man, woman and child with one of their most fundamental rights, health.’’ Thank you.

Mr. MICA. Thank you for your testimony.

[The prepared statement of Mr. Sawyer follows:]

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Mr. MICA. And we will now hear from Dr. John Siegfried who is

with the Pharmaceutical Research and Manufacturers of America.

Welcome, sir, and you’re recognized.

Dr. SIEGFRIED. Thank you, Mr. Chairman. And members of the

subcommittee for inviting PhRMA to testify today on the issue of

whether the pharmaceutical industry is critical to the effort in combating the HIV/AIDS epidemic. By way of introduction, I am Dr.

John Siegfried. I serve in a consultant capacity as senior medical

officer for the Pharmaceutical Research and Manufacturers of

America.

As a PhRMA employee from 1992 to 1998, I lived in the District

of Columbia and was a volunteer physician caring for AIDS patients on a regular basis at the Elizabeth Taylor Medical Center of

the Whitman-Walker Clinic, a leading AIDS facility in the District.

PhRMA is the trade association representing the American-research-based pharmaceutical industry. Defined by their commitment to innovative research and development, PhRMA member

companies led the way in the research for new medicines and vaccines that save lives, improve the quality of life, and often provide

the most effective and cost-effective health care for patients.

In the area of therapies for HIV/AIDS, the contribution made by

the U.S. pharmaceutical industry is nothing short of remarkable.

First reports of a mysterious illness later identified as HIV/AIDS

appeared in the medical literature in 1981, and the HIV virus was

identified in 1983. The first HIV/AIDS treatment was approved

only in 1987.

Since then 54 medicines have been approved for HIV/AIDS and

associated conditions, and an additional 113 are in development,

most of which are being developed by the research-intensive pharmaceutical companies. Government and academic scientists generally lead the way in advancing basic knowledge about HIV/AIDS,

although pharmaceutical companies have contributed. And the industry has led the way in translating those advances and knowledge into HIV/AIDS medicines to help patients.

Drug discovery and development in the United States usually

takes 12 to 15 years from the test tube to the pharmacy. The development of 15 medicines within only a decade and a half is thus an

unprecedented accomplishment. The National Institutes of Health,

particularly the National Institute of Allergy and Infectious Disease, and Dr. Killen who was with us this morning, led in advancing our basic knowledge. Pharmaceutical companies led the discovery and development of medicines to help HIV/AIDS patients. And

the Food and Drug Administration expedited review and approval

of these lifesaving medicines.

Equally unprecedented are the results of this effort in the United

States and in many other developed countries. The death rate from

AIDS in the United States dropped by nearly one-half from 1997

to 1998, the largest single-year decline in any major cause of death

ever. The health of many HIV patients improved. Many have returned and are returning to work and leading more productive

lives.

Often the demand for more expensive secondary and tertiary

health care services has declined as a result of newer therapies

providing the most effective and cost-effective health care for AIDS

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patients. The new products not only help many patients, but can

also reduce the needs for other medicines to treat diseases associated with AIDS and the need for treatment in hospitals and hospices.

The foundation on which this progress rests is investment in innovative research and development, and it is in the area of applied

research and development that the pharmaceutical industry excels.

It is the industry’s role in this crisis to lead the way in the discovery and development of pharmaceutical and biotechnology products

that can play a critical role in HIV/AIDS treatment and prevention.

But not all patients and not all countries can afford them. Effective response to the HIV/AIDS challenge in developing nations

must take into consideration all of the relevant factors, including

medical infrastructure, available resources, disease awareness and

prevention initiatives, and most importantly, national commitment

and leadership to make HIV/AIDS a public priority.

The principal role of the research-based U.S. pharmaceutical industry in confronting HIV/AIDS worldwide is to continue what it

does best, to marshal the expertise and capacity and applied biomedical research and drug development to discover new and more

effective treatments. In cooperation and collaboration with scientists and the government and academia, some pharmaceutical

companies are also seeking to discover and develop an effective

HIV vaccine which ultimately would be the most effective way to

prevent HIV/AIDS.

Investors and pharmaceutical companies seek a return on their

investment commensurate with the large risk they assume. The

current cost of bringing a pharmaceutical product to market averages $500 million, and only 1 in 5- to 10,000 compounds tested ever

reaches the marketplace. Additionally, of marketed products, on average only one in three generates revenue that meets or exceeds

the average R&D cost.

The U.S. pharmaceutical industry is spending $24 billion on research and development this year, including approximately $2 billion on research and development of HIV/AIDS-related drugs. Over

20 percent of all domestic sales revenues go back into research and

development, the highest proportion of any industry with which we

are familiar.

Intellectual property protection and market pricing are keystones

of and essential to this research effort. The research-based U.S.

pharmaceutical industry has contacts with governments and health

agencies around the world, and therefore, is well positioned to provide input in the area of intelligent health education and policy.

This expertise complements and supplements the responsibilities

and expertise of other members of the world health care community, both public and private.

Let me give just several brief examples. Bristol-Myers Squibb is

spending $100 million over 5 years in five southern African countries to fund extensive AIDS research trials, improve training for

more than 200 physicians, and help nongovernmental organizations

bolster community AIDS prevention and treatment programs. The

company has also developed a pediatric AIDS program in Mexico,

and is donating drugs to cover all untreated cases of pediatric

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AIDS in the country, and providing physician training and community outreach.

The Merck Co. Foundation is underwriting the Enhancing Care

Initiative, an initiative coordinated by the Harvard AIDS Institute.

The Enhancing Care Initiative will address the issue of HIV-AIDS

in the developing world by bringing together the most important

expertise within specific developing countries including representatives of the HIV community. Glaxco-Welcome is providing deeply

discounted prices for AZT, in cooperation with UNAIDS, and in addition, the company is sponsoring a program called Positive Action,

whose activities are devoted to initiatives and organizations in developing countries.

These activities in the private sector complement the initiatives

of others, including the HIV community, governments, and international organizations.

In conclusion, Mr. Chairman, broadening access to modern

health care in developing countries, including pharmaceuticals, is

a complex challenge. While the HIV/AIDS pandemic creates special

challenges, the needs of patients worldwide with tuberculosis, cancer, parasitic and fungal infections does not lag far behind.

Many countries lack the broad public health infrastructure necessary to support the use of complex regimens of anti-HIV treatments. Many AIDS experts, such as Dr. Thomas Coats, executive

director of the University of California at San Francisco’s AIDS Research Institute, have been quoted as saying that delivery of complex, demanding AIDS drugs without the necessary infrastructure

and supervision is ‘‘a recipe for disaster.’’

Dr. Herman’s comments earlier this afternoon echo this sentiment. It is neither feasible nor desirable to simply import treatment regimens from other countries into South Africa. This is true

for the disease HIV/AIDS and for many other health conditions.

These are complex issues that can only be addressed through collaborations involving industry, government, international organizations, patient and medical groups. All are vital to finding workable

solutions that will help patients with HIV/AIDS lead better lives

and prevent others from contracting the disease.

Thank you, sir.

Mr. MICA. Thank you for your testimony.

[The prepared statement of Dr. Siegfried follows:]

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Mr. MICA. I thank all of the witnesses for their testimony.

I have a couple of questions. I will start out with Dr. Herman.

Dr. Herman, you cited one of the Ministers of Health, Dr.

Ramakgopa.

Dr. HERMAN. That is close enough.

Mr. MICA. I am not very good at the pronunciation. But your testimony said that the doctor indicated that her fundamental concern

was not the cost of drugs, but the lack of a coherent and well-managed program. Is that really the problem there?

