Wall Street Journal - July 23, 2001
Michael M. Phillips and Rachel Zimmerman, Staff Reporters of The Wall Street Journal

President Bush and other leaders of the world's major economies formally launched the fund last week at their summit in Genoa, Italy. But the announcement was largely a public-relations effort, since the plan has been publicly discussed for months. Governments and private donors have already pledged $1.3 billion for 2002, and Mr. Annan hopes the fund and other health programs will ultimately generate an extra $7 billion to $10 billion in annual spending on the infectious diseases that ravage the developing nations.

"It's a three-front attack," said Tommy Thompson, U.S. secretary of health and human services. "We have to have treatment, we have to have prevention, and we have to have health infrastructure."

At least three African health ministers are on the short-list, according to people familiar with the decision: Uganda's Crispus Kiyonga, South Africa's Manto Tshabalala-Msimang and Traore Fatoumata Nafo of Mali.

Uganda has perhaps the best reputation among African governments for its response to the AIDS epidemic, which now affects some 25 million people south of the Sahara. South African President Thabo Mbeki has stirred controversy by challenging scientific consensus that HIV causes AIDS. Mali, in Muslim West Africa, has a relatively low HIV prevalence rate.

Other candidates are Lin See-Yan, the former deputy governor of the Malaysian central bank, and Tommy Koh, who is leading Singapore's free-trade negotiations with the U.S.

Mr. Annan's choice will become chairman of the transitional working group charged with figuring out how the fund should operate and putting it into effect. Negotiators have already decided that each proposed AIDS project will be reviewed by a panel of experts.

The chairman will need the "negotiating skills to get us on one page by Jan. 1," when the global fund is expected to become operational, said a senior U.S. official. Ultimately, the chairman will be succeeded by the person who will run the fund.

Also undecided is how the fund will pay for AIDS drug cocktails and other medical supplies. Some European officials and AIDS activists have suggested that the fund purchase inexpensive generic versions of patented western medications in a tiered-pricing system.

"At the end of the day, the fund is still a limited amount of money," said Bernard Pecoul, director of the medical group Doctors without Borders. "If we want to implement a strategy that combines prevention and treatment, then all commodities -- drugs, vaccines, diagnostics, everything -- should be purchased at the lowest possible price, not the U.S. price."

The Bush administration is wary of any approach that might lead to the infringement of western patents, and U.S. Trade Representative Robert Zoellick wrote his European Union counterpart, Pascal Lamy, a letter opposing creation of an "international institution or convention to regulate drug prices," the New York Times reported last week.

"Since the EU's position on tiered pricing is fluid, we are unclear what they mean," said a U.S. trade official. U.S. drug companies also oppose a formal tiered system, arguing that they have already cut the prices for AIDS drugs for poor nations.

Write to Michael M. Phillips at michael.phillips@wsj.com1 and Rachel Zimmerman at rachel.zimmerman@wsj.com2

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