Tamar Kahn, Science And Health Correspondent
17 October 2003
Cape Town — The Competition Commission has ruled that drug companies GlaxoSmithKline and Boehringer Ingelheim abused their dominant market positions in respect of antiretroviral medicines, and has decided to refer the case to the Competition Tribunal.
The move comes as drug companies come under increasing pressure from AIDS activists worldwide over the price of their patented AIDS medicines, and their limited efforts to issue licences for the manufacture of cheaper generic copies.
"Our investigation revealed that each of the firms has refused to license their patents to generic manufacturers in return for a reasonable royalty," said commissioner Menzi Simelane.
"We believe this is feasible and that consumers will benefit from cheaper generic versions of the drugs concerned . Granting licences will provide for competition between firms and their generic competitors."
The case stems from a complaint brought by a group of AIDS activists, including the Treatment Action Campaign, and union leaders last year. They accused the two firms of excessive pricing of antiretroviral medicines. The latest development adds impetus to their efforts to bring down the price of antiretroviral medicines, particularly in the private sector.
"It's excellent news," said Jonathon Berger, a researcher with AIDS Law Project, which filed the original complaint.
Boehringer holds the patent for nevirapine, marketed as Viramune. Glaxo holds the patents on AZT (branded Retrovir), lamivudine (3TC), and the two combined (combivir). Both firms issued voluntary licences to JSE-listed Aspen Pharmacare to manufacture generics, but have stipulated the drugs may be used only in the public sector.
However, Glaxo announced yesterday it had extended Aspen's licence to include manufacture for the private sector, and sub-Saharan Africa. Production has not yet started, as Aspen still needs the medicines to be registered by the Medicines Control Council.
Glaxo spokeswoman Vicki Ehrich said the commission's announcement had taken the firm by surprise, as the commission had previously given Glaxo an undertaking that it would not refer the matter to the tribunal while Glaxo was in negotiation with the complainants.
"We do not believe there is any basis for an allegation of excessive pricing, because we have the lowest prices in the private sector (in SA) of anywhere in the world," she said.
The commission plans to recommend that the tribunal order Glaxo and Boehringer to provide information on its patents in return for "reasonable" royalties, in effect ordering the two firms to issue additional licences for the manufacture of generic antiretrovirals. It is also recommending the firms be fined 10% of their annual turnover from antiretroviral drugs in SA for every year they were in contravention of the Competition Act.
"We don't understand the conclusions they've reached," said Boehringer spokesman Kevin McKenna. "A similar complaint was lodged against us two years ago by Cipla-Medpro, and in August we were informed that we were not a dominant company and were not guilty of excessive pricing of viramune."
Zolile Ntukwana, the commission's compliance division manager, said both parties were entitled to begin negotiations for a consent order similar to an out-of-court settlement.
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