Dr. HERMAN. South Africa is just 5 years post-apartheid. Most of

the health care system is still in a state that can best be described

as confused.

Mr. MICA. Is it a public or socialized health care delivery system?

Dr. HERMAN. This is only the publicly funded health care system.

Mr. MICA. Do they have a private system, also?

Dr. HERMAN. There is a larger private health care system in

South Africa.

Mr. MICA. Has this been converted, and you are saying that is

part of the problem, not the cost of drugs?

Dr. HERMAN. We have a very complicated health care system

where both sides are in crisis. In the private side we have a health

inflation rate that is twice that of the national inflation rate, so the

private sector has problems in costing for drugs, et cetera.

Mr. MICA. What percentage of the population has access to——

Dr. HERMAN. Private insurance?

Mr. MICA. We will just say to AIDS treatment.

Dr. HERMAN. Twenty percent of the population actually have

some kind of insurance. The insurance companies now, which number 170 such companies in a country of 14 million people with 40

different fund managers that keep on changing things, those people

are starting to get access to drugs, but the remaining people do not.

Mr. MICA. So there is a large percentage of the population in

South Africa that does not have access to drugs for treatment; is

that correct?

Dr. HERMAN. They do not have access to antiretrovirals, but they

do have access to drugs for opportunistic infections.

Mr. MICA. And you are saying that cost is not a factor there?

Dr. HERMAN. Not at the moment. The problem is the system is

not working very well for many different diseases.

Mr. MICA. Mr. Love, you were critical of our trade policies, and

seemed to single out South Africa for specific treatment, unfair

treatment.

Can you elaborate on what you were saying? You said that other

countries, and I think you named some of them, that, in fact, we

turn our backs or have a different policy than we do for South Africa on this particular issue.

Mr. LOVE. The U.S. Government has had, for the last decade or

so, a policy of advancing positions that are favorable. The drug

companies are like an exporter. They look at it like a domestic

business. They want to help them out, so they want to back them

up.

So, on the particular issue of parallel imports, which is an important part of the dispute with South Africa, it is a fact that many

European countries do parallel imports as a matter of course. In

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fact, the European Commission actually encourages parallel imports within the European community. They think it makes the

markets more efficient.

I was pointing out this hypocrisy between the fact that we do not

complain about the fact that it is an established practice in Europe,

the colonial powers of South Africa, yet we have spent a couple of

years of government officials’ time trying to pick apart the efforts

of the South African Government to do something that is modeled

after European practices.

That said, if the United States had its way, they probably would

try and persuade the European countries not to do it. It is just that

they do not think they would succeed in Europe, so the United

States is most active where it thinks it has the most leverage,

which has to be with small, non-European, and poor countries.

I have an example in my testimony about pressures on Israel,

Thailand, and New Zealand, to give you an example of different

countries we apply pressure to. South Africa is not the only country

where there is pressure.

The South Africa dispute has become quite important because

the South Africans have been uniquely defiant of the Americans.

They have not really backed down. That is why they have become

such a big test case. The sense is that if the South Africans succeed

in doing what they want, then other countries will follow suit. So

it has become of interest to people throughout the world.

Mr. MICA. Thank you.

Mr. Sawyer, your participation in Act Up is rather historic. Has

Act Up testified before Congress before? I know you have participated in hearings.

Mr. SAWYER. I don’t think we have ever been invited.

Mr. MICA. We are pleased that you accepted our invitation.

Mr. SAWYER. I am pleased to be here.

Mr. MICA. I must say that you have made a big difference, because people did not want to broach this subject. I was shocked

today at the difficulty in trying to get the hearing together, and

that is some 12 years later than you started. But we do appreciate

what you have contributed. Sometimes in our societal system, the

only way you can bring attention is by acting up; watch me sometime.

I find you have to get people’s attention, and you have done that

very well and probably have saved a lot of lives, so we appreciate

what you have done, and also your willingness to come forth and

provide constructive testimony.

One of the dilemmas that we have is we do not want to—and you

are sitting next to the pharmaceutical manufacturer’s representative—is we do not want to stop those folks from doing what they

do so well. Every time government gets involved in something, they

have a tendency to mess it up. One of the great things about our

system is the private sector has worked so well, and often with a

profit incentive, and we don’t want to discourage that. There is

nothing like a profit that seems to motivate folks. But there is also

the public good, so we have to balance that.

I am not sure if it was you or Dr. Lurie that mentioned that

there are instances of buying these licenses or providing additional

licenses, and I think that might have been one of your constructive

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suggestions. Could you elaborate? I am not that familiar. There are

drugs——

Mr. SAWYER. Sure.

Mr. MICA. Then you said—the other part was turning over some

of these licenses to international organizations. Can you elaborate

as to how that would work and how we would cover the cost, and

is there some schedule or some precedent for proceeding?

Mr. SAWYER. Yes, and, Jamie, please feel free to chime in. He

sometimes knows the technical trade legalities a little better than

I.

But let us take one drug, for example, ddI; developed by the National Institutes of Health. The patent is in the name of Sam

Broder and a few other scientists who still work in Bethesda for

the National Institutes of Health. So HHS has that patent. HHS

auctioned that drug off. Bristol-Myers Squibb has a licensing agreement with HHS to, for 10 years, exclusively market that drug in

some countries.

My understanding is that the license is primarily for the United

States, Europe, Japan, Australia, the places where they can charge

the highest prices for those drugs.

Because the U.S. Government holds the patent, did not give

them exclusive worldwide right to that drug, and retained the patent, the U.S. Government can issue additional licenses, especially

in countries where Bristol-Myers Squibb was not given exclusive

rights.

The World Health Organization, for example, as well as South

Africa and Thailand, have expressed interest in being able to

produce generic versions of those drugs. If the U.S. Government

gave a license and did transfer of technology, they basically could

be producing not just generic equivalents, but the exact same drug

that Bristol-Myers Squibb produces. The price of that could be negotiated at whatever level was deemed appropriate by the manufacturers and by the U.S. Government.

Bristol-Myers Squibb, for the first 10 years of its license, I believe, pays the U.S. Government 5 percent royalty, 5 percent of

sales. My understanding is that the next 10 years they have a right

to renew that agreement, and that there also was a fair pricing

clause inserted in that contract that stated that Bristol-Myers

Squibb needed to price that drug in a way that it was affordable

to people who needed access to the drug.

We have asked Donna Shalala’s staff, we have asked Sandy

Thurman, we have asked people in the Vice President’s office, including Tom Roshert, who was here earlier today, to please have

the government, and we believe this would be an executive branch

function, do a review of that drug to see if indeed Bristol-Myers

Squibb is being compliant to that fair pricing clause. I do not believe it is, given that the majority of people cannot gain access to

it. I would think that would be reason alone for the U.S. Government to issue additional licenses.

Now, that 10-year exclusivity period is up for review, I believe,

at the end of this year. We have also encouraged the U.S. Government not to renew that.

Mr. LOVE. Actually I have a copy of the license here. We can clarify it.

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Mr. MICA. That could be an interesting question that we could

probably submit to Ms. Thurman. Thank you for your response,

maybe we will include that.

I don’t want to take up all the time. We have other Members

waiting.

The other big point that you made is important, that this is not

just an international issue, but also domestic. You are a survivor

because you have somehow managed to pony up the $30,000 a

year. I could probably name two dozen people, many who work for

Congress and others, who I have known personally very well who

have since died who either did not have the $30,000 or did not

have the drug available. So we have an international and we have

a domestic problem. So we need to address that, too.

