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[e-drug] GSK and BI allow generic ARVs in (South) Africa

E-DRUG: GSK and BI allow generic ARVs in (South) Africa
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[In a historic settlement, AIDS activists and big farma have now agreed that
generic ARVs can now be produced and marketed in South Africa, in both
public and private sector, and also exported to other subsaharan African
countries. See below the press release of TAC and GSK. The agreement means
that all patent barriers have now been slashed, and that affordable generics
can be used all-over Africa. Congrats to TAC and AIDS Law Project, which
clinched the deal. Sorry, long message! WB]

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[TAC press release] see www.tac.org.za

Affordable medicines for millions of sub-Saharan Africans are much closer
after landmark agreements were concluded and signed yesterday between
pharmaceutical companies and AIDS activists.

The Treatment Action Campaign (TAC), COSATU, CEPPWAWU, the AIDS Consortium,
four people living with HIV/AIDS and four health-care workers have entered
into settlement agreements with pharmaceutical giants GlaxoSmithKline (GSK)
and Boehringer Ingelheim (BI).  In signing these agreements, AIDS activists
have now concluded their complaint against GSK and BI.  The terms of the
agreements go well beyond what could conceivably have been won by pursuing
the prosecution of the complaint under the Competition Act.

The effect of the agreements with GSK and BI is that the Clinton Foundation
deal that was announced on 23 October 2003 can be implemented in South
Africa and other sub-Saharan African countries immediately.  The Clinton
Foundation deal has ensured that four generic companies will sell
triple-drug antiretroviral therapy to governments in sub-Saharan Africa at
US $140 per patient per year.

The terms of the agreements are:

1.GSK will grant licences to four generic companies (including Aspen
Pharmacare and Thembalami Pharmaceuticals) to produce and/or import, sell
and distribute the antiretroviral medicines AZT and lamivudine.  Before the
agreement with GSK was concluded and signed, GSK had only granted a licence
to Aspen Pharmacare.

2.BI will grant licences to three generic companies (including Aspen
Pharmacare) to produce and/or import, sell and distribute the antiretroviral
medicine, nevirapine.  Before the agreement with BI was concluded and
signed, BI had only granted a licence to Aspen Pharmacare.

3.The royalty fee on the licences will be no more than 5% of net sales of
the antiretroviral medicines.  Before the agreements with GSK and BI were
concluded and signed the royalty fee that GSK requested was 30% and with BI
it was 15%.

4.The licences will be for both the private and public sectors.  Before the
agreements with GSK and BI were concluded and signed the licences granted by
GSK and BI to Aspen were limited to the public sector only.

5.The agreements with GSK and BI will also allow licensees to export AZT,
lamivudine and nevirapine that are manufactured in South Africa to all 47
sub-Saharan African countries.  Before the agreements with GSK and BI were
concluded and signed, exports to sub-Saharan African countries were not
permitted.

6.The licensees will be able to manufacture AZT, lamivudine and/or
nevirapine in combination with each other and/or any other medicines for
which the licensees have licences.  This is critical because it will allow
triple-drug fixed dose combinations, currently manufactured by at least two
generic producers, to come to the market.

7.The licences apply to both adult and paediatric formulations of AZT,
lamivudine and nevirapine.

Generic companies should therefore apply for regulatory approval (where such
approval has not as yet been obtained) for their versions of AZT, lamivudine
and nevirapine, as well as fixed dose combinations that contain any or all
of these antiretrovirals.  They should also immediately apply to both GSK
and BI in order to obtain voluntary licences as contemplated in the
agreements concluded and signed with GSK and BI.

The agreements are legally binding on GSK and BI.  In the event that GSK
and/or BI do not comply with any aspect of any agreement it will be left
open to the complainants to go to a court of law to enforce any aspect of
the agreement that is not being complied with.

TAC will monitor the prices of generic medicines as vigilantly as it
monitors the prices of brand-name medicines.  We call on the generic
companies such as Aspen Pharmacare and Thembalami Pharmaceuticals to commit
to making generic medicines affordable for the majority of people living
with HIV/AIDS in sub-Saharan Africa.

