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GlaxoSmithKline slashes AIDS drug prices

Published on 28/10/03 at 02:51pm

GlaxoSmithKline has cut prices of its HIV/AIDS drugs for developing countries by nearly half following intense pressure from campaigners and investors.

But the Anglo-American company says the price cuts are not in response to ethical pressure, and are instead made possible by "continuing improvements" to its HIV/AIDS drugs manufacturing process and new economies of scale.

The price reductions make Combivir available at just 90 cents a day in a total of 63 developing countries, including all of sub-Saharan Africa.

GSK says the not-for-profit programme is an extension of its access programme launched in June 2001, and follows price cuts made in September last year.

The move comes just weeks after the world's biggest pension fund and a shareholder in GSK, the Californian Public Employees' Retirement System (CalPERS), demanded that the company review its access to medicines strategy.

CalPERS was itself put under pressure by the AIDS Healthcare Foundation (AHF), which has applauded GSK's action.

The campaign group said it would now withdraw one of its three US lawsuits against GSK, an action alleging false advertising claims about its AIDS drug prices.

AHF's lawyer Tom Myers thanked CalPERS for its efforts, and urged GSK to do more.

"Now that Glaxo baseline prices have come down comparable to those of other branded drugs, we urge Glaxo to complete the circle by extending voluntary licensing to generic manufacturers something that CalPERS sought in its motion and asked them to explore so that these drugs truly can be put to use saving lives worldwide".

The announcement has also been welcomed by Richard Feachem, Executive Director of The Global Fund to Fight AIDS, Tuberculosis and Malaria, and Clare Short, the UK Secretary of State for International Development.

Both made it clear that GSK's initiative was not enough alone to improve basic healthcare for people in developing countries, with commitment needed from governments, employers and other stakeholders.

Echoing these views, GSK Chief Executive Jean-Pierre Garnier said: "We are proud of what we have achieved to date in terms of increased shipments of preferentially-priced HIV/AIDS medicines to patients in the developing world. But we want to work with our partners to do more to address the HIV/AIDS pandemic".

"We recognise and welcome the commitment shown by others. The Global Fund, President Bush's Emergency Plan for AIDS Relief, the World Bank, the Gates Foundation, and other organisations are beginning to provide the funding to help patients in the developing world get access to the medicines they so desperately need. Such funding, and the long-term orders they encourage, is essential to build the demand and economies of scale needed to underpin price reductions".

The company's price cuts have coincided with a G8 summit on access to medicines convened by the European Commission.

One of the key areas of dispute is differential pricing and industry fears that cut-price medicines intended for the developing world will find their way back to developed markets, undermining companiesprofits.

Brian Ager, Director General of European industry body EFPIA, said all sides agreed that joint action was needed, but that more needed to be done to build healthcare infrastructure in needy countries.

Turning to the illegal re-importation or 'diversion' of cut-price medicines from their intended recipients, he said the practice was "both morally and politically unacceptable", but said EC proposals to links anti-diversion measures to a set price formulae would create a complex discrimination between classes of medicines.

EFPIA proposes instead that a simple ban on re-importation would serve all interests better, and should be accompanied by new and stronger anti-counterfeiting and piracy measures.

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