Imposed Socially Responsible Pricing on HIV/AIDS Drugs in Developing Areas

Introduction

The need to plough back profits into the host state or community in the form of ethical, social and environmental responsibilities, where MNCs are active, continue to generate a lot of discussion. Some opine that if there is a need for doing so, it should be in the form of expanded production because all the necessary payments expected of these companies in the form of taxes, royalties and rents are duly paid to the host government. The state as the only credible unit of analysis, with regard to the social contract and the third wave of human rights (Jones 2013, 57), should provide or seek to provide for the welfare and security of its population, including the health sector. This position is forcefully argued by Milton Friedman, as quoted in Wilks and Nordhaug (2013, 289), who maintains that: (a) socially motivated goals will divert the attention of managers from the primary goal of increasing shareholder wealth; (b) CSR-related activities are an expense to the firm that detracts from bottom line financial performance; (c) managers are ‘woefully ignorant’ when it comes to social issues, so will add little value to society by addressing social needs; and (d) CSR is akin to taxation without representation, as shareholders are essentially ‘taxed’ through philanthropic donations, yet have no say as to where and how the money will be spent.

On the other hand, a different opinion holds, mostly by the ‘voluntarist’ camp that the need to embark on CSR ought not to be mandatory as it is a means to gain the support of the community as a Social License to Operate (SLO) (Aaron 2010, 158; Zerk 2006, 32–36). Christian Aid (2004) defines CSR as ‘the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large’. This article intends to interrogate the ethical consideration of MNCs in developing areas, with special focus on South Africa.

It is estimated that out of the 50 million people who make up the South African population, 5.7 million are affected with HIV. Between 1998 and 2007, it was reported that the disease caused the death of 1000 South Africans every day. The right to good health falls under the 1948 Art. 25(1) of the Universal Declaration of Fundamental Human Rights (Twinomugisha 2012, 42). As a consequence, the issue of HIV/AIDs is very crucial for South African policymakers. There are two dominant policy positions to check this trend: (a) to help those already affected and (b) to prevent it from spreading further. However, the two policies are self-reinforcing, to the extent that one cannot succeed if the other fails. In this way, the latter policy position includes a mass campaign on the implications of unprotected sex. On the other hand, the former position demands that government make life-saving anti-retroviral (ARV) drugs available to those already infected.

In order to make the drug available and affordable, financial resources were diverted from other sectors, such as education and general development of the state to health, specifically ARVs, even sidelining people with TB, malaria, polio and other life-threatening diseases to their own fate (Deegan 2009, 135; Hughes 2006, 178). South Africa was, therefore, compelled to approach MPCs to reduce the price of the drugs, in order to make them affordable for the state. This is in line with the June 2001 United Nations General Assembly (UNGSS) Declaration on HIV/AIDS which affirms the need for MPCs to provide affordable drugs, especially for the poorest people (UNDP 2008, 43). On the contrary, the companies maintained that because of their financial commitment to the drugs’ research and development (R&D), the price could not be reduced beyond a certain level. Instead, the companies suggested donations and differential prices for the drugs. Taking into account this dichotomy, this article investigates the gap between CSR of MPCs and their often claimed human development motive.

Models of PMCS’ Responsibility

Donation, out-licensing and differential pricing are the basic models for looking into MPCs’ CSR. The donation thesis posits that since Third World States (TWSs) are generally poor, the only means to afford life-threatening drugs is to rely on donations from NGOs, pharmaceutical companies and developed states. In contrast to this enthusiasm, it is argued that certain non-profit bodies are working for some states in the North as well as for MNCs (Doyle and McEachern 2008, 123–157). These states tend to support the economic base of MPCs in the states concerned, because such aid is channelled through drug companies. This does not solve the principle of affordability since the price will be set at the market rate determined by MPCs. Problems associated with real prices, taking into account the over-invoicing of the imported inputs, under-invoicing of exported finished goods and price fixing negate the concept of globalisation that attracts competition (Akinsanya 1992, 46–51; Elliott 2013, 13). A change in government and or an economic downturn in donor states and or changes in political and economic policies of the recipients threaten the stability of this measure (Bhagwati 2004; Bond 2006 and 2003; Saul 2005; Southall and Melber 2009; Stubbs and Underhill 2006).

