By Gary S. Becker
The number of persons in Africa infected with the AIDS virus is of disastrous proportions. The incidence of the virus is also growing rapidly in India, Brazil, and other poor nations. This epidemic will rival some of the most devastating ones of past centuries unless more affordable and effective policies are developed soon.
A recent U.N. report details the magnitude of the AIDS problem. Almost 30 million adults and 1 million children globally were infected with the AIDS virus by the end of 1997. Two-thirds of those infected are in Africa, and the infection rates on that continent are expected to grow even more rapidly during the next several decades.
Death rates reflect the rate of HIV infections with about an 8- to 10-year lag, since there is no effective treatment once an infection evolves into AIDS. About 12 million people worldwide already have died from AIDS, and the number of deaths will grow rapidly. Eight million succumbed in Africa alone between 1995 and 2000, and the U.N. estimates that deaths there from AIDS will increase to 24 million during this decade. This would constitute almost 40% of all deaths expected on that continent, where AIDS has sharply reversed what had been impressive declines in mortality rates during the past 40 years.
The AIDS "cocktails" that combine various drugs often slow down the progression from HIV positive to symptomatic AIDS. These cocktails have reduced AIDS death rates in the U.S. and other rich nations, but they have been much too expensive elsewhere. This is why pharmaceutical companies have come under enormous international pressure to supply their drugs to poor nations at a small fraction of the cost in the West. Some of these countries have also begun to permit cheap generic copies that violate international patent agreements. As a result, most pharmaceutical companies have recently caved in on pricing.
HUGE OUTLAYS. Over a longer run, this policy could have a negative effect on Africa and other poor nations because it could discourage the costly development of drugs to fight malaria and other world diseases that are mainly due to poverty and climate. Profit-oriented companies will not invest the half-billion dollars and more required to research and develop effective drugs for major diseases if they cannot price them sufficiently high to recoup their investments.
These financial considerations explain why drug companies already concentrate most of their research on cancer, heart disease, and other diseases that are common in richer nations, which can pay enough to support large development costs.
For this reason, a better strategy than pressuring companies to essentially give away their drugs is for international organizations such as the World Bank to negotiate with drug companies to buy large quantities of the AIDS cocktails. They would arrange to have them resold cheaply to persons who are HIV positive in Africa and other poor nations. This approach would provide adequate compensation to drug companies, but it needs to be carefully policed. Otherwise, some individuals and government officials in poor nations who obtain drugs through these programs will ship them instead to the "gray" markets of Western nations to profit from the much higher prices there.
EDUCATION IS KEY. Given the severity of the consequences, it is puzzling that so many young African men and women risk becoming infected with the AIDS virus through unprotected sex or the use of contaminated needles to inject drugs. Presumably many are either unaware of the consequences or they are unwilling to pay for condoms and clean needles. To combat these forces, a second international program should both subsidize condoms and clean needles and spread better information about the dangers of unsafe sex and drugs.
International efforts to reduce the incidence of AIDS are justified not only by humanitarian considerations but also because they would reduce the spread of a deadly contagious disease that has worldwide consequences.
In addition, these efforts would encourage greater investments in human capital in Africa and other poor nations with an AIDS epidemic. Since the typical young person who contracts the AIDS virus lives only for 8 to 10 years, such people have less incentive to invest their time and money in education and training that leads to higher earnings in the future. The heavy incidence of the AIDS virus in many African nations is surely one factor behind their dismal economic performance in recent decades.
International organizations can take steps to reduce the high rates of HIV infections on the African continent and to slow down the progress of this virus among those infected. Successful efforts would dispel some of the prevailing pessimism about prospects for combatting the AIDS epidemic in Africa and in poor countries around the world.
Gary S. Becker, the 1992 Nobel laureate, teaches at the University of Chicago and is a Fellow of the Hoover Institution.