TAC also calls on pharmaceutical companies such as Merck, Roche and Abbot to
follow the examples of GSK, BI and Bristol Myers Squibb by agreeing either
not to enforce their patents on antiretroviral medicines in sub-Saharan
Africa or by granting voluntary licences to generic manufacturers on
reasonable terms.

Today is also International Human Rights Day and the fifth anniversary of
the Treatment Action Campaign.  We remember the countless lives lost because
of patent abuse and government neglect but this deal and our government's
treatment plan allows all of us to work together on saving lives and
preventing new infections.

TAC wants to thank Advocate Robert Petersen SC, Advocate Susannah Cowen, and
the AIDS Law Project's Law and Treatment Access Unit, in particular Jonathan
Berger and Fatima Hassan, Alison Dyer and Geoff Budlender for their
assistance. We also want to thank Advocate Hamilton Maenetje for his work.
Thanks also to the experts who wrote affidavits for the complaint including
Robin Wood, James Love, Rob Dorrington, Leon Regensberg, Marc Cotton and
Alex Van Den Heever.

The complainants were Hazel Tau, Nontsikelelo Zwedala, Sindiswa Godwana,
Isaac Skosana, Sue Roberts, Steve Andrews, Francois Venter, COSATU, CEPPWAWU
and the TAC. They were later joined by the AIDS Consortium and a policeman
who subsequently died of AIDS.

A document entitled "Fact Sheet" explaining the terms of the agreements
entered into is attached to this press statement.

For more information please contact:
Fatima Hassan 083 279 9962 (021 422 2186)
Jonathan Berger 083 419 5779 (011 717 8627)

[END OF TAC STATEMENT - BACK TO CONTENTS]
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NEWS RELEASE FROM THE COMPETITION COMMISSION
Competition Commission concludes an agreement with pharmaceutical firms

The Competition Commission has concluded a settlement agreement with
pharmaceutical firm GlaxoSmithKline South Africa (Pty) Ltd (GSK) and is in
discussions with Boehringer Ingelheim (Pty) Ltd (BI) regarding a settlement
agreement.

The settlement agreement is the result of negotiations following the
Commission's announcement in October 2003 that GSK and BI had, in its view,
contravened the Competition Act of 1998. From its investigation into the
complaints by Hazel Tau and others, the Commission concluded that GSK and BI
had abused their dominant positions in their respective anti-retroviral
(ARV) markets.  This was denied by GSK and BI.

The Competition Commissioner, Menzi Simelane, said he was happy that all
parties concerned had agreed to the terms of the settlement agreements as he
believed that the agreements addressed the competition concerns raised by
the Commission.

"The terms of the agreements are substantially similar to the successful
outcomes which we would have hoped to achieve at hearings before the
Tribunal, namely the issuing of licenses to generic manufacturers of
antiretroviral drugs. It has been a particularly difficult case and we are
happy that the matter has been amicably resolved."

Simelane said the Commission had not asked for the imposition of a fine or
an administrative penalty.

"We think it is far more important to have broadened access to cheaper ARVs
for people with HIV/AIDS through price reductions by generic manufacturers.
The introduction of generic substitutes should result in a drastic reduction
in the prices of antiretroviral drugs.

"As the agreements provide for more than one generic manufacturer, there
will be competition amongst them, which should push prices even lower.  GSK
will be making financial sacrifices by licensing the ARVs to generic
manufacturers at a royalty rate of only 5%, for both the public and private
sector. GSK has also reduced Aspen Pharmacare's royalty by 25% and it will
retain all the royalties at the same 5%."

In terms of the settlement agreement GSK has undertaken to:

-         extend the voluntary licence granted to Aspen Pharmacare 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 does not have manufacturing capability in South
Africa, GSK will  permit the importation of the drugs for distribution in
South Africa;

-         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.

ENDS

Prepared by:    Beachhead Media & Investor Relations
Dani Cohen 021 469 9000 / 082 897 0443
Jennifer Cohen 011 214 2400 /082 468 6469
On behalf of:   The Competition Commission
Further info:    Karin Coode, Head of Communications
  012 482 9079 / 083 357 1039 / karinc@compcom.co.za

[END OF COMPETITION COMMISSION STATEMENT - BACK TO CONTENTS]

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AIDS Consortium jubilant over Competition Commission complaint settlement!

