GlaxoSmithKline to lower drug prices in poorer countries

Capsules

GlaxoSmithKline is taking action to make medicines more affordable in developing countries, including waiving patent protection for new drugs in the world’s poorest nations.

Britain’s biggest drugmaker said it would not file patents for new medicines in the poorest countries, such as Afghanistan, Rwanda and Cambodia, allowing cheaper generic versions to come on the market without the threat of legal action.

GSK’s chief executive, Sir Andrew Witty, said the company was already doing this in some countries, but wanted to streamline its approach to “recognise the realities of the world”. He said the move would have little effect on the group’s profits.

In lower middle income countries such as Kosovo, Pakistan, Morocco and Ukraine, the drugmaker will offer licences to generic drugmakers for 10 years, in return for a small royalty on sales.

The measures will affect 85 countries, helping more than 2 billion people, and benefit Africa most, according to GSK. Any GSK medicines on the World Health Organisation’s list of essential medicines will be automatically included.

Rohit Malpani, director of policy and advocacy at Médecins Sans Frontières, gave a muted response. He noted that the world’s poorest countries were already exempt from patent protection rules until 2033 under a World Trade Organisation agreement, and added that it did not make commercial sense for the pharmaceutical industry to seek patents in many other developing countries.

He said GSK’s move excluded generic drug producing countries such as India, Brazil and China, as well as many other middle income countries that are struggling to pay for medicines. He argued that it was not clear how it would work in practice, and that it should be up to governments, not companies, to make such decisions.

Speaking from New York before a UN panel meeting on access to medicines, Witty said GSK would adopt a “customised approach” as standards of living rise in developing countries.

He pointed to India, where other pharmaceutical companies have been embroiled in patent disputes with local generic firms. GSK has sought to avoid such disputes by filing only a handful of patents and adopting “Indian-style pricing” starting at five rupees for Calpol and ulcer drug Zinetac.

Witty said the new tiered model on intellectual property was analogous to GSK’s pricing on vaccines. However, the company, along with US group Pfizer, has come under fire from MSF, which has criticised high prices for new vaccines and called on the firms to reduce the price of thepneumococcal conjugate vaccine to $5 a child in developing countries.

The move will be seen as an attempt by Witty to seal his legacy before he stands down from his post next year. Under his leadership, GSK has cut the prices of HIV and other drugs in developing countries.

He has also led the way on opening access to clinical research and stopped controversial sales practices, after a corruption scandal in China in 2013 for which the company was fined £300m.

The rest of the industry has also been moving towards tiered pricing for poorer countries, in response to criticism that many new drugs are too expensive for the developing world. GSK also plans to commit its future cancer therapies – it has about a dozen in development after selling a portfolio to Novartis – to the Medicines Patent Pool. This is a UN-backed initiative through which pharmaceutical companies have been granting licences to generic drugmakers in the developing world to make cheaper drugs for HIV, hepatitis C and tuberculosis. Witty said there was a growing need for affordable cancer treatments in developing countries.

Prof Raymond Hill, visiting professor at Imperial College London, welcomed the move as a “brave and positive step” that sets a “precedent for other major multinational pharma companies to follow”.

He added: “The impact of this move on the treatment of cancer and other diseases in each individual country will depend on whether there is a local adequate healthcare infrastructure that will allow the safe use of powerful new drugs.”

Powered by Guardian.co.ukThis article was written by Julia Kollewe, for The Guardian on Thursday 31st March 2016 18.16 Europe/London

guardian.co.uk © Guardian News and Media Limited 2010

 

JefferiesAnd the Best Place to Work in the global financial markets 2016 is...

Register for Financial Markets News Alerts