Out-licensing is another means of obtaining a favourable price from MPCs. This process is categorised into voluntary and involuntary licences (Stiglitz 2006, 120–122; Vachani and Smith 2006, 419). Conditions for granting compulsory licence are (Sople 2012, 279):

circumstances of national emergency;

As pointed out in Hymer’s thesis on DFI (Letto-Gillies 2012, 53), ‘licensing is usually less profitable than direct production and involves the risk of poor control over the quality of production and the risk of losing their monopoly over specific knowledge and technological advantages’. In most cases, no pharmaceutical company will be willing to out-license to others for the production of generic drugs that attract lower prices. They fear the creation of a grey market where the generic producers will export to other states. But ‘multinationals can…discourage diversion by introducing different brands and packaging in developed and developing countries so that diverted products can be easily detected’ (Vachani and Smith 2006, 410). When these companies are forced to out-license, ‘without the consent of the patent holder’ (Stiglitz 2006, 116), they collect royalties of between 1 and 5 per cent from the generic producers yearly. Out-licensing therefore, represents a continuation of business for MNCs.

Another model is the price differentials, to enable developing states to have access to the most expensive drugs which they could not ordinarily afford (Vachani and Smith 2006, 405–406). This appears to be a form of CSR on the part of MPCs. This action, like out-licensing, attracted criticisms from the US government, mostly the US Trade Representative (USTR) and MPCs, who contended that if such an arbitrage, in the era of globalisation is allowed, MPCs are likely not to break-even. This theory ignores the fact that MPCs, because of their power as a cartel, make it difficult to import drugs from other states. Furthermore, the discounted prices are too marginal for developing states to afford, compared with the generic prices.

The question of importation of life-threatening drugs is in line with the theory of the WTO and economic liberalism that the forces of supply and demand should determine the price as well as what, when and where to sell goods and services at any point in time. As expected, and against the tenets of CSR, MPCs rebelled against this position. In an attempt to out manoeuvre developing states and civil societies, the United States (US) signed a series of bilateral and regional trade agreements to avoid competition, coupled with the WTO-TRIPS position (Gordon 2003, 105–118; Stiglitz 2006, 106).

The last model advocated regarding the issue of patented drugs is the research proposition. This is the TWS’s position that the issue of bio-piracy is serious and that traditional/indigenous knowledge should be respected. This school is of the opinion that very many plants from the TWSs are medicinal, a use which might well eventually be patented by multinationals from the West for their own economic interest. For instance, Rooibos (red bush) (Aspalathus linearis) tea in South Africa was about to be patented by a French company in March 2013 before being halted by a court of law in Paris. It is considered to be free of caffeine, low in tannin and rich in anti-oxidants, good for diabetics and cancer prevention; it is also used as an ingredient in the cosmetic industry (Nevin 2013, 88–90). If this patent had been successfully registered by the French company, South Africa would have been dispossessed of its resources. The same Rooibos had been registered by an American company, though this was settled amicably, but as long as the South African farmers fail to register it, it may be smuggled out and registered elsewhere as intellectual property (IP). The implication of this is that South African growers and related product manufacturers would have been required to pay royalties on sales in the US (Nevin 2013, 90). The research proposition model also contends that indigenous people in Africa have been using some of these plants to cure different diseases but smuggled these to the patent system in the North, because the WTO recognises the implication that the original owners will have to apply to use these remedies from the patented companies (Thompson 2009, 299–323). In exchange for this piracy, the anti-bio-piracy school contends that in as much as the issue of patents continues un-defined, developing states have no other choice than to break the law. The issue of indigenous knowledge and bio-piracy is worth addressing as the current system is neo-imperialist and complex.

