GSK drops drug prices for poor nations
They’ve been accused of greed, pursuing profits over people and lacking any collective conscience. But one pharmaceutical company is trying to clean up Big Pharma’s dirty reputation.
United Kingdom-based GlaxoSmithKline (GSK), the world’s second-largest drug company, announced a radical change in its corporate policy this year. It claims it will change the lives of people in the developing world by bringing cheaper drugs and better access to medication.
In February, GSK’s chief executive, Andrew Witty, announced plans to:
- Set up a voluntary patent pool to aid research and development of medicines for neglected tropical diseases such as malaria and cholera;
- Reduce prices for patent medicines in the least developed countries (LDCs) to no more than 25% of developed world prices;
- Encourage greater public and private sector involvement in researching neglected tropical diseases; and
- Reinvest 20% of profits from selling medicines in the LDCs to improving health infrastructure in those countries.
Because the pharmaceutical industry relies on intellectual property for revenue, the patent pool initiative—which promotes the manufacture of cheaper generic medicines—appears to be a bold move. Launched on March 24, the pool currently contains 800 GSK patents and more than 1 500 from Alnylam Pharmaceuticals.
Jon Pender, GSK’s head of government affairs, global access programmes, intellectual property and HIV, said the industry needs to “engage with people and explain the real value of intellectual property as an incentive for research and development”.
But some health activists are unconvinced. Although they support the initiative, they are unhappy about the exclusion of HIV patents. GSK counters such criticism by saying that from a research and development perspective, HIV is not a “neglected disease” and is therefore not included in the patent pool.
Organisations such as Médécins Sans Frontières (MSF) reject this. Michelle Childs, MSF’s director of policy and advocacy for the campaign for access to essential medicines said: “The two areas of neglect are paediatric formulations for children and new fixed-dose combination treatments. We desperately need these and a patent pool [for HIV drugs] can help get it.”
In April GSK implemented its new price structure for LDCs, slashing the cost of a handful of patented medicines. Anti-diabetes medication Avandia now costs 76% less, and the Avamys nasal spray is 67% cheaper. The company has promised more cuts, as long as it can cover production costs.
But researchers say even these discounts will not solve the healthcare problems of developing countries, where one in four people survive on less than $1.25 a day.
Pender does not deny this. “We have to understand that price is only one element of affordability. Unless more resources are going into healthcare systems, unless government budgets are spending more on medicines, poor patients are not going to see the full benefits of the initiatives that we’re implementing,” he said.
Like other companies, GSK has already been selling ARVs and anti-malarials at not-for-profit prices in LDCs and sub-Saharan Africa. For “developing” countries, like South Africa, prices are negotiable.
HIV activists question this logic. “How much sense does it make to commit to low—but not low enough—pricing in LDCs, but not in developing countries?” asked Catherine Tomlinson of the Treatment Action Campaign (TAC).
Yet GSK is determined to roll out the changes, and to do so soon. The company’s director for corporate affairs and community projects in sub-Saharan Africa, Lorinda Kroukamp, confirmed that it aimed to implement its reinvestment initiatives in five LDCs by the end of the year. In collaboration with the World Health Organisation, health ministries and NGOs, GSK said it will focus on maternal, neonatal and child health initiatives.
Kroukamp was upbeat when asked about progress, but cautioned against over-optimism when it comes to reinvestment. “Initially our annual reinvestment will amount to £1- to £2-million as we make less than £5-million in sales in the LDCs each year.
“This may not be much, but it’s a great starting point. We’re planning to make every cent count and use resources wisely to maximise what we can do in the areas we’ve identified,” she said.
The TAC was not convinced. “Wouldn’t it simply be better to slash profits and allow for countries themselves to invest in improving health infrastructure?” asked Tomlinson. “The GSK argument is circular: ‘We charge so much money that we can give you some of your own money back.’”
In July, Witty announced a second series of pledges, this time focusing on HIV/Aids, comprising:
- The creation of a £50-million (R647-million) Positive Action for Children Fund available over 10 years to help prevent mother-to-child transmission of HIV and to support orphans and vulnerable children;
- A fund of a further £10-million (R130-million) to support a public-private partnership into research and development of new paediatric ARVs;
- An extension of a voluntary licensing policy to include the second-line ARV abacavir on a royalty-free basis; and
- A commitment to seek collaborations with other companies to develop fixed-dose combination treatments.
The responsibility for monitoring GSK’s HIV-related commitments will lie with a specialist HIV company it formed with Pfizer in April. The new company will also focus on research and development of new HIV medicines.
GSK has extended its voluntary licensing agreement with South Africa’s largest generic drug manufacturer, Aspen Pharmacare, to include abacavir. The company waived its 5% royalty fee to cut prices further.
Francois Venter, president of the Southern African HIV Clinicians Society, said he is “encouraged” by GSK’s new policy, but points to instances where “pharmaceutical companies have used these initiatives as a PR exercise, while entrenching patent protection”.
“We must practically see whether patients in less-resourced countries do benefit, particularly children. GSK needs to work hard to show us their intentions are good.”
Health activists are waiting to see how Big Pharma will respond to a proposal from international drug purchasing agency Unitaid.
The agency recently announced plans to establish a patent pool for HIV medicines, an initiative that would allow generic HIV drugs to be produced immediately, instead of having to wait 20 years for patents to expire.
The European Parliament, along with leading health organisations, supports the initiative and has called on pharmaceutical companies to pool their HIV patents.
So far, nobody has come to the party. GSK, Gilead, J&J and Merck have been talking to Unitaid, but Big Pharma has yet to agree to put its HIV patents into the pool.
This article is published in association with Inside Story (inside.org.au), with funding from the Melbourne Community Foundation’s Social Justice Fund