Examination of Witnesses (Questions 40
- 56)
TUESDAY 22 NOVEMBER 2005
MR HANS-MARTIN
BOEHMER, MS
ROBIN GORNA
AND MR
DANIEL GRAYMORE
Q40 Ann McKechin: I think you would
agree it has been rather weak, given the South African case where
the US took objection about giving cheaper drugs for public health
reasons. It was only because of enormous political pressure that
the US dropped that case. Is that situation going to arise again?
Mr Graymore: That situation is
slightly different. It is important also to bear in mind that
the reason for coming up with the decision in the first place
was anticipating the impact of full TRIPS implementation and compliance
in countries such as India as of this year. Under the legislation
within India, the expert feeling is that on generic drugs that
have been produced up until 2005 there would be no effect, they
will continue to be produced, and therefore they are still available
and accessible to the countries that have been importing them.
The real impact will be felt from this year onwards, when newer
drugs are patented in India and the changed intellectual property
regime will mean that it is of course harder for copies to be
produced in the way they have been up until now. I would say that,
whilst it has been a long drawn out process, it is very difficult
to assess whether or not it has been ineffective so far because
the issue it seeks to address has really only just come into effect.
From our point of view, it seems very clear that over the next
12 to 18 months you are likely to see what some of the impacts
are, as newer drugs come onto the market and countries perhaps
are unable to purchase them for a variety of reasons, perhaps
around price. Then there might be attempts to use—and we
would like to see attempts to use—the 30 August agreement
in that situation and see how that works.
Q41 Ann McKechin: Could I ask what
the Government here is doing to build the capacity of countries—and
you have mentioned India but there is Brazil, China and Thailand—to
be able to use routinely the TRIPS safeguards? Do you think they
would be able to meet the test when the ultimate test is applied?
Mr Graymore: We think the agreement
should work. We recognise that there are complications, of course,
around how you deal with compulsory licensing. It is an important
area to get right and therefore we do think it is very important
to review and ensure that we are aware of how effective it has
been. Through our financial programmes and other multinational
organisations such as the World Bank and others, we are working
to identify some of the capacity building that can be put in place
to help individual countries to be better able to use TRIPS flexibilities—and
that, it should be borne in mind, includes assessing current legislation
which often is not TRIPS compliant in the first place and often
has hurdles greater than TRIPS, not necessarily because of the
TRIPS plus issues that were mentioned before but just because
it is very old legislation. So part of the issue is about assessing
current legislation and ensuring that is TRIPS compliant and then
helping to build the capacity with other donors and other multinational
organisations so that countries can use it.
Q42 Richard Burden: Could I move
on to the issue of fixed-dose combinations. There seems to be
pretty much a consensus that, to be as successful as possible,
combining different treatments in one capsule prevents the pills
being separated, lost or whatever. But there is some concern according
to Médecins Sans Frontie"res that: "Patent rules
may also hamper the development of fixed-dose combinations—the
three-in-one pills that have helped simplify patients' lives .
. . Although these pills are currently what approximately 70%
of all MSF's patients take as first-line treatment, patent rules
in India will make such combinations difficult if not impossible
to produce in the future." On the specific case of fixed-dose
combinations, what is our Government doing to try to make sure
the WTO finds a way through that?
Mr Graymore: This does relate
to the previous answer, in terms of making sure we have the right
sort of global intellectual property regime that has certain flexibilities
to enable countries to respond to situations where patented versions
of drugs may be deemed too expensive. It is a big issue—and
clearly fixed-dose combinations are very important. There are
a number of fixed-dose combinations, as you say through the Médecins
Sans Frontie"res research, that are available currently.
As I said before, those will not become unavailable under the
changes in the Indian legislation; it will be issues around currently
[as of 2005] or newly patented drugs where the issue will be.
There are a number of ways. As I say, potentially under compulsory
licensing will be ways of looking at how one could use medicines
that are currently patented and bring them into fixed-dose combinations,
but there are also activities by global pharmaceutical companies
increasingly to look at how they can work to produce fixed-dose
combinations of currently patented drugs as well. We continue
to work very closely with the pharmaceutical industry to see how
we can progress that.
