w orking p aper 179 august 2009 - university blog...
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Working Paper 179August 2009
Making Markets for Merit Goods: The Political Economy of Antiretrovirals
Abstract
!is paper examines the role of policy entrepreneurs and global activists in shaping the international market for antiretroviral drugs to combat HIV/AIDS. When ARVs "rst came on the market in the 1990s they were exceedingly expensive; the cost of treatment was upwards of $10,000 per year. !ese drugs were thus accessible only to those patients who had high incomes. But in 2006, the “international community,” meeting at a United Nations General Assembly Special Session (UNGASS), made an astonishing pledge to those who were infected with HIV. It proclaimed that there should be universal access to ARV treatment. !is UNGASS, following up on an earlier historic UN special session devoted entirely to AIDS in 2001, marked the "rst time in history that the international community pledged itself to chronic care for the ill, which in this case includes the approximately 30 million people around the world estimated to be HIV positive. How do we explain the transformation of ARVs from private goods, which only a few could a#ord, into merit goods that were (at least declaratively) to be made available to everyone? In other words, how does a norm of “universal access to treatment”—that no person should be denied these life-extending drugs—become the ethical basis for global public policy with respect to pharmaceutical allocation? What are the lessons of the ARV story for other global issues? !ese are the primary questions we explore in this paper. Brie$y, we argue that the policy entrepreneurs and activists who promoted the creation of a universal access to treatment regime—of the transformation of ARVs into global merit goods—relied on a combination of moral arguments and ideas with favorable material circumstances. From the ethical perspective, the task of these entrepreneurs was to convince the “international community” that access to ARVs was a “human right,” or conversely to convince decision-makers that it was morally wrong to allocate these life-enhancing drugs solely on the basis of ability to pay. But from a material standpoint, these arguments were greatly facilitated by the lowering prices of ARVs caused by a combination of di#erential pricing (that is, lower prices for drugs in the developing world than in the advanced welfare states) and competition from generics producers, coupled with increases in foreign aid spending devoted to HIV/AIDS and other diseases.
Keywords: HIV/AIDS, ARVs, antiretrovirals, activists, policy entrepreneurs, merit goods, international community, global public health, global public policy, foreign aid
www.cgdev.org
Ethan B. Kapstein and Josh Busby
Making Markets for Merit Goods:!e Political Economy of Antiretrovirals
Ethan B. KapsteinCenter for Global Development and University of Texas at Austin
Josh BusbyLBJ School of Public A#airs, University of Texas at Austin
July 2009Revised: August 2009
Ethan B. Kapstein is a visiting fellow at the Center for Global Development. For 2009–2010, he is the Dennis O’Connor Regent’s Professor in Business at the McCombs School of Business, and professor of public policy at the Lyndon Baines Johnson School of Public A#airs, both at the University of Texas at Austin. Josh Busby is an assistant professor at the Lyndon Baines Johnson School of Public A#airs, University of Texas at Austin. !ey wish to thank the Merck Foundation for its support of this research and Pranab Bardhan and Kim Elliott for comments on earlier drafts
!is paper was made possible by "nancial support from the Bill & Melinda Gates Foundation.
Ethan B. Kapstein and Josh Busby. “Making Markets for Merit Goods: !e Political Economy of Antiretrovirals.” CGD Working Paper 179. Washington, D.C.: Center for Global Development. http://www.cgdev.org/content/publications/detail/1422655
Center for Global Development1800 Massachusetts Ave., NW
Washington, DC 20036
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www.cgdev.org
!e Center for Global Development is an independent, nonpro"t policy research organization dedicated to reducing global poverty and inequality and to making globalization work for the poor. Use and dissemination of this Working Paper is encouraged; however, reproduced copies may not be used for commercial purposes. Further usage is permitted under the terms of the Creative Commons License.
!e views expressed in this paper are those of the author and should not be attributed to the board of directors or funders of the Center for Global Development.
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The Global Politics of AIDS: A Brief History
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policy entrepreneurs who wish to promote universal access to a particular good,
therefore, is to transform private goods into merit goods.