South Africa’s HIV/AIDS Drug War and MNCs’ Rhetoric Concerning Socially Responsible Pricing

South Africa is one of the states in Africa afflicted with a high rate of HIV/AIDS infection. The vulnerabilities of the citizens, economies, public health systems and armed forces are well documented by students of international relations and sociology (Bond 2006 and 2003; Lyman and Wittels 2010; Vachani and Smith 2006). In 2000, the UNSC Resolution 1308 admitted that links between HIV/AIDS, social stability, and national security could threaten world stability and security (Garrett 2005, 51) which, amongst other factors, forced former President Thabo Mbeki to come up with different strategies to curb the wider spread of the disease. Many approaches were adopted, such as the campaign to create awareness at the grassroots level, as advised by the AU Abuja summit on HIV/AIDS in 2001 and the UNGASS in the same year. South Africa was accused by the international mass media of misappropriating funds, suspected to have been sponsored by MPCs, when the musical Sarafina-2, aimed at creating AIDS awareness was launched. This awareness campaign eventually created many voluntary organisations such as Khomanani, Love Life, Soul City and Soul Buddz which eventually championed the threefold motto ABC (Abstain, be Faithful and Condomise) Chikane (2013, 259). The government was equally accused of an unscientific interpretation of the disease when Mbeki declared there was no link between HIV and AIDS (Hertz 2001, 218). His argument was borrowed from ‘a conference of about 60 dissident scientists held in Uganda where it was proven that there was no scientific proof that HIV causes AIDS’ (Barrell 2000). Mbeki challenged the use of certain HIV and AIDS-related medicines in developing countries in a way that was different from what obtained in developed countries; he also questioned the toxicity of prescribed drugs as put forward by the Zidovuline (AZT)’s manufacturer, GlaxoSmithKline (GSK).This drug was manufactured in the US, but not prescribed as a mono-therapy drug there; but only in developing areas. The same was recommended by WHO, which caused Mbeki to question why a double standard was introduced for the issue of developing areas, even by various international institutions (Chikane 2012, 205; Chikane 2013, 262–267). His argument was that HIV was not the sole cause of AIDS, but that it was spread by other means, such as venereal diseases, extreme poverty and lack of proper nutrition. The government decision to leave the people with HIV/AIDS to their fate, together with their orphans, because of the cost involved was also criticised by MPCs, various international organisations, local and international media and NGOs.

MPCs’ interest is to make profit and crowd out competitors from the economy. They target government procurement and a few members of the elite whose insurance can cushion the cost of the drugs. Efforts by the government and different civil societies to call for a reduction in the price of the drugs could not materialise. This appears to have obliged the Mbeki government to call for parliament’s intervention through the Medicine Act No. 90 of 1997, which allowed the government to import and form a partnership with private organisations to set up manufacturing companies to produce generic drugs.

In reaction to the Medicine Act, the South African Pharmaceutical Manufacturers Association and 39 MPCs, mostly from the US, brought suit against the government action. They claimed that this was in contravention of the 1996 South African Constitution on the one hand, and the WTO TRIPS agreement on the other hand, (‘t Hoen 2009, x). Their position was also that they had spent a lot in R&D to develop the drugs. The majority of the research is conducted by government institutions and universities; the results are always patented by MNCs because of their financial commitment to these institutions. This does not mean that these costs should be shifted to developing states.

In an effort to dissuade the Pretoria government from implementing the Medicine Act of 1997, most especially Clause 15 (c) which specifically called for out-licensing and importation of generic drugs from Brazil and India, MPCs adopted four major approaches (Willetts 1997, 292): indirectly, by the company asking its own government to put pressure on the foreign government; indirectly, by raising a general policy question in an international organisation; directly at home via diplomatic channels; and/or directly in the other country via government ministries.

