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Monday, 26 February, 2001, 19:41 GMT
Drugs firms out of the dock
An Indian scientist inspects the cheap anti-AIDS cocktail offered by the drugs firm Cipla.
An Indian scientist inspects Cipla's cheap anti-aids cocktail.
By BBC News Online's Jorn Madslien.

Global drug companies leapt at the chance to save face on Monday when UK chancellor Gordon Brown offered them a solution to their collective image problem.

Chancellor Brown's proposal
Tax break for research and development into tuberculosis, aids and malaria
Tax breaks for donations of drugs
An international purchase fund for medicines and vaccines should be established
Attending an anti child-poverty conference, Mr Brown said he might offer tax breaks to encourage more research into diseases that are widespread in the developing world.

He would also back a new international drugs purchase fund.

The drugs firms praised his initiative and vowed to do their bit to make it happen.

Changes ahead

During recent weeks, the pharmaceutical industry has come under considerable fire for failing to make lifesaving medication and vaccines available for the world's poorest people.

Gordon Brown speaking at the anti child-poverty conference.
Gordon Brown wants to reward drugs firms which help developing states
But all this will now change, according to the world's leading drugs firm GlaxoSmithKline.

"Tax credits for research will allow [us] to allocate resources to more new projects," said chief executive Jean-Pierre Garnier.

GlaxoSmithKline last week vowed to supply Aids drugs to non-governmental organisations in developing countries at discounts of 90% or more.

Generic drugs

Both GlaxoSmithKline and other global pharmaceutical firms have stood accused of indirectly causing death in developing countries because they have been using patent protection to prevent small competitors from making low-cost generic versions of their drugs.

"Pharmaceutical giants should stop using their muscle to force developing countries to stop producing or importing cheap copies of patented drugs," the charity Oxfam said as part of its recently launched "Cut the cost" campaign.

Many developing countries, too poor to pay the full price for essential medicines, have gone for generic products instead.

Earlier this month, the Indian drugs company Cipla offered to sell a three-drug Aids cocktail for a fraction of the price charged by the global drugs firms.

Cipla would offer the drug to developing countries for between $350-600 per patient per year, instead of the $10-15,000 charged for the patent protected version in industrialised countries.

African initiatives

A priest in Kenya who works with orphaned HIV-infected children has called for the government to abandon its strict patent laws and instead back his plans to import the Indian drug.

And South Africa recently announced plans to allow the uncontrolled import or manufacture of cut-price versions of patented Aids drugs.

The South African vision is under attack in the courts by more than 40 drug companies keen to protect their patent rights.

But other countries are already relying heavily on generic drugs, with the Brazilian government having dished out free Aids drugs to 90,000 people.

Glaxo's defence

When GlaxoSmithKline reported profits for 2000 of 5.3bn ($7.7bn), protestors spread fake money and pill bottles in its investor relations building, objecting to its policy of blocking access to generic Aids drugs in Africa, and threatening to dent severely the company's public image.

Protesters against GlaxoSmithKline's policy of blocking access to generic aids drugs in Africa.
Anti-GlaxoSmithKline protesters
At first sight, it may appear to have worked, with the company's critics having won both the practical and the moral arguments.

But the drug group remains unrepentant:

"This crisis has nothing to do with patent protection," Mr Garnier wrote recently in an article in The Guardian newspaper.

Instead, he blamed poverty and the absence of effective health systems for the poor access to medication in the developing world.

Mr Garnier dismissed "simplistic suggestions that drug prices are the main problem" as "frankly irresponsible" and insisted that its prices for Aids drugs in Africa were "at a level with, if not better than, those offered by generic manufacturers".

He also stood up for the system of drug patenting.

"Patent protection fundamentally underpins the continued research and development for new and better medicines for diseases, including those which occur in the developing world".

"Undermining intellectual property rights could have serious consequences for the flow of new treatments and vaccines," he argued.

A very wealthy industry

Mr Garnier's arguments do not sit easy with critics of the drugs industry who argue that since its members are both extremely wealthy and very powerful, they have a moral responsibility to do what they can to help.

Children at a hospice in Rio de Janeiro where generic aids drugs are handed out for free.
The Brazilian government hands out Aids drugs for free
Indeed, the world's top five pharmaceutical groups are worth twice as much as the combined gross domestic product of all the countries in sub-Saharan Africa.

And drug industry lobbyists carry considerable clout when they deal with governments, both in developing and industrialised countries.

Oxfam estimates that only 10% of the industry's global research and development is currently directed towards illnesses that account for 90% of the worldwide disease burden.

The charity remains sceptical about commitments by GlaxoSmithKline and the drugs industry as a whole to providing the poor with cheap medicines.

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See also:

21 Feb 01 | Business
Glaxo offers cheaper Aids drugs
21 Feb 01 | Business
Glaxo meets profit forecast
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