[Ip-health] comment on the GSK/Aspen deal

[James Love]

Comment by James Love, Consumer Project on Technology, on GSK/Aspen deal
FMI mobile: 1.202.361.3040, love@cptech.org

"Everyone has been expecting Aspen to cut a deal with one or more big
PhRMA player with a voluntary license for one or more ARV drugs.  The
assumption is that the big pharma companies will seek to undermine the
current CIPLA compulsory licensing effort, or a parallel patient-led
compulsory licensing effort that is in the works in South Africa.   By
issuing the voluntary license, GSK may argue in court that the
compulsory license is not needed."

"There are not many details yet on the GSK/Aspen deal, so we'll have to
take a harder look when more information is available.  Judging from
news reports, it seems as though the Aspen prices will be a great deal
higher than the prices available from other generic suppliers.  At $1.80
per day for the Aspen version of combivir, with limited distribution. 
According to some reports Aspen will only sell to NGOs, charities and
the government, it appears to only shave $.20 per day off the current $2
per day GSK government price for combivr.  In contrast, other generic
firms have announced prices below $1 per day for three drug cocktails,
and we have one offer of a three drug combination for $.67 per day.  The
price of $1.60 per day for AZT alone is almost the same price as for the
Aspen version of combivir.  It is our opinion, judging from the prices
offered by other generic firms currently barred from market entry by GSK
patents, that these prices are still far too high.  We also reject any
deal that does not open up the commercial market to competition, which
is not only the best opportunity for expanded access right now, but also
essential for the generic firms to obtain sufficient economies of
scale."

"I think the limited benefits of the GSK/Aspen deal show how important
it is to lower entry barriers and encourage real competition."

One novel aspect of the deal is that GSK will reportedly forgo
royalties, having 30 percent of the sales given to NGOs involved in HIV
work.  There are some benefits to such an agreement, and some risks too,
if it gives GSK too much influence on the funding of local NGOs.   The
30 percent royalty figure is also very high, and may be used to argue
for similar high royalty rates in other compulsory licensing
proceedings.  It is a bit odd to charge a 30 percent royalty for sales
to NGOs, and then give the money back to certain NGOs selected by the
drug companies."

-- 
James Love
Consumer Project on Technology
http://www.cptech.org
1.202.380.3080 fax 1.202.234.5176
mailto:love@cptech.org