GlaxoSmithKline freezes AIDS drugs prices

PHILADELPHIA (June 20, 2002 10:40 p.m. EDT) - Pharmaceutical giant GlaxoSmithKline PLC is freezing the wholesale prices of its HIV and AIDS drugs until January 2004.

The London-based drug maker, which has its U.S. headquarters in Philadelphia and North Carolina, said Thursday that it was implementing the price freeze to address funding shortfalls that states are facing in their AIDS drug assistance programs.

Glaxo cited an April report by the Kaiser Family Foundation, a philanthropic health care organization, stating that AIDS Drug Assistance Programs in 10 states have limited drug access, imposed waiting lists or capped new enrollments in their AIDS treatment programs because of budget shortages.

The state-administered, federally-funded drug assistance programs provide HIV and AIDS drugs to uninsured and underinsured people.

"It's a huge issue and it involves every state," Glaxo spokeswoman Mary Anne Rhyne said. The company makes, among others, the widely used AIDS drugs AZT, 3TC and Combivir. A one-month supply of the drugs can cost several hundred dollars.

Glaxo also said it will continue to provide its HIV drugs at no cost to low-income people who don't have prescription drug coverage.

An analyst said the announcement of the price freeze in the United States was a good move for GlaxoSmithKline, one of several drug companies that have been facing criticism from some lawmakers and AIDS advocacy groups for their pricing policies.

"The pharmaceutical industry has been taking it on the chin, so being more philanthropic and patient-oriented will help improve their public relations face," said Bob Kirby, senior pharmaceutical analyst at Edward Jones in St. Louis.

"There's no room in the market for major price increases to begin with," he said. "What they're giving up in price increases is a down payment on goodwill."

Critics include the AIDS Healthcare Foundation, one of the nation's largest providers of specialized care for HIV patients, which said last month it was barring Glaxo sales representatives from marketing their drugs at its clinics.

The Los Angeles foundation said the move was to protest the company's pricing policies in the developing world, saying they charge twice as much as competitors. GlaxoSmithKline said it makes no profits on those sales, and its prices reflect the expense of manufacturing the drugs.

"We will do our part with this short-term price freeze, and in the long term we hope to do even more in the fight against HIV-AIDS through innovative discoveries and development of newer and better anti-HIV-AIDS medicines," Peter Hare, Glaxo vice president, said in a statement. "However, a sustainable system must be set in place."

Shares of GlaxoSmithKline closed Thursday at $40.85, down 6 cents, on the New York Stock Exchange.