Q43 Mr Singh: We have thankfully
seen huge increases in the budgets to do with HIV/AIDS and malaria,
a lot of it from the US and a lot of it from ourselves and Europe.
But I still have read somewhere that we might be facing an $18
billion shortfall in that funding. Given what Professor Barnett
says, that we have something like a 10-year window of opportunity
before we might face problems of acquired resistance, what more
do we have to do to get the extra funds in place? Secondly—and
I raised this issue with the earlier panel—we do hear from
time to time that the World Bank and IMF are putting problems
in the way of developing countries developing their healthcare
sector and these are usually fiscal restraints. Have you come
across that? If so, how are you relating with the World Bank and
IMF over these issues?
Ms Gorna: The $18 billion figure
came from UNAIDS. It was based on some work that they were doing
and that was spotlighted around the time of the meeting that the
UK hosted at the beginning of the year under the G8 Presidency
Making the Money Work. One of the reasons that we focused
on that aspect of Making the Money Work was because we
were hearing reports from countries, and indeed from donors, that,
since the massive scaling up of resources for AIDS in the last
couple of years, not all countries were finding it easy to use
the donor money that was coming to them. It seemed to us that
one of the prior questions should be how the money can reach people
who need it. The Three Ones agreement that was made in
April 2004 was the first stage of that really, trying to support
and enable countries to take control of their own responses and
to make sure that donors fell behind country leadership rather
than the other way round. In the work that was stimulated through
the Making the Money Work process this year, the Global
Task Team to which we have referred has been very much about supporting
countries to use the money coming to them to make sure the international
system and donors are supporting what countries need to do. I
think it is disturbing to hear from some, anecdotes of money being
blocked in finance budgets and not getting onto programmes. We
have been trying to tackle two sides of the coin. The first is
getting money that is already flowing to flow to the people and
programmes that need it, and the second is looking at making sure
more money is available so that programmes can scale up to universal
access. In terms of that, the second side of what we have been
doing this year is obviously engaging in the question of increased
resource flows. You will be aware that in September we hosted
the Global Fund Replenishment Conference and $3.7 billion was
pledged at that time, which is a massive increase in the Global
Fund's overall financing. There is still a long way to go, but
it seems to us that we have to have a double approach here of
making sure that the money that is already there is getting used,
and that will, we believe, unlock the future commitments that
have been made, as you say, by the UK and by the US and other
major donors. In terms of the Bank and IMF . . .
Mr Boehmer: As you said before,
if you put this question to the IMF, the IMF says, "We do
not impose sector ceilings." The way the IMF looks at it,
the question is: How do you finance your expenditures? If you
want to engage in a long-term commitment on financing, such as
hiring more health workers, the IMF will say: "Then you ought
to rely on financing that is reasonably predictable over the medium-term,
such as domestic tax revenues or others." If you have donor
financing that is perhaps available for a year or two and the
donors are highly variable in the way that indicated commitments
materialise, then the IMF says, "You are exposing yourself
to a very, very significant fiscal risk and, therefore, our advice,
prudent advice, would be to have a fiscal framework that does
not expose you to that risk. Do not increase your expenditures
on human resources if you do not have the predictable finance."
In response to that problem, two years ago the High Level Forum
on Health (a high level interaction of finance ministers and health
ministers, including the IMF and the World Bank) was started to
address this issue. It is very much on: How can we increase the
predictability of funding from the multilaterals and the bilaterals
and give longer-term indications? The way we have responded on
the UK side to that is that, for example, we have now given a
10-year indication of budget support frameworks for Tanzania,
and in Malawi we have now this five-year funding commitment, going
well beyond what we would normally have under our three-year spending
cycle, and we are trying to push this further in countries where
we think the environment is right that one can in fact give these
long-term commitments. But I should caution that a little bit.
We are in the privileged situation here: we do not have to look
for annual allocations country by country that are authorised
by Parliament; we have the ability under the International Development
Act to use the resources to give those longer-term commitments.
Many other countries do not have that. The US Congress has to
approve almost every line item every year annually; it is very
difficult for the Americans to give the same kind of commitment.