Other strategies not mentioned by Willetts (1997) through NGOs both in the host and parent states and the employment of lobbyists to change the host people’s attitudes towards their government on any legislation to curtail profit (de Wet 2014). All the above-mentioned common routes were followed by MPCs in South Africa to retain transfer price on ARV therapy. The Office of the USTR, headed by Robert Zoellick (later appointed as the Bank President), the Embassy of the US in Pretoria and the personal intervention of the US Vice President Al Gore were employed. The USTR, set up in 1980 by the Carter administration, to represent MNCs in their dealings with other states at the bilateral and regional level, as against the WTO TRIPS, coupled with double standard approach of America worth questioning (Destler 2005, 280, 355). For instance, America between 1957 and 1962, through the Estes Kefauver Act, named after the chair of the Senate Sub-Committee on Anti-trust and Monopoly, could order generic medicines from abroad, regardless of the patent status of the products. Compulsory licences were measures adopted by other developed states, such as Canada and Britain (‘Crown Use’), as part of cost containment measures (‘t Hoen 2009, ix). In 2004, in an effort to promote the high price of HIV/AIDS drugs in Morocco, Zoellick went to negotiate at the bilateral level in 2004 with the Moroccan government, to prevent the state from importing or producing generic drugs (Stiglitz 2006, 103–104). ¹ This was opposed to the concept of globalisation which the states had spearheaded through WTO negotiations.

The USTR is de facto an extension of MNCs: their instrument in the White House. Zoellick was able to convince his government and presumably advised the government wrongly on the need to impose some trade sanctions and deny financial aid to states that opposed the economic interest of MNCs. To maximise profits for their shareholders and executives, MPCs threatened that if the Medicine Act of 1997 was put into practice, they would disinvest from South Africa (Bond 2003, 182; Elliot 2013, 12). The American embassy in Pretoria, took careful note of the parliamentary discussion on the Medicine Act. When the embassy noticed there was no turning back on the issue, it focused on the Health Ministers, Nkozana Dlamini-Zuma and Manto Tshabalala Msimang at different times, critiquing their prescription of a healthy diet composed of beetroot, garlic, olive oil and lemon juice that could prolong the life of people living with HIV (Chikane 2013, 272). The National Security Agency and the CIA worked with the US Commerce Department to intercept conversation and data and passed the same to American firms through a surveillance system (Hertz 2001, 80–83). Al Gore’s actions could not have been far from his state and personal interests as the custodian of research funds in the US, of which MPCs are in effective control. Their financial contribution to his political party’s electioneering campaign was equally important to his presidential bid in the 2000 elections. This explains why his idea of generic drugs was forcefully opposed (Chikane 2013, 248; Hertz 2001, 121–122). The same issue was raised in January 2014 which made the Health Minister Aaron Motsoaledi to describe MPC as ‘satanic plot and genocide’ against South Africans (de Wet 2014). Similarly, MNCs’ claimed contribution to American financial power through different types of taxes cannot be ignored by any government in the states. However, there is enough evidence that MNCs pay less tax by being allowed to ‘transfer assets to foreign tax shelters’ and in some instances, are given a federal income tax holiday for up to four years (Hertsgaard 2002, 135). In terms of the social contract thesis, it is the responsibility of every state in Africa to take necessary measures to protect the health of its subjects and to ensure that they receive medical attention as a right. Article 16(2) of the African Charter on Human and Peoples’ Rights (1981/1986) confirms this assertion. In 2001, at the AU Abuja Summit on HIV/AIDS, it was declared by member states that HIV/AIDS was a threat against human rights and humanity. The Summit called on MPCs to make affordable and comprehensive healthcare available to African governments, for urgent action against HIV/AIDS (Heys and Killander 2010, 361). In 2010, the African Commission Resolution on the Establishment of a Committee on the Protection of the Rights of People Living with HIV agreed that appropriate action by member states should be taken, in line with the 2001 Resolution, to force MPCs to provide affordable drugs to people living with HIV/AIDS (Heys and Killander 2010, 428). This could have contributed, together with the Medicine Act, to the voluntary licensing by the US MPCs of local generic producers (Aspen and Adcock Ingram). These factors and the inputs of NGOs, a unique stakeholder, compelled MPCs to drop their lawsuit in April 2001 (Wilks and Nordhaug 2013, 295–296).