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by matching demand and supply. On the supply side, drug companies were encouraged to
lower the prices on their patented ARVs while generic drug suppliers were encouraged to
enter developing world markets. On the demand side, activists won substantially higher
amounts of foreign aid funding from the United States and other industrial world
governments, specifically targeted at ARV purchases.
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CE8;CH8BC ;<@BL C7898 <DB89 Q2;B:8 "EH9CE@BL ,@>BJ;CD@B `BJ;C8JUM g>C ;9 Z8 7;F8
97@ZB] JDAA8E8BCD;< ?ED:DBL :;B @B<G Z@EK DB C7D9 ;BJ @C78E ;E8B;9 Q9>:7 ;9 988J9] I@@K9]
;BJ 9@ACZ;E8U DA ;:CDFD9C9 ;E8 9>::899A>< DB H;KDBL ; :;98 A@E C7D9 9:78H8 ZDC7 ; IE@;J
:@;<DCD@B @A DBC8E89C9M $B8FDC;I<G] C7D9 ZD<< E8a>DE8 9@H8 8AA@EC9 C@ IEDBL DB C78 ?EDF;C8
98:C@E L8B8E;C@E9 Q;BJ :@?D8E9U @A C7D9 DBC8<<8:C>;< ?E@?8ECG] ;BJ DB H;BG :;989] C7D9 ZD<<
E8a>DE8 @F8E:@HDBL H;EK8C A;D<>E89 @B I@C7 C78 J8H;BJ ;BJ 9>??<G 9DJ8M
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?7;EH;:8>CD:;< :@H?;BD89 ;9 ; ?;E;JDLH;CD: :;98M g>C C78E8 D9 ; Z@E<J @A JDAA8E8B:8
I8CZ88B 98<<DBL JE>L9 ;C 9@H8Z7;C <@Z8E ?ED:89 DB 3;B;J; C7;B DB C78 `BDC8J +C;C89
QI8:;>98 @A C78 JDAA8EDBL E@<8 ?<;G8J IG L@F8EBH8BC DB C7898 :@>BCED89 DB B8L@CD;CDBL ZDC7
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3)- @A "II@CC 2;I@E;C@ED89 9;DJ/ 6,E;BK<G] I8:;>98 DC D9 E8a>DE8JM $A $ J@BlC ?E@FDJ8 @>E
?E@J>:C9 DB "AED:;] L@F8EBH8BC9 ZD<< <D:8B98 @>E DBC8<<8:C>;< ?E@?8ECG C@ @C78E9 Z7@ :;BM
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;E8 ;<E8;JG 9CE;DB8J] :;H?;DLB9 A@E 8VC8BJ8J ;::899 ZD<< 7;F8 C@ :@H?8C8 ZDC7 ;
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;<<M *7D9 :@;<DCD@B] DB C>EB] H>9C I8 j@DB8J IG ; :@BF8EL8BC DJ8; @A Z7;C can and should I8
J@B8M $C D9 @B<G C7E@>L7 C78 A>9D@B @A ; :@H?8<<DBL 98C @A DJ8;9 ;I@>C 7@Z C78 Z@E<J
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Table 1: Median price (United States dollars) of first-line antiretroviral drug
regimens in low-income countries, 2004-2007
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2D8I8EH;B] )F;BM RSSYM Boundaries of Contagion: How Ethnic Politics Have Shaped Government Responses to AIDSM 1EDB:8C@B/ 1EDB:8C@B `BDF8E9DCG 1E899M
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!>9LE;F8] (D:7;EJ "M XYhYM The Theory of Public FinanceM %8Z 4@EK/ !:LE;Z=0D<<M -AAD:8 @A C78 `M+M &<@I;< "DJ9 3@@EJDB;C@EM RSSTM PEPFAR: Latest ResultsM `M+M +C;C8
.8?;ECH8BC] +8?C8HI8E dS RSSk y:DC8J e>B8 X RSSTzM -F8E] !8;JM Prevention Failure: The Ballooning Entitlement Burden of U.S. Global
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