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2001: Drugs firms withdraw from Aids case
The world's biggest pharmaceutical companies have backed out of a landmark court battle over cheap, non-branded anti-Aids drugs.

The 39 firms had brought legal action to fight legislation which would allow generic versions of their patented drugs being made in or imported to South Africa.

They argued such a move would threaten future Aids research.

However, the South African Government argued that it desperately needed cheap medication to help the 4.7 million South Africans infected with HIV or Aids.

Under rules laid down by the World Trade Organisation, governments are allowed to issue compulsory licenses that allow generic drugs to be manufactured, or allow "parallel importation" of cheaper drugs.

But drug companies challenged this in their lawsuit.

However, the case turned into a public relations disaster for the pharmaceutical industry which was accused of putting profit before the lives of millions of people in the developing world.

The firms involved in the court action did not impose any conditions for dropping the case.

Legal costs

However, a spokesman for GlaxoSmithKline said South Africa had made a commitment to respect international law on drugs patents.

During the hearing, which lasted less than a minute, the companies also said they would meet the South African Government's legal costs.

The new settlement could become a blueprint for future relations between pharmaceutical companies and governments in the developing world.

About two thirds of the 40 million HIV positive people in the world are Africans.

President Thabo Mbeki's administration has not yet said whether it will import retroviral drugs, which help prevent HIV turning into Aids.

Mr Mbeki has caused controversy in the past by insisting the HIV virus is not the primary cause of Aids - a view which runs contrary to mainstream medical opinion.

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South African activists celebrate outside court
Activists were overjoyed at the news


In Context
After dropping the case, pharmaceutical companies agreed to sell Aids drugs at cost price in developing countries - a discount of up to 90%.

In October 2001 GlaxoSmithKline gave permission for low-cost, generic versions of its anti-Aids drugs to be manufactured by a South African drugs company.

But the company is not allowed to profit from the sale of the drugs or export them to any other African country.

However, the supply of cheaper drugs has led to an illegal trade, diverting the drugs back into Europe for resale at a higher price.

In February 2005 GlaxoSmithKline announced a new initiative to supply the cheaper drugs with a different-coloured coating and identification to try to reduce the potential for smuggling.

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