CPTech's 2003 reports for the RSA Competition Commission, in Hazel Tau et al.v GSK, Boehringer, et al

On August 13, 2014, the Republic of South Africa (RSA) Competition Commission (CC) released the redacted versions of the reports provided to the CC by CPTech in 2003 in the TAC competition case involving GSK and Boehringer Ingelheim. A complete set of the documents is available here, and links to individual documents are listed below.

The case was more formerly known as Hazel Tau et al. v. GlaxoSmithKline, Boehringer Ingelheim, et al. & Aids Healthcare Foundation et al v. GlaxoSmithKline, Boehringer Ingelheim, et al. Case Numbers: 2002sep226 & 2002jan357.

The final resolution of the case was a settlement between the plaintiffs, and GSK and Boehringer Ingelheim, that included obligations to license generic manufacturers to supply the GSK and BI antiretroviral (ARV) drugs throughout sub-Saharan Africa.

Among the contemporary reports about the case are:

  • GSK and BI issue anti-retroviral licences, Towards a free and fair economy for all, Newsletter of the Competition Commission. Edition 15. March 2004. http://www.compcom.co.za/newsletters/
  • Belinda Beresford, The Price of Life: Hazel Tau and Others vs GlaxoSmithKline and Boehringer, Law and Treatment Access Union of the AIDS Law Project and Treatment Access Campaign. July 2003.
  • Competition Commission Settlement Agreements Secure Access to Affordable Life-Saving Antiretroviral Medicines, TAC Newsletter - 10 December 2003. http://www.tac.org.za/newsletter/2003/ns10_12_2003.htm
  • Jonathan Berger, University of the Witwatersrand, Advancing public health by other means: Using competition policy to increase access to essential medicines, ICTSD-UNCTAD Dialogue on Ensuring Policy Options for Affordable Access to Essential Medicines, Bellagio, 12-16 October 12-16, 2004.

During that time, CPTech also linked to several news reports and NGO statements about the case, here: http://www.cptech.org/ip/health/sa/tac-competition-complaint.html.

Context of the CPTech Documents

In 2003, CPTech was hired by the RSA Competition Commission to evaluate the Hazel Tau and TAC complaint regarding excessive pricing of drug to treat HIV/AIDS.

CPTech assembled an in-house team to evaluate the complaint, led by CPTech Executive Director James Love, and including lawyers Sean Flynn and Robert Weissman, Iris Boutros (then a doctoral student at Harvard), Michael Palmedo and Thiru Balasubramaniam (formerly employed by WHO). In addition, CPTech received expert reports from Aidan Hollis (Industry Canada, University of Calgary), Alicia Yamin (Harvard), Brook Baker (Northeastern), Carlos Correa (CEIDIE), Eleanor Fox (NYU), FM Scherer (Harvard), Jerome Reichman (Duke), Joel Lexchin (University of Toronto), Juan Rovira (World Bank) assisted by Achal Prabhala (Yale), Sandra Fredman (Oxford), Shubha Ghosh (SUNY), William Jack (Georgetown) and a five person team at Oxford: Katja Ziegler, Estelle Dehon, Tina Piper, Sudhir Krishnaswamy and Shamnad Basheer (Oxford Public Interest Lawyers).

CPTech provided the RSA Competition Commission with two evaluations covering three violations of the RSA competition laws. The first evaluation concerned abuses of patent rights related to blocking access to essential facilities (the patents on the ARV drugs) and the exclusionary act of refusing licenses to patents. The second evaluation concerned excessive pricing. These reports were accompanied by 25 expert reports covering a wide range for topics. All of the CPTech reports were protected under a confidentiality agreement between CPTech and the competition commission, and until they were released by the Commission to TAC on August 13, 2014.

The CPTech evaluations and the expert reports were provided to the Competition from August 28, 2003 to September 20, 2003.

On October 16, 2013, the Competition Commission published a media release with the title: "Competition Commission finds pharmaceutical firms in contravention of the Competition Act." The release read in part:

MEDIA RELEASE FROM THE COMPETITION COMMISSION

16 October 2003

Competition Commission finds pharmaceutical firms in contravention of the Competition Act

The Competition Commission has found that pharmaceutical firms GlaxoSmithKline South Africa (Pty) Ltd (GSK) and Boehringer Ingelheim (BI) have contravened the Competition Act of 1998. The firms have been found to have abused their dominant positions in their respective anti-retroviral (ARV) markets.

In particular the Commission has found the firms have engaged in the following restrictive practices:

1. Denied a competitor access to an essential facility
2. Excessive pricing
3. Engaged in an exclusionary act

The Commission has decided to refer the matter to the Competition Tribunal for determination.

