TAC NEWS SERVICE, 19 September 2002 * Statement by TAC on Excessive Pricing Complaint to Competition Commission * Questions and Answers about Complaint (The complaint, its associated affidavits and this email will be available on the TAC website, www.tac.org.za by 17:00 on Friday.) WE WILL SAVE LIVES AND END DRUG COMPANY PROFITEERING TAC STATEMENT ON EXCESSIVE PRICING COMPLAINT TO COMPETITION COMMISSION HAZEL TAU - 1st COMPLAINANT Hazel Tau, a woman living with HIV/AIDS in Soweto and TAC member says: "Since April 2002, I have not been so well. I have had an increasing number of opportunistic infections including thrush and a lung infection, which was suspected to be pneumonia. My CD4 has dropped to 168. I have also lost a lot of weight. I am aware that I need to go onto treatment now that my CD4 has dropped below 200. But I cannot afford to pay even R1000.00 a month for this. If the prices of ARVs were reduced to between R400.00 to R500.00 a month I could afford treatment on my present salary. I am aware that I will have to sacrifice some things, but I know that this treatment will help me and keep me healthy." SINDISWA GODWANA - 3rd COMPLAINANT Sindiswa Godwana a 32 year old mother of two children lives with HIV/AIDS. Sindiswa was lucky to join a clinical trial in 2001. However, the trial will only last for three years. She says: "Because of the drugs that I am taking I am now healthier than before. My CD4 count is now over 400 and my viral load is now below 50. I am very happy that this has happened because before I started taking the drugs I had vaginal thrush twice. Since the trial, I have had no infections. I no longer feel so tired and I am strong. I can work and help my family and help other people living with HIV who come to the TAC offices for help. When the trial ends next year my fear is that I will not get the drugs anymore and that I will get infections again and my CD4 count will be low again. I cannot afford to pay for these drugs and I do not to want to get sick. I would like the pharmaceutical companies to lower their prices so that people like me can buy these drugs or get these drugsin clinics." ZWELINZIMA VAVI COSATU GENERAL-SECRETARY - 9th COMPLAINANT "COSATU is concerned about the high cost of drugs to treat AIDS relative to the incomes of working people. Almost 40% of all working people earn under R1000 a month, while 25% earn between R1000 and R2500. The majority of people with HIV in South Africa cannot afford the treatment they need. In this context, the high cost of medical care has imposed an unacceptable burden on our people. According to Statistics South Africa the costs of medical care have risen more rapidly than the Consumer Price Index. One reason for the rapid increase in health costs has been the medical costs associated with the HIV epidemic. Cosatu will campaign to save lives, reduce the prices of ARVs and make all medicines affordable." DR. STEVE ANDREWS - 7th COMPLAINANT "It is morally debilitating to see many of my patients suffer needlessly because they cannot afford to pay for drugs that could save and enhance their lives at the prices that are currently being charged. As a doctor, I realise that I cannot cure, but that I can care. With HIV/AIDS I have witnessed breadwinners removed from their families, plunging people further into poverty; I have witnessed families torn apart by this epidemic. I have witnessed many children dying because they do not have access to treatment, because their parents cannot afford to pay for them at the current prices. I know that the tools to stop or at least substantially reduce these eventualities are within my grasp but that they are restrained by the financial and political impediments imposed by the rich on the poor." DR FRANCOIS VENTER 8th COMPLAINANT "As a medical practitioner it is disconcerting to have to see patients stopping treatment because of financial problems. This is especially so after we get them to adhere to taking their drugs. These are patients who sacrificed a lot to pay for their drugs but because of financial circumstances they have to stop treatment. This is very frustrating because HIV/AIDS is a chronic manageable disease. Every week I see mothers who but for the unaffordability of one other drug would be better. This is also very demoralising. If patients lose their jobs or their access to sponsored treatment stops, continuation with treatment is difficult because of the high prices charged for ARVs." SISTER SUE ROBERTS - 5th COMPLAINANT "I have been a nurse for many years and the burden that HIV is putting on hospitals is making it very difficult for nurses to function effectively. This is because of the workload and the increased number of patients brought on by the HIV/AIDS epidemic. I cannot emphasise sufficiently the crucial importance of making the ARVs available generally both through public health services and through private chemists (on prescription) at affordable prices. It is impossible to exaggerate the detriment to consumers and to society as a whole of excessive prices charged for these drugs by the companies holding the exclusive rights to manufacture and distribute them. *********************** The Competition Commission Complaint: Questions and Answers 1.What is the Competition Commission complaint? COSATU, the TAC, CEPPWAWU, Hazel Tau, Nontsikelelo Zwedala, Sindiswa Godwana, Sue Roberts, Isaac Skosana, William Mmbara, Steve Andrews and Francois Venter have lodged a complaint with the Competition Commission regarding the excessive pricing of antiretroviral medicines by GlaxoSmithKline and Boehringer Ingelheim. 