AIDS Healthcare Foundation Announces New South African Legal Complaint Against British Drug Maker GlaxoSmithKline.

Business Editors

WASHINGTON, DC, CAPE TOWN and DURBAN, SOUTH AFRICA--(BUSINESS WIRE)--Jan. 28, 2003--AIDS Healthcare Foundation:

-- Competition Commission Complaint by AIDS Healthcare Foundation Seeks to Require GSK to Allow Licensing and Manufacturing of Life-Saving AIDS Drugs by Generic Makers

-- AHF Announces Action in Durban & Cape Town, South Africa, & Washington, DC

AIDS Healthcare Foundation (AHF), the largest AIDS organization in the United States, today filed a complaint with the Competition Commission of South Africa against British-owned pharmaceutical giant GlaxoSmithKline South Africa (PTY) Ltd. (GSK) over GSK's AIDS drug pricing and policies in that African country. AIDS Healthcare Foundation operates the Ithembalabantu (Zulu for "people's hope") Clinic, a free AIDS treatment clinic in Durban, KwaZuluNatal Province and is registered in South Africa as a non-profit "duly incorporated under Section 21A of the Companies Act of 1973," allowing them standing to file the complaint. AHF operates the Ithembalabantu Clinic in conjunction with the Network of AIDS Communities in South Africa (NetCom SA), a non-governmental organization (NGO) based in Durban.

"Glaxo fiddles while South Africa burns," said Michael Weinstein, AHF's President, from Washington, DC. "We are filing this complaint against GlaxoSmithKline in South Africa today to prevent the ongoing irreparable harm that is occurring both in South Africa and throughout the world. GSK's stranglehold on key AIDS drug patents and their unfettered monopoly pricing on these life-saving medications means thousands of deaths daily. We are asking the Competition Commission to require GSK to allow licensing and manufacturing of these AIDS drugs by generic manufacturers in South Africa."

Glaxo's current worldwide market for its AIDS medications is estimated to be approximately $2 billion dollars annually. GSK controls 40% of the lucrative U.S. AIDS drug market.

"This Competition Complaint filed by AIDS Healthcare Foundation against GSK here in South Africa asserts that, `Excessive pricing by respondents (GSK) creates barriers to access and treatment for HIV/AIDS,'" said Ronald S. Katz, an attorney representing AHF in its related lawsuit against GlaxoSmithKline in the U.S. Katz, with the U.S. law firm, Manatt, Phelps & Phillips, was attending the Centenary Reunion of Rhodes Scholars in Cape Town where he issued his statement. "As in our pending U.S. court case, AHF wants to break down these barriers -- GSK's exorbitant, monopolistic pricing on many medications that weren't even invented or discovered by GSK scientists -- to continue the Foundation's commitment and mission to provide free medical care and anti-retroviral treatment to South Africans and others in need throughout the world."

AHF's Competition Commission Complaint seeks to obtain licensing and manufacturing concessions in South Africa for some of the following GSK AIDS medications which Glaxo has the exclusive right to market and sell there: zidovudine (AZT, branded as Retrovir(R)), lamivudine (branded as 3TC(R)), Abacavir (branded as Ziagen(R)), and Combivir and Trizivir, Glaxo's best selling AIDS drugs that are reformulations of existing AIDS drugs that offer patients the convenience of two-in-one and three-in-one pill dosing and may offer the greatest hope for successful treatment in resource-poor settings throughout the world.

"It is unfortunate that these life-saving drugs are only available to ten percent of the people who require them," said Dr. Elijah Paul Musoke, the physician for AHF's Ithembalabantu Clinic in Durban in his official affidavit accompanying the Competition Commission Complaint. "The reality of the situation is that many of us are frustrated professionally, having to face death at a much more regular frequency than ever before. One would hope that there would never be a time when human life is of less value than financial gain. Believe it or not, that time is now and that place is here."

Mpho Makhathini, an HIV positive South African is currently under care at the Ithembalabantu Clinic where he is on a waiting list to begin anti-retroviral therapy, is the first complainant in the complaint submitted AIDS Healthcare Foundation. The complaint is being submitted under terms of Section 49B2(b) and Section 8(a) of the Competition Act 89 of 1998 to the Competition Commission about the conduct of GlaxoSmithKline. In his affidavit, Makhathini, who is the sole support of his 69-year-old grandmother, stated, "I have been advised by the clinic that I may need to take anti-retrovirals sooner than later. However, the clinic is, at this stage, not able to provide such anti-retroviral drugs as it has been adversely affected by the excessive prices of the anti-retrovirals and has put me on its waiting list. I might add that I have been on such waiting list since February, 2002."

AHF's Ithembalabantu Clinic has close to one hundred patients currently receiving life-saving ARV therapy with an additional several hundred being monitored like Makhathini. Approximately fifty people are on the waiting list with Makhathini to begin anti-retroviral therapy.

AHF in the past has criticized GSK for spending too little on assisting people with AIDS in the developing world, which by Glaxo's own account is about $55 million over the last decade. "That's three-tenths of one-percent of Glaxo's yearly AIDS drug sales," said Weinstein.

Weinstein contrasts the annual price of triple-combination anti-retroviral care charged by GSK, generics manufacturer Cipla, and the government of Thailand: "Glaxo charges the U.S. government $10,600 annually, Cipla's price is $440, and the Thais charge $336. In developing nations, Glaxo's so-called preferential prices are also up to double that charged by Bristol Myers Squibb, Merck and Pfizer," said Weinstein.

In the United States, AIDS Healthcare Foundation's U.S. District Court case challenging the legality of GSK's patent on AZT and other AIDS medications is currently pending. AHF filed a motion for a Preliminary Injunction against Glaxo in mid-December. AHF's U.S. lawsuit against GSK was first filed in July 2002, and amended in October. The anti-trust lawsuit (and subsequent motions) were filed in the United States Federal Court for Central District of California (Western Division, Case No. 02-5223 TJH Ex). Arguments for AHF's motion for Preliminary Injunction are to be heard in court on March 10, 2003.

AIDS Healthcare Foundation -- represented in the U.S. action by the law firm of Manatt Phelps & Phillips -- challenged the pharmaceutical giant's right to exclude competition in the markets for its anti-viral prescription drugs AZT, Ziagen and 3TC and to price these drugs well above competitive rates.

In the South African Competition Commission Complaint filed today, AHF is represented by the South African law firm Strauss Daly Inc, with attorney Musa Ntsibande serving as chief counsel. (Strauss Daly Inc., 2nd Floor, East Coast Radio House, 313/315 Umhlanga Rocks Drive, Umhlanga, South Africa [phone].)

AIDS Healthcare Foundation is the U.S.' largest specialized provider of HIV/AIDS medical care. AHF serves thousands of patients in California, New York and Florida regardless of their insurance status or ability to pay. In addition, AHF currently operates two free AIDS treatment clinics in Africa: the Ithembalabantu (Zulu for "people's hope") Clinic in KwaZulu Natal, Durban, South Africa & the Uganda Cares Healthcare Center in Masaka, Uganda. www.aidshealth.org.