Important note: Information in this article was accurate in 2002. The state of the art may have changed since the publication date.
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Wall Street Journal - July 1, 2002
Gautam Naik, Staff Reporter
The lawsuit, which is expected to be filed in the U.S. District Court for the Central District of California, Western Division, alleges that Glaxo's prices for big-selling AIDS drugs such as Ziagen, Epivir, AZT and Retrovir "exorbitantly exceed its costs of licensing, manufacturing and distributing," according to a draft copy of the lawsuit. These prices, the lawsuit says, "present a formidable obstacle for proper treatment of the AIDS epidemic in the U.S."
A Glaxo spokesman said: "We believe we have valid patents for our products."
The lawsuit marks the latest onslaught by AIDS activists against big drug makers over the high price of AIDS medicines. It comes just as experts are set to gather next week at the 14th International AIDS Conference in Barcelona, Spain. Faced with international pressure, Glaxo and other makers of AIDS drugs have cut prices by 90% or more to many poor nations. Now, AIDS activists are aggressively pursuing similar price cuts for the U.S. market.
AHF is the largest nongovernment provider of health-care services for U.S. patients with HIV/AIDS. The Los Angeles group operates AIDS clinics and pharmacies that provide AIDS drugs to patients in the U.S., Uganda and South Africa.
Glaxo is one of the biggest manufacturers of AIDS medicines. Last year the British company said sales of its AIDS drugs rose 14% to ú1.15 billion ($1.76 billion). Activists have especially targeted the British company because prices of some of its AIDS drugs in developing countries are twice the prices charged by rivals such as Merck & Co. and Bristol Myers-Squibb Co. In the past, Glaxo has said it makes no profits on those sales and its prices reflect the cost of manufacturing.
AHF said it would seek triple damages of $66 million from Glaxo, based on drug purchases by the foundation from Glaxo totaling $22 million over about four years. The group said it has recently tried to persuade Glaxo to lower its prices in the U.S., but the negotiations faltered. AHF said it also asked Glaxo to fund a program to provide free AIDS drugs in Uganda, South Africa and elsewhere, but the company declined.
AHF is taking aim at patent and pricing issues concerning Glaxo's main AIDS medicines, AZT, Epivir and Ziagen, which are also used in various drug combinations. In the case of AZT, for example, the lawsuit claims that the patent held by the company for using AZT to treat HIV should be invalidated because of its "obviousness."
AHF also claims that all three drugs were developed with significant amounts of U.S. government funding and, under U.S. law, should be sold at more "reasonable" rates.
Glaxo "didn't discover these drugs, and they are charging too much money for them," said Michael Weinstein, founder and president of the foundation. After facing criticism over its drug-pricing policies, the company has made an extra effort to improve that image. For example, it recently said it would freeze wholesale prices for its HIV and AIDS drugs until January 2004. It already provides HIV drugs at no cost to low-income people who lack prescription-drug coverage in the U.S.
Write to Gautam Naik at gautam.naik@wsj.com
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