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http://www.nytimes.com/2002/06/21/business/21AIDS.html

Glaxo Freezes Prices of AIDS Drugs in U.S.

By REED ABELSON

cknowledging the budget constraints of many state programs intended to help people with little or no health insurance afford AIDS drugs, GlaxoSmithKline said yesterday that it was freezing the American prices of its six AIDS drugs through January 2004. The freeze includes its most widely prescribed AIDS medicine, Combivir.

An individual might pay about $18 a day for Combivir — an annual cost of $6,600. Companies typically raise the prices of these drugs roughly 5 percent a year.

GlaxoSmithKline will also continue to provide some drugs free to low-income people eligible for its patient assistance program.

The company's decision follows a similar move by Pfizer recently to freeze the price of its two AIDS drugs, Viracept and Rescriptor, for two years.

The state programs "are starting to have a real budget crunch," the company's chief executive, Jean-Pierre Garnier, said. Glaxo, which is based in Britain, decided that the freeze should apply to all its AIDS drugs sold in the United States. "It's a small step, but it helps," said Dr. Garnier, adding that he hoped other manufacturers would follow suit.

The world's second-largest drug company, GlaxoSmithKline led many of its competitors in providing discounts on prescription drugs to low-income elderly people. Earlier this year, seven companies, including Glaxo- SmithKline, agreed to adopt a program offering discounts of 20 percent or more on dozens of medications.

With the bulk of their funds from the federal government, state and local AIDS drug assistance programs were created in 1987 and were incorporated in the Ryan White AIDS legislation in 1990. Last year, these programs provided drugs, some of which can cost as much as $12,000 a year, to 140,000 people.

In June 2001 alone, according to a recent report, these programs filled a total of 246,062 prescriptions for 76,743 individuals at a cost of $63.8 million.

As more people use these programs and the price of the drugs increased, many programs are struggling to meet demand, according to the National Alliance of State and Territorial AIDS Directors in Washington. Ten states have established waiting lists or are otherwise limiting access.

"We are really concerned about the crisis looming ahead," said Murray Penner, a program manager at the alliance. Federal financing "has not kept up with demand," he said.

While the Bush administration has proposed keeping funds in 2003 at $619 million, a coalition of AIDS groups has estimated that the programs need an additional $162 million, Mr. Penner said, and many states are also having difficulty finding the money in their budgets to pay for the programs.

Hundreds of people are now on waiting lists, according to Glaxo- SmithKline, including 550 in North Carolina and 220 in Alabama. The company says a sustainable system is necessary to finance these programs.

Glaxo's decision "is a step in the direction drug companies need to be going," Mr. Penner said.

The high cost of AIDS drugs has set off criticism, particularly in the poor countries least able to afford them. In the United States, drug companies are also under considerable political pressure to keep prices level.

"The pharmaceutical companies won't be using pricing as a lever to gain top-line growth," said Andrea Hotz, a research associate who follows European drug makers for Sanford C. Bernstein & Company, and Glaxo's move yesterday is one way to generate some good will.

"There is great difficulty finding funding for all drugs everywhere in the world," Dr. Garnier said.

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