On behalf of its members and many people living with HIV the AIDS Consortium
welcomes the settlement in the Competition Commission complaint between Tau
and Others vs GlaxoSmithKline and Boehringer Ingelheim. We congratulate the
legal team, and negotiators from the Treatment Action Campaign and the AIDS
Law Project who have been working on this case.

The AIDS Consortium was one of the complainants and Hazel Tau, the first
complainant, is an executive committee member of the AIDS Consortium. In a
year, which saw cabinet announce its plans to roll out of ARVs in the public
health sector, ending 2003 on this note could not get better.

The settlement will mean that millions of people should soon be able to
access cheaper treatment and be able to comply with their drug regime simply
because the drugs are more affordable. Something they just could not do with
the excessive pricing that was being charged for AZT, 3TC and Nevirpaine
brand drugs.

This settlement means that people in the rest of Africa will also benefit
and the fact that the agreement is not confined to sales in the public
health sector but includes the private health sector is indeed historic.

We call on other drug companies to do the same and issue voluntary licences
for essential life saving drugs, because this will enable governments in
developing countries to provide treatment for all people living with HIV and
AIDS in a sustainable manner and invest money to improve health care
facilities and employ more health care workers.

The Consortium will be present to witness this ground-breaking settlement
and has closed its offices for today to celebrate.
For more information please contact

Sharon Ekambaram
Advocacy Officer
AIDS Consortium -083 6348924

[END OF AIDS CONSORTIUM STATEMENT - BACK TO CONTENTS]
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TAC/ALP FACT SHEET

SETTLEMENT AGREEMENTS REACHED IN HAZEL TAU AND OTHERS v GLAXOSMITHKLINE
(GSK) AND BOEHRINGER INGELHEIM (BI)

Background

On September 19th 2002, the AIDS Law Project lodged a complaint with the
Competition Commission against GlaxoSmithKline (GSK) and Boehringer
Ingelheim (BI) on behalf of four people living openly with HIV/AIDS, four
health care workers, the Treatment Action Campaign (TAC), and COSATU and its
affiliate CEPPWAWU.  In February 2003, two further complainants joined-a
police officer living openly with HIV/AIDS (who subsequently passed away on
June 16th 2003) and the AIDS Consortium (representing more than a thousand
individual and organisational members).

Alleging that the two multinational pharmaceutical groups were acting
unlawfully by charging excessive prices for certain of their antiretroviral
medicines (ARVs) to the detriment of consumers, the complaint argued that
the prices charged by the groups for their essential and life saving
medicines are directly responsible for the premature, predictable and
avoidable deaths of women, men and children living with HIV/AIDS.  The
complaint showed that even when allowance is made for the costs of research
and development, higher profits, licensing fees and the incentive to develop
new drugs, the prices of these ARVs were excessive.

On October 16th 2003, the Competition Commission announced that it had
decided to refer the complaint to the Competition Tribunal for adjudication.
As a result of its year-long investigation, the Competition Commission found
evidence to support the referral on the basis of prohibited excessive
pricing as well as two additional grounds, both of which deal with the
failure of GSK and BI to license generic manufacturers in certain
circumstances.  GSK and BI were using their patent monopolies to deny
appropriate licences to other manufacturers while keeping their own prices
high.

What were the prices of the ARVS at the time the complaint was lodged in
2002?

The ex-manufacturer private sector prices of the relevant ARVs (excluding
VAT) for a month's supply were as follows:

AZT (Retrovir®):            R582.00
Lamivudine (3TC®):         R640.00
AZT/lamivudine (Combivir®):     R800.00
Nevirapine (Viramune®):     R360.00

The prices for paediatric formulations were as follows:

AZT solution:             R138.12 (for 200ml)
Lamivudine solution:         R235.00 (for 240ml)

ARVs should be given as a cocktail of at least three drugs (such as AZT,
lamivudine and nevirapine).  This is also known as highly active
antiretroviral therapy, or HAART.

What licences had been granted at the time the complaint was lodged?

Aspen Pharmacare, a South African generic pharmaceutical company, was
already licensed by GSK to manufacture and sell AZT and lamivudine products
in South Africa to the government, NGOs and employers who treat their
workers who do not belong to medical schemes.  Such sales were subject to a
30% licensing (or royalty) fee.