The MPCs’ lobbying strategies to attract support from the American government could not compete with the pro-generic NGOs. Brazil ² had adopted the WTO-TRIPS pronouncement on generic drugs by forcefully issuing licences to generic companies. By 1999, at the WTO Seattle submit, the power of the NGOs had become too much to ignore: the Clinton administration issued Executive Order 13155 to enable Sub-Saharan African states to introduce compulsory licensing in order to produce generic ARV drugs and import the same. This forced MPCs to announce a reduction in the price of AIDS drugs after Clinton’s announcement in May 2000.

GSK reluctantly signed five licensing agreements, but in its declaration, the company believed that these were to promote the development of the host state. Woolman and Sprague (2008, 288) articulate this as follows:

Voluntary licences (VL) enable local manufacturers to produce and sell generic versions of our products. A decision to grant VL depends on a number of factors including the severity of the HIV/AIDS epidemic in that country, local healthcare provision and the economic and manufacturing environment … Selecting the most appropriate licensee is key. We need to be sure that the manufacturer will be able to provide a long-term supply of good-quality medicines and will implement safeguards to prevent the diversion of medicines to wealthier markets.

Almost at the same time, Mbeki accused the CIA and MPCs of infiltrating his officials, and lobbying opposition parties and some ANC members to vote against his health care strategies on the issue of HIV/AIDS (Barrell 2000; Chikane 2012, 205–206; Chikane 2013, 247). He specifically accused the TAC led by Zackie Achmat, his Labour Minister, Mambathisi Mdaladlana and some Cabinet Ministers of supporting MPCs (Barrell 2000; Bond 2003 183). What remains dubious about this is the court case instituted against GSK but not against anti-competitive practices. The same NGO took Mbeki’s government to court in March 2004 for importing generic AIDS drugs when relevant medical institutions in the country were busy with generic drugs registration. If there was a corrupt relationship between the MPCs and TAC, court action would not be an option (Kenyon 2012, 89). Achmat’s interview with Patrick Bond (2003, 183–188) appears to have confirmed that there was no link between the PMCs and TAC. Even if TAC received funds from MPCs, this would have been for the promotion of the second and third generation of human rights, including access to medical care (Kárníková 2012). TAC’s unilateral importation of generic ARVs for distribution to AIDS patients through accompagnateurs ³ for free appears to portray the NGO as an independent actor against government and MPCs (Woolman and Sprague 2008, 295). Noreena Hertz (2001, 152) had this to say about the power of NGOs in the twenty-first century:

It is the most effective weapon in the armory of ordinary citizens, enabling people to press for some degree of accountability in governments, international organisations and multinational corporations. In the world of the Silent Takeover, in which the social contract between government and the people is increasingly meaningless, popular pressure is doing something that governments can’t or won’t: demanding that corporations be judged by non-economic criteria, holding them accountable in a way that we cannot hold our elected representatives.

When the drug companies realised that the Medicine Act was out of national interest, plan B was introduced. A 72 per cent discount for the antiretroviral therapy was suggested. This discounted price was not regarded as competitive, compared to what obtained in India, Brazil and Thailand (Bond 2003, 183). AZT, invented by the US government and produced by GSK, costs $240 a month in South Africa; its generic in India costs $48. The company offered a 70 per cent discount only for a pilot project; the cost of $72 was rejected by Dlamini-Zuma, then South African Health Minister (Bond 2003, 155). The Mbeki government reasoned that both the ARV donation and the discounted price were not sustainable, based on the theory of aids politics which causes developing states to become poorer (Acemoglu and Robinson 2012, 451–455; Mills 2010, 337). As of April 2013, government introduced Atroiza, which is a combination of Tenofovir, Emtricitabine and Efavirenz. This is not only economical for the government, but also assists patients who only have to take one pill instead of six a day. The new drug from generic manufacturing companies saves government more than R300 ($33.7), from R400 ($44.9) in a month (Sifile 2013, 2); by extension, between 2013 and 2014, government would save more than R2 billion ($224,466 million) (Wild 2013, 42).

