Multinationals face drug price complaints

Tamar Kahn

Cosatu and TAC take companies to competition body

The Treatment Action Campaign' (TAC) and the Congress of SA Trade Unions (Cosatu) launched a new broadside yesterday in their campaign to widen access to affordable AIDS drugs, lodging a complaint of excessive pricing with the Competition Commission against multinational drug companies GlaxoSmithKline and Boehringer Ingelheim.

If the Competition Commission refers the case to the Competition Tribunal, it will open up the possibility of the companies being ordered - under provisions in the Competition Act - to reduce the prices of AIDS drugs in the private sector.

They could also be forced to pay a penalty of up to 10% of their annual turnover in SA and face damages claims from individuals.

The complaint alleges that the local and international operations of the companies have engaged in excessive pricing of antiretroviral medicines, used to delay the onset of AIDS. It also alleges that the pricing practice is detrimental to the consumer because it is directly responsible for premature, predictable and avoidable deaths of people living with HIV/AIDS.

Geffen said the commission would consider a price to be excessive if it was higher than one reasonably related to the economic value of the product. Three of the drugs in question are manufactured by Glaxo AZT (Retrovir), Lamivudine (3TC) and the two in combination (Combivir). Boehringer is being challenged over the price of Nevirapine, which it manufactures under the brand name Viramune.

Antiretroviral medicines are currently available only in the private sector because government policy limits provision of the drugs in state facilities to victims of sexual assault and medical personnel injured at work.

Boehringer SA MD Kevin McKenna said yesterday he rejected completely  allegations that the company had abused its dominant market position to charge excessive prices. The SA price of Viramune was about 20% of that in developed countries.

Glaxo's director for corporate affairs, Vicki Ehrich, said a preliminary assessment of the complaint led the company to believe that it was unjustified We reject the allegations of excessive pricing. Glaxo's pricing in the private sector in SA was among the lowest in the world.

The price ofCombivir, for example, was 80% lower than the world average, she said. She also pointed out that Glaxo had offered its AIDS drugs at preferential prices to governments in the developing world, including SA, and they had not taken up the offer. Nine complainants have joined TAC and Cosatu in the case. (Source: Business Day, 20 September 2002)