E-DRUG: US Export-Import Bank Offers Africa Billions to Fight AIDS
[Below a New York Times article on the loan announcement.
Will a loan help to buy drugs that are priced too expensively??
I thought we were trying to reduce debts... WB]
July 19, 2000
U.S. Offers Africa Billions to Fight AIDS
By JOSEPH KAHN
WASHINGTON, July 18 -- The United States plans to offer sub-Saharan
African nations $1 billion in loans annually to finance the purchase
of American AIDS drugs and medical services, a program that greatly
increases the money available to combat the disease in a region that
has become its epicenter.
The program, which will be announced by the United States
Export-Import Bank on Wednesday, comes after five multinational drug
companies agreed in May to cut the prices they charge African nations
for drugs to combat AIDS. The loans will help poor nations to buy the
drugs that fight the complications and transmission of AIDS, and
which are expensive even at discounted prices.
It is estimated that Africa already has 50 million people who carry
H.I.V., the virus that causes AIDS, far more than any other region,
and doing more to fight the disease there has become a central goal
of the Clinton administration and several European nations. Despite
the severity of the problem, international health officials estimate
that only 5 percent of Africans who carry H.I.V. are aware of the
But wealthy nations have only just begun to make money available to
match their vocal pledges to address the problem. The United Nations
estimated recently that the amount of money devoted to fight the
disease in Africa needs to rise 10-fold to $3 billion annually if the
nations hardest hit are to make significant progress in education,
prevention and care.
"This is at least a first step in showing the world that Africa is
important to the United States and that we can make a dent in this
terrible problem," said James A. Harmon, president of the
Export-Import Bank, which is an independent government agency
financed by Congress. "We think that this is the most significant
funding commitment by any international institution to date."
Mr. Harmon said he expected that export promotion agencies in Europe
and Japan would eventually match the American initiative. He
estimated that together wealthy nations could make $3 billion
available in annual financing to African governments that want to buy
pharmaceuticals, equipment and services.
The loans are not without complications. Several officials said the
administration was split about the wisdom of the Export-Import bank's
action, with some officials arguing that it does not make sense for
the United States to lend African countries billions of dollars in
export credits at a time when Congress is being pressed to forgive
Most of the new loans, which will not require Congressional approval,
would be provided at commercial interest rates that now average about
7 percent, though a small percentage might be offered at a lower
concessional rate, bank officials said.
Wealthy nations and international lending agencies are seeking to
forgive as much as $100 billion in past development loans to the most
indebted nations, including many in Africa. Some administration
officials had promoted debt relief to a reluctant Republican-led
Congress as the best way for the United States to combat AIDS,
because it would free up money that African nations would otherwise
have to use to service their debts.
The loans are also likely to increase an active debate among groups
interested in development over the best way to tackle AIDS. Many of
the African nations and private charity groups have argued that AIDS
is a huge medical and social crisis that requires more than
discounted drugs and new loans.
"I think what the United States is doing is laudable," said Koby
Koomson, Ghana's ambassador in Washington, referring to the loans.
"But the pharmaceutical companies need to come around and see that
the only way to fight this pandemic is to donate whatever is
The United States loans could help American pharmaceutical companies
prevent the spread of generic knock-offs of their profitable AIDS
drugs to Africa. Even with heavy discounts of up to 80 or 90 percent
-- the companies have not made public the prices they will charge --
some drug makers may still hope to sell their product profitably in
The United Nations has said it is exploring the possibility of
helping African nations buy generic AIDS drugs from Brazil and India
for less money that even the discounted prices Western drug companies
might charge for the original product. The drug companies consider
generic alternatives a violation of their intellectual property.
But it seems unlikely that Brazil, India or other nations that
produce such drugs for home consumption would have the export
financing available to help African nations buy the goods. The
American loans, along with a recent commitment by the World Bank to
provide at least $500 million to help African nations set up
anti-AIDS initiatives, give added incentive to African nations to
treat many of their AIDS cases with Western medicine.
Even at 90 percent discounts, a typical cocktail of AIDS-suppressing
drugs might cost $2,000 a year for a single patient in Africa, more
than four times the average per capita income in many of the
Jacob Gayle, a senior technical adviser for the United Nations AIDS
Program, which is based in Geneva, called the Export-Import Bank
action "a major announcement" that takes a big step toward providing
the $3 billion in annual fund commitments that his agency considers
necessary to fight the disease in Africa.
But he stressed that the problem is much broader than a lack of AIDS
drugs. African nations need to set up education and prevention
efforts and develop the medical infrastructure to administer drugs
effectively before they can make good use of loans to purchase
medicine, he said.
The loan program is the first time the Export-Import Bank has offered
financing for drug purchases by any nation, Mr. Harmon said.
Moreover, the government bank plans to make the financing available
to the 24 eligible sub-Saharan nations for five-year terms, an
unusually long term for loans that are considered high risk.
He called the loans a pilot program that could be expanded or scaled
back depending on how African nations and drug companies respond.
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