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GlaxoSmithKline PLC Settles Complaint

December 10, 2003

PRETORIA, South Africa (AP) _ GlaxoSmithKline PLC announced Wednesday it will license up to three more South African companies to manufacture generic versions of its AIDS medicines and allow the country to import drugs produced elsewhere.

The moves, part of a settlement with a business regulator, are expected to reduce the cost of life-prolonging treatment in one of the countries hardest hit by HIV.

The British-based pharmaceutical giant and Boehringer Ingelheim were named in a complaint filed last year by AIDS activists and a trade union federation alleging that the companies were using their dominant market positions to keep prices up.

The Competition Commission agreed there was a case against the companies and referred the matter in October to the Competition Tribunal, which has the authority to impose fines and other penalties.

Both companies have already drastically reduced their prices in the developing world under intense international pressure.

Peter Bains, Glaxo’s senior vice president, said his company maintains that the complaint was unfounded. But he said the agreement was ``an appropriate response to the HIV/AIDS pandemic in the region, and that is what really matters.″

Talks are continuing with German-based Boehringer Ingelheim, which produces the AIDS drug Nevirapine.

Lawyer Menzi Simelane, a member of the commission, said the agreement meant that cheaper, generic AIDS drugs could be available to patients within a year.

``As the agreement provides for more than one generic manufacturer, there will be competition among them, which should push prices even lower,″ he said.

Currently, only one South African company is licensed to produce generic versions of Glaxo’s AIDS drugs, 3TC, AZT and Combivir.

Glaxo has now agreed to provide the blueprints to the drugs to at least one and up to three more companies. In return for paying 5 percent in royalties, they will be allowed to distribute in the public and private sectors throughout sub-Saharan Africa.

Aspen Pharmacare, which previously paid 30 percent royalties and was allowed only to market in the public sector, is now benefiting from the same terms.

Glaxo also is allowing South Africa to import generics from other countries.

``It’s come late, and at a cost of many lives, but now it is time to put that behind us and get on with the matter of saving the lives of those who still don’t have access to cheaper AIDS drugs,″ said Zackie Achmat, leader of the Treatment Action Campaign, one of the complainants.

Achmat, who is HIV-positive, said he paid 329 rands ($51) a month for treatment, but believed with new generics on the market the price could come down to as low as 100 rands ($15).

Sub-Saharan Africa is home to 26.6 million of the 34 million to 46 million people worldwide living with HIV, according to U.N. figures. An estimated 5.3 million of South Africa’s 45 million people are infected with HIV _ more than in any other country.

After years of pressure, the government approved a plan last month to provide free anti-retrovirals to all who need them within five years. Previously, it had argued that the drugs were too expensive and questioned their effectiveness.

Simelane said Wednesday’s announcement should boost the treatment plan by giving the government access to cheaper generic drugs.

``As an African woman with AIDS, I am thankful for this,″ said Hazel Tau, the original complainant in the case. ``I wouldn’t be here without ARVs.″

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