Mammoth Pension Fund Holds Nearly US$1 Billion in Stock: California Pension System -CalPERS- to Ask Glaxo to Defend AIDS Drug Pricing: CalPERS Responds to Plea from AIDS Healthcare Foundation Advocates

Business Wire - December 17, 2002

SACRAMENTO, Calif.--(BUSINESS WIRE)--Dec. 17, 2002-- The mammoth CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEM (CalPERS) -- which is estimated to hold nearly $1 billion in GLAXOSMITHKLINE (GSK) shares -- yesterday vowed to investigate the impact GSK's drug pricing policies on retirees, the state and people in need of AIDS medications. The CalPERS investment committee acted in response to a plea from AIDS advocates that it assist them in trying to get specific answers from Glaxo officials justifying its prices on its life-saving AIDS drug AZT (Retrovir(R) or zidovudine) -- a drug which GSK didn't even invent -- yet now charges 32 times the cost of manufacturing.

"We don't believe California employees would support the price of Glaxo's profits, a price counted daily in lost human lives," said Ged Kenslea, spokesman for AIDS HEALTHCARE FOUNDATION (AHF). "GSK did not invent the key AIDS drugs it markets, yet it refuses to make them affordable to both Africans and Americans whose lives depend on those drugs. We're heartened CalPERS is willing to ask GSK for hard numbers on the pricing for AZT, a drug that was originally invented in the 1960s as a possible cancer fighting agent, and therefore should have virtually no research and development costs to recoup. If Glaxo fails to comply, we will urge CalPERS and other investors to divest."

In testimony at a previous investment committee meeting earlier this year, Kenslea had asked CalPERS to consider divesting from GSK in light of 8,500 AIDS deaths daily among those who cannot afford life-saving medications. To date, Glaxo has been unable or unwilling to justify its AIDS drug pricing publicly.

At the CalPERS investment committee meeting yesterday, Kenslea and AIDS activist Miki Jackson testified that GSK's prices are not only prohibiting the poor in Africa from benefiting, but that domestic pricing of GSK's AIDS drugs must also drop: "With a $24 billion deficit, California is facing the very real threat of waiting lines for our own AIDS drug assistance program," said Jackson. "GSK refuses to rollback its prices, and in fact is actually increasing prices on AIDS drugs like AZT, which was invented in 1964!"

Kenslea thanked the investment board for its motion yesterday to investigate the impact of GSK's pricing on retirees, Californians and those who depend on life-saving medications and vowed to work with CalPERS staff to help CalPERS pursue the information from Glaxo so the investment committee can make a more informed investment decision on this holding.

CalPERS, the nation's second largest pension fund, has had a distinguished history trying to balance its fiduciary responsibility with socially responsible investments. It was among the first funds to divest holdings to combat apartheid in South Africa; more recently it divested holdings in several Southeast Asian countries in response to alleged human rights abuses. At yesterday's meeting, retiring investment committee member Kathleen Connell (who steps down as California State Controller and a CalPERS committee member in January) noted that it had been an honor for her to serve on a board so committed to investing in an "ethically prudent manner."

"CalPERS leadership has expressed sensitivity to this issue and we thank them for their interest and concern," said AHF's Kenslea. "The next step, we believe, is divestiture from GlaxoSmithKline."

CONTACT: AIDS Healthcare Foundation

Ged Kenslea, 323/860-5225 (Communications Director)

Cesar Portillo, 323/860-5202 (Chief of Public Affairs)

SOURCE: AIDS Healthcare Foundation

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