But at least where we can make those commitments, we can do it,
and then you are matching long-term funding indications with long-term
expenditures. In the case of Malawi, the essential step to making
the top-up of salaries for the health workers a reality was that
we said, "Yes, if no other donors come in, you can use our
money for the next five years to pay for this top-up." Of
course we hope that other donors will come in as well, so that
they do not have to use all of that money, but without that five-year
commitment at least they would not have done it.
Q44 Mr Singh: I do want to understand
this. You are therefore saying that, where long-term programmes
for paying for health workers, primarily, cannot be put in place,
the IMF can say to a country receiving this aid, "You cannot
implement the programme fully because we will not allow you to
employ further staff?"
Mr Boehmer: The IMF looks at how
sustainable and credible a fiscal programme this is and they need
to provide advice to their board.
Q45 Mr Singh: The point I am making
is: Can they, because of their fiscal demands, stop health care
being delivered in an effective manner in these countries—
Mr Boehmer: They can say, "You
will not have the IMF support."
Q46 Mr Singh: What does that mean?
What are the consequences?
Mr Boehmer: Donors do not have
the fiscal capacity to assess: "Is this a sound fiscal framework
or not?" But they do provide budget support or other support
through the national budget. If the IMF says, "We do not
advise that this is a sound fiscal framework," many donors
would shy away from putting their money into the budget.
Q47 Mr Singh: That is very clear.
Mr Boehmer: And the same thing
if the IMF puts funding in itself: of course it can say, "We
will not ourselves fund it."
Q48 Hugh Bayley: Is the IMF wrong
to see this as revenue expenditure rather than investment in future
productive capacity?
Mr Boehmer: I do not think the
distinction is current expenditure versus future investment. I
think the question really is one of matching up the commitment
on expenditure that you have with the commitment on financing
that you have. That is more the question. We have really moved
slightly beyond the distinction: Is something an investment or
recurrent? Because there is the recognition that in fact you need
to increase the recurrent expenditures, and, therefore, even at
the World Bank side there is no longer just a traditional approach,
where basically the assumption is that recurrent expenditures
need to be financed by the country's resources themselves, donors
come in to pick up the investment side. Through budget support,
certainly, increased recurrent expenditures, but also now through
investment programmes there can be increased recurrent cost financing.
Q49 Joan Ruddock: I would like to
turn to the issue of user fees. We had a very interesting discussion
in the previous session. Tom Ellman was very clear that, unless
the access to HIV/AIDS treatment is free at the point of service
delivery, it will not be possible to meet the universal target
for treatment by 2010—and I have to say I think his argument
was very persuasive. Where does DFID stand on this?
Mr Boehmer: On user fees more
generally, we have recently brought out a statement, which is
included in the package of papers, on how we intend to translate
the commitments that we made at Gleneagles into action that the
Chancellor recently launched. Our view on user fees more generally
is that in low income countries we are opposed to official user
fees and advocate the "free at point of service". We
do not dictate economic policies to countries, so, in some sense,
we will not go in and say, "Unless you do that, we will withdraw
our funding." I think that would be quite contrary to our
general approach on conditionality. But we do certainly advocate
that view in low income countries because, on balance, it is a
barrier of access that is particular to the lowest income groups.
Exemption schemes have a very poor track record. Often they do
not work. You will find examples where they work, but often they
do not work and most of the time they do not work. There are differentiations
across countries. In Africa that view is one that is very workable,
that you simply, on balance, must provide those services at the
point of delivery for free. In Asia you have a much stronger involvement
of private sector health delivery and a much stronger industry
in place. Again, on the official fees, our view is that in low
income settings it ought to be free at point of service, but we
would very much want to work with countries to see how we can
make this possible. This gets us back to the question of finance.
