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Global pressure leads to falling drug prices

The recent barrage of public criticism of the pharmaceutical industry, following the collapse of the recent court case brought by 39 drugs companies against South Africa, has forced the industry into lowering drugs prices for developing nations.

In June, GlaxoSmithKline, Britain’s biggets drugs company, announced price cuts for drugs used to treat malaria, diarrhoea and other infectious diseases, including HIV/Aids. The lower prices will apply to 63 nations, including all of those classified as ‘least developed countries’.

Oxfam, which has campaigned hard to make essential drugs more widely available, welcomed the decision. ‘This is a really important move – it’s an unprecedented step in the number of products and countries involved,’ said Sophia Tickell, Oxfam’s senior policy adviser.

Pressure for lower prices is also coming from the British government. Chancellor Gordon Brown and international development secretary Clare Short have called on the industry to provide ‘deeply discounted’ drugs to poor countries.

But Britain’s contribution to the UN’s new ‘global drugs fund’ has been only £75m. Kofi Annan, the UN secretary general, set the fund up in April to help combat the diseases which cause the greatest number of deaths worldwide – malaria, tuberculosis and HIV/Aids. Although there were early hopes of raising $7-10bn annually from the governments of wealthy nations, politicians have backed the idea with enthusiastic words but little cash and this now looks hopelessly unrealistic.

The pharmaceutical industry is also fighting hard to defend worldwide application of its patents, and the TRIPs (trade-related intellectual property rights) agreement which underpins this. At a recent special session of the WTO in Geneva, African countries argued for greater flexibility in interpreting the rules, to allow poorer countries to make cheaper medicines locally or import them at lower prices.