Hazel Tau’s Struggle

Hazel Tau first came to the ALP with a request. Her husband had divorced her after finding out that she had HIV, and sold all their possessions without her consent. What could she do?

“I was destitute. I had to be accommodated by a friend,” recalls Tau.

The Aids Law Project was initially formed to combat discrimination faced by people living with HIV/AIDS. In 1993, its founder Edwin Cameron wrote, “If it is true that over the next decade AIDS will supplant race in our nation’s life as the major criterion of discrimination and exclusion, then the moral challenge to lawyers and law makers will be enormous.” But as the HIV epidemic turned into an AIDS epidemic, the role of the ALP shifted: advocating for the human rights of people with HIV/AIDS soon had to include advocating for treatment.

By 2002, HIV was taking a heavy toll on Hazel Tau. She had lost nearly 25 kg, her CD4 count was below 200, and her immune system was giving way to opportunistic infections. Earning R 4 800 month as a counsellor, she could not afford the R1 000 a month for ARVs. Her resolve, however, could not be broken. Hazel Tau decided to join the fight for access. 51

“We [TAC and ALP] looked at how expensive treatment was, and how people were dying. And I put myself in their shoes, because I was a breadwinner at home. If I got sick, I won’t [be able to] manage,” remembers Tau.

She became the first complainant in the case put together by the ALP and TAC to reduce the price of ARVs. In September 2002, ALP and TAC filed a complaint at the Competition Commission against two pharmaceutical giants, GlaxoSmithKline (GSK) and Boehringer Ingelheim (BI). 52 Using a new approach to competition law, ALP, TAC and a broad coalition—including healthcare workers and the Congress of South African Trade Unions (COSATU)—argued that the pharmaceutical companies violated competition law by abusing their dominance in the market and charging excessive prices for ARVs.

Sibongile Tshabalala talking about her struggle accessing treatment.

The prices, they alleged, were directly responsible for the “premature, predictable and avoidable loss of life.” 53 They were also unjustifiable after taking into account research and development costs, profits and licensing fees.

Pharmaceutical companies still frequently rely on the myth of high research and development costs to justify exorbitant prices. Innovation, they claim, is risky and must be generously rewarded. But there is no link between the cost of developing a drug and its price. 54 Companies spend far more on marketing than research and development. 55 Public funding also plays a vital and often neglected role: government and non-profit organizations fund 40 percent of total research and development spending. 56 One recent study found that, between 2010 to 2016, all 210 new drugs approved by the US Food and Drug Administration had some government funding. 57 There is not—and never has been—a justification for private profiteering. The challenge in the Tau case was to show this problem using competition law.

“We were operating very much in the dark,” recalls Jonathan Berger, a former senior researcher at SECTION27 who was instrumental in the case. There was no prior caselaw defining what “excessive pricing” meant. “That’s the difficulty and opportunity for lawyers. On the one hand, you’ve got nothing to guide you. But on the other hand, you don’t have a whole lot restricting you,” he says.

To gain public support, ALP and TAC met with stakeholders, held workshops for activists across the country, and produced a simple language booklet entitled The Right to Life. International civil society—ranging from Médecins Sans Frontières (MSF) to the Consumer Project on Technology—submitted expert reports to the commission supporting the complaint.

Underpinning the ALP and TAC approach was a key strategic consideration: the pharmaceutical companies would not want to publicly justify why they were charging so much. Berger recalls that they knew they would be successful if they could “get to a position where [a company] had to sit in public hearings before the tribunal and explain why in a small market like South Africa, with the epidemic that it has and where no one is getting access to treatment, why it’s charging what it’s charging.”

In October 2003, the Competition Commission announced that it would refer the complaint to the Competition Tribunal. The Commission found evidence that the companies were using their patent monopolies to deny licenses to other manufacturers, and to keep their prices excessively high. While negotiations between the parties were on-going before the referral, they soon picked up speed and the pharmaceutical companies reached a settlement to license the medicines, paving the way for more affordable generics. Hazel Tau’s fight thus led to drastic price cuts for ARVs and the introduction of the largest HIV treatment programme in the world (see Save Our Babies).

But not everyone could be saved. “It’s a pain which I will not forget. I lost a lot of friends, colleagues,” says Tau. “When we won the case, it was for me to say ‘OK. The left ones can get treatment.’ But we lost a lot—millions.”

In the years after, the Hazel Tau case opened the door for others. ALP and TAC used Competition Commission complaints—or sometimes their mere threat—to help bring down prices for more HIV medicines. The ARV efavirenz, for example, was licensed after ALP and TAC brought a complaint against MSD. 58 In another case, the Competition Commission approached the ALP and TAC for a submission on a proposed merger between GSK SA and Aspen Pharmacare. The organisations successfully argued that the merger should only be approved on the condition that GSK grant non-exclusive licenses for its ARV medicine.

In this way, the ALP and TAC harnessed the power of competition law to improve access to HIV medicines. The Competition Commission, in an echo of this history, is currently investigating Pfizer and Roche for excessive pricing for cancer medicines. 59

Still, competition law has not been used much in South Africa. 60 A competition complaint is necessarily limited to a single medicine with unique facts. They require a lot of resources and are often lengthy. Competition law remedies are thus ad-hoc, one-off solutions to a system-wide problem. Unless and until they are routinely used, these remedies will not make companies think twice about setting excessive prices. Given their historical success, competition law complaints should be explored further.

For Hazel Tau, the battle is still not over. “What we did with HIV, we still have to do for all types of chronic diseases, to make sure that treatment is available for all of us.”

Hazel Tau reflecting on the legacy of the case.

  2. Tau et al. v GSK & BI, Statement of Complaint in Terms of Section 49(B)(2)(b) of the Competition Act 89 of 1998.
  3. Tau et al. v GSK & BI, Statement of Complaint in Terms of Section 49(B)(2)(b) of the Competition Act 89 of 1998, 5.
  4. For example, a recent study found that the average, risk-adjusted cost to develop a cancer drug was $648 million, while the median revenue was $1658 million. Vinay Prasad et al., Research and Development Spending to Bring a Single Cancer Drug to Market and Revenues After Approval, JAMA Intern Med. (2017), doi:10.1001/jamainternmed.2017.3601.
  5. Donald Light & Joel Lexchin, Pharmaceutical research and development: what do we get for all that money?, 345 BMJ (2012), available https://www.bmj.com/content/345/bmj.e4348
  6. John-Arne Rottingen et al., Mapping of available health research and development data: what’s there, what’s missing, and what role is there for a global observatory?, The Lancet (2013), available at https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(13)61046-6/abstract.
  7. Ekaterina Cleary et al., Contribution of NIH funding to new drug approvals 2010–2016, PNAS (2018), available at http://www.pnas.org/content/early/2018/02/06/1715368115.
  8. TAC, TAC complaint increases access to efavirenz: MSD finally agrees to grant licenses on reasonable terms, https://www.tac.org.za/community/node/2329
  9. Competition Commission on Investigation into Cancer Drugs Manufacturers (Jun. 13, 2017), available at https://www.gov.za/speeches/media-statement-commissioner-investigation-manufacturers-cancer-drugs-13-jun-2017-0000.
  10. Jonathan Berger, Using competition law to increase access to medicines: Tau v GSK and TAC v MSD (2010) [Slide deck], available at http://section27.org.za/wp-content/uploads/2010/0c7/Lecture-14-Hazel-Tau-and-Others.pdf.