[Ip-health] TAC statement on SA settlement

[Sean Flynn]

A better version of this press release and copies of the settlement
agreements are at http://www.tac.org.za/Documents/DrugCompaniesCC/


Competition Commission Settlement Agreements Secure Access to Affordable
Life-Saving Antiretroviral Medicines

=0910 December 2003, 11h00 SA time (GMT plus 2)

=09Contents

=09*=09A Victory for People living with HIV/AIDS and for public health:
Statement by TAC on Settlement Agreements
=09*=09Statement by Competition Commission on Settlement Agreements
=09*=09Statement by AIDS Consortium on Settlement Agreements
=09*=09TAC/ALP Fact Sheet on Settlement Agreements

=09*=09Web Links to the Settlement Agreements

=09=09*=09Agreement between Hazel Tau and Others and  GlaxoSmithKline
<http://www.tac.org.za/Documents/DrugCompaniesCC/TAU-GSK-Settlement-2003120=
9.doc>

=09=09*=09Agreement between Hazel Tau and Others and Boehringer Ingelheim
<http://www.tac.org.za/Documents/DrugCompaniesCC/TAU-BI-Settlement-20031209=
.doc>



=09Editor's Note: Today, International Human Rights Day, is TAC's 5th
Birthday!



=09A Victory for People living with HIV/AIDS and for public health!



=09Affordable medicines for millions of sub-Saharan Africans are much
closer after landmark agreements were concluded and signed yesterday
between pharmaceutical companies and AIDS activists.

=09The Treatment Action Campaign (TAC), COSATU, CEPPWAWU, the AIDS
Consortium, four people living with HIV/AIDS and four health-care
workers have entered into settlement agreements with pharmaceutical
giants GlaxoSmithKline (GSK) and Boehringer Ingelheim (BI).  In signing
these agreements, AIDS activists have now concluded their complaint
against GSK and BI.  The terms of the agreements go well beyond what
could conceivably have been won by pursuing the prosecution of the
complaint under the Competition Act.

=09The effect of the agreements with GSK and BI is that the Clinton
Foundation deal that was announced on 23 October 2003 can be implemented
in South Africa and other sub-Saharan African countries immediately.
The Clinton Foundation deal has ensured that four generic companies will
sell triple-drug antiretroviral therapy to governments in sub-Saharan
Africa at US $140 per patient per year.

=09The terms of the agreements are:

=091.GSK will grant licences to four generic companies (including Aspen
Pharmacare and Thembalami Pharmaceuticals) to produce and/or import,
sell and distribute the antiretroviral medicines AZT and lamivudine.
Before the agreement with GSK was concluded and signed, GSK had only
granted a licence to Aspen Pharmacare.

=092.BI will grant licences to three generic companies (including Aspen
Pharmacare) to produce and/or import, sell and distribute the
antiretroviral medicine, nevirapine.  Before the agreement with BI was
concluded and signed, BI had only granted a licence to Aspen Pharmacare.

=093.The royalty fee on the licences will be no more than 5% of net sales
of the antiretroviral medicines.  Before the agreements with GSK and BI
were concluded and signed the royalty fee that GSK requested was 30% and
with BI it was 15%.

=094.The licences will be for both the private and public sectors.  Before
the agreements with GSK and BI were concluded and signed the licences
granted by GSK and BI to Aspen were limited to the public sector only.

=095.The agreements with GSK and BI will also allow licensees to export
AZT, lamivudine and nevirapine that are manufactured in South Africa to
all 47 sub-Saharan African countries.  Before the agreements with GSK
and BI were concluded and signed, exports to sub-Saharan African
countries were not permitted.

=096.The licensees will be able to manufacture AZT, lamivudine and/or
nevirapine in combination with each other and/or any other medicines for
which the licensees have licences.  This is critical because it will
allow triple-drug fixed dose combinations, currently manufactured by at
least two generic producers, to come to the market.

=097.The licences apply to both adult and paediatric formulations of AZT,
lamivudine and nevirapine.

=09Generic companies should therefore apply for regulatory approval (where
such approval has not as yet been obtained) for their versions of AZT,
lamivudine and nevirapine, as well as fixed dose combinations that
contain any or all of these antiretrovirals.  They should also
immediately apply to both GSK and BI in order to obtain voluntary
licences as contemplated in the agreements concluded and signed with GSK
and BI.

=09The agreements are legally binding on GSK and BI.  In the event that
GSK and/or BI do not comply with any aspect of any agreement it will be
left open to the complainants to go to a court of law to enforce any
aspect of the agreement that is not being complied with.

