[e-drug] SA Competition Commission raps GSK and BI; GSK announces further

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E-DRUG: SA Competition Commission raps GSK and BI; GSK announces further
price reductions
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[Two press releases, by sheer coincidence(??) on the same day...

1. the South African Competition Commission finds GSK and Boehringer
Ingelheim in contravention of the Competition Act for excessive pricing and
other breaches of the Act, and,
2. GSK announces further price reductions for its ARVs in developing
countries, and expands the voluntary license to generic manufacturer Aspen
Pharmacare in South Africa.

They show the power of using competition law in democratic societies where
well-organised NGOs can complain about excessive pricing and other
anti-competitive practices.

I looked for a press release of Boehringer Ingelheim, announcing also a
price reduction for its ARV nevirapine, but I didn't find one (yet). Anyone
has talked to Boehringer for a response? Please ask them to post to
E-drug@healthnet.org.
WB]


MEDIA RELEASE FROM THE [SOUTH AFRICAN] COMPETITION COMMISSION

16 October 2003

Competition Commission finds pharmaceutical firms in contravention of the
Competition Act

The Competition Commission has found that pharmaceutical firms
GlaxoSmithKline South Africa (Pty) Ltd (GSK) and Boehringer Ingelheim (BI)
have contravened the Competition Act of 1998. The firms have been found to
have abused their dominant positions in their respective anti-retroviral
(ARV) markets.

In particular the Commission has found the firms have engaged in the
following restrictive practices:

1.      Denied a competitor access to an essential facility
2.      Excessive pricing
3.      Engaged in an exclusionary act

The Commission has decided to refer the matter to the Competition Tribunal
for determination.

Menzi Simelane, Commissioner at the Competition Commission, says," Our
investigation revealed that each of the firms has refused to license their
patents to generic manufacturers in return for a reasonable royalty. We
believe that this is feasible and that consumers will benefit from cheaper
generic versions of the drugs concerned. We further believe that granting
licenses would provide for competition between firms and their generic
competitors."

"We will request the Tribunal to make an order authorising any person to
exploit the patents to market generic versions of the respondents patented
medicines or fixed dose combinations that require these patents, in return
for the payment of a reasonable royalty. In addition, we will recommend a
penalty of 10% of the annual turnover of the respondents' ARVs in South
Africa for each year that they are found to have violated the Act."

Simelane said these practices violate the Competition Act of 1998's
prohibitions against excessive pricing (section 8(a)), refusing access to
essential facilities (section 8(b)) and exclusionary acts that have an
anticompetitive effect that outweighs technological, efficiency or other
pro-competitive gains (section 8(c).

"Indeed the very goals of our Competition Act - promoting development,
providing consumers with competitive prices and product choices, advancing
social and economic welfare and correcting structural imbalances - have been
made difficult in this context by the refusal of the respondents to license
patents."

The original complaint in this matter was filed by Hazel Tau and others
alleging that GSK and BI were charging excessive prices to the detriment of
consumers for their patented ARV medicines.

GSK and BI hold patents on certain antiretroviral (ARV) medications used to
treat HIV/AIDS.  GSK holds patents in South Africa on AZT (branded as
Retrovir), Lamivudine (branded as 3TC) and AZT/Lamivudine (branded as
Combivir).  BI holds patents in South Africa on Nevirapine (NVP) (branded as
Viramune).

ENDS

Prepared by:    Beachhead Media & Investor Relations
Dani Cohen 021 469 9000 / 082 897 0443
Jennifer Cohen 011 214 2400 /082 468 646
On behalf of:   The Competition Commission
Further info:   Zolile Ntukwana
                Manager, Compliance Division at the Competition Commission
                082 774 6017
www.bmsa.co.za


---------
[GSK press release]

GlaxoSmithKline takes further action to help the world's poorest fight
HIV/AIDS
Combivir down to 65 cents per day; extensions to South Africa voluntary
license

London, UK - 16 October 2003 - GlaxoSmithKline (GSK) today announced further
action to help the world's poorest countries meet the unique challenges of
HIV/AIDS. In keeping with its commitment to pass on cost savings in the
manufacture of antiretrovirals (ARVs), the company has again reduced the
not-for-profit prices of its HIV/AIDS medicines for qualifying countries and
organisations. It has also extended the voluntary licence granted to Aspen
Pharmacare, sub-Saharan Africa's largest generics company, for the
manufacture and sale of antiretrovirals.

The latest reduction lowers the not-for-profit price of Combivir - the
backbone of HIV/AIDS treatment regimens currently recommended by the World
Health Organisation (WHO) - from US$ 0.90 cents to 0.65 cents per day. GSK
has also reduced the not-for-profit price of many of its other HIV/AIDS
medicines. For example, Epivir is now available at US$ 0.19 cents per day,
and Retrovir at US$ 0.58 cents per day.

The price reductions announced today are made possible by further
improvements in the manufacturing process as well as the economies of scale
achieved. To date, GSK has secured over 150 arrangements to supply
preferentially priced HIV/AIDS medicines to 56 countries. In the six months
from April to September 2003, GSK shipped over 6 million tablets of
preferentially priced Combivir.

