GlaxoSmithKline Will Not Discount AIDS Drugs for Developed Countries
Drug maker GlaxoSmithKline announced yesterday that it has no plans to cut the prices of its anti-AIDS drugs in "key Western markets," the Philadelphia Inquirer reports (Warner, Philadelphia Inquirer, 4/25). In February, GlaxoSmithKline agreed to supply "heavily discounted" antiretrovirals to not-for-profit organizations that distribute the drugs in Africa, and the company already has offered drug discounts of up to 90% for Senegal, Uganda and Rwanda (Kaiser Daily HIV/AIDS Report, 2/22). However, GSK CEO Jean-Pierre Garnier said that falling prices in developing nations will not result in discounts in wealthier ones, adding that U.S. and European government officials and U.S. health insurers have said they "would not penalize" pharmaceutical firms for their discounts to poorer countries. "They see we are doing our best to increase access and we should not be punished for doing a good deed," he said. Aetna U.S. Healthcare stated yesterday that it does not plan to ask GlaxoSmithKline to discount its anti-AIDS drugs. Aetna spokesperson Jennifer King said, "Aetna strives to negotiate on behalf of our members and plan sponsors in an effort to ensure that they have access to affordable medications. However, we would not take any specific action relative to the humanitarian gesture in South Africa." First-quarter pharmaceutical sales for GSK, also announced yesterday, were up 11% internationally and rose by 14% in the United States. When asked at a news conference whether he was "embarrassed" by his company's profits "in light of the HIV/AIDS epidemic in Africa," Garnier replied, "As a CEO, I will never be embarrassed to do well by the shareholders. The AIDS drugs exist because we discovered them. Let's not forget that" (Warner, Philadelphia Inquirer, 4/25).
Glaxo Looks at Differential Pricing
GlaxoSmithKline also said yesterday that it plans to increase access to anti-AIDS drugs in the developing world through an "increased emphasis" on differential pricing, which sets lower drugs prices for developing nations while maintaining higher ones in wealthier countries. Garnier said that he hoped the drug industry would extend discounts on anti-AIDS drugs to more developing markets and that the cost of other drugs, such as those used to treat malaria and tuberculosis, would be reduced as well. But he warned that for differential pricing to work, discounted drugs must not be reimported back to wealthier nations. He said, "GlaxoSmithKline has led the way in offering differential prices on a range of medicines used in developing countries. However, to do what is really needed in these countries we must maintain revenues in the developed world" (Cope, London Independent, 4/25).
Although Garnier's decision to emphasize differential pricing indicates that he is "moving in the right direction," implementing and enforcing this strategy will be "fraught with difficulties," a London Independent opinion piece states. Differential pricing will only work "if Western countries agree to it," and this is uncertain, the article says. Although the flow of discounted drugs back to wealthier nations is "probably quite limited," GSK will soon find itself "under pressure to supply the [drugs] at the reduced rate to all takers." Implementing a differential pricing strategy requires "Western governments to hold the line and in effect concede the principle that unhealthy people in their own countries should subsidize those in the same position elsewhere." The article says that the scheme is "[a]ll very philanthropic, but ideologically not to everyone's taste, and also practically very hard to sustain." The article concludes that offering drugs at lower cost to developing nations "won't in itself solve the humanitarian problem" and more aid from Western governments is needed before the epidemic can be effectively fought (London Independent, 4/25).