=09TAC will monitor the prices of generic medicines as vigilantly as it
monitors the prices of brand-name medicines.  We call on the generic
companies such as Aspen Pharmacare and Thembalami Pharmaceuticals to
commit to making generic medicines affordable for the majority of people
living with HIV/AIDS in sub-Saharan Africa.

=09TAC also calls on pharmaceutical companies such as Merck, Roche and
Abbot to follow the examples of GSK, BI and Bristol Myers Squibb by
agreeing either not to enforce their patents on antiretroviral medicines
in sub-Saharan Africa or by granting voluntary licences to generic
manufacturers on reasonable terms.

=09Today is also International Human Rights Day and the fifth anniversary
of the Treatment Action Campaign.  We remember the countless lives lost
because of patent abuse and government neglect but this deal and our
government's treatment plan allows all of us to work together on saving
lives and preventing new infections.

=09TAC wants to thank Advocate Robert Petersen SC, Advocate Susannah
Cowen, and the AIDS Law Project's Law and Treatment Access Unit, in
particular Jonathan Berger and Fatima Hassan, Alison Dyer and Geoff
Budlender for their assistance. We also want to thank Advocate Hamilton
Maenetje for his work. Thanks also to the experts who wrote affidavits
for the complaint including Robin Wood, James Love, Rob Dorrington, Leon
Regensberg, Marc Cotton and Alex Van Den Heever.

=09The complainants were Hazel Tau, Nontsikelelo Zwedala, Sindiswa
Godwana, Isaac Skosana, Sue Roberts, Steve Andrews, Francois Venter,
COSATU, CEPPWAWU and the TAC. They were later joined by the AIDS
Consortium and a policeman who subsequently died of AIDS.

=09A document entitled "Fact Sheet" explaining the terms of the agreements
entered into is attached to this press statement.

=09For more information please contact:
=09Fatima Hassan 083 279 9962 (021 422 2186)
=09Jonathan Berger 083 419 5779 (011 717 8627)

=09[END OF TAC STATEMENT - BACK TO CONTENTS]

AIDS Consortium jubilant over Competition Commission complaint settlement!


=09On behalf of its members and many people living with HIV the AIDS
Consortium welcomes the settlement in the Competition Commission
complaint between Tau and Others vs GlaxoSmithKline and Boehringer
Ingelheim. We congratulate the  legal team, and negotiators from the
Treatment Action Campaign and the AIDS Law Project who have been working
on this case.

=09The AIDS Consortium was one of the complainants and Hazel Tau, the
first complainant, is an executive committee member of the AIDS
Consortium. In a year, which saw cabinet announce its plans to roll out
of ARVs in the public health sector, ending 2003 on this note could not
get better.

=09The settlement will mean that millions of people should soon be able to
access cheaper treatment and be able to comply with their drug regime
simply because the drugs are more affordable. Something they just could
not do with the excessive pricing that was being charged for AZT, 3TC
and Nevirpaine brand drugs.

=09This settlement means that people in the rest of Africa will also
benefit and the fact that the agreement is not confined to sales in the
public health sector but includes the private health sector is indeed
historic.

=09We call on other drug companies to do the same and issue voluntary
licences for essential life saving drugs, because this will enable
governments in developing countries to provide treatment for all people
living with HIV and AIDS in a sustainable manner and invest money to
improve health care facilities and employ more health care workers.

=09The Consortium will be present to witness this ground-breaking
settlement and has closed its offices for today to celebrate.
=09For more information please contact

=09Sharon Ekambaram
=09Advocacy Officer
=09AIDS Consortium -083 6348924


=09[END OF AIDS CONSORTIUM STATEMENT - BACK TO CONTENTS]



=09TAC/ALP FACT SHEET



=09SETTLEMENT AGREEMENTS REACHED IN HAZEL TAU AND OTHERS v GLAXOSMITHKLINE
(GSK) AND BOEHRINGER INGELHEIM (BI)




=09Background


=09On September 19th 2002, the AIDS Law Project lodged a complaint with
the Competition Commission against GlaxoSmithKline (GSK) and Boehringer
Ingelheim (BI) on behalf of four people living openly with HIV/AIDS,
four health care workers, the Treatment Action Campaign (TAC), and
COSATU and its affiliate CEPPWAWU.  In February 2003, two further
complainants joined-a police officer living openly with HIV/AIDS (who
subsequently passed away on June 16th 2003) and the AIDS Consortium
(representing more than a thousand individual and organisational members).

