Medicine tariffs: how they cost lives

Richard Tren | 10 Aug 2006
Business Day (South Africa)

HARRY Lime, the odious character played by Orson Welles in the 1949 film The Third Man, is a man most people would happily hate. This seedy racketeer sold adulterated penicillin to the poverty-stricken population of postwar Vienna, something which must rank as one of the more objectionable crimes. It is particularly heinous when one considers that many poor people will save up and sacrifice other goods in order to buy "medicines". Yet in many countries, governments sink as low as Harry Lime by creating barriers to obtaining medicines, passing rules and regulations that delay delivery, imposing tariffs to hike prices, and creating perfect conditions for officials to extort bribes.

A new study published by the American Enterprise Institute calls for an end to tariffs on medicines and to the corruption that often accompanies them. The study, of which I am a co-author, details the results of surveys of various organisations from the private and public sectors as well as charities involved in importing medicines and medical devices to developing countries.

Respondents, most of whom preferred to remain anonymous, reported that in 85% of cases, their products experienced unanticipated delays in clearing customs — sometimes delays of a few days, but often of many months. The worst performing country with regard to delays was found to be Nigeria, followed by Kenya and India.

The mere fact that some countries impose import tariffs on medicines and the complexity of the tariff rules means that customs officials have an ideal opportunity to exact bribes from medicine importers. In one-third of the cases, respondents reported that an out-and-out bribe was demanded from customs officials in order to clear their goods.

Delays are possibly the most damaging aspect of the corruption. In some cases, sensitive medicines are held up at border crossing and because they require specialised storage, they are spoiled. The import tariffs, the bribes and the lengthy delays all hamper public health efforts in countries often facing severe health emergencies. With diseases such as malaria, the delays can cost lives. Many countries have a defined malaria season and mosquito control efforts have to begin before the rainy season begins and the mosquitoes begin to breed. Any delay in delivering insecticides, mosquito nets or medicines means more mosquitoes, and therefore more people exposed to their deadly bite, and little in the way of treating them when they become ill.

Interestingly, our study finds that most donor-nation disease-control programmes, such as those run by the US Agency for International Development, are not subjected to the delays and corruption that others face. The strong diplomatic and economic pressure that the US government can exert means that few countries dare interfere with official development aid.

Most charities, nongovernmental organisations and private companies involved in health care don't have the benefit of protection against this bureaucratic bullying. A recent study by the Washington-based Hudson Institute showed that, overall, US private international donations to developing countries exceeded $62bn in 2003, more than three-and-a-half times the official donor aid from the US government. This private aid from well-meaning individuals in the US is sent in the hope of relieving suffering in poor countries and yet it seems that state officials rather view it as a way to line their pockets.

Developing countries have it within their powers to stop the corruption and absurd barriers to trade that keep their people locked in poverty and exposed to avoidable and curable diseases. Poor-country governments can and should remove all tariffs or charges imposed on medicines, medical devices, insecticides and other public health products. Giving tariff exemptions
to certain organisations or certain disease classes is not good enough as it simply creates complications that allow customs officials to tie products up in red tape and extort bribes. The only way to rid a country of corruption is to remove the discretionary power of officials to extort bribes. If everyone knows that there are no tariffs, officials won't be able to use the threat of them in order to be paid off.

Several World Trade Organisation member countries already have an initiative under way that would remove all medicine import tariffs; poor countries could easily sign up to this. Any failure to make these necessary reforms equates to tacit approval of corruption and official countenance of the fact that millions go without accessible medical care.

Tren is a director of the health advocacy group, Africa Fighting Malaria.