When the Clintons are questioned about the obvious sketchiness of their foundation, they routinely cite AIDS work. But the AIDS work is carried out by CHAI ("Clinton Health Access Initiative"), a separate organization.
In one angry fax, Ira Magaziner, the head of CHAI, says the Clinton Foundation would have 40% overhead if they left out CHAI from the statistics (see pg.10 of attachment). The Clintons conflate these two organizations and they know it. Here is an email from Podesta where he admits he, "mixed CHAI and CF together" on a television appearance defending the foundation. Tina Flournoy, an aide to Bill Clinton, worried that the foundation was constantly "using CHAI stats." Craig Minassian, an employee of the Clinton Foundation, dismissed those concerns by noting "the HIV/AIDS work hits home in a way that other stats don’t."
But now, with this new email, reveals the true nature of CHAI's work. CHAI contracted with Big Pharma companies for AIDS drugs to be distributed in developing countries. This contract specified that AIDS drugs would be provided for a significant discount to CHAI. Getting the drugs at a large discount acts like a direct donation to CHAI. The Clintons reap all of the PR benefits which they use to defend themselves. Otherwise the Clintons would have no defense when the issue of the Clinton Foundation corruption is raised.
But why is this arrangement beneficial for Big Pharma? They could easily distribute drugs to the developing world themselves. Many pharma companies already have programs where they tightly monitor and control the distribution of drugs (REMS) and programs that allow them to distribute to the less fortunate (Pfizer Rx Assistance Programs). Why then, do they need to go through the Clintons?
Corrupt Bargain
The answer, laid out for the first time in this email, is that the Pharma companies relied on the Clintons to resist efforts to lower the costs of AIDS drugs in the United States, the world's most lucrative drug market. They enable CHAI to do and claim credit for running a massive AIDS drug program, in exchange they expect high drug prices in the United States.
The Clintons get the positive press for running a large drug program with CHAI from the cheap drugs from the companies.
The Pharma companies get a political machine to preserve their ability to fleece the American consumer.
Since the insurance companies mostly pay for these drugs, the American consumer barely notices.
And everyone else, even those without AIDS, just pay higher insurance premiums to offset this expense. The costs are distributed throughout the population via the insurance industry.
Smoking Gun Email
The email is a reaction to "comments President Clinton made on lowering domestic AIDS drugs prices at the World AIDS day event" that must have set off a firestorm within Clinton world. Ira notes that CHAI was "taken by surprise" and "wish[ed] that someone had consulted with us before he made these comments." He explains:
we think that publicly pressuring the US and European AIDS drug companies to lower prices and bringing pressure to allow generic AIDS drugs into the United States will have limited if any success and could seriously jeopardize our negotiations to continually lower prices in poor countries. ...
We have always told the drug companies that we would not pressure them and create a slippery slope where prices they negotiate with us for poor countries would inevitably lead to similar prices in rich countries. If we were going to change our view on this, we should have informed the companies before President Clinton went public with his statement and attempted to negotiate a way for them to participate in and get credit for whatever steps we could have persuaded them to take to help the crisis in the states.
Since President Clinton’s comments were made, we have been contacted by a number of advocacy groups who are now intending to wage a public campaign to bring in generics and lower drug prices. We do not feel we can participate in this without jeopardizing our work around the world. We cannot oppose what they might do, but we also cannot be publicly supporting it either.This campaign will not get started until January, so we have some time to figure out and act upon our own strategy.
Having laid out the damage, Ira turns to mitigation strategies:
If we do try to do something in this area, we suggest that we approach the innovator companies that can currently sell products in the US with the idea of making donations to help clear the ADAP lists. For a variety of reasons, the companies will likely favor a donation approach rather than one that erodes prices across the board. ...
What reason(s) could there possibly be beyond simple profit maximization?
... I would guess that they would also likely favor a solution that involved their drugs rather than an approach that allowed generic drugs from India to flood the US market at low prices or one that set a precedent of waiving patent laws on drugs. ... We can go to war with the US drug companies if President Clinton would like to do so, but we would not suggest it.