Menzi Simelane, Commissioner at the Competition Commission, says," Our investigation revealed that each of the firms has refused to license their patents to generic manufacturers in return for a reasonable royalty. We believe that this is feasible and that consumers will benefit from cheaper generic versions of the drugs concerned. We further believe that granting licenses would provide for competition between firms and their generic competitors."

"We will request the Tribunal to make an order authorising any person to exploit the patents to market generic versions of the respondents patented medicines or fixed dose combinations that require these patents, in return for the payment of a reasonable royalty. In addition, we will recommend a penalty of 10% of the annual turnover of the respondents' ARVs in South Africa for each year that they are found to have violated the Act."

Simelane said these practices violate the Competition Act of 1998's prohibitions against excessive pricing (section 8(a)), refusing access to essential facilities (section 8(b)) and exclusionary acts that have an anticompetitive effect that outweighs technological, efficiency or other pro-competitive gains (section 8(c).

. . .

The original complaint in this matter was filed by Hazel Tau and others alleging that GSK and BI were charging excessive prices to the detriment of consumers for their patented ARV medicines.

. . .

On the same day, the Treatment Action Campaign issued this statement:

PRESS RELEASE FROM SOUTH AFRICAN TREATMENT ACTION CAMPAIGN

16 October 2003

The Treatment Action Campaign welcomes the statement below by the Competition Commission. Just over a year ago, Hazel Tau and 10 others lodged a complaint at the Competition Commission against GlaxoSmithKline and Boehringer Ingelheim for excessive pricing of their antiretroviral medicines. The Competition Commission has now decided to refer this matter to the Competition Tribunal for ajudication.

The 11 complainants are: COSATU, the TAC, CEPPWAWU, Hazel Tau, Nontsikelelo Zwedala, Sindiswa Godwana, Sue Roberts, Isaac Skosana, William Mmbara, Steve Andrews and Francois Venter. Two additional parties joined the complaint in February 2003, the AIDS Consortium and a TAC volunteer who subsequently died of AIDS in June .

For questions on the Competition Commission case, please contact Jonathan Berger on 011 717 8600 or 083 419 5779, or Fatima Hassan on 083 279 9962.

Both TAC and the RSA Competition Commission subsequently entered into settlements with GSK and Boehringer to provide generic manufacturers with licenses to their patents.

KEI Director James Love, the lead consultant to the RSA Competition Commission in the Hazel Tau case, had this to say about the release of the documents.

"The reports released by the Competition Commission involve the work of more than two dozen talented and dedicated experts. Nearly all of the outside experts worked on a pro bono basis, and the CPTech staff spent months working for very modest pay. The 25 expert reports and the two evaluations covered a wide range of topics and it will be useful to have these documents in the public domain. The fact that RSA Competition Commission commissioned this work, which was extensive and often innovative, and acted on the recommendations, speaks to the commitment of the Competition Commission, including in particular Diane Terblanche, who led the work of the Commission on this case, to address the concerns about access to ARV drugs put forward so forcefully in the Hazel Tau/TAC complaint. Among the original CPTech team, nearly everyone remains engaged in efforts to expand access to medical treatments, including Thiru Balasubramaniam, who works for KEI, Sean Flynn and Michael Palmedo, now working at the American University Program on Information Justice and Intellectual Property, and Robert Weissman, now the President of Public Citizen. The outside experts included many of the most authoritative and knowledgeable researchers on intellectual property rights, competition law and human rights, and the contributions of each made deep impressions on the Competition Commission and its staff. Now, with the release of the documents, thanks to the request by TAC, a wider audience will have access to these reports."

The titles and authors of the CPTech documents follow:

Title Author
Economic Analysis Of The Need For A Compulsory License Remedy To Promote Access To Essential Medicines Under Section 8(C) Of The South African Competition Act Professor Aidan Hollis (Industry Canada, University of Calgary)
Human Rights Obligations Regarding Access To Medications Alicia Ely Yamin (Harvard School of Public Health)
Essential Facilities For Fixed-Dose Combination ARVs Professor Brook K. Baker (Northeastern University School of Law)
International Experience With Regard To "Refusal To Deal" Professor Carlos Correa (Center for Interdisciplinary Studies of Industrial Property and Economics CEIDIE, Law Faculty, University of Buenos Aires)
Section 8(A) Threshold For "Excessiveness" As Lower For Necessities Than Luxuries Eleanor M. Fox (Walter J. Derenberg Professor of Law New York University School of Law)
In the Matter of Glaxosmithkline South Africa et al. Professor F.M. Scherer (John F. Kennedy School of Government, Harvard University)
Treatment And FDCs Iris Boutros
The AIDS Epidemic In South Africa Iris Boutros
The Socio-Economic And Demographic Impact Of The HIV/AIDS Epidemic In South Africa Iris Boutros
Compulsory Licences: History And Legal Principles Professor J. H. Reichman (Bunyan S. Womble Professor of Law, Duke University)
Evidence Regarding Research and Development Investments in Innovative and Non-Innovative Medicines James Love
Evaluation Of Excessive Pricing James Love
Compensation for Non-Voluntary Use Of a Patent On Medical Technologies James Love
Price Evolution Of Antiretroviral Drugs 1996 To 2002 Maryland Reimbursements For Medicaid Program James Love and Thiru Balasubramaniam
The Effects Of Generic Competition On Drug Prices Over Time James Love and Thiru Balasubramaniam
The Role Of Marketing In The Pharmaceutical Industry Professor Joel Lexchin (School of Health Policy and Management, York University, Department of Family and Community Medicine at the University of Toronto)
Promoting Affordability Of Antiretroviral Therapy (ART) In South Africa Juan Rovira (World Bank), assisted by Achal Prabhala
Annex A - Antiretroviral Prices Michael Palmedo
E.C. Case Review: Essential Facilities/Refusal To License Katja Ziegler, Estelle Dehon, Tina Piper, Sudhir Krishnaswamy and Shamnad Basheer (Oxford Public Interest Lawyers)
Relevance Of The European Convention On Human Rights Professor Sandra Fredman (Exeter College and Faculty of Law, Oxford)
Excessive Pricing as Abuse of Dominant Position Professor Shubha Ghosh (University at Buffalo, SUNY, Law School)
Economic Analysis Of Prices And Royalties For ARVs In South Africa Professor William Jack (Department of Economics, Georgetown University)
Economies Of Scale are Important and a Compulsory License Must Permit Exports so that a Domestic Producer Can Reach Efficient Economies Of Scale Robert Weissman
The Legislative Purposes and History of the South Africa Competition Act Robert Weissman
The World Trade Organisation's Agreement On Trade- Related Aspects Of Intellectual Property Robert Weissman
Focusing on Exclusionary Practices Sean Flynn
Evaluation Of The Essential Facilities And Exclusionary Acts The Consumer Project on Technology
AttachmentSize
Evaluation_Essential_Facilitites_Exclusionary_Acts Final Report_Redacted_20030909.pdf920.75 KB
Evaluation_Excessive_Pricing_Redacted_20030831.pdf350.11 KB
ER_Aidan_Hollis_Industry_Canada_Exclusionary_Act_20030828.pdf168.13 KB
ER_Alicia_Yamin_Harvard_Human_Rights_20030828.pdf295.82 KB
ER_Brook_Baker_Essential_Fac_FDC_ARV_20030827.pdf140.53 KB
ER_Carlos_Correa_CEIDIE_Refusal_to_Deal_20030828.pdf158.04 KB
ER_Eleanor_Fox_NYU_Excessiveness_Necessities_20030828.pdf86.24 KB
ER_FM_Scherer_Harvard_Compulsory_Licensing_20030828.pdf154.1 KB
ER_Iris_Boutros_AIDS_South_Africa_20030828.pdf139.51 KB
ER_Iris_Boutros_Impact_HIV_20030828.pdf144.41 KB
ER_Iris_Boutros_Treatment_FDCs_Redacted_20030828.pdf241.05 KB
ER_James_Love_Compensation_Non-Voluntary_Use_20030907.pdf426.2 KB
ER_James_Love_RND_Costs_Redacted_20030920.pdf395.15 KB
ER_James_Love_Thiru_Balasubramaniam_Generic_Entry_Prices_Over_Time_20030828.pdf95.74 KB
ER_James_Love_Thiru_Balasubramaniam_Maryland_Medicaid_ARV_prices_20030828.pdf88.88 KB
ER_Jerome_Reichman_Duke_Compulsory_Licences_20030828.pdf591.19 KB
ER_Joel_Lexchin_UToronto_Pharmaceutical_Marketing_20030828.pdf103.15 KB
ER_Juan_Rovira_World_Bank_Affordability_ART_20030828.pdf100.94 KB
ER_Oxford_PIL_Essential_Facilities_Refussal_to_License_20030828.pdf214.35 KB
ER_Robert_Weissman_Economies_Scale_Export_20030907.pdf65.88 KB
ER_Robert_Weissman_History_Purpose_RSA_Competition_Act-purpose_20030828.pdf79.52 KB
ER_Robert_Weissman_WTO_TRIPS_Agreement_20030828.pdf57.45 KB
ER_Sandra_Fredman_Oxford_Human_Rights_Europe_20030828.pdf109.57 KB
ER_Sean_Flynn_Exclusionary_Practices_20030828.pdf110.68 KB
ER_Shubha_Ghosh_SUNY_Excessive_Pricing_20030828.pdf116.62 KB
ER_William_Jack_Georgetown_Economic_Analysis_Anticompetive_Acts_20030828.pdf130.56 KB
ER_Mike_Palmedo_ARV_Prices_Redacted_20030828.pdf102.95 KB