During a recent House hearing, the Clinton administration was accused of bowing to pharmaceutical industry pressure and punishing the South African government—all in efforts to win a trade battle with South Africa over whether local companies can create cheap, generic versions of expensive AIDS drugs.

"While special interest groups have tried to convince members of Congress and the administration that implementation of the South African Medicines Act would cause violations of international intellectual property rights agreements, I have seen no evidence that such violations are likely to occur. Compulsory licensing is not an assault on intellectual property rights," said Rep. Marion Barry (D-Ark.), during a July 22 hearing.

The hearing focused on America’s role in combating the global HIV/AIDS epidemic, but an important part of it was the trade dispute between the United States, which has sided with pharmaceutical giants, and the South African government over "compulsory licensing."

"The debate over compulsory licensing has nothing to do with wealthy nations providing drugs; its about whether poor nations should be allowed to produce their own generic drugs, as they are authorized to do under international laws," said Fairness & Accuracy in Reporting (FAIR). The media group has blasted ABC News for two reports it says back pharmaceutical industry positions and conclude: "It’s better for poor Africans to die than to have access to cheap AIDS drugs," according to FAIR.

Mr. Barry said the U.S. government responded to pressure from the pharmaceutical industry when the State Department released a negative report about the provisions of the South African Medicines and Related Substances Act.

The South African law allows the minister of health to approve local production of cheaper versions of AIDS drugs, to bring in drugs from a third party in what’s called parallel imports, or to simply shop for the best drugs on the international market.

An organization representing the interests of the U.S. pharmaceutical industry said South Africa’s new approach—signed into law in December 1998 but not implemented because of American and European legal challenges in South African courts—would impede profits and future funding for research and development.

They maintain that the new law fails to comply with a World Trade Organization agreement on several areas of intellectual property, including pharmaceutical patents.

The Pharmaceutical Research and Manufacturers of America (PhRMA) have pushed the U.S. government to have the South African law repealed and vehemently opposes it. "As the new law has just been enacted, it is not possible to estimate the losses to American investors and exporters. Numerous PhRMA member companies have, however, already indicated that new investments in South Africa, in some cases valued at more than $50 million, have been suspended as a result of the new legislation. Coupled with the posture of the South African government in promoting global diminishment of patent standards, the potential harm from these recent developments can be expected to reach into many other developing countries," said PhRMA.

They also argue access to cheaper AIDS drugs will not alleviate South Africa’s epidemic because an infrastructure for distribution and treatment is lacking, a view roundly disputed by AIDS activists.

Joseph Papovich, of the U.S. Trade Representative’s office, told congressmen the Clinton administration doesn’t believe "compromising intellectual property rights is the solution to the greater problem" of AIDS but doesn’t object to compulsory licensing or parallel importing of AIDS drugs, if done in accord with trade pacts.

"Unfortunately, the Office of the U.S. Trade Representative, and the U.S. government, have pressured the South Africans to abandon legal attempts to employ compulsory licensing and parallel imports. They have been more responsive to the narrow commercial interests of the pharmaceutical industry than to the public health and humanitarian interest in treating people with HIV/AIDS in Africa," said Rep. Jesse Jackson, Jr. (D-Ill.).

Rep. Jackson said the United States withheld some trade benefits from South Africa, and threatened trade sanctions as punishment for the refusal to repeal provisions of its Medicines Act.

As the two-year-old battle continues, Rep. Jackson plans to introduce legislation that would prevent any U.S. trade sanctions against South Africa and other sub-Saharan nations who have the right to produce their own generic drugs, said a spokesman.