GSK Annual Report 2002

Access to healthcare in the developing world
Access to healthcare in developing countries presents a unique
challenge to the global community. The problem, which is rooted
in poverty, demands a significant mobilisation of resources, an
unprecedented sense of urgency and a new spirit of partnership.
It must be tackled as a shared responsibility by all sectors of global
society. The Group does not have the mandate, expertise or
resources to address the underlying problems that exist. However,
GlaxoSmithKline is playing a vital role. There are three key areas in
which it makes innovative, responsible and, above all, sustainable
contributions to improving healthcare in the developing world:
• investing in R&D that targets diseases which particularly affect
the developing world
• preferential pricing of its antiretrovirals (ARVs), anti-malarials
and vaccines
• and community investment activities and partnerships that
foster effective health care.
R&D for diseases of the developing world
Continued investment in R&D into new drugs and vaccines for
diseases that affect the developing world is essential to long-term
improvement in the health of people in these regions, not least
because of challenges such as the development of resistance to
current treatments and poor patient adherence to complex
treatment regimens.
The Group believes GlaxoSmithKline has the industry’s most
extensive portfolio of products and R&D projects for diseases of the
developing world, and that it is the only Group undertaking R&D
into the prevention and treatment of all three of the World Health
Organisation’s (WHO) priority diseases in the developing world -
HIV/AIDS, tuberculosis and malaria. The Group currently has over
20 R&D projects and programmes of relevance to the developing
world, ten of which are aimed at producing vaccines and
medicines for diseases that disproportionally affect developing
countries. GlaxoSmithKline is increasingly involved in public-private
partnerships to enable a wider range of projects to be undertaken.
In addition to the R&D on HIV/AIDS, an R&D group dedicated to
Diseases of the Developing World has been created to ensure a
focus on these diseases. Projects are prioritised primarily on their
socio-economic and public health benefits rather than on their
commercial returns.
Preferential pricing arrangements
GlaxoSmithKline has offered its vaccines to public health
programmes at significant discounts for over 20 years. The Group
sets a single, sustainable, preferential price for each of its ARVs
and anti-malarials to a wide range of customers in the Least
Developed Countries and sub-Saharan Africa - a total of 63
countries. GlaxoSmithKline is committed to contributing to health
improvements in a sustainable manner. Preferential prices for its
ARVs and anti-malarials are therefore set at levels on which no
profit is made, but that cover direct costs, so that supply can be
sustained for as long as required. There has been notable progress
in expanding access through preferential pricing. The Group has
some 120 arrangements, covering 50 of the world’s poorest
countries, to supply ARVs at preferential prices. Customers include
governments, non-governmental organisations (NGOs), hospitals,
academic institutions and private employers.
Description of business GlaxoSmithKline 27
In 2002, evidence was uncovered that some of the company’s
ARVs that had been sold to Africa at not-for-profit prices were
being illegally re-imported into the European Union for sale at a
higher price. The victims of this trade are HIV/AIDS patients in
Africa and the only beneficiaries are the illegal importers. This
diversion threatens GlaxoSmithKline’s ability to provide preferential
prices to the developing world. The offer of not-for-profit prices
requires a sustainable framework, combining the Group’s
commitment to preferential pricing with commitments from others
to put in place ways to prevent product diversion and to avoid
price referencing against preferentially priced medicines.
GlaxoSmithKline has taken steps to address the problem and from
a regulatory perspective, it is now able to supply 31 countries with
Combivir in a special, tri-lingual ‘access’ pack to provide a barrier to
diversion. However, this alone will not fully deter illegal traders
who are experts in the repackaging of medicines. Stricter
regulations and enforcement to counter this illegal trade will be
required.
Success through partnership
During 2002, GlaxoSmithKline continued to engage with
stakeholders working on improving access to healthcare in the
developing world. The Group has a long history of supporting
community investment programmes and has a wide range of
partnerships to support delivery of better health and education to
under-served communities around the world. The Group also
consulted and worked with governments of both the developed
and developing world, the United Nations, the WHO, NGOs and
with the investment community and will continue constructive
dialogue with organisations that share its aim of trying to improve
access to healthcare in the developing world.
GlaxoSmithKline is making a vital contribution to improving
healthcare in the developing world. The Group will continue with
its efforts, improving its initiatives by applying lessons learned and
looking for opportunities to do more. For example, in September
2002 the Group further reduced its preferential prices for ARVs
by up to 33 per cent. It looks to other stakeholders also to go
further and play their part through embracing partnership,
showing political will and, above all, committing significant new
funding. This is critical if an improvement in healthcare and quality
of life across the developing world is to be achieved.
Global community partnerships
GlaxoSmithKline’s community investment in 2002 totalled
£239 million of which £112 million was related to the Group’s
patient assistance programmes in the USA. This was equivalent to
4.3 per cent of Group profit before tax. Many of the programmes
are long-term commitments that help bring about sustainable
change. The Group’s community investment activities are focused
on health and education and include:
Patient assistance programmes
The patient assistance programmes provide access to
GlaxoSmithKline’s medicines for the most needy US patients who
do not have prescription drug insurance. In 2002, over 410,000
patients received medicines through the Group’s patient assistance
programmes, at a value of $168 million.