^{Posted on December 1, 2001}

Glaxo Attempts to Block Access To Generic AIDS Drugs in Ghana

Mark Schoofs
Staff Reporter, The Wall Street Journal

In the midst of the wrenching international debate over how to get expensive HIV drugs into Africa, pharmaceutical giant Glaxo Wellcome PLC has set off a new controversy by trying to block access to less-costly generic versions of its top-selling AIDS medicine.

In letters to a drug distributor in Ghana and an Indian generic-drug maker, Glaxo said sales of generic versions of its drug, Combivir, in Ghana would be illegal because they would be violating company patents. As a result, the Indian company, Cipla Ltd. of Bombay, has stopped selling its low-cost version in Ghana, a small country in west Africa. However, officials at the multilateral African agency that issued the Glaxo patents in question said they are either invalid in Ghana or don't apply.

Glaxo's actions are "wrong," said Christopher Kiige, head patent examiner of the African Regional Industrial Property Organization. He says: "If [Glaxo officials] went to court they would lose." A Glaxo spokesman in London says the drug maker believes its drug is patent-protected in Ghana but declined to provide an explanation or legal documentation.

This clash may seem like a tiny dust-up in a far-off minor market. But the conflict is the latest skirmish in one of the most contentious issues emerging in sub-Saharan Africa, where 25 million people are infected with HIV, but only a tiny proportion have access to life-prolonging HIV drug cocktails.

During the past year, and under intense pressure, five major drug makers, including Glaxo, have agreedÊ substantially slash prices of their AIDS drugs in Africa. But to date, concrete pricing agreements have been struck with only one country, Senegal. A second agreement is expected to be announced with Uganda Friday, according to people familiar with talks between Uganda and the drug makers.

Glaxo has offered to sell Combivir in Senegal and Uganda for $2 a day, far less than the drug sells for in the U.S. The company said it has offered the same discount to Ghana. Cipla sold its generic version in Ghana for about $1.74 a day.

The five drug companies, which also include Bristol-Myers Squibb Co., Merck & Co., Boehringer Ingelheim GmbH of Germany and Roche Holding Ltd. of Switzerland, offered to discount their prices in part because they fear African nations will begin buying generic copies of their drugs produced by Cipla in India and by other companies in Thailand and Brazil. In recent months, several African nations have begun exploring the option of doing
just that. But a debate is now raging as to whether such actions would violate the companies' patents and international intellectual- property agreements.

The pharmaceutical companies argue that without intellectual-property protection they would have no incentive to invest the millions required to discover and develop new drugs. Ghana may represent only a sliver of Glaxo's revenue, "but where do you draw the line?" asks Martin Sutton, a Glaxo spokesman. In particular, Glaxo is believed to be worried that if a small country such as Ghana violates patent protection, that could open a
Pandora's box of violations in larger markets, such as South Africa, Latin America and parts of southeast Asia where AIDS is also raging.

"It's the precedent aspect," says Peter Young, chief executive officer of the biotech company AlphaVax Inc. of Durham, N.C., and a former Glaxo executive. "The companies are sensitive about a pattern starting to develop where countries use generics."

Indeed, the product in question is becoming increasingly valuable to Glaxo. Combivir is a combination of two principal AIDS drugs, AZT and 3TC. Total world-wide sales of AZT, 3TC, and Combivir are expected to top $1.1Ê billion this year, up from about $775 million in 1997, according to IMS Health, a drug marketing-research firm in Westport, Conn.

But as the AIDS pandemic is killing many millions of people in the prime of their lives and producing millions of orphans, public-health officials and grass-roots activists are increasingly advocating that African nations begin buying generic drugs, even if it means that intellectual-property rights are violated.

In South Africa, the Treatment Action Campaign, an AIDS advocacy group, recently imported a generic version of Pfizer Inc.'s expensive antifungal drug, Diflucan, which treats two opportunistic illnesses common in AIDS patients. And this week, the South African government granted a legal exemption to the group, allowing it to continue importing the drug. The battle in Ghana is being watched closely elsewhere partly because it involves Cipla, one of the world's major producers of generic AIDS
medicines. Cipla's stature, and its ability to market its drugs throughout Africa, may be why Glaxo has moved so aggressively in Ghana, according to industry analysts. Glaxo says it is simply protecting patents in a routine fashion.

Several months ago, Healthcare Ltd., a pharmaceutical distributor in Accra, Ghana, purchased a small consignment of Duovir, Cipla's version ofÊ Glaxo's Combivir. Soon afterward, Glaxo sent letters to Cipla and Healthcare charging that "importation of Duovir into Ghana by Cipla or its affiliates represents an infringement of our company's exclusive patent rights." As a result, Cipla stopped selling Duovir in Ghana, according to Amar Lulla, CEO of Cipla. Healthcare, the Ghana distributor, said boxes of Duovir remain unopened in its offices and that no patients have received any of the drug.

In its letters, Glaxo said four patents issued by the African Regional Industrial Property Organization in Harare, Zimbabwe, provide the company exclusive marketing rights to its drug in Ghana. But three of those patents "are not valid in Ghana," says ARIPO's Mr. Kiige. The fourth patent covers a specific formulation of the drug, but Cipla said that patent doesn't pertain to its product.

Mr. Kiige said the three patents are invalid because at the time they were issued Ghana didn't grant patent protection to pharmaceuticals. Indeed, Ghana had filed legal documents, obtained by The Wall Street Journal, that clearly state the country had rejected the three patents. Ghana's registrar of patents declined to comment. While the dispute is continuing, neither Cipla nor any other generic drug maker is expected to provide generic AIDS drugs to Ghana.

"Glaxo has called out the dogs," says Toby Kasper, an activist in Capetown, South Africa, with Doctors Without Borders, which has been fighting for lower-priced drugs throughout the continent. Mr. Kasper says Glaxo's action "goes a long way to explaining why there is so much skepticism in the developing world towards the negotiations" between the five drug makers and African nations.