Although ninety-five percent of people living with HIV/AIDS are in developing countries, the impact of this epidemic is global. In South Africa, where one in four adults are living with the disease, HIV/AIDS means almost certain death for those infected. In developed countries however, the introduction of antiretroviral drugs has meant HIV/AIDS is treated as a chronic condition rather than a killer disease. In developing countries like South Africa, the drugs that allow people to live with the disease elsewhere in the world, are simply too expensive for individuals and governments to afford at market price.
Drug prices are set by pharmaceutical companies to cover research and development costs. While R&D costs clearly need to be covered, markets in developed countries already pay for most R&D of new products. Because of this, it makes moral and economical sense to establish a two-tiered pricing system; for R&D costs to be paid for by developed countries, allowing significantly reduced prices to be charged in developing countries.
Pharmaceutical companies had been reluctant to provide drugs to developing countries at reduced prices because of concerns around distributing drugs in unregulated and unreliable environments. They argued that this could create new drug-resistant strains of the HIV virus. There was also concern about corruption or diversion of supplies from both government and distributors, and no guarantee the product would in fact reach the people who need it. There is a significant risk of the discounted drugs being illegally re-imported back to into the West.
The failure of pharmaceutical companies to provide developing countries with significantly discounted drugs means they...