Aspen obtained a similar licence from BI to manufacture and sell nevirapine
in South Africa to the government, NGOs and employers who treat their
workers who do not belong to medical schemes.  It is understood that such
sales were initially subject to a 15% licensing (or royalty) fee. As with
the GSK licence, this licence did not entitle Aspen to sell to the private
sector.  It is unclear whether Aspen was permitted to export even to
Southern African Development Community (SADC) countries.

Why was a single license from GSK and BI to Aspen not enough?

There are five key reasons why the licences given to Aspen by GSK and BI did
not solve the problem of ensuring access to a sustainable supply of
affordable ARVs.

First, more licensees are needed to ensure that there is proper competition
among generic drug companies.  Proper competition will ensure that the
prices of ARVs reach their lowest possible amount and remain affordable.

Second, Aspen's AZT, lamivudine, AZT/lamivudine combination and nevirapine
are not yet registered by South Africa's Medicines Control Council (MCC) and
therefore cannot yet be used in South Africa.  Other generic companies' ARV
products are already registered by the MCC.  But GSK and BI would not allow
such products to be sold in South Africa and other countries where their
patents apply.

Third, at least two generic companies produce a single pill that contains
three different ARVs.  This is very important because patients can take this
single pill twice a day instead of having to take many pills twice a day.
Such fixed-dose combination ARVs have been shown to improve adherence to
treatment regimens and ultimately improve patient health.

However, since all the ARVs that are combined in the pill (stavudine,
lamivudine and nevirapine) are patented in South Africa, the generic
companies cannot legally sell the combination pill in South Africa unless
they get licences from the patent holders to do so.
So far, Bristol Myers-Squibb has agreed that it will not enforce its rights
in its patented ARVs, one of which is d4T.  Without GSK doing the same (or
granting licences to generic companies) for lamivudine, and BI doing the
same for nevirapine, the combination pill cannot be sold in South Africa.

In addition, at least one generic company produces another pill that
contains a different combination of three ARVs (AZT, lamivudine and
nevirapine).  But it cannot sell this important combination pill in South
Africa until it gets licences to do so.

Fourth, the GSK licence to Aspen did not allow for exports, with the BI
licence possibly allowing for limited exports only.  It is important to note
that HIV/AIDS affects all countries - it does not respect national borders.
Solving the issues of access in South Africa without addressing similar
issues in all other sub-Saharan African countries is both problematic and
immoral.  In addition, local generic manufacturers must have economies of
scale if they are to be able to offer and sell at prices that are
competitive.

Finally, excluding the private sector from these licences is problematic for
the following reasons:

Many poor people, especially in rural areas, buy their medicines from
doctors and pharmacies in the private sector.
If more people can afford to buy the medicines in the private sector, they
are less likely to use the public sector to get their ARVs.  This can reduce
the burden of HIV/AIDS on the public sector.
Medical schemes are under financial pressure due to the HIV/AIDS epidemic.
To ensure that medical schemes provide reasonable and acceptable benefits to
people living with HIV/AIDS and that more people are able to access medical
scheme cover, the prices of ARVs must be kept as low and as competitive as
possible.
The public sector may take up to five years to reach all those who need
access to ARV treatment.  Affordable prices in the private sector would make
it possible for many people to access ARV treatment while the public sector
programme is being rolled out.

What do the settlement agreements with GSK and BI achieve?

The settlement agreements will open up the ARV market to generic
competitors.  Including Aspen Pharmacare, four generic companies will be
licensed to manufacture and/or import generic AZT and lamivudine products,
with three companies being licensed to manufacture and/or import generic
nevirapine products.  All licensees will be entitled to combine AZT, 3TC and
nevirapine, both with each other and with other ARVs.  All licensees will be
entitled to sell their products to both the public and private sectors, with
sales being subject to a maximum 5% royalty rate.

While all licensees will be strongly encouraged to manufacture generic ARVs
in South Africa in the interests of developing local pharmaceutical
manufacturing capacity and job creation, they will nevertheless be entitled
to use their licences to import if they decide not to or are unable to
manufacture locally.  Licensees that manufacture the ARVs in South Africa
will be entitled to export their products to all countries in sub-Saharan
Africa.

