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Gerald R Ford School of Public Policy ** Integrated Policy Exercise ** January 2003

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Nearly $18M in Discounted AIDS Drugs Allocated for Africa Diverted by Wholesalers and Sold on European Market

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Nearly $18 million worth of discounted AIDS drugs earmarked for Africa

have been intercepted by "profiteer[ing]" wholesalers and diverted back to

Europe to be sold at higher prices there, the Washington Post reports.

Drug maker GlaxoSmithKline estimates that 28 shipments of Combivir, Epivir

and Trizivir were diverted by European wholesalers from Africa to markets

in Germany, the Netherlands, Switzerland and the United Kingdom between

July 2001 and July 2002. The 28 shipments comprised three million doses of

the drugs and had an estimated retail value of $18 million; they were

intended for distribution in five central African nations. Glaxo and

European regulators did not detect the fraud until July 2002, when customs

inspectors in Belgium noticed irregularities in a shipment sent from

Senegal by a Dutch wholesaler that was passing the drugs to another Dutch

wholesaler. The medicines earmarked for Africa did not contain any special

markings or packaging to differentiate them from those destined for the

European market, meaning that pharmacists may have been unaware that they

were purchasing rerouted drugs. None of the African entities slated to

receive the drugs complained of not receiving their shipments. Viehbacher

noted that the lapse might have been due to problems with inventory control

or delays between shipping and billing.

Glaxo To Continue Program

AIDS advocates have previously expressed fears that drug diversion and

other fraudulent activities might threaten drug makers' willingness to

participate in differential pricing programs. "We've been fighting so hard

to get these medicines, and for someone to take them from the hands of

people who are dying, to make money for themselves, it's terrible, a

scandal," Sarata Ottro Zirignon-Toure, deputy chief of staff to the

president of Ivory Coast, said (Washington Post, 10/3). But Glaxo

officials said they do not plan to stop making discounted drugs available

to developing nations (Reuters, 10/3). Chris Viehbacher, president of

pharmaceuticals for Glaxo's European division, said that Glaxo does not

plan to discontinue its differential pricing program because the "human

need is too big," noting that the company will instead press for tighter

border controls and adherence to existing trade regulations. He added that

Glaxo will change the packaging of medicines destined for African countries

(Washington Post, 10/3). The Dutch Health Supervisory Service has said it

will recall 3,600 packets of Combivir and Epivir and will prosecute the

individuals involved in the scheme (Dyer, Financial Times, 10/3).