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Corporate Responsibility Report 2008

Q&As

Here we respond to questions raised by our stakeholders

Aren’t your access programmes just a drop in the ocean, given the scale of the healthcare crisis in the developing world?

The global healthcare crisis is extensive and complex, and the programmes of any single organisation are insufficient on their own. Political will and the effective investment of extra resources are required to support healthcare development and build infrastructure. GSK and the wider pharmaceutical industry do not have the mandate, expertise or resources to address the problem alone. Without a global partnership to address the issues, the efforts of any individual stakeholder will be inadequate. Primary responsibility for dealing with the crisis lies with governments, which can call on international agencies and NGOs for support. GSK is committed to playing a full part in partnerships with these organisations and is seeking new ways to make a contribution.

We focus our access programmes on specific areas where we think we can make a real difference. For example, we research and develop medicines and vaccines that are particularly needed in developing countries, and make them available at lower prices through preferential pricing arrangements and voluntary licences. We are also working to identify other ways that we can support the strengthening of healthcare systems through expanding our pricing policies, by being more flexible with our intellectual property and by investing in healthcare infrastructure.

Why are your medicines so expensive? Wouldn’t the most responsible thing you could do be to cut the price of your medicines?

Improving affordability of our medicines is important and we are taking steps to do more in this area. However, as Kevin de Cock, the Head of HIV/AIDS at the WHO, has said “If you work in these countries it is very obvious, very quickly, that the elephant in the room is not the current price of drugs. The real obstacle is the fragility of the health systems, particularly in Africa.” Therefore, unless action is taken to address the underlying problems of poverty and healthcare infrastructure, reducing prices alone will not solve the problem.

We have to price our products at a level that enables us to continue to fund R&D and discover the medicines and vaccines of the future. We also need to make enough profit so that GSK remains an attractive prospect for investors. While we want to make a difference, cutting prices too far would mean we undermine the long-term profitability and therefore sustainability of our business. Getting this balance right isn’t easy. The pricing pilots we have been conducting in recent years have taught us that there are no easy solutions. We believe that the new pricing policies we announced in 2009 will help to improve affordability for the world’s poorest and we will continue to learn and refine our approach as we roll out these policies.

Why are so few people with HIV/AIDS receiving treatment in the developing world?

There has been important progress in this area and now over three million people in the developing world are receiving treatment with life-saving anti-retrovirals. This has led to a decline in deaths caused by AIDS despite an increase in the number of people living with HIV. However, there is much more to do. The core issue is that many people in developing countries do not have access to effective healthcare services and are therefore unable to access medicines. Due to poverty, many clinics and patients are unable to pay for even the cheapest basic generic medicines.

The access issue is complex and multifaceted. Pricing of medicines is important, but we believe there are many other more significant barriers. Other factors that play a part are inadequate healthcare resources, lack of clinics and hospitals, poor distribution networks, low numbers of trained healthcare providers, high levels of patient illiteracy, significant stigma and discrimination, and a lack of political will and inadequate prioritisation of health in government budgets. This is why in 2009 we announced that 20 per cent of the profits we make from selling medicines in least developed countries will be reinvested into projects that strengthen infrastructure and widen access.

Why don’t you just donate your AIDS products to the world’s poorest?

In common with many other stakeholders, including Oxfam and the WHO, we do not believe that donations of ARVs offer a solution to the AIDS pandemic or for healthcare problems in the developing world more generally. This is a widespread crisis and one which requires a long-term commitment to treatment. This commitment cannot be assured through donations. As WHO Director General Margaret Chan has said “Health systems are the tap root for better health. All the donated drugs in the world won’t do any good without an infrastructure for their delivery.”

In some limited circumstances donations may be appropriate, for example, in disease elimination efforts such as the Global Alliance to Eliminate LF. We have in the past donated ARVs to support UNICEF Prevention of Mother-to-Child Transmission programmes, and we continue to support collaborative clinical trials to assess the appropriate use of ARVs in resource poor settings.

Why doesn’t GSK extend its not-for-profit prices to middle-income countries?

Middle-income countries are not automatically eligible for the not-for-profit prices offered to Least Developed Countries (LDCs) and sub-Saharan Africa. However, they can access medicines at reduced prices. Middle-income countries can secure preferential prices through bilateral discussions with GSK and we are looking at ways to make this process easier.

We are focusing our preferential prices on the countries where the need is greatest and resources are most limited. It is widely accepted that in terms of support for improving healthcare services, these are the LDCs (as defined by the UN) and sub-Saharan Africa. We have been conducting pricing pilots in middle-income countries in recent years which have taught us that there are no easy solutions. However, we will continue to develop policies in middle-income countries that are more flexible on price and therefore more closely reflect a country’s ability to pay.

Why don’t you allow middle-income countries to buy your ARVs from generic manufacturers?

We have granted eight voluntary licences for our ARVs to African generic companies. Under these arrangements they can supply a number of middle-income countries in Africa. Middle-income countries are generally more economically developed than the least developed countries and often have a large and affluent middle-class. These countries also have large numbers of people living in extreme poverty and healthcare demands often outstrip available resources. We recognise that many middle-income countries need assistance. However, we believe a different approach is needed from the one we take in the world’s poorest countries and we will continue to refine our approach during 2009.

Our offer to supply products at not-for-profit prices in the world’s poorest countries is only sustainable if we can continue to make an adequate return on them in wealthier markets. Many middle-income countries are also growing commercial markets for GSK and represent an important source of future business for our industry. Our response in these markets must therefore be one that balances our commercial objectives with our global commitment to work with governments and other stakeholders to ensure that our medicines and vaccines reach as many as possible of those who need them.

We believe governments in middle-income countries can improve access by increasing investment in disease prevention and healthcare; eliminating taxation and tariffs on medicines; and creating an environment which allows a strong private healthcare sector to co-exist with public healthcare provision. We are working with governments to find creative ways to meet these goals.

Why don’t pharmaceutical companies work together to increase access to medicines?

We are working with the main industry associations on new initiatives to increase R&D and improve access, and we will continue to seek new opportunities to work in collaboration with all stakeholders, including other companies.