Important note: Information in this article was accurate in 2003. The state of the art may have changed since the publication date.

Reuters NewMedia - Thursday October 16, 2003
Wambui Chege and Jodie Ginsberg

In a ruling hailed by activists, the Competition Commission said it would recommend the companies be forced to allow generic firms to copy their anti-retroviral (ARV) drugs, in return for royalties, and that they be fined a portion of past local sales.

South Africa has more people living with HIV/AIDS than any other country in the world -- an estimated 5.3 million, equivalent to 13 percent of the world's infected.

"We welcome the ruling. For us, the main objective is we get affordable access of ARVs to the people who most need them.

We're happy that drug companies are being held accountable," said Fatima Hassan, lawyer with the AIDS Law Project, which filed the complaint.

The investigatory commission will refer its findings to the Competition Tribunal, which has powers of enforcement.

Despite steep price cuts for poor countries in recent years and competition from generics, modern therapy remains out of reach for the vast majority of sufferers in Africa.

Drug industry figures show cut-price HIV/AIDS medicines from six companies were getting to only 76,000 Africans in June this year. This remains a drop in the ocean when set against the need for treatment in sub-Saharan Africa, home to 30 million of the 42 million people infected with HIV worldwide.

The commission issued its decision just as GSK, the world's largest manufacturer of HIV/AIDS drugs, announced a further cut in the price of its leading Combivir AIDS treatment in poor countries to 65 U.S. cents a day from 90 cents.

Over half the people living in sub-Saharan Africa live on less than $1 a day.

PENALTIES

In its ruling Thursday, the commission said it had found that GSK and Boehringer had refused to license their patents to generic manufacturers in return for a reasonable royalty.

"We believe that this is feasible and that consumers will benefit from cheaper generic versions of the drugs concerned," the commission said in a statement. "We further believe that granting licenses would provide for competition between firms and their generic competitors."

In addition, the commission recommended a penalty of 10 percent of annual sales of the firms' anti-retroviral drugs in South Africa for each year they were found to have violated the Competition Act of 1998.

GSK sales of HIV/AIDS drugs totaled some $2.5 billion in 2002, representing eight percent of group pharmaceutical sales. But industry analysts estimate sales of anti-retrovirals to the developing world accounted for less than 40 million pounds ($67 million).

Germany's Boehringer, whose nevirapine drug is used widely to block transmission of the virus from mother to child, said it was considering the finding.

"We are carefully studying the reasoning that they have used in order to consider us a dominant company, when in August of this year they reached a totally different decision about the same product and a similar complaint," a Boehringer spokesman in Johannesburg told Reuters.

A company spokeswoman in Frankfurt said the firm was exploring further options to widen access to medicines. "Among those options, voluntary licenses constitute a component, bearing in mind proper safety monitoring is ensured," she said.

"We have reasonable pricing -- our prices are low as they are now," she said.

Boehringer has already offered South Africa's Aspen Pharmacare a voluntary license that entitles Aspen to deliver nevirapine to 13 sub-Saharan countries. The royalties on the drug sales go to a healthcare program.

GSK said it was still in discussions with the commission.

If the tribunal upholds the commission's recommendations, the fine would go to the government, commission manager Zolile Ntukwana told Reuters.

(Additional reporting by Ben Hirschler in London and Sitaraman Shankar in Frankfurt)

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