GSK to review drug pricing policy: pharmaceuticals giant reacts to criticism over costs to poor countries

GlaxoSmithKline, under pressure to make its drugs more widely available in poor countries, is reviewing its approach to pricing and patent enforcement. At a meeting with institutional investors,

GSK promised to present a new policy framework outlining its stance on affordable medicines by the end of June. Jean-Pierre Garnier, chief executive of the newly merged Anglo-American company, has said he will make the issue a priority. However, he has stressed that drug companies cannot achieve anything alone and that the problems go deeper than the price of drugs. Several investors, concerned that a bad public image could damage GSK’s long-term share price, attended Wednesday’s meeting in central London. They included Friends Ivory & Sime, Hendersons, Morley Fund Management, Jupiter and the Universities Superannuation Scheme.

“Investors want the company to have something that looks more like a coherent strategy towards access to medicines,” said one investor. “They have to raise their game in understanding how seriously the public takes this issue and how seriously investors take it.” GSK was targeted by Oxfam this week as part of a campaign to highlight the allegedly damaging implications of tighter global patent regulations on public health in poor countries. GSK was criticised, in particular, for appearing to defend patents on Aids drugs in Ghana and Uganda and for backing legal action against the South African government, which is seeking the right to import cheaper medicines. “GSK has some very interesting (access) programmes, but they don’t seem to have a thoroughly thought-out approach to this problem,” said one investor. “The real crunch is over intellectual property and whether the company can be flexible without damaging other parts of its business.”

Drug companies say poverty is a greater barrier to health than the price of patented medicines. They are also concerned that, if cheap copies of drugs become widely available in poor countries, they could undermine their markets in the west. Oxfam insists high drug prices can have a huge impact on people with limited access to health care. “We still disagree about the impact of patents on the price of drugs,” said Sophia Tikell, senior policy adviser at Oxfam. “Any review of policy will not be serious unless it addresses this issue.”

Source: Financial Times; Feb 16, 2001.

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