When MPCs realised that the battle for holding onto their patent rights was almost lost, two weeks before the annual World Health Assembly (WHA) in 2001, as an ethical gesture, $100 million was raised and donated to some HIV/AIDS NGOs for ARV procurement. This was an attempt to silence the AIDS-ravaged developing states from tabling the generic drugs issue before the WHA; taking into consideration the loophole in the WTO TRIPS that allows any state to import or force drugs companies to out-license ARV to generic companies (Bond 2003, 182; ‘t Hoen 2009, 2). Despite this gesture, the conference adopted the WTO TRIPS position and declared that:

Because of their low prices, generic drugs are often the only medicines that the poorest can access. The Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement does not prevent governments from requiring accurate labeling or allowing generic substitution. Indeed, it is argued that competition between drug companies and generic producers has been more effective than negotiations with drug companies in reducing the cost of drugs in particular those used to treat HIV/AIDS. (cf. Woolman and Sprague 2008, 288)

By 2002, WHO was forced to include ARV medicines in its Essential Medicines List (EML) for the first time and in 2003, it adopted the ‘August 30th’ decision to allow drugs to be produced under a compulsory licence predominantly for export. This contributed to the granting of licences to Aspen and Adcock Ingram to produce the ARVs, which was affordable for the government, without much effect on education, agriculture and the delivery of other life-saving drugs (Sople 2012, 280). This arrangement permits the two generic producers to supply about 47 other African states, mostly in the Sub-Saharan region. ‘The license agreements contain 1 to 5 per cent royalty charges, backward technology transfers, and technological assistance with respect to both the manufacture and distribution of the pharmaceuticals’ (Woolman and Sprague 2008, 288). They were able to produce ARVs as a result of some support from a Strategic Investment Programme (SIP) introduced by the Department of Trade and Industry’s (DTI) public–private partnership.

As if the issue of MPCs and HIV/AIDs received a logical conclusion based on the earlier discussed development in the production of generic ARV as allowed under TRIPS regime, in January 2014, the big pharmaceutical companies under the umbrella of the Innovative Pharmaceutical Association of South Africa (IPASA), hired the services of an American-based lobby firm, Public Affairs Engagement (PAE) to focus on South Africans and targeted some political elite in the country, the rest of Africa and Europe against the government. The aim of this move was to indirectly influence the 2013 Proposed Draft National IP Policy by protecting the companies through stronger IP protection (de Wet 2014). Since the DTI published a draft framework for a new policy on IP in September 2013 that called for weaker IP regime on drugs, mostly over life-saving drugs, the MPCs perceived this move as a further threat to their profits rather than the life of Africans who are the most affected by HIV/AIDS. This led the South African Minister for Health, Motsoaledi, declaring in January 2014 that the plan ‘can sentence many South Africans to death … That is no exaggeration. This is a plan for genocide’ (de Wet 2014). According to the document made available to the government on the proposed American MPCs, the lobby group intended to (de Wet 2014):

set up a ‘coalition’ with an innocuous name, such as ‘Forward South Africa’, which will be directed from Washington while appearing to be locally run;

In terms of the development discussed earlier, can one talk of CSR or CSR imposed by MPCs? The latter were not interested in the development of their immediate environment in South Africa. Attempts to donate drugs to AIDS patients are conceived as another act of neocolonialism in South Africa. The system that was resisted between 1997 and 2001 became the cornerstone of the States’ HIV/AIDS policy in 2002, to lower the rate of the infection. In his state of the Union Address in 2002, President George Bush called for a bilateral approach to curtail the spread of HIV through PEPFAR (the President’s Emergency Plan for AIDS Relief), (Garrett 2005, 66–67), an approach criticised by the American Embassy in Pretoria and MPCs in the late 1990s when the Sarafina-2 musical to create public awareness was considered a waste of resources and a source of corruption (Bond 2005, 220). The aim of PEPFAR, to gain political support of recipient states, was not achieved. According to Lyman and Wittels (2010, 75), ‘the Obama administration is now trying to shift more of the cost of treating HIV/AIDS patients to African governments … Few, if any, of these governments, will be able to pick the slack’. What Mbeki had called for between 1997 and 2000 became the policy position of the US on the issue of ARV distribution ten years later. The US argues that other issues, such as the high rate of unemployment, food scarcity, environmental crises and other health-related crises should be focused on, rather than the only 11 per cent (5.7 million) people living with HIV/AIDS. One could say that Lyman and Wittels’ position is not dissimilar from that of the American government. Lyman was the American Ambassador to Nigeria and South Africa at different times during the debate over HIV/AIDS. The skyrocketing increase in the cost of ARVs influenced America’s internationalisation, as against its preferred unilateral approach (Lyman and Wittels 2010, 84).

