Business Wire - July 1, 2002

AIDS Healthcare Foundation (AHF) -- represented by the law firm of Manatt Phelps & Phillips -- challenges the pharmaceutical giant's right to exclude competition in the markets for its anti-viral prescription drugs AZT, Ziagen and 3TC and to price these drugs well above competitive rates. GlaxoSmithKline (GSK) controls 40% of the lucrative U.S. AIDS drug market.

"They lied to the patent office in the 1980s about discovering AZT's ability to treat AIDS, and in doing so secured exclusive rights to manufacture it," said AHF President Michael Weinstein. "AZT was developed with federal assistance in the 1960s, and the National Institutes of Health tested it for HIV use in the 1980s, but Glaxo secured patents on the substance in the '80s and locked competitors out. They then priced AZT at thirty-two times the cost of manufacture, a practice repeated with every new AIDS drug since then."

Robert D. Becker, a partner at Manatt specializing in patent law, said GSK's predecessor Burroughs Wellcome "made matters worse by asserting the invalid patents against two generic manufacturers in the early '90s to block cheaper generic versions of AZT. Although Burroughs successfully blocked the drugs, the validity of the patents was never decided."

AHF -- a non-profit that provides medical care to over 12,000 uninsured patients and also operates two AIDS clinics in Africa -- is suing for damages created by such artificially high prices. "It's patent piracy that has cost untold numbers their lives and is denying treatment to millions today," said Weinstein, "all in the name of corporate greed.

"How many more lives could we have saved if Glaxo had not gouged the government and AHF for almost 15 years now?" asks Weinstein. "Next week, GSK will spend millions of dollars at the International AIDS Conference in Barcelona to benefit its drugs, and annually spends $500 million to market those drugs. That's enough to provide care to one million people with AIDS in the developing world."

AHF's lawsuit describes a pattern of such abuse by GSK in marketing AIDS drugs. AHF charges that Glaxo's abacavir (Ziagen) and 3TC (lamivudine) are manufactured and sold pursuant to exclusive licenses from the University of Minnesota and Emory University. Despite the fact that the drugs were developed with public assistance, GSK is doing all that it can to gouge the public and price the drugs out of reach.

AHF claims damages as a major purchaser of these medications for its uninsured patients. "Enron's fraud cost jobs and savings," said Weinstein. "GSK's fraud has cost AIDS patients their lives, and has cost the federal and state governments billions of dollars in ill-gotten gain."

AHF in the past has criticized GSK for spending too little on assisting people with AIDS in the developing world, which by Glaxo's own account is about $55 million over the last decade. "That's three-tenths of one-percent of Glaxo's AIDS drug sales," said Weinstein.

In calling for pricing based on cost, Weinstein contrasts the annual price of triple-combination anti-retroviral care charged by GSK, generics manufacturer Cipla, and the Thai government: "Glaxo charges the U.S. government $10,600 annually, Cipla's price is $440, and the Thai's charge $336. Since Glaxo didn't invent or discover AZT, Ziagen or 3TC, what could possibly justify the difference?" In developing nations, Glaxo's so-called preferential prices are also up to double that charged by Bristol Myers Squibb, Merck and Pfizer, said Weinstein.

The suit is being filed in United States Federal Court for Central District of California (Western Division). Manatt attorneys John F. Libby, Robert D. Becker, and Noel S. Cohen represent AHF in this action.

CONTACT: AIDS Healthcare Foundation Cesar Portillo, 323/860-5202, 213/509-3263 (cell) SOURCE: AIDS Healthcare Foundation

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