PRETORIA, South Africa — The world's biggest drug companies dropped their controversial lawsuit against the South African government Thursday, paving the way for this country to provide cheaper medication to combat diseases such as AIDS.
The Pharmaceutical Manufacturers Assn., on behalf of 39 drug companies, unconditionally withdrew its challenge to legislation--passed in 1997 but not yet implemented--that allows the government to make or buy cheaper drugs.
The outcome is seen by human rights and health activists as a significant step in the fight to secure treatment for millions of Africans infected with HIV, the virus that can lead to acquired immune deficiency syndrome, and it is expected to help developing nations obtain less expensive medicine.
The settlement allows South Africans "to pursue policies that we believe are critical to securing medicines at affordable rates and exercising wise control over them," said Health Minister Manto Tshabalala-Msimang. "We have undertaken to include pharmaceutical manufacturers in such initiatives, where appropriate, and we fully intend to pursue this course of action."
The drug companies, which include giants Merck, Bristol-Myers Squibb, GlaxoSmithKline and Boehringer Ingelheim, had claimed that a section of the 1997 law that allows South Africa to import or make cheaper drugs overrode their patent rights. The patents are necessary, they said, to encourage drug research.
AIDS activists, who packed the Pretoria courtroom, burst into song and dance when a lawyer for the drug companies announced the settlement and agreed to pay the estimated $286,000 cost of the case.
"There is no doubt that they have received a black eye," Mark Heywood, a spokesman for the lobbying group Treatment Action Campaign, said of the drug companies. "And I think it will embolden people in developing countries around the world to stand up for medicines that are affordable."
"What happened in the courtroom will send a very strong signal that governments have a right to put their people first," said Kevin Watkins of the British charity Oxfam.
Tshabalala-Msimang said the government had not agreed to any deals in exchange for the withdrawal of the lawsuit. The agreement was brokered during talks involving U.N. Secretary-General Kofi Annan and South African President Thabo Mbeki, she said.
South Africa still must reconcile the 1997 law with its commitment to honor international trade agreements and patent rules. The health minister said the government has invited members of the pharmaceutical industry and the public to help draft the regulations governing the law.
"It's a partnership. It's a settlement, and it's based on trust," said Mirryena Deeb, chief executive of the Pharmaceutical Manufacturers Assn.
"This settlement meets the objectives of both the South African government and the pharmaceutical industry," added GlaxoSmithKline chief executive Jean-Pierre Garnier in a statement. "But it is my fervent hope that the real winners will be patients."
GlaxoSmithKline's South African head, John Kearney, said the ball is now in South Africa's court to deliver AIDS drugs to its people.
But critics, who accuse the government of indifference in its approach to tackling the country's AIDS crisis, remain skeptical that South Africa will take quick advantage of its ability to implement the legislation. Activists vowed to keep up pressure on the government to make cheap drugs available.
Nearly 70% of the world's 36 million HIV and AIDS cases and 90% of all related deaths occur in sub-Saharan Africa, according to U.N. statistics. About 4.7 million South Africans--more than 10% of the population--are living with the human immunodeficiency virus. Last year, 2.4 million people in sub-Saharan Africa died from the effects of AIDS.
The standard triple-therapy used in treatment costs $10,000 to $15,000 a year. Generic versions of the drugs could cost as little as $300 a year.
But that would still be unaffordable for most people in South Africa, where many survive on less than $1 a day. The annual per capita spending on medication in sub-Saharan Africa is $8, according to the World Bank.
In addition, government officials said the decision does not mean patients will suddenly have access to cheaper antiretroviral drugs. Many state hospitals lack equipment and medicine to treat even basic illnesses. Doctors and nurses are in short supply. Poor roads and communications hamper access to medical facilities in rural areas.
Some officials estimate that South Africa will need to spend at least $1.25 billion over the next 10 years to build up an infrastructure that could cope with an infusion of AIDS drugs.
The government has come under fire for stalling on authorizing the use of AIDS drugs in public clinics. Health officials cite concerns over correct administration of the medicines and their long-term impact.