What prices can we be expected to pay in the public and private sectors?

Government will now be free to procure ARVs from a range of generic
manufacturers, without first having to issue compulsory licenses or
negotiate voluntary licences.  In the public sector, the settlement
agreements will open up access to the prices recently announced by the
William J. Clinton Foundation, removing the last patent barriers to
accessing AZT, lamivudine and/or nevirapine products.  For the standard
first-line regimen of stavudine, lamivudine and nevirapine, for example, the
Clinton Foundation price of US$140 per patient per year (± R75 per month)
represents a 74% savings on the current best price of US$538 per patient per
year (± R290 per month).

Based on the current international best price offers made by generic
companies and at current exchange rates, we expect to see the same
stavudine, lamivudine and nevirapine regimen costing in the range of
US$200 - 250 per patient per year (± R110 - 140 per month), with the same
regimen in a three-in-one fixed dose combination form costing in the range
of US$250 - 290 per patient per year (± R140 - 160 per month).  The same
regimen currently costs over R1000 per month.1

At current exchange rates, other ARVs are expected to cost consumers as
follows:

AZT: US$160 - 180 per patient per year (± R85 - 100 per month, down from
R582);
Lamivudine: US$65 - 100 per patient per year (± R35 - 55 per month, down
from R640);
AZT/lamivudine combination: US$200 - 250 per patient per year (± R110 - 140
per month, down from R800);
Nevirapine: US$100 - 150 per patient per year (± R55 - 80 per month, down
from R360);
AZT paediatric solution: US$3 - 4 (± R20 - 26) for 200ml, down from R138.12;
and
Lamivudine paediatric solution: US$5 - 6 (± R32 - 40) for 240ml, down from
R235.

Why have the complainants agreed to withdraw the complaint?

In return for the concessions made by GSK and BI in the settlement
agreements, the complainants have agreed to formally withdraw the complaint.
This does not mean the complaint was unjustified.  It simply means that the
public interest will be better served by securing these gains now, at least
for South Africa and the whole of sub-Saharan Africa, through a negotiated
settlement.

Although the complainants would have wanted GSK and BI to concede more, they
concluded after lengthy negotiations that this is the best that can be
achieved now.  It goes well beyond what could conceivably have been won by
pursuing the prosecution of the complaint under the Competition Act.

[END OF FACT SHEET - BACK TO CONTENTS]
-------
[GSK press release]

10 December 2003

GlaxoSmithKline welcomes decision of non-referral by the Competition
Commission

December 10, 2003 - GlaxoSmithKline (GSK) today welcomed the South African
Competition Commission?s decision not to refer the complaints on pricing of
GSK?s antiretroviral medicines (ARVs) to the Competition Tribunal.  The
complaints were brought by the Treatment Action Campaign (TAC) on behalf of
a group of complainants as well as the AIDS Healthcare Foundation (AHF), an
American organisation.  The Competition Commission?s announcement brings to
a close a year-long investigation.

Commenting on the announcement, Peter Bains, Senior Vice President, GSK,
said: ?We welcome the decision not to refer the complaint.  We have always
believed the complaint to be unfounded.  We are pleased that a satisfactory
settlement has been achieved.  We have reached agreement with the Commission
and the complainants on an appropriate response to the HIV/AIDS pandemic in
the region.  That is what really matters.?
GSK has long been a leader in addressing the HIV/AIDS crisis in the
developing world, including in South Africa.  GSK first offered preferential
pricing on its ARVs to the government in South Africa in 1997.  For a number
of years, it has offered not-for-profit prices to the public sector,
non-government organisations (NGOs) and employers providing ARV treatment to
their employees.  GSK now has 28 agreements in South Africa to supply ARVs
at not-for-profit prices, including with such organisations as Anglo
American, De Beers, Harmony, Sappi and Transnet.  In addition, GSK?s prices
for the private sector in South Africa have been among the lowest private
sector prices in the world.
GSK has also taken a lead in voluntary licensing.  In 2001, the company
granted a voluntary licence to generic drug manufacturer Aspen Pharmacare
for the manufacture and sale of three ARVs ? Epivir (3TC), Retrovir (AZT)
and Combivir - to the public sector in South Africa.  In October 2003, GSK
extended this licence to include both the public and private sectors and all
countries in the sub-Saharan region.