=09Alleging that the two multinational pharmaceutical groups were acting
unlawfully by charging excessive prices for certain of their
antiretroviral medicines (ARVs) to the detriment of consumers, the
complaint argued that the prices charged by the groups for their
essential and life saving medicines are directly responsible for the
premature, predictable and avoidable deaths of women, men and children
living with HIV/AIDS.  The complaint showed that even when allowance is
made for the costs of research and development, higher profits,
licensing fees and the incentive to develop new drugs, the prices of
these ARVs were excessive.

=09On October 16th 2003, the Competition Commission announced that it had
decided to refer the complaint to the Competition Tribunal for
adjudication.  As a result of its year-long investigation, the
Competition Commission found evidence to support the referral on the
basis of prohibited excessive pricing as well as two additional grounds,
both of which deal with the failure of GSK and BI to license generic
manufacturers in certain circumstances.  GSK and BI were using their
patent monopolies to deny appropriate licences to other manufacturers
while keeping their own prices high.



=09What were the prices of the ARVS at the time the complaint was lodged
in 2002?


=09The ex-manufacturer private sector prices of the relevant ARVs
(excluding VAT) for a month's supply were as follows:


=09*=09AZT (Retrovir=AE):            R582.00
=09*=09Lamivudine (3TC=AE):         R640.00
=09*=09AZT/lamivudine (Combivir=AE):     R800.00
=09*=09Nevirapine (Viramune=AE):     R360.00


=09The prices for paediatric formulations were as follows:


=09*=09AZT solution:             R138.12 (for 200ml)
=09*=09Lamivudine solution:         R235.00 (for 240ml)


=09ARVs should be given as a cocktail of at least three drugs (such as
AZT, lamivudine and nevirapine).  This is also known as highly active
antiretroviral therapy, or HAART.



=09What licences had been granted at the time the complaint was lodged?


=09Aspen Pharmacare, a South African generic pharmaceutical company, was
already licensed by GSK to manufacture and sell AZT and lamivudine
products in South Africa to the government, NGOs and employers who treat
their workers who do not belong to medical schemes.  Such sales were
subject to a 30% licensing (or royalty) fee.

=09Aspen obtained a similar licence from BI to manufacture and sell
nevirapine in South Africa to the government, NGOs and employers who
treat their workers who do not belong to medical schemes.  It is
understood that such sales were initially subject to a 15% licensing (or
royalty) fee. As with the GSK licence, this licence did not entitle
Aspen to sell to the private sector.  It is unclear whether Aspen was
permitted to export even to Southern African Development Community
(SADC) countries.



=09Why was a single license from GSK and BI to Aspen not enough?


=09There are five key reasons why the licences given to Aspen by GSK and
BI did not solve the problem of ensuring access to a sustainable supply
of affordable ARVs.

=09First, more licensees are needed to ensure that there is proper
competition among generic drug companies.  Proper competition will
ensure that the prices of ARVs reach their lowest possible amount and
remain affordable.

=09Second, Aspen's AZT, lamivudine, AZT/lamivudine combination and
nevirapine are not yet registered by South Africa's Medicines Control
Council (MCC) and therefore cannot yet be used in South Africa.  Other
generic companies' ARV products are already registered by the MCC.  But
GSK and BI would not allow such products to be sold in South Africa and
other countries where their patents apply.

=09Third, at least two generic companies produce a single pill that
contains three different ARVs.  This is very important because patients
can take this single pill twice a day instead of having to take many
pills twice a day.  Such fixed-dose combination ARVs have been shown to
improve adherence to treatment regimens and ultimately improve patient
health.

=09However, since all the ARVs that are combined in the pill (stavudine,
lamivudine and nevirapine) are patented in South Africa, the generic
companies cannot legally sell the combination pill in South Africa
unless they get licences from the patent holders to do so.
=09So far, Bristol Myers-Squibb has agreed that it will not enforce its
rights in its patented ARVs, one of which is d4T.  Without GSK doing the
same (or granting licences to generic companies) for lamivudine, and BI
doing the same for nevirapine, the combination pill cannot be sold in
South Africa.

=09In addition, at least one generic company produces another pill that
contains a different combination of three ARVs (AZT, lamivudine and
nevirapine).  But it cannot sell this important combination pill in
South Africa until it gets licences to do so.

