[Debate] Last words (for now) on Jim Kim, yawn

[Riaz K Tayob]

On 2012/04/19 06:23 PM, Hein Marais wrote:
> c'mon Riaz, spare me the neolib slurs. Don't assume folk who don't agree 100% are coming from some dark unholy place.
Adequately chastised and regretted. Apologies, my frustrations showing : )

To explain, for years we have been pushing the productive capacity 
argument, linked to the right to issue compulsory licenses (which are 
the best way to reduce prices) which are our legal rights. The necessary 
tactical position (maximum access) was insufficiently linked to the 
strategic goals (meeting our health needs sustainably). CSOs were not 
diverse enough to push for arguments beyond the tactical, and now we 
find ourselves at the mercy of PEPFAR and other aid schemes, and we 
rally around those.

We have legal rights and it is not such a radical notion if CSOs push 
for its use.

>    I'm simply pointing out that a whole set of additional arrangements are required to realize actual benefits from domestic productive capacity. it's not a "good" in its own right.

You are correct. Local production is not a good in its own right. We 
have argued at SADC for instance,  for the principle of increasing 
regional self reliance (in part because markets are not large, and for 
some products scale is important to reduce price) with the management of 
destructive competition (i.e. too many producers rendering generic 
makers marginal cost producers, in a vicious competition environment). 
Backward (API) and forward linkages (public procurement, distribution) 
need to be looked at too.

>   In my example, a big part of the "good' arrives when you're able to buy quality ARVs at affordable prices so you can treat as many people as possible.

This is exactly where the problem lies. We have people who cannot/should 
not be denied treatment. The solution was health aid while maintaining 
the power imbalance for patented medicines. Necessary as this was, with 
the crisis, we see that this necessary short termism needs to be looked 
at more closely. In addition, this is precisely where the particular 
needs of PLWHIV ought to have maintained a more strategic position in 
addition to the immediate necessities.

>   SA had productive capacity in the shape of Aspen, but no regulatory framework that stopped the public health procurers from being taken to the cleaners.

Well this could have been managed, if there was a strategic rather than 
ad hoc plans. Public procurement, especially with companies that rely on 
volume, is a powerful instrument indeed if one is serious about it. DOH 
was warned about exit pricing, and when it did not work, at least we had 
the semblance of something being done...

>   And when the health dept did step in, they opted for the "incentive" of global competition (and a few other mechanisms, liking proper unit cost transparence etc.) to drive prices down.

If DOH were serious it could have addressed this using a BEE Industrial 
Policy approach to develop black entrepreneurs as well. It is now on the 
lowest price route, which would make it hard for black entrants into the 
sector.

> Government as you know does now have a joint venture drug scheme on the go, so they've learned something.

Yes this is a great initiative, along with promoting incentives in APIs. 
But there is also regional competition rising with Brazil and others 
investing in similar production lines. So there are challenges to the 
issue of scale and cost, and unless handled well with public procurement 
and market management, local producers can be rendered marginal or 
unprofitable.

> So, yes to building domestic capacity, but without a suitable regulatory arrangement the benefits can be pretty damn thin (unless your currency crashes and/or your BoP goes belly-up).

We are in trouble with current aid strategies as well. So perhaps what 
you talk about is already underway. But I agree, good regulatory 
environment, as well managed industrial policy for the sector are 
important...

>
> On 19 Apr 2012, at 3:27 PM, Riaz K Tayob wrote:
>
>> Forgive me, but this is neoliberalism 101! buy from the cheapest
>> supplier and treat the maximum number of people. For HIV I can
>> understand the necessity of maximisation, but why not a Brazil type
>> approach that caters for needs while also ensuring more import
>> substitution for needs other than ARVs and pushing the sector to diversify?
>>
>> It is possible to protect the domestic sector while simultaneously
>> allowing for price competition (managing destructive competition). But
>> CSOs have gone mainly or cheap prices at the expense of productive
>> capacity, it means that external shocks ( balance of payments
>> constraints problems that can occur, or supply shortages (as was the
>> case with flu vaccines or treatments)) will be fully borne by the locals
>> - this may seem like a distant risks, but we have to cater for it.
>>
>> One can look at one treatment, but one needs to look at the entire
>> sector, those with AIDS need many other treatments. There are multiple
>> bottlenecks and problems. We chose to look at exit pricing, not
>> recognising that IPR pricing is unilateral in most cases.
>>
>> On 2012/04/19 03:19 PM, Hein Marais wrote:
>>> Can get sticky in some respects, though, this self-reliance goal, when it relies on profit-taking private corps that get to enjoy preferential procurement arrangements.  Consider this. SA has developed some independent productive capacity in the pharma sector. And our tender system favoured their products, which ended up costing way in excess of the going international rates for ARVs at least. We revised that system in 2010-2011, made it competitive again with other global manufacturers, and the ARV prices fell through the floor. Measured against a goal (yes, not the only one, but an NB one), of treating as many people, for as long as possible, for as cheap as possible, then having our own generic producers didn't in itself do us many favours; they just milked the system for all it was worth. It worked better when we found a way to force their prices down, and sorry to say, that way was by exposing them to global competition. Or am I missing something.
>>>
>>> H
>>>
>>> On 19 Apr 2012, at 9:53 AM, Riaz K Tayob wrote:
>>>
>>>> Not at all (it is perhaps the best triumph of the global movements), but
>>>> one must state that independent self-reliant development (i.e.
>>>> productive capacity) was caught up in the cross fire of the urgency of
>>>> getting treatment. So while copying these drugs was possible, it was not
>>>> done in violation of the legal rights of developing countries. So
>>>> working the system when even the law is not a defence is quite
>>>> something... so now it is time to put technology transfer and local
>>>> production on the agenda more firmly (especially since aid/welfare
>>>> colonialism is drying up)... in the 80s Surendra Patel pointed out that
>>>> consumption of technology rich goods is not technology transfer... and
>>>> he was right.
>>>>
>>>> On 2012/04/19 10:44 AM, Patrick Bond wrote:
>>>>> And to have done that both bottom-up (TAC)
>>>>> and top-down (Kim) is one of the world's greatest-ever anti-corporate
>>>>> feats, no? Now am I being way too generous?
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