GlaxoSmithKline Pressed on AIDS Drug Issue

The California Public Employees Retirement System (Calpers), a major shareholder in GlaxoSmithKline, is pressuring the world's second-largest drug maker to do more to make its AIDS drugs affordable in developing countries. Calpers owns about $760 million worth of GSK stock, according to Bloomberg News.

On Monday, Calpers' investment committee agreed to send GSK CEO Jean-Pierre Garnier a letter encouraging the company to re-evaluate its pricing policy in the developing world and to consider licensing its AIDS drugs to others, allowing them to make cheaper generic copies.

Calpers is the largest U.S. public pension fund and has a history of being an influential activist shareholder. Calpers' action was suggested by the AIDS Healthcare Foundation, a nonprofit that operates AIDS clinics in the United States and Africa. AHF spokesperson Ged Kenslea said GSK, the No. 1 seller of AIDS drugs worldwide, has lagged behind its rivals in making AIDS drugs accessible. Kenslea said Pharmacia has taken steps to license it AIDS drug Rescriptor to generic firms in numerous countries. GSK has licensed its AIDS drugs for generic production only in South Africa, and Kenslea said government red tape there has tied up distribution. Kenslea said while other companies, like Pfizer and Boehringer Ingelheim, have agreed to donate AIDS drugs to some poor countries, GSK has not.

GSK spokesperson Nancy Pekarek defended its actions, noting that the company sells its AIDS drugs in developing countries at a price that merely covers its costs.

Despite Calpers' letter, GSK claimed a victory of sorts. GSK said AHF had been pressuring Calpers for months to sell its GSK shares in protest of the AIDS drug pricing policies. Calpers rejected this move, writing the letter instead. AHF President Michael Weinstein denied this. GSK and AHF have had a tense relationship for months. AHF has legal complaints against GSK, and Garnier has complained that AHF was attacking GSK because the drug maker turned down its requests for donations, which he characterized as "blackmail."

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