Case analysis Q Introduce the case with the theoretical background. By 1997, South Africa was wrestlingwith the AIDS crisis of enormous proportions. More than 3million of the country’s 45 million population were infected with the virus at the time, more than any country as per an estimation report given. This AIDS epidemic became the primary reason for the development of new laws by the South African government to cover communicable diseases. This is why the government in December 1997 passed a law, authorizing two controversial practices. One, called parallel importing, allowing importers in South Africa to purchase drugs from any cheapest source available, regardless of whether the patents had given their approval or not.
This country still asserted to “generic versions” that are patent protected. This was because the government was unable to afford the high cost of medicines that were patent protected. The other practice was compulsory license, which permitted the government to license local companies that would produce cheaper versions of drugs with different patents irrespective whether the patent holder agreed or not. The law seemed to violate international agreements like World Trade Organization agreement on patents, to protect patent rights, to which South Africa is a signatory ( Block, 2001). The law also expropriated intellectual property rights of foreign drug manufacturers, and 39 foreign companies filed a suit to prevent implementation of the laws.
In their arguments, these drug companies argued the process of development of a drug to be risky, time-consuming, and expensive. This created the need for intellectual property rights to protect their innovations. While the drug companies may have international law on their side, the tie-on AIDS epidemic clearly puts them on public relations defensive.
However, they may reconsider the developing countries like South Africa, whereby they recognized that they faced special health challenges and did not have the money to pay work prices. Human rights and AIDS organizations also support South Africa in contrasting the idea of western drug companies to protect their intellectual property rights (Jeter, 2001). Q2. Identification of the major issue/ problem from the case based on international business. The major issue in relation to international business from the case is whether poor countries like South Africa should be allowed to buy low-priced generic versions of patent- protected drugs.
That may be in violation of intellectual property rights guaranteed in international agreements like the World Trade Organization agreement on patents, to which such countries are party. This is because AIDS in such countries like South Africa, may force them to come up with new national laws. These laws may provide for low-price patent drugs that help curb that epidemic, forcing cheap drugs that are patent-protected with or without approval of the patent owner.
These drugs may be imported contrary to intellectual property rights in international agreements signed. Such countries may also choose to rely on local drug companies that are patent protected to get those drugs. This is because they cannot afford the high-cost drugs from Western drug companies (Cooper, Zimmerman & McGinley, 2001). Q3. Analysis and evaluation. The legal issues that can be analyzed for this case is about some international agreements on intellectual property rights concerning drugs like World Trade Organization agreement on patents. Countries like South Africa are a signatory to have provisions that accommodate those countries health challenges.
Such countries have the problem to pay developed world drug high prices. As a result, the industry has priced drugs low, given them free in the developing countries. In South Africa, the government sought to make a law that developed two controversial practices that may be in violation of the international treaties on intellectual property rights on patents. They sought to confer a right to import “generic versions” of drugs that are still patent protected. The giving of a compulsory license by such countries to license local companies to produce cheaper versions of drugs with or without approval of the patent holders.
These are the controversial practices that South Africa sought to adopt (Jeter, 2001). Various human rights and AIDS organizations have also stood up in support of the South African government. They argue that the claim made by the foreign drug manufacturers of invalidating the law passed by South African government, as inconsiderable and self-centered. They argue that the attempt by the multinational drug companies to maintain their intellectual property rights in the face of the desperate attempt by an impoverished government to stem a deadly crisis, to be inhumane and unreasonable.
These multinational drug companies argue in their case that South Africa just wants a pathway to breach international law. This has made several leading manufacturers of AIDS drugs change their policies (Block, 2001). Evaluating the different individual persons and companies that have supported the fight of the AIDS epidemic using low-price drugs, February 2001 was a magnificent time for Cipla Ltd. This Indian Drug Company made an offer to sell AIDS drugs to poor African nations at $600 per patient per year, and for $350 for doctors globally.