Building on these programmes, GSK has reached an agreement with the
Commission and the complainants over what it believes to be a reasonable
response in the current situation.  In terms of the agreement, GSK will be
offering a further voluntary licence to a second generic manufacturer for
the GSK range of locally marketed antiretroviral medicines.  This licence
will be granted on terms substantially similar to those of the Aspen
licence.  GSK has also agreed to entertain applications for a further two
possible licences.

Peter Bains continued: "We want to continue to play our part in addressing
South Africa?s healthcare needs.  We have a key role to play in providing
products today.  Perhaps more importantly, we are leading efforts to
discover and develop new vaccines and medicines for AIDS.  There is no
vaccine for AIDS.  There is no cure for AIDS.  And existing treatments are
increasingly subject to resistance.

"There are many barriers to overcome in addressing the HIV/AIDS epidemic.
The challenges include prevention, stigma and discrimination, and the lack
of funding for treatment programmes and infrastructure to deal with the
disease.  It is important to stay focused on these.  Against that
background, the commitment now being shown by the South African Government
towards tackling the HIV/AIDS epidemic is a crucial, and welcome, step
forward.

?The key now is for all parties to focus on fighting HIV/AIDS, which
represents a unique challenge for South Africa and the rest of sub-Saharan
Africa.  We look forward to continued partnership with the Government of
South Africa and other stakeholders in addressing this unprecedented
pandemic.?

Editors? notes

GlaxoSmithKline (GSK) is committed to playing a leading part in improving
healthcare in the developing world.  GSK makes a vital contribution in three
key areas: supplying antiretrovirals (ARVs) and anti-malarials at
not-for-profit prices and vaccines at significant discounts; investing in
research and development (R&D) that targets diseases particularly affecting
the developing world; and community investment activities and partnerships
that support better healthcare.

Preferential Pricing
GSK has offered sustainable preferential pricing for ARVs since 1997 and for
vaccines for over 20 years.
All our ARVs and anti-malarials are now available at not-for-profit prices
to public sector customers and not-for-profit organisations in 63
countries - all the Least Developed Countries of the world (LDCs) and all of
sub-Saharan Africa (SSA).  In addition, all private employers in sub-Saharan
Africa who provide care and treatment to their uninsured staff can purchase
our ARVs at not-for-profit preferential prices.  All projects fully funded
by the Global Fund to Fight AIDS, TB and Malaria are also eligible, which
means that our not-for-profit prices are now available in over 100
countries.  Our prices are sustainable ? we do not make a profit on them,
but we do cover our costs.  This means that we can sustain supply of these
high-quality products for as long as they are needed

Research and Development
We believe that we are the only company undertaking R&D into the prevention
and treatment of all three of the World Health Organisation's priority
diseases in the developing world ? HIV/AIDS, tuberculosis and malaria.  GSK
is the industry leader in HIV R&D, with the broadest discovery and
development pipeline (currently totalling 16 active treatment projects).

Community Investment
GSK funds community-led initiatives in almost 100 countries.  Our community
investment programmes span three major developing world diseases (lymphatic
filariasis, malaria and HIV/AIDS), a number of regional health initiatives,
and health education.  In addition, we also provide donations of products,
when appropriate, to support emergency humanitarian relief efforts.  In
South Africa, the majority of our Corporate Social Investment budget is
dedicated to helping those affected by HIV /AIDS.

EPIVIR, 3TC, RETROVIR, AZT and COMBIVIR are Registered Trademarks of the
GlaxoSmithKline Group of companies.

Issued on behalf of GlaxoSmithKline South Africa (Pty) Ltd, Private Bag
X173, Bryanston 2021
For further information, please contact:
Vicki Ehrich, Director, Corporate Affairs, GlaxoSmithKline, Tel 011 745 6563
or 082 453 4367, or
Grace Schuurman, Grace Communications, Tel 011 465 0309 or 083 302 3981.
10 December 2003                                        Media-CC Non-Referral

----end-----

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