OPINION | Why Hazel Tau’s victory on HIV/Aids medicine pricing still matters today

Exactly 20 years ago, Hazel Tau became the first of 11 complainants to bring a ground-breaking complaint to the Competition Commission alleging that the price of drugs to treat HIV/Aids in SA was excessive.

So excessive that SA’s price ranged from 540% to 1,543% more than the best-priced generic available in the world.

In 2002, the cost for a month of antiretroviral drugs that people needed to keep themselves alive was about R4,500.

At the time, the health department reported that about one in nine South Africans (or five million people) were living with HIV/Aids.

Moreover, these were the days before the government started supplying HIV/Aids drugs so the drugs were not available at all in the public sector, though Aspen Pharma had been given rights to manufacture for the public sector.

The result was a grossly inequitable situation where those who needed the life-saving drugs the most were hopelessly unable to afford them.

Tau herself fell within this community but, due to her prominence as an HIV/Aids activist, was fortunate to have gained a corporate sponsor.

Nevertheless, Tau, the then Treatment Action Campaign and nine other complainants launched a battle against the two pharmaceutical giants that supplied the drugs — GlaxoSmithKline SA (GSK) and Boehringer Ingelheim (BI).

At the time of the investigation, GSK held patents in SA on AZT (branded as Retrovir), Lamivudine (branded as 3TC) and AZT/Lamivudine (branded as Combivir) while BI held patents in SA on Nevirapine (branded as Viramune).

The complainants brought their complaint to the commission seeking an outcome that would lead to the reduction of HIV/Aids drug prices, not just in SA  but through all of Sub-Saharan Africa, given that this region was most affected by HIV/Aids in the world.

After investigating, the commission concluded that GSK and BI had indeed contravened the Competition Act by (1) refusing to grant (generic) competitors access to an essential facility when it was economically feasible to do so; and by (2) charging excessive prices for the drugs supplied to the South African market.

It was a bold move designed to challenge the balance between patent protection, competition law and plain social responsibility.

However, our approach was never fully tested in the courts because the respondents offered to settle the matter by granting generic manufacturers the right to develop and supply generic HIV/Aids drugs to the market.

In particular, GlaxoSmithKline undertook to:

• Extend the voluntary licence granted to Aspen Pharmacare (a South African generics manufacturer) in October 2001 in respect of the public sector to include the private sector;
• Grant up to three more voluntary licences on terms no less favourable than those granted to Aspen Pharmacare, based on reasonable criteria which include registration with the Medicines Control Council and the meeting of safety and efficacy obligations;
• Permit the licensees to export the relevant antiretroviral drugs to sub-Saharan African countries;
• Where the licensee did not have manufacturing capability in SA, GSK would permit the importation of the drugs for distribution in SA;
• Permit licensees to combine the relevant ARV with other antiretroviral medicines and;
• Charge royalties of no more than 5% of the net sales of the relevant ARVs.

Boehringer Ingelheim on the other hand undertook to:

• Issue voluntary licences to at least three companies based on reasonable criteria which would include registration with the Medicines Control Council and the meeting of safety efficacy obligations;
• Grant the above licences to the public and private sectors;
• Charge a royalty of 5%;
• Allow licensees to produce fixed-dose combinations containing nevirapine;
• Allow for importation and/or production of the relevant antiretrovirals; and 
• Allow South African licensees to export locally manufactured products containing nevirapine into sub-Saharan African countries.

And it worked! The settlements brought a huge reduction in the price of HIV/Aids drugs.

The Treatment Action Campaign’s Mark Heywood later reported that the cost of the first line of ARVs had gone down to less than R100 a  month.

Fast forward to 2022 and we have just emerged from another display of inequity in the distribution of life-saving medicines — this time Covid-19 vaccines.

Once again, the pharmaceutical industry demonstrated that those with the deepest pockets get first pickings.

And this is not all. In February this year, the Competition Commission referred a complaint against Roche Holding AG to the Competition Tribunal for prosecution.

In it, we alleged that from about 2011 to 2022, Roche charged excessive prices for Herceptin/Herclon, a breast-cancer drug, and we estimated that more than 10,000 breast cancer patients (nearly 50% of the total number of newly infected patients in the private and public healthcare sectors) were unable to receive treatment with Herceptin between 2011 and 2019 because of the excessive prices Roche charged for the medicine.

We also drew the link between this matter and the constitutional right to healthcare, which is enshrined in the Bill of Rights.

As an example, a 12-month course of Herceptin in the private sector cost about R355,000 for 17 cycles of treatment for a period of one year.

In the public sector, an equivalent treatment with Herclon costs about R160,000.

Our case against Roche is yet to be heard in the Competition Tribunal.

All three scenarios: the Hazel Tau case — the matter of Covid-19 vaccines; and the commission’s case against Roche essentially pose one question — where should we draw the line between the rights conferred on pharmaceutical companies by patent law protection and the right of fair access to life-saving pharmaceutical drugs?

The Roche case, which is yet to go to trial, is set to debate this very issue.

The benefits and incentives of patent law protection are well recorded and widely accepted. However, at the Competition Commission we believe there are instances where this right must be squarely challenged and weighed up against patient rights to access medicines.

The Competition Act 89 of 1998, as amended, provides the legislative tools for us to do so within the judicial system.

The Tau case concluded with a settlement agreement that achieved the same outcome we would have wanted to see from a contested trial.

The distribution of Covid-19 vaccines became more equitable as time passed due, in part, to global social activism in this regard.

However, neither case established a precedent or framework from which future matters questioning the balance between patent protection and free access can be assessed.

It remains to be seen what outcomes emanate from the commission’s case against Roche but, certainly, whichever way this matter unfolds, it will mark a significant moment in the shaping of our pharmaceutical regime — in much the same way the Hazel Tau case did just 20 short years ago.       

Doris Tshepe is the commissioner at the Competition Commission of SA