2.What is the Competition Commission? The Competition Commission is an independent body. Its job is to ensure that companies compete fairly in the market and where companies dominate a particular market, that they do not abuse their powerful position. 3. Is the Competition Commission a Court? No. However, when a complaint is lodged with the Commission, it investigates whether the complaint makes a strong case. If the Commission finds that a strong case has been made, then the commissioner (the head of the Competition Commission) refers the complaint to the Competition Tribunal which adjudicates the matter. Decisions taken by the Competition Tribunal can be appealed to the Competition Appeal Court. The law pertaining to the Competition Commission, the Competition Tribunal and the Competition Appeal Court is the Competition Act 89 of 1998. 4.What is the complaint about? The complaint charges that GlaxoSmithKline (GSK) and Boehringer Ingelheim (BI) are charging excessive prices on the following life-saving antiretroviral medicines: AZT (manufactured by GSK under the brand-name Retrovir) Lamivudine (manufactured by GSK under the brand-name 3TC) AZT and Lamivudine in combination (manufactured by GSK under the brand-name Combivir) Nevirapine (manufactured by BI under the brand-name Viramune) The Competition Commission considers a price to be excessive if it is higher than one that is reasonably related to the economic value of the product. 5.What evidence does the complaint present that shows that excessive prices are being charged for these medicines? The complaint compares the prices of these four patented medicines with generic prices available from elsewhere in the world. The prices of these patented medicines are far in excess of the generic prices, even when allowance is made for research and development, higher profits, licensing fees and the incentive to develop new drugs. Detailed Explanation of Evidence of Excessive Pricing ----------------------------------------------------- The complaint calculates an economic value for the four medicines. For each product the lowest priced generic version approved by the World Health Organisation is assumed to be the cost of manufacturing the drug. Since generic companies also make a profit, this is obviously an overestimate of the cost of manufacturing. Then the cost of research and development (and where applicable, licensing fees) are added on to the price. Finally the average profit of the pharmaceutical industry, which is higher than any industry in the world, is added on to the price. This is then considered an estimated economic value of the medicine, though it is far in excess of a fair price. This calculation can be summarised as follows: ECONOMIC VALUE 3D LOWEST PRICED GENERIC + COST OF R&D + PROFIT The economic value is then compared to the price at which the drug is sold by the pharmaceutical company in the South African private sector. Doing this yields the following results: A 300mg pill of AZT is 2.58 times the economic value. A 150mg pill of Lamivudine is 4.01 times the economic value. A combined pill with 300mg AZT and 150mg Lamivudine is 2.24 times the economic value. A 200mg Nevirapine pill is 1.7 times the economic value. The syrup form of AZT (used for treating children) is 2.27 times the economic value. The syrup form of Lamivudine is 1.97 times the economic value. The following table compares the yearly prices of the medicines that are the subject of the complaint. [ONLY AVAILABLE IN THE ONLINE VERSION OF THIS DOCUMENT WHICH CAN BE DOWNLOADED FROM www.tac.org.za] 6.Why does the complaint calculate such a generous economic value? The pharmaceutical companies do not disclose their manufacturing costs. It was felt that if a very generous economic value was calculated and the brand-name prices substantially exceeded it, then it would demonstrate to the Competition Commission the level of profiteering of the pharmaceutical industry. 7.Does the complaint pertain to the private and public sector? From a legal perspective, the excessive pricing pertains to the private sector, however the associated public campaign that will be launched by the TAC and its allies will have repercussions for both sectors. Furthermore, many people who use the public sector buy their medicines in the private sec tor. Some of the supporting affidavits in the complaint are written by doctors and nurses in the public sector who want their patients to be able to access antiretroviral medicines, even if it is through the private sector. It is important to remember that antiretroviral medicines are not generally available in the public sector. 8.What relief does the complaint ask for? The complaint requests the Competition Commission to request the following relief from the Competition Tribunal: Order GSK and BI to stop their excessive pricing practices. Declare that GSK and BI have conducted a prohibitive practice. If this is done, the companies can be sued by people who suffered loss as a result of past excessive pricing of the medicines. Fine GSK and BI up to 10% of their annual South African turnover. This relief is explicitly provided for in the Competition Act. 9.What would be an adequate response from GSK and BI be to the complaint? GSK and BI should issue non-exclusive voluntary licenses on the medicines that are the subject of the complaint on a 4 or 5% royalty fee basis. Government could also resolve this matter quickly by using its powers under the Patents Act to obtain compulsory licenses. 10.What is a non-exclusive voluntary license? In this context, it would be where a pharmaceutical company that holds a patent on a drug allows any manufacturer who produces a safe and effective generic version to produce and sell the medicine to both the private and public sectors. This should be done on a royalty-fee basis: i.e. the patent-holder receives 4 or 5% of the sales on the generic versions. 