=09Fourth, the GSK licence to Aspen did not allow for exports, with the BI
licence possibly allowing for limited exports only.  It is important to
note that HIV/AIDS affects all countries - it does not respect national
borders.  Solving the issues of access in South Africa without
addressing similar issues in all other sub-Saharan African countries is
both problematic and immoral.  In addition, local generic manufacturers
must have economies of scale if they are to be able to offer and sell at
prices that are competitive.

=09Finally, excluding the private sector from these licences is
problematic for the following reasons:



=09*=09Many poor people, especially in rural areas, buy their medicines fro=
m
doctors and pharmacies in the private sector.
=09*=09If more people can afford to buy the medicines in the private sector=
,
they are less likely to use the public sector to get their ARVs.  This
can reduce the burden of HIV/AIDS on the public sector.
=09*=09Medical schemes are under financial pressure due to the HIV/AIDS
epidemic.  To ensure that medical schemes provide reasonable and
acceptable benefits to people living with HIV/AIDS and that more people
are able to access medical scheme cover, the prices of ARVs must be kept
as low and as competitive as possible.
=09*=09The public sector may take up to five years to reach all those who
need access to ARV treatment.  Affordable prices in the private sector
would make it possible for many people to access ARV treatment while the
public sector programme is being rolled out.



=09What do the settlement agreements with GSK and BI achieve?


=09The settlement agreements will open up the ARV market to generic
competitors.  Including Aspen Pharmacare, four generic companies will be
licensed to manufacture and/or import generic AZT and lamivudine
products, with three companies being licensed to manufacture and/or
import generic nevirapine products.  All licensees will be entitled to
combine AZT, 3TC and nevirapine, both with each other and with other
ARVs.  All licensees will be entitled to sell their products to both the
public and private sectors, with sales being subject to a maximum 5%
royalty rate.

=09While all licensees will be strongly encouraged to manufacture generic
ARVs in South Africa in the interests of developing local pharmaceutical
manufacturing capacity and job creation, they will nevertheless be
entitled to use their licences to import if they decide not to or are
unable to manufacture locally.  Licensees that manufacture the ARVs in
South Africa will be entitled to export their products to all countries
in sub-Saharan Africa.



=09What prices can we be expected to pay in the public and private sectors?


=09Government will now be free to procure ARVs from a range of generic
manufacturers, without first having to issue compulsory licenses or
negotiate voluntary licences.  In the public sector, the settlement
agreements will open up access to the prices recently announced by the
William J. Clinton Foundation, removing the last patent barriers to
accessing AZT, lamivudine and/or nevirapine products.  For the standard
first-line regimen of stavudine, lamivudine and nevirapine, for example,
the Clinton Foundation price of US$140 per patient per year (=B1 R75 per
month) represents a 74% savings on the current best price of US$538 per
patient per year (=B1 R290 per month).

=09Based on the current international best price offers made by generic
companies and at current exchange rates, we expect to see the same
stavudine, lamivudine and nevirapine regimen costing in the range of
US$200 - 250 per patient per year (=B1 R110 - 140 per month), with the
same regimen in a three-in-one fixed dose combination form costing in
the range of US$250 - 290 per patient per year (=B1 R140 - 160 per month).
  The same regimen currently costs over R1000 per month.

=09At current exchange rates, other ARVs are expected to cost consumers as
follows:


=09*=09AZT: US$160 - 180 per patient per year (=B1 R85 - 100 per month, dow=
n
from R582);
=09*=09Lamivudine: US$65 - 100 per patient per year (=B1 R35 - 55 per month=
,
down from R640);
=09*=09AZT/lamivudine combination: US$200 - 250 per patient per year (=B1 R=
110
- 140 per month, down from R800);
=09*=09Nevirapine: US$100 - 150 per patient per year (=B1 R55 - 80 per mont=
h,
down from R360);
=09*=09AZT paediatric solution: US$3 - 4 (=B1 R20 - 26) for 200ml, down fro=
m
R138.12; and
=09*=09Lamivudine paediatric solution: US$5 - 6 (=B1 R32 - 40) for 240ml, d=
own
from R235.



=09Why have the complainants agreed to withdraw the complaint?


=09In return for the concessions made by GSK and BI in the settlement
agreements, the complainants have agreed to formally withdraw the
complaint.  This does not mean the complaint was unjustified.  It simply
means that the public interest will be better served by securing these
gains now, at least for South Africa and the whole of sub-Saharan
Africa, through a negotiated settlement.

=09Although the complainants would have wanted GSK and BI to concede more,
they concluded after lengthy negotiations that this is the best that can
be achieved now.  It goes well beyond what could conceivably have been
won by pursuing the prosecution of the complaint under the Competition Act.