In a lot of countries (for example, in Zambia now) there is consideration
given to: Can you eliminate user fees on health?—and that
would include, of course, treatment on AIDS. The question comes
back to one of finance: Will we have the financial resources to
do this?—and it is tied up with the previous question, that
this will be a long-term commitment on loss of revenue. Our view
is that the loss of revenue involved is relatively small. The
much bigger issue is that you will have a much stronger demand
for services and therefore the ability to respond to that demand
for services must be enhanced, so it must go hand in hand with
a very significant increase in national health budgets, in donor
resources available to finance this—which again gets us
back to translating this overall commitment that we had in Gleneagles
about: We do need that extra $50 billion annually by 2010—that
it actually materialises and then allows countries to pursue exactly
these kinds of policies so that they can eliminate the barriers
to access.
Q50 Joan Ruddock: We heard that the
UNAIDS position was slightly different, and you have made a precise
distinction between Africa, low income countries and the rest.
Is there really a need for perhaps DFID to work with UNAIDS, with
WHO and to issue some kind of principled international statement
about the need for free access?
Mr Boehmer: Through WHO certainly
those statements are being developed. The distinction between
UNAIDS and us, I would say, is that it is easy for us to say:
"As a matter of principle this is what we would like to support."
We would not go in to a country without further examination and
say, "Tomorrow we would advocate removing those fees."
There has to be a process to go through regarding how we do this:
If there is some loss of revenue, how do we compensate for the
loss of revenue and how do we deal with the broader question?
With the World Bank we have certainly had that discussion. In
principle the World Bank agrees with the approach: Let us put
this question to countries and work it through. But I have to
admit there is a difference between having principled discussions
and actually doing this in practice in-country, where quite often
the social insurance schemes are still given preference than other
schemes being advertised, and grave concern expressed about the
loss of revenue when the World Bank is concerned that their donors
will not come forward with the additional revenue.
Q51 Joan Ruddock: But an international
policy statement might have quite an effect because it focuses
people on saying: "How much is being lost and how do you
make it up?"
Mr Boehmer: Yes. I believe at
WHO—and I am not 100% certain on this—there is a resolution
that basically endorses free basic services. Of course that is
not necessarily then binding on an organisation such as the World
Bank, so one needs to have a separate dialogue. But we certainly
think it is a useful statement. We think it was useful for us
to have brought out the statement. The hard part is translating
it into practice. I do not believe the World Bank has a statement
to the contrary; it simply has a country-by-country approach that
then quite often varies.
Q52 Joan Ruddock: Perhaps you may
do more work on this?
Mr Boehmer: We will.
Q53 John Battle: Listening to the
whole of the discussion this morning, the discussion on targets,
some discussion on budgets, it worries me that I am left thinking
we are miles behind and the game has moved on. Perhaps we do not
pay enough attention to biology and the biosciences. I was kind
of distracted by thinking that maybe viruses have understood Darwin
(whose 150 years anniversary it is) but we have not read Darwin,
so that what is happening is the viruses are already resistant
to the first line ARV therapies that we are discussing. In the
modern world we have moved on to second-line therapies, but generic
copies of these are not available in the developing world. I heard
a figure somewhere—and I would have to check it in the record—of
$22 billion needed by 2008 to tackle the problem, and I am left
wondering: If the second-line therapies are four to 10 times more
expensive than ARV, what is the strategy now to get into the game,
never mind ahead of it?
Mr Graymore: I think this is an
important issue. I think it is also worth pointing out, in terms
of rolling out access to ARVs in most low income and middle income
countries, that it is still currently the case that first-line
ARVs will be necessary and useful, and available, indeed. It is
important to bear that in mind. But, yes, of course resistance
develops and it will be vital between now and 2010, as we really
scale up efforts to get as close as possible to universal access,
that second-line ARVs are affordable in this context. They are—and
you have mentioned the figures: four to 10 times—significantly
more expensive currently than first-line ARVs. Being newer, they
are on the whole still under patent, whereas a lot of first-line
ARVs are not. In terms of what is the strategy, it is worth looking
at what caused the first-line ARVs to drop from such a high price
of over $10,000 back in 2000 to now as low as $150 for a typical
triple-combination therapy and those factors were, variously:
a significant increase in financing, buying drugs, actually building
a market; generic competition; and, individual offers by pharmaceutical
companies for a variety of reasons: partly in response to generic
competition and partly for other drivers in their developed country
markets as well. Those sorts of factors will have to play a part
in bringing down the price of second-line ARVs as well. As I say,
we are working very closely with the pharmaceutical industry,
talking to them about the sort of offers they might have around
second-line ARVs, as are others. There is a lot of discussion
and activity in that area. There is, of course, as we have heard,
a significant increase in financing that will also affect it.