11.What is a compulsory license? In this context, it would be where a court orders a pharmaceutical company that holds a patent on a drug to allow other manufacturers to sell and produce safe and effective generic versions of the medicine. The patent-holder would receive some form of compensation. 12.Did the TAC try to negotiate with the pharmaceutical companies before lodging the complaint? Since its inception in 1998, the TAC has campaigned for the pharmaceutical industry to lower medicine prices and issue non-exclusive voluntary licenses. On many occasions we have negotiated with the industry or attempted to do so. We will continue negotiating and engaging with the pharmaceutical companies. 13.Who are the complainants and what are they saying? Hazel Tau. Hazel lives openly with HIV. Her affidavit explains how she has become sick and needs antiretroviral medicines. She earns a salary but cannot afford the medicines at their current prices. She could afford them if they were available for R400 to R500 per month. Hazel is the first complainant. Nontsikelelo Zwedala. Nontsikelelo lives openly with HIV. She lives in a squatter camp in Phillipi township. Her affidavit tells how she became very ill with AIDS, but was fortunate to be able to obtain antiretroviral treatment via a trial. Her health has since recovered remarkably. She will not be able to afford her medicines once retroviral programme. Sindiswa Godwana. Sindiswa lives openly with HIV. Like Nontisikelelo she also managed to access antiretroviral medicines through a trial. However, when her post-trial period ends she does not know how she will be able to access antiretroviral medicines. Isaac Skosana. Isaac lives openly with HIV. His affidavit describes how he is becoming very sick. He needs antiretroviral treatment but he cannot afford to pay for a regimen that would be appropriate for him. He might be able to afford the drugs if they were between R400 to R500 per month. Sister Sue Roberts. Sue is a nurse at Helen Joseph Hospital. She sees many patients with HIV who need antiretroviral medicines. Her affidavit explains how the high prices of antiretrovirals render them inaccessible for most of her patients. Furthermore, some of her patients on medical aid are limited from buying the regimen appropriate for them or cannot switch to a different more expensive regimen. She describes the awful situation nurses in the public sector have to face everyday because their patients cannot afford to pay for the medicines they need. Dr. William Mmbara. William is a doctor working in Hillbrow for the Rhema Christian Service Foundation, an NGO. William states that he wants to treat his patients with antiretroviral medicines. However, he explains that most of his patients cannot access them because they are too expensive. Nor does his NGO does not have the money to provide antiretrovirals for their patients. Dr. Steve Andrews. Steve is a doctor practising at the Brooklyn Medical Centre in Cape Town. Steve explains that many of his patients who take antiretroviral treatment have do so through clinical trials. Many on medical schemes began taking sub-optimal regimens because this is all their medical aids would cover. Currently about 35% of his patients require antiretroviral medicines but cannot afford them. Dr. Francois Venter. Francois is a doctor working at the Johannesburg General Hospital HIV clinic. He explains that most of his patients have to take a sub-optimal antiretroviral regimen with many side effects, because it is the cheapest and they cannot afford to pay more. He explains how if the prices were not an issue he would advise many of his patients to take AZT, Lamivudine and either Efavirenz or Nevirapine. He describes the frustration of seeing patients having to stop their treatment because they cannot afford to continue paying for them. Congress of South African Trade Unions (COSATU). COSATU describe in detail, citing many facts and figures, how most South African workers cannot afford access to antiretroviral medicines at their current prices. It describes the devastating effects on them and their families. Chemical, Energy, Paper, Printing, Wood and Allied Workers' Union (CEPPWAWU). CEPPAWU's affidavit affirms the facts of the COSATU affidavit about the way in which workers are affected by lack of access to antiretroviral (ARV) treatment. Treatment Action Campaign (TAC). The TAC describes their interest in the case and their efforts to engage and negotiate with the respondents. ENDS Zackie Achmat South Africa Email: zackie@pixie.co.za *---* A posting from AF-AIDS (af-aids@healthdev.net) To submit a posting, send to af-aids@healthdev.net For anonymous postings, add the word "anon" to the subject line To join, send a blank message to join-af-aids@healthdev.net To leave send a blank email to leave-af-aids@healthdev.net You are currently subscribed to af-aids as: kate@fahamu.org Archives before 19 September 2001: http://www.hivnet.ch:8000/africa/af-aids Archives after 19 September 2001: http://archives.healthdev.net/af-aids *********** The forum is moderated by the Health & Development Networks Moderation Team (HDN, www.hdnet.org) on behalf of the AF-AIDS Policy and Steering Committee (HST, HDN & SAfAIDS) with support from Fondation du Present (FdP) and technical support from Health Systems Trust (HST). The views expressed in this forum do not necessarily reflect those of HDN, HST, SAfAIDS or FdP. 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