MPCs and CSR: A Critique

Larry Elliot (2013, 13) opines that

Companies will only change for one of three reasons: they are forced to do so legally; they are forced to do so by their customers; or because they spontaneously decide that they want to operate in accord with (Adam) Smith’s moral sentiments...CSR has been a smokescreen behind which companies can screw their customers while pretending they are putting something back. Capitalism is not about being cuddly or sponsoring exhibitions...; it is about making profits ….

It was only when members of civil society, mostly NGOs, such as Médecins Sans Frontières (MSF), Health Action International (HAI) and Consumer Project on Technology (CPTech), organised the first meeting on compulsory licensing of AIDS medicines at the UN in Geneva, in March 1999 that the issue was globally attended to (‘t Hoen 2009, x; Zerk 2006, 33). This awareness caused MPCs to embark on a belated CSR. The four aspects of CSR which some MNCs tend to abide by were only implemented after external influences imposed these on them. They prefer to spend more money on lobbying their parent states. The same is generally the case in their host states as their directors are politicians, serving and retired civil servants and serving and retired military officers. These are the appropriate personalities in the host states to reach out to government in power. In some occasions, their fraternising with NGOs from the parent states is another veritable source of their influence (Acemoglu and Robinson 2012, 451). Many of these NGOs are in the TWSs not because of their interest in the betterment of the developing world, but because of the need to satisfy their sponsors such as MNCs. In some cases, when their governments support their activities, it is equally to the detriment of the hosts (Hertz 2001, 185–186; Mbeki 2009, 31–38).

The deployment of the CIA claimed by President Thabo Mbeki concerning the issue of generic AIDS drugs is very hard to confirm, but in his reminiscences as the Director General in the Presidency, Reverend Frank Chikane (2012, 2013) was of the view that because of the HIV issue, if Mbeki had not been forced to step aside in the palace coup within the ANC, he might have been assassinated because he refused to serve the interests of the pharmaceutical industries on the question of AIDS drugs (Chikane 2012, 204–206). As mentioned earlier, MPCs exist to make profits and any obstacle to this might be addressed through every possible means. ‘It was mentioned in a meeting Chikane had during his visit to the USA that the industry lost US$2 billion because of Mbeki’s position on HIV/AIDS campaign’ (Bhagwati 2004, 168; Chikane 2012, 205). The MPCs were critical of South Africa’s position because South Africa was a leading power in the Non-Aligned Movement (NAM), the African Union (AU) and SADC, which translates into the ability to influence other developing states in respect of ARV drugs as prescribed by MPCs and the WHO. This was hoped to have exerted some negative impacts on MPCs profit margins (Chikane 2013, 263). The court injunction sought by the drug companies implies that ultra-capitalism is their guiding principle, rather than the long-term effects of short-term decision making. As much as MPCs target is only the wealthy within the society and the government, the implication of this is a call for political instability in the country. Focusing primarily on ARV drugs to the detriment of other ailments as deadly as HIV/AIDS in developing states might have left the health sector in disarray. Other issues, such as education, food production through agricultural incentives, social grants for unemployed mothers and their children, the impoverished as well as treatment for other life-threatening diseases, such as malaria, tuberculosis, childhood dysentery, gonorrhea, antibiotic-resistant bacteria infections, and newly emerging infections like severe acute respiratory syndrome (SARS) and the Marburg virus will not receive government attention (Garrett 2005, 53). A vertical or what Garrett and Farmer (2007, 158) describe as a stovepipe as against a comprehensive horizontalised approach to the health care system should be in place, especially for rural dwellers. Focusing on HIV/AIDS tends to be an isolationist scenario which can hardly solve the health crisis in South Africa. The link between TB and HIV is organic; there should be an approach to treat the two together. Increase in morbidity and mortality rates in South Africa are not the concern of MPCs. For instance, Anglo-American, a MNC mining giant in South Africa that employs about 160,000 people of which 21 per cent of them being HIV positive, gave a Greek gift to its HIV/AIDS infected workers. In an effort to protect the company’s profits, it agreed in 2001 to supply ARVs free to its workforce, on condition that the affected people would go on voluntary retirement. This is a method of bribing HIV infected workers to go home and die (Bond 2005, 285–286). Can one classify this as part of CSR?

