Drug Makers GlaxoSmithKline, Boehringer Ingelheim To Expand Licensing of Antiretrovirals for Use in South Africa
The South African AIDS treatment advocacy group Treatment Action Campaign on Wednesday signed a deal with pharmaceutical companies GlaxoSmithKline and Boehringer Ingelheim in which the companies will grant licenses to four different generic drug makers to manufacture their patented antiretroviral drugs, the Toronto Globe and Mail reports (Nolen, Toronto Globe and Mail, 12/11). South Africa's Competition Commission in October decided that GSK and Boehringer Ingelheim violated the country's competition act by setting antiretroviral drug prices too high and by refusing to license their patents to generic drug manufacturers. The commission recommended to the Competition Tribunal -- which has enforcement powers -- that the two companies be forced to allow generic licenses in exchange for royalties and be required to pay a fine of 10% of their annual antiretroviral sales for each year that they have violated the 1998 law (Kaiser Daily HIV/AIDS Report, 11/14). The commission on Wednesday said that following the announcement of the deal, it would ask that GSK not be fined, and the commission said that it is negotiating a similar deal with Boehringer, Reuters reports (Ginsberg, Reuters, 12/10). Both companies denied the commission's charges that they violated the country's competition act; however, without a settlement, the companies would have had to defend themselves in court, which could have exposed tightly protected pricing and marketing strategies, the New York Times reports (Wines, New York Times, 12/11).
Currently, GSK licenses only one company -- South Africa's Aspen Pharmacare -- to produce generic versions of the GSK antiretrovirals zidovudine, lamivudine and the combination drug Combivir, the AP/Las Vegas Sun reports. Under the new agreement, Aspen -- along with at least one and up to three additional drug makers -- will pay no more than 5% in royalties; Aspen previously paid 30% in royalties and was only allowed to market the drugs in the public sector (Sylvester, AP/Las Vegas Sun, 12/10). Under the deal, GSK said that it would extend the licenses to both the private and public sectors and allow the generic firms that receive the licenses to export antiretrovirals manufactured in South Africa to 47 other sub-Saharan African countries, the Wall Street Journal reports (Flynn/Schoofs, Wall Street Journal, 12/11). GSK Senior Vice President Peter Bains said that the company did not have an estimate on the cost it would incur by limiting the royalty fee on its drugs. GSK is in advanced discussions with South Africa's Thembalami Pharmaceuticals -- a joint venture between South African pharmaceutical group Adcock Ingram and India's Ranbaxy Laboratories -- and will consider issuing licenses to two more companies for production of the GSK antiretrovirals, Reuters reports. GSK said that although it would prefer to provide licenses to local drug makers, the company would consider allowing South Africa to import generic versions of its drugs from other countries. According TAC, Boehringer plans to grant three licenses to generic drug makers to produce and import nevirapine, Reuters reports. Boehringer was not available for comment, according to Reuters (Reuters, 12/10).
By introducing more competition into the antiretroviral drug market in South Africa, the deal likely will "sharply" lower the cost of the drugs and broaden access to the medications in Africa, according to the Journal (Wall Street Journal, 12/10). Currently, the drugs are available to "only a tiny sliver" of the estimated 30 million HIV-positive people in Africa, according to the Times. Estimates of the price reductions expected as a result of the deal "vary wildly," according to the New York Times. Jonathan Berger, a lawyer at the AIDS Law Project at the University of Witswatersrand, said that the average monthly price of an antiretroviral regimen could drop to as little as $25 per person from as much as $225 (New York Times, 12/11). TAC Chair Zackie Achmat, who is HIV-positive and who recently began taking the drugs, said that he pays $51 a month for his regimen, but he said that he thought that the price could come down to as low as $15 a month under the new plan (AP/Las Vegas Sun, 12/10).
Competition Commissioner Menzi Simelane said, "We think it is far more important to have broadened access to cheaper antiretrovirals for people with HIV/AIDS through price reductions by generic manufacturers. The introduction of generic substitutes should result in a drastic reduction in the prices of antiretroviral drugs" (BBC News, 12/10). He added, "We'll monitor the situation to ensure that the objective of cheaper drugs is achieved" (South African Press Association, 12/10). Simelane said that the settlement would boost the South African government's national treatment plan by providing access to less expensive drugs (AP/Las Vegas Sun, 12/10). The South African Cabinet last month approved a plan for a national HIV/AIDS treatment program, including the distribution of free antiretroviral drugs through service points in every health district within one year and in every local municipality within five years. The program aims to treat 1.2 million people -- or about 25% of the country's HIV-positive population -- by 2008 (Kaiser Daily HIV/AIDS Report, 11/21). Achmat said, "For us, this is an historic occasion. It's come late. It's come at a cost of many thousands of lives, but we now want to say to the drug companies, 'Let's put this behind us, and move on'" (Globe and Mail, 12/11). A GSK spokesperson said that the company is pleased to have settled the case, according to the Journal (Wall Street Journal, 12/11).
AIDS Healthcare Foundation President Michael Weinstein said that AHF is "disappointed" with the Competition Commission's decision "not [to] hold GSK accountable for their past misdeeds" (AHF release, 12/10). AHF in November announced plans to file a class-action lawsuit in South Africa against GSK seeking damages on behalf of deceased HIV-positive people who could not afford antiretroviral drugs. AHF -- the largest nongovernmental provider of AIDS care in the United States -- filed a complaint with the commission against GSK in January, claiming that the company's high drug prices block access to antiretroviral treatments (Kaiser Daily HIV/AIDS Report, 11/14). Weinstein said that AHF will continue to seek damages on behalf of HIV/AIDS patients and family members who "have been harmed by GSK's actions in South Africa." He said that although AHF hopes "this settlement will lead to increased access to drugs in the future, it is difficult to see how lowering GSK's royalties is sufficient punishment for decades of overcharging for their drugs," adding, "Even though one cannot place a monetary value on the hundreds of thousands of lives lost to the greed of GSK, surely some financial price must be paid by the world's largest HIV/AIDS drug maker for their callous disregard for human life" (AHF release, 12/10).