We are going to see a situation where the issues we discussed
earlier in TRIPS and new provisions will be tested as well—and
that is right and proper. Where there is a situation where countries
are unable to afford second-line ARVs for a variety of reasons,
that will be one of their options: either they will have their
own industry and they will be in a position to issue a compulsory
licence or the threats to do so might lead to reduced prices anyway
but they might do it themselves, or they will be a country that
does not have their own industry which will use the 30 August
decision. In many respects, the sooner that decision is used,
the easier it will be to assess its effectiveness and utility.
I think those factors will have to be part of the strategy.
Q54 John Battle: It was not without
incredible pressure from multifaceted directions we got the price
down. It did not just happen by market forces. I wonder whether
there is, if I may put it in these terms, in the most generic
sense the political pressure to get to second line or are you
just hoping there will be a replica of first line and it will
somehow reach and trickle down eventually?
Mr Graymore: No, it is not a situation
of hoping at all. As I have said, there is a great deal of political
commitment to identifying the hurdles and barriers around the
overall target and we have identified access to second-line ARVs
and the prices thereof as one of the issues that needs to be addressed.
We have already been talking to some pharmaceutical companies
about it as an issue and with others and we will continue to work,
including through the Global Steering Committee and our co-sponsors
of UNAIDS, to ensure that the international response takes account
of this as an issue and seeks to put in place the necessary plans.
John Battle: Thank you.
Q55 John Barrett: The direction of
US policy in the battle against HIV/AIDS is key, the US being
the biggest donor. I wonder if you could comment on two aspects
that we have detected in the evidence we have gathered. One is
a move towards bilateral mechanisms through PEPFAR. Although there
has been a major increase in the US funding of the Global Fund,
we detected an enthusiasm for bilateral arrangements, and also
we detected, in greater or lesser degrees, an increase in the
moralistic message from the US, particularly on abstinence and
again related to the PEPFAR fund. I wonder if you could comment
on that drive towards basically the US going it alone and setting
up bilateral arrangements and saying, "This is our moral
stand on the issue and this is the way we are going to go."
Mr Boehmer: Perhaps I can do the
bilateral question and then Robin can do the moral one. On the
bilateral question, it is true that the US has a quite different
view on how best to support countries from most of the Europeans
and certainly the UK. We believe that the best way to support
a country is to strengthen the country's ability to tackle its
own issues and therefore strengthen the national system set up
to do so. The US is often rather sceptical of the public sector
and prefers approaches that give it the flexibility to have targeted
interventions where the US can account for its own money and report
back to Congress. Earlier I believe it was you who said that PEPFAR
in fact does set very specific targets. PEPFAR must commit, to
get funding, to demonstrate that a certain number of individuals
have been put on treatment with PEPFAR money. That of course means
they are very reluctant to have PEPFAR money being put into systems
where you can no longer separate out whether the money is PEPFAR
or international resources. We think that is not the most helpful
way of achieving progress in a country because you do undermine
the country's own ability to tackle these issues. It has not really
changed so much: the US was never quite a strong friend of going
through multilateral channels or going through budget support
channels. On the Global Fund side, the US is very strong, because
it does believe that in fact the Global Fund targets these three
specific issues, AIDS, TB and malaria, and it has a very strong
monitoring framework in place and a results framework in place.
