The South Africa AIDS Controversy

Running Head: CASE STUDY, THE SOUTH AFRICA AIDS CONTROVERSY 1
The South Africa AIDS Controversy
Case Study
Erika Prado
Ethical/Legal Environment of Business (BUSB-300-ST26)
Professor Brian Kurbjeweit
February 13, 2019
The case study was taken from class; EDMP was taken from the professor's suggestions form
class.
Issue
What should the pharmaceutical companies do, defend their patents, allow infringement to occur,
lower the price?
Relevant Facts
Major Pharmaceutical companies owned patent rights on drugs that could control the
spread of AIDS. South Africa (in the late 1990s) had 66% of the total world population of AIDS
victims. South Africans could not afford the market prices of AIDS medications. South Africa
wrote a law to allow South African companies to buy AIDS medications from companies who

CASE STUDY, THE SOUTH AFRICA AIDS CONTROVERSY 2
could copy the patented brands, without providing payment to the patent holder. South African
government was not waiting for their reply, however, and a legal and political battle erupted
(Fisher, William W, and Cyrill P Rigamonti).
The issue of access to affordable drugs involves numerous and complex issues, including
health care infrastructure, international pricing mechanisms, financing, debt, tariffs, and patents.
By 2000, the average the annual income of most South Africans suffering from HIV/AIDS was
$2,600, with the cost for treatment with antiretroviral drugs cost about $1,000 a month (Fisher).
Stakeholders
The stakeholder in this situation is Pasture Institute, who found the cause of AIDS, Dr.
Robert Gallo who had identified the virus and which was known as “human T-cell lymphotropic
virus III”, pharmaceutical companies, the government of South Africa and the citizen of South
Africa (Allison, and Prentice). The U.S. patent office denied for giving a patent to the Pasture
Institute and NCI was sued by the French scientists who claimed that the virus was first isolated
by them. Later the case was settled and both the parties agreed to share the credit of discovery.
Pharmaceutical companies owned the patent right on the drugs which were helping in controlling
the virus. South African government wanted to copy the drugs so that it can be made available to
the citizens of the country at a low price. The citizen of South Africa was suffering and dying
every day from this virus.
Expectations of Stakeholders
Pasture Institute and Dr. Robert Gallo expected to get the credit for inventing the virus as
National Cancer Institute had filed the patent application for both of them but the U.S. patent
office denied in giving the patent to the Pasture Institute, NCI was sued by the French scientists
who claimed that the virus was first isolated by them (Emerson). Major Pharmaceutical
companies had already owned the patient right for the drugs and they were expecting that their
patent right must not be snatched by the government of South Africa. They were fighting against
the government to defend their right. South African companies were not in a position to afford
the medicines for AIDS on the market price so they wanted to copy the medicines. A law had
been made to give a right to South African companies so that they can purchase AIDS medicine
from those companies who would be able to copy patent companies’ brands without issuing any
payment to those patent holders.
The Government of South Africa was going through a huge problem. The HIV infection
was spreading all over the country which has become an issue of public health problem. Soon
South Africa has become the country where the highest numbers of citizens were infected with
HIV/AIDS. In order to deal with the situation, the South African government expected from the
pharmaceutical companies to reduce the price for the drugs that lead to criticism from the
pharmaceutical industry (Ferrell et al.). The citizen of South Africa was not in a position to
afford the drugs for the virus, they were afraid of it. Twenty percent of the youth was infected
with the virus and somewhat around forty-five percent of military persons. They were expecting
from the government to reduce the price for the drugs. The average income of an infected
African people was $2600 and the cost of the treatment was $1000 a month, which was very
costly that's why they were not able to pay for the treatment.
Values of the Company