Grassroots activists in South Africa gained an important victory on Thursday over two giant pharmaceutical companies which could open the door to cheap Aids drugs being available across the hard-hit continent.
South Africa's competition commission announced that it had accepted the case, argued by the Treatment Action Campaign and other groups, that the high charges made by GlaxoSmithKline (GSK) and Boehringer Ingelheim for Aids drugs were unfair.
The companies had engaged in restrictive practices by refusing licences to other firms making their own low-cost generic versions of Aids drugs, the commission said.
Those companies, such as Cipla in India, are regularly accused of piracy by the multinationals, which, through the courts and by lobbying friendly governments such as the US in trade negotiations, have vigorously defended the 20-year patents on their drugs.
But the commission's statement yesterday leaves the large companies staring at the potential wreckage of their carefully crafted drug policies in Africa.
GlaxoSmithKline has led the way in cutting the prices of its Aids drugs in Africa. The bombshell dropped on the day GSK announced another reduction, with a fanfare that included an endorsement from Britain's international development secretary, Hilary Benn.
But yesterday's cuts still left GSK's drugs at a higher price than those of the Indian generic companies. The GSK price of the two-drug treatment Combivir will be cut to US$273 a patient a year.
But the generic firms' drugs are still much cheaper. Cipla's version sells at US$197 and Ranbaxy's is priced at US$265. Both treatments are approved by the World Health Organization.
GSK's answer has been to license one generic company -- South Africa's own Aspen -- to produce its drugs, but these are some way off reaching the market and there is no guarantee the prices will be low unless there is competition.
The competition commission is now referring the case to its tribunal for a final decision. But the commission's recommendations are trenchant and will be received with enthusiasm by Aids activists.
Menzi Simelane, a member of the commission, said: "Each of the firms has refused to license their patents to generic manufacturers in return for a reasonable royalty. We believe this is feasible and that consumers will benefit from cheaper generic versions of the drugs. Granting licences will also provide for competition between firms and their generic competitors."
The commission is to ask the tribunal to make an order saying generic firms should be allowed to sell their drugs in South Africa.
It is also to recommend a penalty of 10 percent of the multinationals' annual turnover from Aids drugs sold in South Africa -- for each year the pharmaceuticals are found to have violated the 1998 competition act.
In practice this is not likely to be a substantial fine since so few people have been able to buy the drugs in South Africa.
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