But it then also, in the first instance, has the US approach of
not being a very good player in-country in collaboration with
the national systems. The Global Fund, I would say, struggles
with this question of: Do we become so that the US will continue
to see us as an attractive recipient of funds that is consistent
with the US view on funding? Or do we become what we think would
be in fact a more effective approach in many countries—and
these are countries where you do have strong governments where
you do have strong national systems—where the Fund ought
to be a supportive player, supporting national programmes rather
than separate programmes? I think in the end the likelihood that
we will influence the US on its broad thinking is relatively slim,
but we can all support national programmes through different mechanisms
of funding. If the US wants to support a slice through a traditional
project, that is fine as long as that slice is part of what the
government knows is an overall programme. So it goes a little
bit backwards, making sure that governments in fact take ownership
of everything that goes on in their countries, determine their
own policies, and then make sure that the donor funding comes
in to support it. And there is great willingness at the country
level certainly, even amongst PEPFAR, to do just that, because
it is not inconsistent with their thinking. It gets a little bit
over to the moral question of then who sets these kinds of policies
that dictate how we deal with prevention.
Ms Gorna: We do have a very lively
dialogue with the US and we are very aware of the work that they
are doing. Obviously, as we are the two largest bilateral donors
on AIDS, it is very important that we maintain that conversation.
You may be aware that in 2003 we set up a US/UK task force on
AIDS focused on five countries where we both have strong bilateral
programmes and that is one of many mechanisms and opportunities
whereby we look at the extent to which we are both able in complementary
ways to support governments to do the right work. I think it is
very important to note that the US played a key role in the Three
Ones agreement which does stress country ownership and I think
that provides a context whereby we can work closely with the US.
I think Dr Dhaliwal said earlier that the situation is quite complex
with PEPFAR. There are the global policies that are spoken about
with PEPFAR and then there is the country reality, and certainly
the experience we have, both in our headquarters' conversations
and also in what we see at country level, the fear that many have
about the moral messages and the reality in-country is not always
as linear as it might be presented. That said, we are always obviously
concerned about any situation where evidence-based policy has
not been put into place. I think the Secretary of State has said
on many occasions that we take a different view from the US on
many matters concerning prevention, whether that is about support
for sexual and reproductive health and rights, whether that is
the extent to which the UK will get behind harm reduction programming,
condoms and so forth. There is no secret about the fact that we
have a very different approach on HIV prevention from the US Government's
stated approach, but, again, as Mr Plumley mentioned earlier,
we did work closely with UNAIDS on the agreement of the intensifying
prevention policy statement that came out in June and the US did
sign on to the whole of that document, which is a progressive
document emphasising evidence-based policy. I think it is a complex
situation where clearly the US, as we have mentioned earlier in
this discussion, has a very high level of scrutiny on the detail
of its programming which is very different from the UK experience,
and I think that is part of what leads to some of the messaging.
At country level we are trying to look at what the impact is on
the ground. We have already done one survey of country programmes,
trying to understand whether their PEPFAR central policies are
impacting on the country's ability to deliver effective programming,
and we are going to keep that under close review because we think
it is tremendously important that countries are able to take forward
the right policies that they need to do. That is where the international
system comes into play as being extremely important in supporting
countries and providing that policy guidance and evidence, and
the UK is clear about wishing to get behind what countries want
to do themselves.
Hugh Bayley: If it is helpful, I think
this Committee will want to keep it under review as well and perhaps
we should do some more study about non-linear policy implementation.
Q56 Mr Singh: This question might
be more pertinent for the Home Office or the Department of Health.
I would like to know what the DFID attitude to these issues are
and whether you have made any representations to those other departments.
First, is it right to refuse treatment to asylum seekers who suffer
from HIV/AIDS? Secondly, is it right to deport failed asylum seekers
who suffer from HIV/AIDS to countries and areas especially where
no treatment is available? Thirdly, given the likely colour of
the people these policies are going to affect, are these policies
in any shape or form racist?
Ms Gorna: I do think, as you suggest,
that this is something we ought to take up with our colleagues.
As I mentioned earlier, I think this is something we will place
on the agenda of our next cross-Whitehall group meeting because
I do not feel comfortable answering it without talking to our
colleagues in advance.
Hugh Bayley: Could I thank all three
witnesses for explaining so carefully the Government's policy.
It is something we value. Might I also say as a comment that I
find it reassuring when officials listen to what we are saying
and say they will take some of the points we have made back to
discuss more broadly in government. It gives us reassurance that
this Committee is doing the job that we think it ought to be doing.
Thank you for that.
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