Defense Contractors Seek $7-Billion Drug Grant

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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 Dyble, 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, Dyble said.

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