[e-drug] Defense Contractors Seek $7-Billion Drug Grant

["Johanna Crane" <jcrane@itsa.ucsf.edu>]

E-DRUG: Defense Contractors Seek $7-Billion Drug Grant
------------------------------------------------------

Dear E-drug,

Below is a write-up of a story than ran in the US on National 
Public Radio (NPR) on October 14th.  The story reported the 
possibility that some of the PEPFAR funding might go to US 
defense contractors, who would be used to transport and 
distribute ARVs in the 15 countries targeted by PEPFAR.

The story describes defense contractors approaching agencies 
receiving PEPFAR funding, such as Catholic Relief Services, in 
search of possible contracts.

Has anyone working with PEPFAR funding had similar 
experiences?

Thanks,
Johanna Crane
University of California San Francisco
San Francisco, CA USA

Defense Contractors Seek $7-Billion Drug Grant

Morning Edition, October 14, 2004 7 

NPR health correspondent Brenda Wilson reports that the 
defense industry has suddenly become very interested in AIDS. 
And the interest is not entirely humanitarian. The Bush 
administration is finalizing details of a $7-billion contract that's 
up for grabs as part of the president's Emergency Plan for AIDS 
Relief. 

So far, the administration has spent relatively little of the $15 
billion in AIDS relief first promised by President George W. 
Bush in 2003. Only 25,000 people are getting treatment in the 
15 countries targeted by the United States.

In contrast, tens of millions of people are infected with HIV in 
these countries, and many of them need immediate treatment. 
According to a draft of the contract, the administration is seeking 
to quickly ramp up treatment to 2 million people at a cost of $7 
billion. 

The winner of the contract would set up a supply-chain 
management system through which drugs would be shipped, 
tracked, stored and dispensed. 

It could mean lasting profits in the range of several hundred 
million dollars a year to the company that gets into Africa first to 
build new infrastructures and drug-distribution channels. 
Carl Stecker, director of AIDS treatment programs for Catholic 
Relief Services -- one of the largest international health and 
relief organizations -- tells NPR that he's been visited by a 
number of defense contractors, including Dyncorp and Northrop 
Grumman. The defense contractors also brought along 
representatives of large American health-system specialists 
that are active in Africa. These companies would be the main 
subcontractors who would set up infrastructures and 
supply-chain management operations. 

Northrop Grummond is teaming up with John Snow 
International and Management Sciences for Health. Dyncorp, 
now part of the CSC company, has partnered with the largest 
U.S. drug distributor, McKesson. Stecker says he's also been 
approached by Crown Agents, a British corporation. 

Several defense analysts and company officials that NPR 
spoke with did not want to be identified because they were 
discussing confidential company information. But they did 
confirm that the companies above are strongly interested in 
bidding on the contract, as are information technology 
companies like IBM and Chemonics. 

"When the presentations were made to us about who they are 
and what they do," Stecker told NPR, "they were up front about, 
'Yes, we've made F-16s. Yes we've done other traditional 
defense contracting type things. But we want you to know that 
we've been involved in health care, and we have x number of 
people involved in healthcare in our organization." Several of the 
companies have expanded into health care in recent years, 
mainly building computer systems. 

Catholic Relief Services is already part of the president's 
Emergency Plan for AIDS Relief. It leads a consortium of 
nongovernmental organizations that was awarded a 
$335-million grant by the president's emergency plan. It 
declined the invitations to join up with one of the big companies 
chasing the contract. 

But Stecker says they're willing to talk to any company about 
how to set up health care systems, explaining, for example, that 
it can take months to get drugs from port-of-entry through 
customs and then overland to a hospital or clinic in the 
hinterlands. 

The $7 billion represents the value of the contract, with payment 
contingent upon performance -- how many orders for drugs 
there are and how many ultimately are delivered between now 
and 2008, according to the state department, which oversees 
the President's AIDS plan.

Steven Morrison, the director of Africa programs for the Center 
for Strategic International Studies is not surprised that defense 
companies are interested. "They are companies that are there 
to make a profit. And they can diversify their portfolio and move 
into another field, in terms of reputational benefits," he says. "If 
they perform well, there is the promise that this will expand."
An official from one of the companies that didn't want to be 
identified insisted that many of the people who work for them 
are former U.S. military personnel, and that they're primarily 
motivated by public spiritedness, not profit.

But public health experts who've worked for decades in AIDS 
domestically and internationally are troubled by the prospect of 
working with defense contractors. Jean Maguire of Northeastern 
University says the logistics of setting up complete health 
systems to distribute drugs to millions is terribly complicated. 
But there's a catch, she says. 

"What does it mean for us to be investing this level of resources 
in the defense industry entities to achieve our international AIDS 
efforts, and how close are we moving to have this become the 
Halliburton of AIDS relief?"

Maguire says the president's plan shows the price of going it 
alone -- and not working with multilateral groups already 
present in these countries. Groups like the World Health 
Organization and the Global Fund to Fight AIDS, Tuberculosis 
and Malaria. The fear, she says, is that there will be parallel 
systems with duplication and waste.

"There is an absence of where are our partners in this," she 
says. "Are we potentially going it alone because of our own 
interest, not just in the projects and contracts that we already 
have in the various countries, but because of the interest in the 
suppliers and pharmaceuticals based here."

There's also concern in the public health community about the 
image that might be created if health workers in villages, towns 
and cities in Africa become associated with American military 
interests, especially at a time when the U.S. is involved in a war 
in Iraq, which does not have popular support in most of these 
countries. 

Safety could become an issue. Trust could also be 
compromised, and trust is a central element of the relationship 
between doctors, nurses and their patients. If patients fear that 
health workers are part of the American military industry, they 
may shun treatment altogether and the goals of treating 
millions of people could be thwarted, Maguire and others fear.

At the moment, the state department is silent on the great 
scramble to line up the best team to win the $7 billion contract. 
"We don't know which companies are competing," maintains 
Dr. Mark Dybul, assistant to the U.S. Global AIDS Coordinator at 
the state department. "We don't have any objections to whoever 
can get the job done."

The final version of request for proposals on how companies 
would execute the contract is expected to be issued next week, 
Dybue said.