Andrew Sullivan wrote in the Times of London, regarding the AIDS epidemic devastating the Third World:

Why not simply rip off the formulae of existing drugs and provide them to the developing world for free? One answer is that theft is theft. Another is that such an approach could actually lead to a resurgence of HIV.

The reason?

[…] You […] destroy the financial incentive to come up with new drugs, kill off the investment capital that keeps HIV research going, and leave the next generation of people with HIV with next to nothing in the pipeline.

But today in his blog he has second thoughts:

To be perfectly honest, my column last Sunday, though heartfelt, has been troubling my conscience. Perhaps this is one of those instances where prudence needs to be set aside. But judging whether that is appropriate demands a particular kind of prudence as well.

Well, here is a way for Andrew Sullivan to be conscientious and prudent:

Drug companies do not have a market in the Third World for full-cost AIDS drugs. The wealth simply isn’t there. But developing drugs is like developing software; development is expensive while production is cheap. So why not institute an ability-to-pay regime for the intellectual property component of AIDS drug costs? First World countries would pay for AIDS drug research and production, Third World countries would pay for production only.

The argument that this approach would confiscate drug companies’ profits is disingenuous: Drug companies have long been budgeting drug development for their First World markets only. The Third World has never figured in their revenue model.

On the contrary, an ability-to-pay regime is a good business decision for drug companies. It is in their long-term interest to allow cheap copies of their AIDS drugs to flood the Third World, because winning the battle against the AIDS epidemic is now a prerequisite for the development of the Third World, and their ability to become profitable markets in the future. Not to be macabre, but you can’t sell drugs to dead people.

And yes, it isn’t lost on me that this arrangement would amount to an increase in aid to the Third World, paid for by First World consumers of AIDS drugs (and their insurance companies/governments). But this aid is analogous to Microsoft donating their software to poorer schools–with the upshot that more kids will have opportunities to grow up to be consumers of Microsoft products. It’s time drug companies do the same.

[Tue, Jul 16 2002 – 12:03] Felix (www) (email) I think you give Sullivan too much credit for making any sense at all in his original article. He cites two reasons not to let developing countries manufacture their own versions of anti-HIV drugs.

(1) theft is theft. Well, if you give developing countries the right to do this, it’s not theft any more. When the first world starts allowing universal acceptance of third-world agricultural exports, then we’ll start talking about the third world allowing universal acceptance of first-world intellectual property rights. Until that happens, it might be theft in the US, but it’s not theft in Brazil.

(2) you’re denying drug companies profits. As Stefan points out, you’re not: the drug companies make negligible profits on their anti-HIV drugs in the developing world. But then Stefan says that such an arrangement would amount to an increase in aid to the developing world, paid for by the consumers of anti-HIV drugs in the west. But it wouldn’t! The cost of the drugs in the developing world would be borne by the developing world; they just wouldn’t pay the western drug companies for western intellectual property rights.