In March 2001, Merck announced to cut the price of its two AIDS drugs, critical and stocrin. These are remarkable advancements to curb the AIDS epidemic in poor countries (Jeter, 2001). Q4. Discussion of alternatives. According to Hall (2009), the apartheid regime by the whites in South Africa, has made the said country one among the poor developing African countries. This is because potential scientists and medical doctors living at the time of the apartheid regime were killed.
The South African medical education system has however tried to heal and fill that gap left by offering standard medical training education. The training will ensure more scientists who will eventually come up with new innovative ideas, and venture into the AIDS drug manufacturing area. That will cut-short the over-reliance of South Africa from the western drug companies, whose AIDS drugs are highly unaffordable. Ternale (2011) asserts that different forces on the continent have intensively interfered with African sexualities. She suggests an alternative to curb the deadly epidemic (AIDS), as the avoidance of immoral sexual practices that Africans borrow from the western countries that spread the deadly disease.
Africa countries are considered poor to obtain foreign AIDS drugs from western countries and should, therefore, uphold their morals. Q5. Answer the questions given in the case. Drug companies should protect their patents, in order to preserve their intellectual property rights. The drug development process is very expensive, time- consuming and a risky process and, therefore, they should maintain their incentives to be innovative (Jeter, 2001). The policy of the drug patent- protected companies towards poor countries like South Africa should be; pricing lower the drugs in the developing world or selling them at a larger discount in contrast to developed countries.
Their policies should concur with those of the HUMAN Rights and AIDS organizations, in relation to the deadly AIDS epidemic (Block, 2001). In the developed nations, the price for this kind of drugs should also be made at a reasonable price. The 2003 New York Times article noted playwright and activist Larry trainer, who stated that it is incumbent for every HIV drug manufacturer to contribute its patents or drugs price for the salvation of the people.
The drug companies should possess a means of saving lives and then distribute such drugs to every desperate victim regardless of boundaries (Cooper, Zimmerman & McGinley, 2001). The western pharmaceuticals could have taken better the initiative and differently the 1997 South African law, by looking into the detailed reasons as to why the South African government had first come up with that law. These western drug manufacturers should not have rushed to court before taking into consideration the struggles that poor countries like South Africa have undergone in fighting the deadly AIDS epidemic to save lives.
Instead of seeing it as a breach of the international agreement by the South African government, they should have taken the initiative of supporting the government. Human rights and AIDS organization have lowered the price of the AIDS drugs that are patently- protected from the foreign drug companies (Cooper, Zimmerman & McGinley, 2001). AIDS is a special case. This is because AIDS is a communicable disease that has caused death to many people, especially in developing countries.
A large percentage of people die each day out of AIDS. This is why it is a special case for drug patent protected manufacturers to give the drugs at a low price. The poor people suffering from AIDS cannot afford the drugs (Jeter, 2001). Q6. Recommendations. Stable AIDS drug patent protected companies and the patent holders should not seek to use the patents for their selfish gains, but rather consider the dying worldly population, due to AIDS epidemic.
They should make their products affordable to all people irrespective of boundaries. They should possess a focused aspect of saving human lives rather than simply engaging in business. References Tamale, S. (2011). African Sexualities: A Reader. Oxford, UK: Pambazuka Press. Hall, J.(2009). Sangoma: My Odyssey Into the Spirit World of Africa. Swaziland: Sterling Publishing Company, Inc. Block, R. (2001). Big Drugs Firms Defend Right to Patent on AIDS Drug in South Africa Courts. The Wall Street Journal, Retrieved from http: //www. wsj. com/articles/SB983836144503505217 Cooper, H, R. Zimmerman, and L. McGinley. (2001). Patents Pending- AIDS Epidemic Traps Drug Firms in a Vise.
Treatments vs. Profits The wall street journal, A, 1. Jeter. J. (2001). Trial Opens in South Africa AIDS Drug Suit. Washington, Post, P. A1.