The current voluntary licence granted to Aspen Pharmacare, which relates to
the manufacture and sale of Combivir, Epivir and Retrovir, covers only the
public sector in South Africa and Zimbabwe. GSK is now extending this
licence to include both the public and private sectors and all countries in
the Sub-Saharan region.

"The HIV/AIDS pandemic presents a unique challenge to the global community.
The actions we are announcing today demonstrate our commitment to playing an
integral role in the global response through sustainable preferential
pricing, partnership and community investment, and research and development
of new medicines and vaccines to fight disease," said Jean-Pierre Garnier,
CEO of GlaxoSmithKline.

In response to the announcement, Dr. Jack C. Chow, Assistant
Director-General of the WHO for HIV/AIDS, TB, and Malaria said:

"WHO welcomes these proactive steps taken by GSK to lower prices and extend
its license for the generic manufacture and sale of antiretrovirals in
sub-Saharan Africa. Such steps will contribute to the expansion of ARV
therapy in resource-poor settings and accelerate progress towards the WHO's
goal of providing life-saving ARVs to three million people by the end of
2005.

"When combined with the building of health infrastructures, innovative
public-private partnerships and the training of national health workforces,
the company's efforts are a major gain in the campaign in support of people
living with HIV/AIDS."

The UK Secretary of State for International Development, Hilary Benn MP,
said:

"I very much welcome this announcement from GlaxoSmithKline, particularly
the extension of their voluntary licence with Aspen, which will help
increase access to essential medicines in developing countries. If we are to
combat the HIV/AIDS epidemic, much more is required from developing country
governments, industry and donors. The UK is committed to play our part,
through treatment and prevention. And what we must not forget is that if
poor people are to get access to medicines they also need a functioning
health system."

Notes for Editors

GSK is the leading supplier of HIV/AIDS medicines and also an industry
leader in the research and development of medicines and vaccines for
diseases of the developing world, including an HIV/AIDS vaccine. The company
believes it is the only company researching the prevention and treatment of
all three of the World Health Organisation's priority diseases in the
developing world: HIV/AIDS, malaria and tuberculosis.

This announcement reflects GlaxoSmithKline's long-standing and continuing
commitment to improve access to medicines in developing countries. GSK has
been offering substantial discounts on vaccines to governments, charities
and agencies for public health programmes for over 20 years.

GSK pioneered sustainable preferential pricing for antiretrovirals in 1997,
when the company made Retrovir available for use in mother-to-child
transmission reduction programmes in the developing world at up to 75% off
the global price. In 2000, the company became a founding member of the
Accelerating Access Initiative (AAI), a public-private partnership to
increase sustained access to appropriate, good quality intervention in the
fight against HIV/AIDS, including antiretroviral therapy.

In 2001, the company expanded its access programme, lowered its preferential
prices and extended not-for-profit preferential pricing to more customers,
countries and medicines. It also promised to continue to find ways to reduce
costs and pass those savings on to patients, In September 2002 and April
2003, further price reductions lowered the single not-for-profit price of
Combivir to $0.90.

Today's price reductions reflect improvements in the cost of goods and the
manufacturing process. These include re-engineering of the manufacturing
process to reduce cost and complexity; new purchasing agreements and
bringing more of the manufacturing process in-house.

GSK's single, not-for-profit prices are available to a wide range of
customers in the United Nation's list of Least Developed Countries and all
of sub-Saharan Africa - a total of 63 countries. They are also available to
all projects fully financed by the Global Fund to Fight AIDS, TB and
Malaria. Eligible customer groups include governments, non-governmental
organisations (NGOs), aid agencies, UN agencies and other international
purchase funds. Additionally, in sub-Saharan Africa, employers who offer
HIV/AIDS care and treatment to uninsured staff are also eligible for GSK's
not-for-profit prices for antiretrovirals.

In recent months there have been many important developments in HIV/AIDS,
such as the Bush Emergency Plan for AIDS Relief, the G8 commitments on
access to medicines, disbursements by the Global Fund and increased focus
from the WHO. GSK believes more is required. A significant increase in
resources is still needed, and every measure must be taken to prevent
diversion and ensure medicines reach the patients for whom they are
intended. It is also important to maintain incentives for R&D through
protection of intellectual property - for example, there is neither a cure
nor a vaccine yet for HIV/AIDS; and existing medicines for HIV/AIDS face the
challenge of resistance.

Improved healthcare in the developing world can only be delivered if the
significant barriers that stand in the way of better access are tackled as a
shared responsibility by all sectors of global society - governments,
international agencies, charities, academic institutions, the pharmaceutical
industry and others.

GSK continues to offer its anti-malarials at sustainable not-for-profit
prices to eligible customers in the 63 countries, but the prices of these
are unchanged because economies of scale have not occurred.

GlaxoSmithKline
UK Media Enquiries: Martin Sutton
David Mawdsley
Chris Hunter-Ward 020 8047 5502
020 8047 5502
020 8047 5502
US Media Enquiries: Nancy Pekarek
Mary Anne Rhyne
Patricia Seif (215) 751 7709
(919) 483 2839
(215) 751 7709
European Analyst/Investor enquiries: Duncan Learmouth
Anita Kidgell
Philip Thomson (020) 8047 5540
(020) 8047 5542
(020) 8047 5543
US Analyst/ Investor enquiries:  Frank Murdolo
Tom Curry (215) 751 7002
(215) 751 5419

---------

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