There are a whole range of questions there that we are unable

to get into in this hearing, but we appreciate again your testimony.

I yield now, if I may, to our ranking member, Mrs. Mink.

Mrs. MINK. Thank you.

Mr. Sawyer, the comments you made about this drug that the

United States holds the license for, you said it was ddI?

Mr. SAWYER. Correct.

Mrs. MINK. What specifically is that used for?

Mr. SAWYER. It is an antiretroviral drug that prohibits reproduction of the HIV virus, so it slows the progression of HIV to fullblown AIDS, in short it helps control the HIV virus.

Mrs. MINK. Is that used solo, or is that used in combination with

other drugs?

Mr. SAWYER. It was first used as monotherapy, but that was not

deemed to be effective, due to its short-term effects. It is one of the

components of a triple therapy.

Mrs. MINK. What about the other two components?

Mr. SAWYER. There are actually a whole number of additional

drugs that can be used in a triple therapy. I mentioned that I take

five.

For someone like myself, who has had access to each of these

drugs in monotherapy as they have come to market, I have developed a partial resistance to them, so for me, it takes five of these

drugs to control my virus. But here is another one, 3TC, that the

U.S. Government does not have a patent on. There are about four

patents held by some universities, a generic drug company in Canada, some other companies, but this drug was one that was significantly funded by government grants, and again, the patents and

the licensing agreement have footnotes that state the U.S. Government retains some ownership rights.

You could use this drug in combination also with this drug,

Norvir, a protease inhibitor. It is one of the most expensive classes

of drugs. Again, these three triple cocktails help control the HIV

virus and stop or slow the progression to full-blown AIDS.

Norvir also was significantly funded. The initial research on this,

funded by the U.S. Government, was what helped discover this

whole class of drugs. Again, the footnotes in the licensing agreement and patents say because of taxpayer investments in the research of this drug, the U.S. Government retains certain ownership

rights.

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So if you added these two drugs together with ddI, you would

have drugs that the government maintains ownership rights to

that could effectively be used at prices the government deems appropriate, in my understanding, so that they could be used on a

more cost-effective basis.

Mrs. MINK. This information that you have provided this subcommittee certainly underscores, at least in my way of thinking, a

tremendous legal and moral responsibility on the part of the

United States to devise a policy that would utilize these proprietary rights which it owns for the benefit of our own citizens here

in the United States, as well as internationally.

Mr. SAWYER. And global public health.

Mrs. MINK. We, Mr. Chairman, I think have hit on an issue here

that would require us to expand this investigation, call upon the

government to explain the lack of extensive use of these drugs that

it has in its ownership.

I’m very compelled by an argument made by Mr. Love with reference to the opportunistic illnesses that come together with AIDS.

As Mr. Sawyer testified in many cases they are the reasons for

death. So if we want to support these individuals, one of the ways

to do it is to provide the drugs necessary for tuberculosis, diarrhea,

and all these other things that you have explained.

My problem in coping with that rather simple, direct issue is

why aren’t we doing it? What are the barriers that confront us and

prevent us from using the World Health Organization or UNAID

or all of our resources, or the full $200 million to make it possible

for the accessibility of these very simple drugs, which I assume are

no longer in the proprietary control of the pharmaceutical companies?

Mr. SAWYER. That is, many of the reasons, many are controlled

by the generic drug companies or they are on the generic market,

so there is not a huge profit margin in them. Therefore, the big

multinational drug companies are not interested in developing new

versions. They have the most extensive distribution networks. The

generic drug companies don’t have as huge profits and don’t have

as far-reaching distribution networks, so they have not been able

to put them out. Things like structural adjustments prevent many

developing countries from allocating sufficient amounts of their

own national resources to health care. They are forced to repay

loans to the World Bank.

Mrs. MINK. Why couldn’t the USAID policy in this area include

substantial monetary support so that these particular kinds of

drugs can be made more readily available?

Mr. SAWYER. We have actually asked USAID to do that very

thing for several years. Their mandate so far that has come down

from the State Department, in my understanding, and Paul Delay,

who is the head of the USAID Global Program, was here. Is he still

here? I guess he is not. We have had these various discussions with

him. He has stated that the State Department mandate limits the

role of USAID to prevention only. The thinking was that condoms

and preventing someone from getting infected was more cost-effective than treating people.

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Again, unfortunately, organizations like the World Health Organization, or I’m sorry, the UNAIDS, the primary coordinating body

to join in the UNAIDS budget is less than $60 million a year.

Dr. LURIE. I think in addition to the issue of infection treatment

is the issue of mother-to-child transmission prevention. That is another area where, for a relatively small amount of money, you can

make an enormous difference, not only extending people’s lives, but

actually saving them.

In that regard, it can be a rather small amount of money that

is the difference between access and nonaccess. Despite Dr. Herman’s assertion that money is not the issue in South Africa, I have

an article that I published in the South African Medical Journal

last week, last month, in which we addressed the failure of the

South African Government to be willing to invest even approximately $50 per patient in HIV prevention, mother-to-infant.

When asked, Dr. Zuma, then the head health person in South Africa, said, ‘‘The drug treatment is not cost-effective because we

don’t have the money.’’ So I simply do not find believable, even in

South Africa, that money is not a problem; there you have the

Health Minister making that precise point.

I also would just, in a rather slightly different note, before I miss

the opportunity of having the mic, is Dr. Siegfried quoted Dr. Coats

on the question of antiviral resistance. I happen to know Dr. Coats.

I have written a number of papers with him. Dr. Coats is a psychologist? He is a doctor, but he is not a psychologist. If that is the

best the pharmaceutical companies can come up with, that is a

rather sad state of affairs.

Mr. MICA. Mr. Lantos.

Mr. LANTOS. Thank you, Mr. Chairman, very much. Let me again

commend you for holding this very important hearing. And let me

commend all of the witnesses for their very interesting and useful

input.

I have a somewhat different approach than what emerged from

your dialog with Mr. Sawyer a few minutes ago. I was very much

impressed by your testimony, Mr. Sawyer.

We must not trivialize this issue. Tactics of advocates who clearly are speaking on behalf of a minority must not create a backlash

on the part of the majority that needs to be persuaded. I think it

is always important to realize that we all have roles to play. An

advocate has a very clearcut role to play. A one-issue advocate has

an even clearer role to play.

But I think you need to know that a whole range of illnesses,

from Alzheimer’s to diabetes, are coming to us on a regular basis

saying, this particular tragic illness is getting a disproportionate

share of attention, interest, money, and involvement.

Since I represent, along with my friend, Nancy Pelosi, San Francisco, I am extremely sympathetic and understanding and supportive of all these efforts. But I think it is extremely critical to understand that if we wish to go beyond just feeling good about powerful

statements we make, coalitions have to be built. And statements

that $100 million additional funding announced by the administration just a short while ago is really a step in the right direction,

but palpably insufficient is not very helpful.

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We have a range of issues that we in the Congress deal with,

ranging from tobacco to cancer to drug abuse to gun violence to alcoholism to hate crimes, every one of which, and 100 others, could

gain 10 times the financial support that it is gaining and would

still not be sufficient.

So with all due respect, I would suggest that temper tantrums

and histrionics are not a good avenue to advance the cause, which

is much too serious. The numbers of lives involved are unbelievably

weighty, and good will needs to be generated across the board on

the part of people who are supportive. Attacking people who are

supportive is not a helpful formula.