Between 1997 and 2000, the America–South Africa Bi-National Commission, meant to discuss political and economic developments between the two states, was reduced to HIV/AIDS drugs discussion summits. From the date when Pretoria passed the Medicine Act, the US had no other issue to discuss than the need to cancel Clause 15(c) of the Act which empowered Pretoria to import and produce generic drugs for AIDS patients in the country. What continues to agitate one’s mind is the lack of interest by the US in basic human rights to good healthcare in developing countries. This is in contravention to the 13 August 2003 UN Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with Regard to Human Rights (UN Doc.E/CN.4/Sub.2/2003/12/Rev.2). With the introduction of WTO, the instrument, once signed by member states, becomes a ‘single undertaking’ (Stephan et al. 2006, 204), while the Commission set up to try any violator of the documents becomes final (Hertz 2001, 106–108). The negotiations which led to the signing of the WTO did not involve developing states, while most of the decisions are the handiwork of MNCs which work hand in hand with the Departments of States, Commerce and USTR (Hertz 2001, 107–108). One question still remains unanswered as maintained by Saul (2005, 181): ‘How long will a handful of the most profitable joint stock corporations in the world, whose declared purpose is human well-being, be allowed to cause tens of thousands of premature deaths each year in the name of patent protection and stockholder interest?’ The implication of this is that the question of CSR is not in line with the provision of the ultra-neoliberal international regime which hardly considers the plight of developing areas.

Conclusion

The four concepts discussed earlier regarding donations, differential prices, licensing and research confirm the power of neo-colonialism in which MPCs have embarked on in South Africa. As discussed earlier, none of the positions proposed brings about development. Donations constitute a source of underdevelopment for the recipient state and a continuation of profit-making by the donors. The cessation of donations would force recipients to procure drugs, at cut-throat prices from manufacturers. On the issue of discounted prices, no MPCs will sell below the cost price. Problems of over-invoicing on imported inputs and under-invoicing of exported goods are issues beyond the control of host states. Licensing is discussed as the last option for MPCs when pressure comes from civil societies on the need to uphold fundamental human rights, with special focus on the right to basic health. America’s opposition to out-licensing could be explained by the likely reduction in the revenue through tax from MNC, compared with what people pay through property and income tax. Not too far away from this motive is the employment generated by MPCs for the teeming population of Americans both at home and in the host states. The effects of Obamac are and the controversial Affordable Care Act (ACA) in the economy of America, since these affect the elite, health insurance companies and MPCs, led to a media war against the government by MPCs (Friedman 2012, 87–98). The power of the media and private individuals who own them continue to be an easy way of manipulating the dissemination of information in the interests of MPCs (Hertsgaard 2002, 97).

For any meaningful equal exchange between developing states and MPCs, there is a need to cause the latter to understand that the cost of R&D was never for the account of MPCs, but for that of the tax payers in the parent states. In conclusion, the much publicised philanthropic roles of pharmaceutical firms in South Africa create a smokescreen. Any government in power in the US will continue to support MPCs for national interest, employment, revenue and power. As a result of the global economic recession which started in November 2007, the support for MNCs by the American government will continue despite the dictates of the WTO and globalisation. Members of civil society, especially NGOs, will continue to check the power of MPCs when fundamental human rights are trampled upon, for the foreseeable future.