• Home
• Responsibility
• CR Report 2005
• Access to medicines
• Developing world
• Preferential pricing

Preferential pricing

Poverty, lack of political will and insufficient medical infrastructure (hospitals, clinics and health workers) are the biggest barriers to accessing healthcare in developing countries.

The affordability of medicines is also important and there are two elements to this. First is the ability of governments or patients to pay for medicines. Solving this problem will require governments and inter-governmental agencies to make significant additional financial resources available.

The second element is the price at which medicines are sold, an area GSK can help to address. We are making key medicines available to developing countries at more affordable prices. This is a major commitment that we call ‘preferential pricing’ which includes not-for-profit prices for the world’s poorest countries, and discounted prices for wealthier developing countries. Other factors in the supply chain such as taxes, tariffs and distributor mark-ups can also have a significant impact on the price of medicines. These factors are out of our control and should be addressed by governments.

All our HIV/AIDS and malaria treatments are available at not-for-profit prices to public sector customers and not-for-profit organisations in all the Least Developed Countries and sub-Saharan Africa, as well as countries with eligible Global Fund and PEPFAR projects. This means that our not-for-profit prices are offered in over 100 countries (see Eligibility for not-for-profit prices). Our not-for-profit prices are sustainable - we do not make a profit on them, but we do cover our manufacturing and distribution costs. Therefore we can continue to supply them in the long-term.

Our not-for-profit prices are comparable with generics. Combivir, our leading ARV, is available at $0.65 a day including delivery costs. The latest (June 2005) pricing report by Médecins Sans Frontières shows that the average cost of generic equivalents is $0.64 a day and the lowest priced generic equivalent costs $0.50 a day - the generic prices do not include shipping costs and insurance, which are included in our prices.

We negotiate public sector prices with middle-income developing countries on a case-by-case basis, see below.

GSK vaccines are also available at preferential prices. Here we work with multinational organisations such as UNICEF, the World Health Organization and the Pan American Health Organisation, governments and non-governmental organisations, to provide appropriate and affordable vaccines for the developing world. This includes basic polio vaccines as well as specially developed combination vaccines that target several diseases. In 2005, of the 1.2 billion vaccines we shipped, around 90% went to the developing world.

Progress in 2005
In 2005 we shipped 45 million preferentially-priced Combivir tablets, with the majority of these going to Africa. This is a 40 % increase on last year and more than in the previous two years combined. Shipments of Epivir grew by 135% to 81m tablets. The number of arrangements we have in place for the supply of preferentially priced ARVs did not change significantly during the year.

Overall shipments are relatively low considering the scale of the HIV/AIDS epidemic but the growth is encouraging. More doctors, hospitals and clinics are needed to treat more patients and ensure better uptake of preferentially priced medicines.

It is difficult to estimate the number of patients treated as a result of our preferential pricing agreements, since GSK does not control healthcare provision. A report from the UN-led Accelerating Access Initiative (AAI), suggests that by September 2005 more than 582,000 people living with HIV/AIDS in developing countries were receiving treatment with at least one antiretroviral supplied by the seven pharmaceutical companies in the AAI (compared with 221,000 people on treatment in 2004). This includes 341,000 patients in Africa. Much remains to be done, but this growth is encouraging.

Middle income countries
We can only afford to supply products at low prices in the world’s poorest countries if we can still make an adequate return on them in wealthier markets. Nevertheless, we recognise that many middle-income countries also need assistance.

We negotiate preferential pricing arrangements with middle-income countries on a case-by-case basis. We believe this is the best approach since the disease burden, and resources available to address it vary significantly from country to country. These arrangements combine a viable and sustainable commercial return for GSK with increased affordability for the healthcare systems concerned.

For several more developed countries we are also introducing discount cards for senior citizens, see Developed world.

Anti-diversion measures
Product diversion, where not-for-profit medicines are illegally shipped back for sale in wealthier countries, undermines our ability to provide n-f-p prices and denies treatment to the intended patients in poorer countries. We have introduced different packaging and tablet colours for many of our not-for-profit medicines to help prevent product diversion. Special tri-lingual ‘access packs’ are now approved for Combivir, Epivir and Trizivir in over 50 countries, and we have received regulatory approval for the red Epivir and Combivir tablets in over 25 countries. GSK has nine ARVs registered under the EU’s Anti-Diversion Regulation. We are the only company to have registered products under this regulation.

Extending preferential pricing
We set up five pilot projects in collaboration with NGOs in Tanzania, Uganda, Nigeria, Zambia and Malawi to assess the impact of extending preferential pricing to a wider range of products, such as antibiotics and asthma treatments.

As expected we found that pricing is just one of a number of factors that affect the accessibility of medicines. Lack of healthcare capacity and infrastructure were more fundamental barriers. However, making our products available at more affordable prices did expand usage. There also appeared to be a preference for our products over similarly priced generics. We are evaluating the findings from the pilots and will use them to inform a strategic review of our business in sub-Saharan Africa.

Back to top