I would merely make the general observation, having learned a

great deal during the course of this hearing, that I think as the

issue gains more visibility and support, as I hope that it will, a

greater sense of responsibility must be present on the part of its

advocates, because the advocates will succeed in proportion to their

sense of responsibility and sensitivity to other problems.

This is not the only medical problem the Congress is called upon

to deal with. While statements such as yours, Mr. Sawyer, and I

truly admired your testimony, which was very moving and I think

very impressive, that their health problems in South Africa are our

health problems, I don’t think you would get many votes for that

statement in the House of Representatives. We are a much more

parochial body than one which would embrace such a statement.

Therefore, as one who is so strongly supportive of what you are

attempting to achieve, my word of caution is merely a very friendly

one. Broad coalitions need to be built to begin to move in the direction that all of us would like to move in. The people who are supportive, perhaps not to the extent that any one of us would like to

see them being supportive, nevertheless need to be appreciated and

recognized for their support. It is very easy to alienate people,

while it is very difficult to build coalitions. I think this issue deserves the painful task of building coalitions. I, for one, will be very

much a part of that coalition as we move ahead.

Thank you, Mr. Chairman.

Mr. MICA. Thank you.

Let me, if I may, recognize Mr. Cummings, who is a member of

our subcommittee, next.

Mr. CUMMINGS. I have no questions, Mr. Chairman.

Mr. MICA. And in seniority, Ms. Norton.

Ms. NORTON. Thank you, Mr. Chairman.

Let me echo the words of my colleagues who have complimented

you on bringing this issue forward. It has not received the public

attention of this body that it requires, and I have been listening

not only because of my concern and the concern of the Congressional Black Caucus, or the plague in Africa that is wiping away

the continent, but because so much of the testimony we hear today

applies to situations in the United States.

After this hearing, I’m not going to forget it. Fifty percent of the

new AIDS cases in this country are black people right here, where

all the drugs are supposed to be available. Why do you think this

is happening? We are 13 percent of the population.

I want to make sure that there is an understanding that we are

truly knitted together, and that we begin to deal with what is a

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real epidemic in this country as well. We have to be able to walk

and chew gum at the same time.

I want to begin by some questions to Dr. Siegfried.

First, make me understand, Dr. Siegfried, why there would not

be uniform treatment across the globe of compulsory licensing and

parallel importing. How is it possible to justify differential treatment among countries with respect to these two legal approaches?

Dr. SIEGFRIED. Congresswoman Norton, I appreciate the question. Unfortunately, my involvement with AIDS and AIDS policy

has been very limited to treatment issues; I am not an expert at

all or a lawyer or involved with parallel imports or in a position

to describe that.

Ms. NORTON. I was asking you that question as a physician.

Would you see any reason why there should be any difference

among the countries of the world in these approaches to providing

drugs?

Dr. SIEGFRIED. As a physician, what I would love to see is uniform access to all the AIDS treatments throughout the world, just

as I would like to see all hungry children fed and all ill people——

Ms. NORTON. So your answer is you do believe there should be

uniform compulsory licensing and parallel importing policies

throughout the world, as a physician? I understand you are not a

lawyer, I understand you are not a trade expert.

Dr. SIEGFRIED. I am not sure that is what I said, because I don’t

know the policy terminology. I think as a physician, we ought to

have access to the best treatment, not only for everyone in this

country, but throughout the world, absolutely.

Ms. NORTON. Dr. Siegfried, let me ask you something that I am

sure is right directly in your sphere of knowledge, because it is in

your testimony. You testified that Bristol-Myers Squibb is spending $100 million

over 5 years in five southern African countries to fund extensive

AIDS research trials. Now, I don’t know if you heard Ms. Nkhoma’s

testimony, but her testimony included a very poignant point and

one that is very disturbing to me. Let me see if I can get some

sense of it from you.

She says that when these trials are done, and I certainly believe

it is important to do trials in developing countries, AZT, for example, has been given to some and placebos, as trials must, given to

others. And then she says the companies pick up and leave so that

the people who had the placebo have no access to any treatment.

As a physician, would you comment on that practice of the drug

companies?

Dr. SIEGFRIED. As a physician and also as somebody who has

been involved with the research and development end of drugs, I

think the thing that is important to appreciate is that every trial

that is done in developing countries, as well as in this country, has

individual kinds of protocols, or contracts. In some of those, I am

sure what she referred to this morning is, in fact, the case. It is

not a uniform practice, and there are trials in which treatment continues.

Ms. NORTON. What is your view of that?

Dr. SIEGFRIED. It becomes, for the pharmaceutical companies, almost a deterrent to do drug trials in developing countries if part

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of the contract is that they must then continue treatment, and

along with treatment, the laboratory studies, all of the other ancillary services for long periods of time.

Here in this country the way it gets handled, of course, is after

the trial is over, there often is a compassionate use program to assist people until the drug comes on the market. If you don’t have

the infrastructure in countries, it is not possible to do that.

Ms. NORTON. If you did have the infrastructure, if you are using

a fairly simple drug, do you think that should be done?

Dr. SIEGFRIED. Absolutely.

Dr. LURIE. Let me try and help out a little here, because the

whole matter of use of placebos and the subsequent availability of

drugs after clinical trials is one that our group brought to public

attention 2 years ago in the context of the mother-to-infant transmission studies, which I think in part was what was referred to.

Actually it is not to provide—we objected to the use of placebos

in those studies because there were known effective treatments at

that time which the American government-funded researchers

elected not to provide.

Ms. NORTON. Let’s deal with those where there are effective

treatments.

Dr. LURIE. My point is that in those initial trials, there were placebos, despite the availability of effective treatment. In defense of

the pharmaceutical industries, the sort of followup studies that

were done in developing countries were not funded by the pharmaceutical industry. Actually, the situation is much worse; they were

funded by the CDC and the NIH, and a number of other funding

agencies around the world.

Ms. NORTON. I don’t care who funds them. I am asking an underlying medical ethics question.

Dr. LURIE. I understand.

Ms. NORTON. His testimony talked about Bristol-Myers Squibb’s spending $100 million specifically for such trials. I understand this

may be happening in all kinds of ways. The government does it

even worse. I am trying to find out if you go to a developing country, if it is an ethical practice to have two groups and to leave one

group with nothing afterwards, even though they have understood

that they are in the placebo group. That is my simple question.

Dr. LURIE. I am trying to not complicate it, but in the case of

mother-to-infant transmission, it does not really matter what happens after the trial, in the sense that if you are in the placebo

group, you are already more likely to have developed an HIV-infected infant.

Ms. NORTON. Are you suggesting there should not be such trials

at all?

Dr. LURIE. With regard to effective treatment that exists, but

with regard to this, ethics are clear, but frequently violated. The

Council of Organizations in the Medical Sciences, which has written one of the two major ethics documents for the world, states

that after a trial is completed, any medication proved effective during the trial should be made ‘‘reasonably available’’ to the population from which the study subjects were drawn.

It is, however, an unfortunately common practice for pharmaceutical companies and government-funded researchers to do the

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research and then to do exactly what Dr. Siegfried has sought to

justify; to not provide therapy after the trial. We find that completely unacceptable.

Unfortunately, the pharmaceutical industry, to a limited extent,

but especially researchers from this country, including those from

the NIH and the CDC, have sought to address the problem of the

fact that they have been violating these ethical agreements with regard to reasonable availability after the trial, as well as with respect to the requirement to provide best-known therapy to people

in developing countries during a trial. They have addressed that

problem by trying to rewrite all the ethics rules.

What we have now going on in the world is a coordinated effort

involving principally people from the United States, especially U.S.

