GSK halves drug prices to 63 countries

Graham McKerrow, HIV i-Base

GlaxoSmithKline has announced a fresh round of price cutting that almost halves the cost of Combivir (3TC/lamivudine/Epivir and zidovudine/ZDV/AZT/retrovir) in developing countries from $1.70 a day to 90 cents – closer to the prices of generic rivals. The price in the US is $18 a day.

In those countries that qualify, and for those organisations that qualify for the new price reductions, the annual price for Combivir is £206, which compares to the WHO-approved generic version produced by Ranbaxy in India that sells for £167. Another generic version of the same combination, but one that doesn’t have the WHO’s approval, is sold by Aurobindo, also of India, for £128.

Poor countries now represent a considerable market for GSK. Last year, Glaxo supplied nearly 6 million tablets of Combivir to developing countries, the company said, up from about 2 million tablets in 2001.

Glaxo said it is able to reduce the drugs’ prices because it is making them less expensively, as a result of improved manufacturing techniques and deals with some of the suppliers of raw materials that go into the medicines.

In addition to Combivir, GSK has also reduced the prices other HIV medicines. For example, 3TC (Epivir) is now available at 35 cents per day, and AZT (Retrovir) at 75 cents per day – reductions of 45% and 38% respectively.

GSK’s new price cut was widely welcomed by, among others, the Global Fund to Fight AIDS, TB and Malaria and Clare Short, UK Secretary of State for International Development, but it also attracted immediate criticism. Euan Wilmshurst, Director of Action for Southern Africa, wrote to the Guardian newspaper saying: “We sincerely hope that GSK’s price cuts for the anti-AIDS drug Combivir are not simply an attempt to muscle in on funds not intended for over-priced patented medicines.”

He pointed out that the annual cost of the generic version produced by Ranbaxy, is almost 20% cheaper than GSK’s Combivir following its latest price cut.

And Wilmshurst added: “Deep and sustained cuts in prices of medicines will only be brought about through competition with licensed generics manufacturers. If GSK truly wishes to contribute to the global struggle against AIDS, it should provide voluntary licences for the production of patented AIDS drugs in poor countries and should issue a public statement supporting the rights of developing country governments to provide healthcare by overriding drug patents.”

Customers eligible for the new low prices include governments, non-governmental organisations (NGOs), aid agencies, UN agencies and international purchase funds like the Global Fund to Fight AIDS, TB and Malaria, operating in 63 named countries.



With every move GSK makes it becomes clearer that they respond to three things: shareholders, share price and profit – and the greatest of these is profit. With the Global Fund attempting to raise $10 billion a year and the United States offering $15 billion for HIV treatment and prevention in poor countries over the next five years there is suddenly a huge market for antiretrovirals in poor countries. GSK – and it was not alone – once said dual pricing was impossible but with the manufacturers of generic drugs expanding into this growing market they, like other pharmaceutical companies, are eager for a slice of the pie.

The Global Fund has made clear it will fund projects that buy the best drugs at the lowest prices and President Bush recently said his $15 billion plan would take advantage of treatments now costing $300 a year – and when he said that only generics cost that little. The Global Fund and the president should both be praised for making clear that they are not going to pay the high western prices for treating poor people in developing nations.

Shareholders should also take a bow, both the institutional investors who, as we reported last month, are worried that the prices of shares in pharmaceutical companies could plummet unless they make treatments available to poor countries; and more politically motivated shareholders like The California Public Employees Retirement System (Calpers). Calpers owns about $760 million worth of GSK stock and in April attracted attention by demanding GSK cut its prices in poor countries.

GSK is the world’s second largest drug maker and likes to throw its weight around – its very name is designed to intimidate, its turnover is bigger than many national GDPs – but even this giant is vulnerable to pressure. We can urge them to cut their prices further, but now is the time to look ahead to September when the World Trade Organisation holds its Ministers Meeting, and medicines are on their agenda. They must be persuaded to radically change the international patent system so that more countries can make, buy and distribute generic versions of drugs. It is not for the WTO to protect multinational companies against competition from smaller producers, and it is not for the WTO to enforce rules that let millions die from treatable illnesses.

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