Analysts say it is problematic for generic versions of widely patented drugs to be circulating, even in small sales markets like Africa, because it weakens the patent process. Patents are the basis for high drug prices. The companies say the revenue allows them to recoup development costs and generate profits to fund new medicines. Pharmaceutical executives are quick to point out that this system created the AIDS drugs in the first place. AIDS activists have been calling for drug companies to offer cheap drug-licensing agreements to poor countries.
Drug companies have powerful allies in their effort to keep generics at bay.
Harvard economist Jeffrey Sachs, who is active in the African AIDS fight, agreed it was important to respect patent rights while solving the crisis. Analysts fear that, even with patent protection, the reduced drug prices will eventually be too costly. Pharmaceutical companies have always had significant charitable programs, but the demands in fighting AIDS could be too much. Negative responses from shareholders and others has been scant. Drug companies have long been Wall Street darlings because of their consistent profitability and high profit margins.