Government researchers, who are trying to rewrite the Declaration

of Helsinki, and are trying to rewrite the SIAMS document I just

referred to, such that these kinds of practices would be less likely

to be criticizable.

Ms. NORTON. Let me just say that I think that those involved in

trials are a relatively small group.

Dr. LURIE. Absolutely.

Ms. NORTON. When people volunteer to possibly be somebody

who would not, in fact—who is not, in fact, receiving treatment, the

least we can do for this small group is to provide continuing treatment.

Dr. LURIE. One would hope that. But in the aftermath of what

I call the second generation of studies, the one that included the

placebo group in developing countries, what we now have is a new

generation, a third generation of studies, including one in Malawi,

in which the new, cheaper effective regimens are still being denied

people, even today.

I agree with you, though, that the situation in the clinical trial

is very easy to complain about because it is conducted by the U.S.

Government, for example. But the far greater problem is the lack

of commitment of pharmaceutical companies and others who conduct research, human experiments, on the citizens of developing

countries and then seek to evade their ethical obligation to provide

treatment after the trial.

Ms. NORTON. Dr. Siegfried wanted to respond.

Dr. SIEGFRIED. I think it becomes very difficult to put all trials

in developing countries in one basket, or all companies conducting

trials, or all government agencies conducting trials. My guess is if

these were looked at very carefully, you would find specific differences.

Ms. NORTON. That is why I was looking for a universal principle.

Dr. SIEGFRIED. I am really reluctant to comment on BristolMyers Squibb in terms of specific trials in Malawi or wherever, because my understanding as part of this program in which they are

doing a number of trials is that they will be providing continuing

drugs. But that is an understanding, and I cannot state that for

sure.

Ms. NORTON. That is why I looked for the principle.

One last question; you testified that the company has developed,

and this is really of interest to me, because even the very important testimony of Mr. Sawyer, if I may say so, Mr. Sawyer, it was

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just poignant for me to see you pour those drugs out, because I represent many people right here in the Nation’s Capital who cannot

get anywhere close to affording those drugs, and these drugs are

going to middle-class white people, let us be clear.

And that is why, when somebody tells me about drugs like that

in Africa, I am very much more interested, and I know my time

is going to be up, in hearing more about what Dr. Herman has to

say about a practical approach to dealing with an epidemic.

This is so American, really, and we do it all over the world. We

get sick, and even poor people, not people in between; by the way,

even poor people can go to the emergency room and go to the doctor. So we have our approach to a Dr. Herman, because we are

used to finding medicines. So you have to understand that the way

we think about these problems is, there is a cure, get yourself a

drug, it will take care of it.

I want to say to you, Dr. Herman, that what you say resonates

with me, because AIDS cases in this country are so largely black

today that I feel like we have a runaway problem among black

Americans. And I am here, and that is why you see me far more

interested in getting my government to figure out what to do at the

front end of this disease. Because as long as I have to look at a

young man telling me that these drugs are available, and some of

them are even simpler than others, I know he is not talking about

large numbers of people that I happen to represent. I am much

more interested when I see the magnitude of the problem throughout Africa.

South Africa may be even better as the only industrialized country in Africa. When I see the magnitude of the problem there, I am

interested in trying to keep countries from doing what Uganda has

to do, which is to go to triage and say, we have to let some people

die, because the only way we can do now is to deal at the back end

with drugs. That is hopeless for us.

I am looking for what is practical. You used the word ‘‘practical.’’

I’m looking for a practical way to get hold of this problem in a developing country. I must tell you, Doctor, I’m looking for a practical

way to get hold of this problem in Anacostia, across the Anacostia

River, because the American way is not even helping African Americans in this country. So I cannot imagine that the American way

is going to help in your country, though of course I must say that

I regard it as immoral not to allow these drugs to be transmitted

to South Africa and other countries in perfectly legal ways which

may underprice them relative to how they are usually priced.

This is what I want to ask Dr. Siegfried. He testifies and raised

my hopes that the company, and this must be Bristol-Myers, has

developed a pediatric AIDS program in Mexico, donating drugs to

cover all untreated cases of pediatric AIDS in the country, and providing physician training and community outreach.

Now, where I want to start—and here I am talking about pragmatism, if I were trying to get hold of AIDS in the developing

world, would not be—you all come. I would try to find an entryway

to break the back of the epidemic. Bristol-Myers must understand

that in Mexico, because it apparently has said every case of pediatric AIDS in Mexico.

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I am asking you whether or not there is any company that you

would be willing to recommend, if there is one that for any country

in Africa, wouild try to get hold of this epidemic? Do you believe

that is a challenge that the pharmaceutical companies should take

on, given the fact that they have set a precedent right in Mexico,

and considering the severity of the epidemic in Africa, that this

would be an important thing to repeat in some country, of their

choosing, on the continent?

Dr. SIEGFRIED. Congresswoman Norton, I can’t speak for any of

the companies, obviously. I think it is a wonderful challenge. I do

know that the pharmaceutical companies are anxious to be seen as

and try very hard to be good citizens and to respond positively, you

know, to crises in times of need.

I take it as a challenge I can take back to the organization and

that can be really disseminated throughout the industry, but I

would be very hopeful, frankly, that if Bristol-Myers Squibb can do

this for pediatric AIDS in Mexico, that other companies might be

able to step forward for specific countries or populations. I think

it is a wonderful challenge.

Ms. NORTON. Dr. Siegfried, I appreciate it. I would appreciate

your responding to Chairman Mica, who I am sure would let me

know what response you have gotten from the industry.

I realize this is a small step, but I can’t—these are children. If

we start with babies, and with children, where there has been

greater success than adults, it does seem to me that we could work

our way up and finally get hold of this epidemic in at least one

country.

Thank you very much, Mr. Chairman.

Mr. MICA. If the gentlewoman from the District will compose the

letter on behalf of the committee, we will sign it and send it to all

of them.

Ms. NORTON. Thank you very much, Mr. Chairman. I will.

Mr. MICA. I would like to recognize now the very patient gentleman from Vermont, Mr. Sanders. You are recognized.

Mr. SANDERS. Thank you very much, Mr. Chairman. And thank

you very much for holding this hearing. I consider this issue to be

extremely important.

As you may know, Mr. Chairman, yesterday I brought up an

amendment with Ms. Schakowsky’s help, among others, just to deal

with this issue. I was extremely disappointed that we only got 117

votes on it.

Mr. Chairman, as you know, and as we have heard from testimony already, the pharmaceutical industry is arguably the most

profitable industry in America. Last year the top 10 companies

averaged $2.5 billion in profit each, and earned 26 percent more

last year than they did the year before. Also, I think what we

should know, and it is important to be frank about this and throw

this out on the table, is that the pharmaceutical industry spends

more money in lobbying and in campaign contributions than does

any other industry. I think 97 out of 100 Members of the U.S. Senate have kindly received money from your PACs, and many Members of the House, have also. I think it would be very naive not to

assume that that largesse on the part of the very profitable and

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wealthy industry has had some impact on the public policy by the

U.S. Congress regarding pharmaceuticals.

Mr. Chairman, I wondered if I might, before we get to Africa, tell

you about a trip that I took 2 weeks ago. I didn’t go to Africa, but

to another foreign country called Canada. I was not dealing with

AIDS, but with breast cancer. I took five women from northern

Vermont who were battling breast cancer to Montreal, Canada. The

reason I went was to help them purchase pharmaceutical drugs

that they are using. One of the drugs that all five of these women

were using is a drug called Tamoxifen, which, Dr. Siegfried, you

are certainly aware of, used pretty commonly for those women who

have breast cancer.

