GSK to cut price of drugs in Third World and open doors for researchers

Published on Saturday 14 February 2009 18:43

ONE OF the world's biggest pharmaceutical firms has announced it will slash drug prices for developing countries and share its research in a bid to speed up new treatments.

Andrew Witty, the new head of GlaxoSmithKline (GSK), said he has made the move because he believes pharmaceutical companies have a duty to help the poor.

Witty plans to cut prices by 75% or more on medicines for the poorest countries, give back profits to be spent on hospitals and clinics, and share knowledge about potential drugs that are protected by patents.

The measures represent significant changes to the way the drug industry works and Witty has challenged others to follow suit. Pressure on the drugs industry to provide cheaper medicines to the Third World has been growing in the past decade, triggered by the Aids epidemic.

Drugs companies have been repeatedly criticised for failing to drop their prices for HIV drugs while millions died in Africa and Asia. But yesterday Witty said: "We work like crazy to come up with the next great medicine, knowing that it's likely to get used an awful lot in developed countries, but we could do something for developing countries.

"I think it's absolutely the kind of thing large global companies need to be demonstrating, that they've got a more balanced view of the world than short-term returns."

Witty added that GSK, the second biggest pharmaceutical company in the world, will cut its prices in the 50 least developed countries to no more than 25% of the expense in the UK and US.

One example might be its HIV drug Telzir, which costs about 3,755 per patient per year in the UK. The equivalent cost to the Third World might be around 939.

A fifth of the firm's profits in the developing world will be reinvested in hospitals and clinics. But one of the most groundbreaking moves will be to put any chemicals or processes over which it has intellectual property rights that are relevant to finding drugs for neglected diseases into a 'patent pool' so they can be explored by other researchers.

IP rights have traditionally been fiercely protected by the pharmaceutical industry. Witty added: "What I really hope this does is stimulate people to start engaging with us."

But it is unlikely the move will prove too damaging to GSK's 7.8bn annual profits. Similar moves in sharing developments in computer software have shown that companies can still ensure commercial success, for example by charging other firms for licences or by ensuring that they are kept informed of others' progress.

Witty's announcement has been welcomed by charities.

Rohit Malpani, from Oxfam, said: "He is breaking the mould in validating the concept of patent pools. It's a big step forward.

"It is welcome that he is inviting other companies to take this on and have a race to the top instead of a race to the bottom."