Glaxo Cuts Price of AIDS Drugs for 63 Developing NationsGlaxoSmithKline, the world's largest producer of AIDS drugs, is expected to announce today that it will cut the price of its AIDS drugs by as much as 47% for 63 nations, including all of sub-Saharan Africa, the New York Times reports. Glaxo said that it will reduce the price of Combivir from $1.70 per person per day to 90 cents per person per day, a 47% reduction (Abelson, New York Times, 4/28). The World Health Organization has recommended that generic or equivalent pricing for the drug should be roughly 72 cents per day (Naik, Wall Street Journal, 4/28). Glaxo said that the new pricing will make the price of the drug "roughly equivalent" to some generic versions of the drug, according to the Times (New York Times, 4/28). India's Ranbaxy Laboratories offers the same treatment at 73 cents a day, Daniel Berman of Medecins Sans Frontieres said (Hirschler, Reuters/Boston Globe, 4/28). The company will also cut the price of Epivir from 64 cents to 35 cents per person per day and Retrovir from $1.20 to 75 cents per person per day (Loyd, Philadelphia Inquirer, 4/28). The reduced pricing scheme will be available to not-for-profit groups, governments, aid agencies and companies that provide the drugs to their employees (Bloomberg News/Los Angeles Times, 4/28). The announcement will be made at a meeting hosted by European Commissioners Pascal Lamy and Philippe Busquin to discuss improving access to drugs in developing nations (Wall Street Journal, 4/28).
What Prompted the Price Cut?
The announcement comes less than two weeks after the California Public Employees Retirement System, a major Glaxo shareholder, sent a letter to the company urging it to make its drugs more affordable for developing nations and one month after a group of European investment managers made similar requests. However, Glaxo said those actions did not prompt the pricing change, the Raleigh News & Observer reports (Ranii, Raleigh News & Observer, 4/28). Glaxo said the price cuts are the result of improvements in the manufacturing process as well as negotiations with the suppliers of the raw materials used to produce the drugs (New York Times, 4/28). Although Berman said that the price cut was "welcome," he and other industry critics were "skeptical" of Glaxo's explanation, according to the Globe. Berman said, "Glaxo may say they have found some new way to bring down the price, but it's kind of funny when you consider that two years ago generic companies had already figured out how to make it at a much lower price" (Boston Globe, 4/28).
AIDS Healthcare Foundation Drops Glaxo Lawsuit
AIDS Healthcare Foundation -- the largest AIDS organization in the United States -- has announced that, as a result of the price cuts, it will drop an unlawful business practices lawsuit it filed in California against Glaxo, the Business and Finance Daily News Service reports (Business and Finance Daily News Service, 4/28). The lawsuit, filed in February in the Superior Court of California, said that the company had made false claims in its advertising and public relations campaigns "in order to induce consumers, insurers and investors to purchase" the company's products and stock. AHF's allegations centered around Glaxo's preferential pricing program, which the company launched in 2000 following intense pressure for price cuts for African nations. Under the program, Glaxo says that it offers its antiretroviral drugs Retrovir, Epivir and Combivir "at cost" to developing nations, making "no profit" from the sale of the drugs. AHF alleged that Glaxo's claims were false, citing a disparity between the pricing of Glaxo's drugs and those of similar generic drugs, which AHF claimed were two to four times less expensive than Glaxo's brand name drugs (Kaiser Daily HIV/AIDS Report, 2/14). "We congratulate GlaxoSmithKline on their humanitarian action today to significantly lower the preferential prices on their AIDS drugs for the world's poorest nations," AHF President Michael Weinstein said, adding, "In light of Glaxo's intention to reduce prices, AHF will withdraw our California lawsuit against GSK" (AHF release, 4/28).