Dr. Siegfried, do you happen to know the price differential these

women experienced in the drug Tamoxifen in Canada versus the

United States?

Dr. SIEGFRIED. No, I don’t, sir.

Mr. SANDERS. No idea? The women purchased Tamoxifen for onetenth, not 10 percent, one-tenth of the price that they paid 50 miles

south in the good old United States of America, in the most extreme case. These are women battling breast cancer, and every

other drug that they had to purchase was also purchased at significantly lower prices in Canada than in the United States.

I have to say that there is clearly something very wrong, and I

think probably all of the panelists have raised this issue, about the

pricing mechanisms that exist in the pharmaceutical industry, because I would give you day and night, Dr. Siegfried, to explain to

the people of the country why a drug used to battle breast cancer

costs one-tenth of the price in Canada than it does in the United

States.

Now we are dealing with the issue of South Africa. It seems to

me that what we are dealing with is an extraordinary moral issue,

that is, is it acceptable for the U.S. Government to unilaterally put

pressure on the South African Government and other governments

because they are trying to develop and purchase prescription drugs

to treat a killer disease?

Is it acceptable for the U.S. Government to work hand in glove

with the pharmaceutical industry, which, as you know, is currently

suing in the courts in South Africa on this issue, trying to get the

South African Government to rescind that law which gives them

the right to parallel import and to develop generic drugs?

To me, it is beyond comprehension how—the pharmaceutical industry has the right to do what they will do, and that the U.S. Government would work hand in glove, and I have seen the reports,

with the pharmaceutical industries to try to force South Africa and

other countries not to generate the cheaper drugs that they need

in order to treat people.

I would simply say, picking up on a point, I think, that Mr. Sawyer made, Mr. Chairman, and I hope that you will pursue this

issue, because I think you have an enormous moral dilemma, what

do you do when you have a product that can save somebody’s life

from an industry which enjoys record-breaking profits, and then,

all over the world, people who are poor are dying because they cannot have access to that product?

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Now, all of us know, in fact, that the pharmaceutical industry

has done a good job, and we are proud of the work that they have

done not only on AIDS, but on many other diseases. But what we

also know, whether it is Washington, Burlington, Vermont, or

South Africa, is that all of the research and development that you

have done does not mean a damned thing if somebody cannot afford that product.

If all of the research and development means that you come up

with a treatment that costs $15,000 a year, forget about the people

of South Africa, forget about the people in DC, forget about the

working families of the State of Vermont, and say that it is going

for the wealthiest people in this country. That is what your treatment is for.

Picking up on a point I think Mr. Sawyer made, and as somebody

who has also introduced legislation on this, we know that the taxpayers of the country have contributed billions of dollars to the

NIH for research they have done, and to research that other universities and colleges all over America have done. They have developed products and given them over to the pharmaceutical industry

without any reasonable price clause attached to it.

We have seen case after case where the pharmaceutical industry

has said, thank you very much for this government-sponsored research. Now we are going to charge the consumers of the country

$10,000 or $15,000 for that treatment, and then you have profits

of $2.5 billion each for the top 10 companies.

So what we are dealing with is an extraordinarily difficult issue

from an economic, medical, and moral point of view. I think it is

not good enough, and I will say, Mr. Chairman, and I know Mr.

Gore has been criticized, that yesterday I think we got 19 votes

from the Republicans on this issue. We got a lot more votes—we

didn’t get enough votes from the Democrats, but we got almost half

the Democrats, and a very few Republicans stood up on this issue,

being prepared to take on the pharmaceutical industry.

But I think we have to take a hard look, because this is so

unique. This is not housing, this is not automobiles; this is life and

death. What is the proper role of the U.S. Government in terms of

dealing with an industry in which we have been very closely related to that issue, putting a lot of funds into that issue, giving up

tax breaks to go to Puerto Rico to develop their products; what is

the moral and proper role of the U.S. Government in saying to you,

we want you to continue to do your research, but we want the results of that research to be spread out and to be positive for working families in this country, for poor people in this country, and for

desperate people all over the world?

That is an enormously profound moral issue, and I hope as a

Congress we can begin to address that issue.

I wanted to congratulate all of the panelists up there, but I don’t

know if Dr. Lurie wanted to add 2 cents to what I said.

Dr. LURIE. It is hard to. I think another way of putting it is like

this: There is an inevitable tension between the price of the drug

and its accessibility. Quite how that curve looks might vary from

drug to drug, but as a general matter when price goes down, access

will go up.

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What we have basically done in this country and elsewhere is

taken the position that it is more important to maintain the ability

of the pharmaceutical industry to retain these kinds of irrational

drug price practices than it is to bring them down to prices like

what they have in Canada, and in the rest of Europe; substantially

lower than here, even knowing that as long as those prices remain

high, people will not get those drugs, and if people will not get

those drugs, they will die. Collectively that is the decision we have

made. That seems unacceptable to me.

Mr. SANDERS. I would like to ask Dr. Siegfried, and I get disturbed, Doctor, by your telling me you don’t know the answers, because that is the purpose of this hearing. If they sent you here as

a nice guy and a good physician who does not know the answers,

maybe they should have sent somebody else to answer these questions, because that is the issue we are dealing with today.

Can you give me your response, and you indicated that you don’t

know why the prices of drugs, of Tamoxifen, in the United States,

for women who are battling a life-and-death struggle with breast

cancer, is 10 times higher in the United States than in Canada.

You don’t know the answer to that; is that what I hear you say?

Dr. SIEGFRIED. Congressman Sanders, I don’t know the answer

to that. But I do want to comment, going back to Mr. Mica’s earlier

observation, the pricing differential is one thing, but also the differential of what the pharmaceutical industry in terms of its research and development in Canada and others parts of the world

versus what the United States has accomplished is also significantly different.

I find, interestingly enough, and I may be perceived as the

enemy because I represent the pharmaceutical industry, but I have

found very little today in the presentations that I personally have

much argument with. I have great concern that the goose that laid

the golden egg not be killed in the process of trying to provide omelettes for people throughout the world. That is a personal concern.

I really don’t envy you or any members of the panel who have

to struggle with these issues of how do you do that, how do you

keep golden eggs coming out of pharmaceutical research and development, how do you do that in a situation that is going to allow

pricing that is universally affordable, much less globally affordable.

I don’t have an answer to that, I’m sorry.

Mr. SANDERS. Let me just ask my last question, Mr. Chairman.

That is actually taking something that came out of your statement.

Maybe Mr. Love might want to comment on that.

On page 3 or 4 of your statement, under compulsory licensing,

you state that ‘‘in terms of pharmaceutical production in times of

national emergency, trade agreements may permit the government

of a developing country to grant production rights to a local company.’’ You say the question arises as to whether HIV/AIDS epidemic in sub-Saharan Africa is such an emergency. I am reading

from your testimony.

Jamie, did you want to respond to that? What we heard yesterday from my opponents on this amendment is that what South Africa is doing is illegal. My response is if it is illegal, take them to

the WTO, don’t take unilateral action. But I am hearing from Mr.

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Mica’s own testimony that it is apparently not illegal; that if you

have a medical emergency, you can produce generic drugs.

I cannot believe that anyone could tell us with a straight face

that what is going on in HIV and AIDS in South Africa is not a

medical emergency.

Mr. LOVE. It is true that in the international trade agreements

that if there is a declared national emergency, the most liberal

rules apply to compulsory licensing, which means that you do not

have to try and do any prior negotiation. And the compensation is

actually—is whatever is considered adequate under the laws of the

national government; that is the part of the international trade

agreement for international emergencies.

