Western Drug Companies and the AIDS Epidemic in South Africa
In December 1997, the government of South Africa passed a law that authorized two controversial practices. One, called parallel importing, allowed importers in South Africa to purchase drugs from the cheapest source available, regardless of whether the patent holders had given their approval or not. Thus South Africa asserted its right to import “generic versions” of drugs that are still patent protected.
The government did this because it claimed to be unable to afford the high cost of medicines that were patent protected. The other practice, called compulsory licensing, permitted the South African government to license local companies to produce cheaper versions of drugs whose patents are held by foreign companies, irrespective of whether the patent holder agreed. The law seemed to be in violation of international agreements to protect property rights, including a World Trade Organization agreement on patents to which South Africa is a signatory. South Africa, however, insisted that the law was necessary given its own health crisis and the high cost of patented medicines.
By 1997, South Africa was wrestling with an AIDS crisis of enormous proportions. It was estimated that over 3 million of the country's 45 million people were infected with the virus at the time, more than in any other country. However, although the AIDS epidemic in South Africa was seen as primary reason for the new law, the law itself was applied to “communicable diseases” (of which AIDS is just one, albeit a devastating one). Foreign drug manufacturers saw the law as an unbridled attempt to expropriate their intellectual property rights, and 39 foreign companies quickly filed a lawsuit in the country to try to block implementation of the law. Drug manufacturers were particularly concerned about the applicability of the law to all