Drug Dumping
Drug dumping occurs when large amounts of unwanted and unusable pharmaceutical products are sent from developed countries to areas of crisis. This usually occurs after a humanitarian disaster such as an earthquake, flood or war.
Sometimes the drugs come from individuals emptying their first aid cabinet which are then distributed by well meaning charities.

An impulse that is understandable but not very helpful if you are on the receiving end. But more often large scale drug dumping comes from donations made to charities from pharmaceutical companies.

There are many reasons why drugs companies may choose to act in this way. Sometimes a product may not be selling well, perhaps they need to clear their shelves of unwanted stock, perhaps a product is nearing the end of its shelf life. Donating these drugs means that the companies do not have to undergo the costly business of disposal. It also can mean that, in the case of the United States, they may qualify for a deduction in their tax bill. US tax laws In the US the tax law states that if you donate a product for the sick, the needy or for humanitarian purposes then you can claim a maximum of twice the ‘cost basis’ of the product to claim against tax which is called an ‘enhanced deduction’. ‘Cost basis’ includes the component materials, labour costs, accounting costs and warehousing costs. Many organisations working in this field have expressed concern at this law suggesting that it provides an incentive for bad donations. The law doesn’t just cover pharmaceutical products although it is these that cause the most problems The law also allows the same deductions for any product which may explain why we found instances of large donations of bikinis to Gujarat after the earthquake last year, or a consignment of Double D cup bras to Kobi in Japan after the earthquake. There is another deduction in the US tax system which is called a ‘bargain sale’ and it occurs when a product is sold to a charity at below its normal retail value. If it is for the needy, sick or for humanitarian purposes then this deduction works in conjunction with the ‘enhanced deduction’ mentioned above which in some cases can actually push the donor company into profit. Bosnia During the civil war in Bosnia so much unwanted drugs were dumped that the government were forced to pay $34 million to build an incinerator just to dispose of them. One charity we spoke to, Pharmaciens Sans Frontieres, said that they had to spend £100,000 in the town of Mostar alone disposing of these drugs in lime filled buckets. The situation prompted the World Health Organisation (WHO) to issue a set of guidelines on best practice for good donations which stated that drugs have a shelf life of at least one year, that they should be no returned samples and that they should be requested. Albania - 1999 Since then, the situation has not improved. We spoke to a woman who was involved in sorting out drugs in Albania in 1999. She told us of a hospital in Tirana which had received tonnes of drugs, shown below. However in sorting them out she found some nitrous oxide canisters which had an expiry date of 1989 or 1990 – ten years before they reached Albania. She also discovered sadly that of all the tonnes of drugs donated, only a small proportion could actually be termed useful, shown below. Americares We got hold of an internal WHO report which studied drug donations in Albania in 1999. It documented several donations that were “conspicuous by their size and inappropriateness”, one of which was a donation from American Home Products via a charity called Americares, of painkillers which had only 5 months left before it expired. American Home Products has since changed its name to Wyeth and we thought that seeing as Wyeth were so found of giving, we’d respond in kind. We got 450,000 US coins (a ton in weight) in a flat bed truck and drove them to Wyeth’s UK headquarters. Mark then donated these coins to Wyeth. They didn’t want our donation and asked us to take it away and wouldn’t answer our questions, saying that Americares would reply on their behalf. True enough, Americares did so and said that the Albanian Ministry of Health were aware that the drugs were short dated before they were sent and still said they were needed. Thinking we needed a bit of insight into why the Albanians would do this we spoke to Claudi Curchillo again from Pharmaciens Sans Frontieres about what he thought their reasons could be. Claudi said in his experience countries would not refuse any donations for fear of offending the donor and also in case this would mean they wouldn’t make any future donations which could include drugs that were badly needed. Bristol-Myers Squibb Then we heard of a company called Bristol Myers Squibb. It produces two drugs which can be used in conjunction to combat AIDS. They have a programme called Secure the Future which they say will allow sub-Saharan African countries to have access to these drugs at well below their normal retail price. The figure they give for selling these drugs in Africa is $1 per patient, per treatment, per day. We asked them if they were selling this drug below what it costs them to produce it. They replied that they did. We asked them if they claimed a "bargain sale" from the tax man for this. They said to the best of their knowledge they weren’t doing that but then they did admit that they didn’t speak to their accountants that often... So we’re not sure whether the company that claims it is selling life saving drugs below cost as an act of charity is actually recouping any of its costs from the taxman. Then we looked at Guatemala. Medecins Sans Frontieres, an international humanitarian aid organisation, approached BMS and asked to purchase its combination AIDS drugs at a reduced rate of $1.60 per patient, per treatment, per day for a small group of people. No, said BMS. The figure will be $2 per patient, per treatment, per day. And we won’t sell them to you, we will ‘give’ them to you but we will charge an administration fee of $2 per patient, per treatment, per day. How odd, why would a drug company package this in this way? Why not just go ahead with a straight commercial transaction as MSF wanted? Could it be because they did not want to set a precedent of selling drugs at this reduced cost in this region? Could it be that they plan to claim the enhanced tax deduction by ‘giving’ the drug and pocket the $2 administration fee? We asked them. They said that they never used the word ‘donation’ and that they wouldn’t be taking the enhanced tax deduction. We asked then whether $2 was below the cost of producing the drug. They said they’d get back to us. We can’t check of course whether they ever claim the deduction or not because they don’t have to publicly declare it. War on Want have produced a report written by Mark which discusses this whole issue in more details and which is available to download from their website at www.waronwant.org or a hard copy is available by calling Nick Dearden on +44 20 7620 1111.