But it’s also true that those same roles apply to government use;

that is to say that if a government manufactures through its public

health service, even if it was not a national emergency, that those

same liberal rules would apply.

And I would go further to say that even if it wasn’t for government use, and it wasn’t an emergency, you are still permitted to

do compulsory licensing, it’s just that you have to follow a different

set of procedures. And so within the WTO agreement, which we

have a book here about the agreement that’s published by the

World Health Organization, including a chapter on compulsory licensing, you just figure out what rules should apply, depending on

what you’re trying to do.

Now, you also, Congressman, accurately described this tension

between claiming what South Africa is trying to do is illegal under

the trade agreement and refusing to bring our dispute before the

WTO’s own dispute resolution mechanism. The South Africans are

begging the United States to take them to the WTO. They’re saying, if you think we violated the agreement, take us to the WTO,

where at least we can have a decision by a judge. We only have

a 2-year-old—2-year nightmare of sort of a Kafkaesque-like thing

where we don’t even know what we’re accused of precisely. You

submit briefs, there’s a decision, and there’s a finding. That’s what

they want.

What South Africa—the problem the industry has with South Africa is precisely that what they’re doing is legal under the agreement. That’s actually why it’s such an important case. And that’s

why bilateral is used, because if they were doing something illegal,

we would already have a WTO, we bring WT cases against countries all the time.

Mr. SANDERS. Bananas.

Mr. LOVE. Bananas; we bring it against India on pipeline protection. We won that. WTO, we’re not afraid to use it. The reason why

don’t we use it in South Africa is we would lose; we don’t have a

case.

Mr. SANDERS. That’s a good point.

Do you think we have more Republican support in the future for

this issue?

Mr. MICA. Mr. Sanders, I think—as we begin hearings, I think

the only two hearings on the AIDS question which was brought to

my attention was one that Mr. Gilman did in his subcommittee and

our subcommittee. This is the first time that ACT UP folks even

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had an opportunity to testify. And, again, I think if there’s more

education——

Mr. SANDERS. I applaud you.

Mr. MICA. This is indeed unfortunate, and I commented to my

colleague that, you know, you can have a disaster in Central America where 10,000–15,000 people are killed in a natural disaster,

and we rush in with a supplemental appropriation and huge

amounts of money, and it gets attention, where you have millions

die.

Mr. SANDERS. You’re absolutely right.

Mr. MICA. Everyone is asleep at the switch. So it is an education

process. Part of that is this hearing process, and, as I said, this is

only the second hearing.

Mr. SANDERS. And I thank you very much.

Mr. MICA. I will discuss with the ranking member the followup,

and I think you can hold one hearing, and it doesn’t mean anything

on issues. But followup is important, and we have a whole range

of areas. I mean, they’ve—this panel and the previous panel have

given us enough to probably just do many hearings on with those

comments. Let me just——

Mr. SANDERS. Let me thank you again. This is an enormously

important issue, and you put together excellent panels. And I

thank you very much.

Mr. MICA. Let me yield now, and without difficulty, Mr. Sanders,

that has not been a fun thing. I got heat from my side, from your

side, from pharmaceutical folks, from congressional folks, from administration people. I mean, it is not a popular thing to do for some

reason, but it does deserve our attention.

With that, let me yield to the most patient, and she will get the

last word on this issue, Ms. Schakowsky from Illinois.

Ms. SCHAKOWSKY. Thank you, Mr. Chairman. And I’ve really appreciated spending the day on this important issue. And I hope

that this hearing will result in some practical moves as the lady

from the District has been seeking.

I wanted to followup—that’s the advantage of going last, I can

comment on everybody—something that Mr. Lantos said, and he

was right when he said that we’re faced with competition, with

these competitive requests all the time, particularly among diseases. And that’s in a way the beauty of the recommendations that

have come out of this panel is that we’re not, in fact, talking about

any taxpayer dollars, but rather using approved market and trade

mechanisms and things that the United States could do at negligible costs to the taxpayer, other than working out an agreement

and signing some papers.

And so what you’ve presented to us, I think, are solutions that

we ought to posthaste explore to make sure that we are delivering

these drugs to people around the world at a cost that can be afforded.

And the other thing that Mr. Lantos was talking about were

strategies. What are the strategies that we can use that bring people together rather than separate them? And I’m hoping that we

cannot pit, for example, prevention against treatment, because I

think we all agree how important both are, and treatment we’re

facing, what, almost 40 million people around the world. This is a

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pandemic that currently have it, so clearly we do need to be talking

about treatment.

And I appreciate that one of you also talked about rather low- cost solutions, was it—who talked about for $70 a year the three

drugs that could save many lives. We’re not necessarily talking

about $30,000 a year, and that was $70 at the U.S. costs that Mr.

Sanders already showed us that is very often the highest in the

world. We don’t want to have diabetes versus AIDS, you know.

Let’s figure out ways that we can address both.

And, again, with AIDS we’re talking about not using taxpayer

dollars. And let’s also be concerned about, all of us in the United

States, particularly African Americans and Latinos who don’t have

and/or may not be able to afford access, but I think also as Ms.

Nkhoma, was it, said, we also need to treat each other around the

world as brothers and sisters. And therefore, I hope we don’t make

this a Republican versus Democrat issue, so that we can all work

together.

There were a couple of questions that I wanted to ask Dr. Siegfried. Again, I am disappointed that these issues of South Africa

and trade agreements are not your bailiwick, because that is what

we’re talking about today. But perhaps you can provide me with

this information. I know you haven’t come alone; I know there are

other people from PhRMA that are with you, and certainly those

that can help.

What I’m interested in is knowing what the dollar amount that

your members have received in tax credits and research funding

from the U.S. Government over the past 10 years. What has been

the U.S. investment? When you talk about the $24 billion on research and development, I suspect that a good deal of that are taxpayer dollars as well; but in any case, what is the contribution to

developing all drugs, that is, what is the U.S. contribution to R&D

in the pharmaceutical industry and specifically in AIDS drugs. I

would hope that I could get that information.

Dr. SIEGRIED. The $24 billion, I believe, is really industry money

and does not include the public funding that you’re speaking of. I

don’t have the information, and certainly not over a 10-year period

of time. I’m not even sure whether that’s easily available within

the industry or through the government. But if it’s information

that’s important, we can certainly try and get that to the chairman.

Ms. SCHAKOWSKY. I think that it is important for us, when we

talk about research and development, that we do have an understanding of the extent to which taxpayers are funding that as well.

Dr. SIEGRIED. I think one of the things that gets a bit confused

here is that a lot of the public funding for NIH kinds of research

is focused on what we call basic research. The industry picks up

on that and does applied research. You sort of have to have the

basic understanding of the scientific or pathogenic process before

you can go ahead and develop drugs that might attack it. So the

two are complementary. And there’s a sense in which you can’t

have one without the other. We went through that a few years ago

when NIH was into——

Ms. SCHAKOWSKY. Dr. Siegfried, I’m going to ask your indulgence

since my time is running out, if I can just ask my questions and

you can answer.

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Dr. SIEGRIED. I apologize.

Ms. SCHAKOWSKY. No, that’s OK. I’m also interested in—because

it relates to the question of parallel importing certainly. If we took

the top 10 AIDS drugs and I could get information about the price

of those drugs in the United States, Spain, Canada, South Africa

and Australia, I would be interested to see, as Representative

Sanders has found, these differentials.

You also mentioned that we don’t want to kill the goose that laid

the golden egg. But it was Dr. Lurie’s testimony that I think did

put it in some perspective when he said that R&D represented a

median of 11.4 percent of sales for the top pharmaceutical companies, and contrast to that with profit, net income representation,

18.6 percent of sales by those same companies in 1998.

And another figure that I think would be useful to know, I would

be interested to know how the advertising budgets compare to the

R&D budgets as well. And I think that we want to be responsible

in making sure we don’t kill that golden goose, but we also want

to have some sense of how those costs relate to other costs.

Yes, Mr. Sawyer, do you have a response to that?

Mr. SAWYER. I was going to say some of the questions you’ve

asked, I know Jamie Love has data on it, according to the orphan

drug tax credits for the development of several of the early AIDS

drugs. The point you just made about the amount of money that

was invested in research, Dr. Siegfried said 20 percent is what the

industry puts in. Dr. Lurie—actually analysis showed that it was

11 percent.

I looked at Abbott Drugs’ annual report. Abbott Drugs on sales of $12.8 billion, their own annual report listed their research and

development budget at 9.8 percent of sales, because they invested

less than $1.2 billion out of that almost $13 billion in sales into research and development. Their marketing budget was more than

$2.6 billion. So more than 20 percent went to advertising. Less

than 10 percent went to research and development. That’s just one

company.

But Jamie, I think, has data on early AIDS drugs.

Dr. LURIE. I’m glad you’re asking these questions, because historically it’s been very difficult to get any kind of handle on what

is going on in the pharmaceutical companies’ accounting practices.

Aside from the fact that there are millions and millions of dollars

in handouts to the pharmaceutical industry that come courtesy of

U.S. taxpayers, these estimates of R&D are themselves most likely

distorted to the best that we can tell. Much of the R is not, in fact,

R, but rather D. And much of the D is not D, but is probably marketing.

And even the R that is done is primarily spent not on these

breakthrough drugs, but much of the brainwork comes from the

NIH and other places, or universities funded by the American Government, but instead is expended in the service of developing copycat drugs which provide little advantage over existing drugs rather

than truly breakthrough ones, and then the process is that you just

mount a massive advertising campaign, and you make your money

that way.

The money—that’s where most of the work is being done in simple copycat drugs, and much less is—it’s hard to tell, they don’t

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give you numbers, but we suspect that limited amounts are actually true significant breakthroughs.

Ms. SCHAKOWSKY. I wanted to ask if there are documents on

hand that are responsive to this, I wonder if they could become

part of the record of this—is that possible, Mr. Chairman?

Mr. MICA. We can certainly—anything you would like to request,

we would make a part of the record. We’re going to ask questions

to the previous panel. We will leave the record open for at least 3

weeks here so that we can get some responses, and we can submit

questions. If you would like to do that, we would be glad to pass

them on.

Ms. SCHAKOWSKY. If Mr. Love could make—I know my time is

up, but if you could answer.

Mr. LOVE. One thing that the committee could be very helpful on

is that there are these controversies about what it costs to develop

a drug. I think we heard today 500 million, 1 out of 10, that sounds

like $5 billion a drug now. So every week it seems to be going up

faster than Internet stock.

One thing that the committee could do is the U.S. Government

for some set of drugs has actually done all the clinical work, and

if you were to ask Donna Shalala’s office to provide you with data

on what—for those drugs that it’s actually taken all the way

through approval, how much it costs for those drugs, we would

leave the area of the Wizard of Oz behind the curtain and start

dealing with real data, and it might be interesting.

We’ve asked for that data, but I think, as the chairman of the

committee, you’re probably a much more important guy than we

are; so it would be helpful if you would ask for that information,

and maybe they would give it to you.

The other thing is that there’s an orphan tax credit which covers

one-half of the cost of clinical trials that are done under the Orphan Drug Act, which includes all AIDS drugs, a few cancer drugs,

and drugs for the severe illnesses. It’s another independent audited

source of information which would be a nice addition to the record;

that is to say, for the drugs that are covered in that category,

which includes all AIDS drugs plus other things, like how much do

the companies report on their tax returns they actually spent on

the clinical trials. Then you would also again go beyond the public

relations world to the world of actual data.

And if you were to take those two numbers and put them in the

record, it would be maybe a helpful nice trend to actually look at

the evidence.

Ms. SCHAKOWSKY. Thank you.

Mr. MICA. Well, thank you.

Did anyone have any additional final questions?

Well, we haven’t gotten all the answers today, but we’ve certainly raised a lot of questions. We’ve gotten some answers.

I want to thank each of you for participating in this hearing. I

still have some questions that I will submit to some of the members of this panel and the previous panel.

Dr. Siegfried, you didn’t bring up the problem of liability. I’m a

real big advocate of reform of product liability. And I’ve been told

in the immunization area where you can buy an immunization shot

for $10, that $6 or $7 of it goes now to product liability, and that,

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you know, $1 or $2 goes into actually the manufacturer, plus we’re

losing manufacturers of some of these substances. So you need to

get some more examples of some of the problems for us, but I think

we have found a whole range of areas we can explore.

The question of U.S. rights and the interests and research was

an interesting thing that was raised, and we do have some rights,

and maybe it should be part of our research grants that we ensure

that we have some hook into that on behalf of those that are funding this.

Certainly there’s been—there was a great deal of discussion

about unfair U.S. trade policy and actually preventing some of the

countries from making the products available at reduced costs. And

I think some of the suggestions about looking at providing additional licenses might be interesting.

I was in the communications business, and lo and behold a government issued another license after we invested an incredible

amount of money. I wasn’t too happy, but that’s the way the cookie

crumbles sometimes, and it created competition, and the consumer

benefited. And most importantly, I think we’ve opened some congressional debate. The important thing is that we have some followup.

Our subcommittee has jurisdiction over international trade

issues, over HHS, and a number of other agencies. There have been

questions here about State—and maybe we can get Mr. Lantos and

Mr. Gilman to followup on those issues. And then if the committee

panel members have others, I think Agriculture was also mentioned, we don’t have jurisdiction there—we can ask some of the

other subcommittees to look at these, some of these problem areas.

I think the interest, of course, is to see that we can get treatment, research, and development to everyone; not only in our country, but across the globe, as expeditiously as possible, especially

when you’re faced with a crisis of this magnitude that sort of has

been glossed over to date.

But again, in closing, I want to thank all of you for your participation. I’m sure you didn’t anticipate being here through almost

the dinner hour with us, but we do appreciate your testimony and

your contribution to our subcommittee.

Ms. Schakowsky asked unanimous consent that a statement by

Congressman Jim McDermott be submitted for the record.

[The prepared statement of Hon. Jim McDermott follows:]

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Mr. MICA. She also asks unanimous consent that a statement by

Donna Christenson be submitted for the record, and further that

a statement from Doctors without Borders be submitted to the

record. Without objection, so ordered.

[The prepared statements of Mrs. Christenson and Doctors without Borders follow:]

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Mr. MICA. We will also, without objection, leave the record open

for 3 weeks, as I said, for additional statements. And we will be

asking questions.

There being no further business to come before the subcommittee, this meeting is adjourned.

[Whereupon, at 5:11 p.m., the subcommittee was adjourned.]

[NOTE.—The report entitled, ‘‘Report on the Presidential Mission

on Children Orphaned by AIDS in Sub-Saharan Africa: Findings

and Plan of Action,’’ may be found in subcommittee files.]

[The prepared statements of Hon. Bernard Sanders and Hon.

Henry A. Waxman, and additional information submitted for the

hearing record follow:]

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