May 16, 2003

Dear [to the CEOs of Bristol-Myers Squibb, GlaxoSmithKline, and Pfizer, with cc:s to AIDS community relations staff and others]:

We, the undersigned organizations and individuals, are writing to express our profound disappointment at your companies' failure to negotiate serious price discounts and freezes in good faith with the state and territorial AIDS Drug Assistance Program (ADAP) directors. The ADAP Crisis Task Force initiated price negotiations for ADAP in the hopes that the pharmaceutical INDUSTRY will prove to be good corporate citizens in this time of severe funding shortfalls at the state and federal levels. They have asked for additional discounts on your HIV drugs in order to keep this vital heath care infrastructure intact. Instead, they were offered nothing but smoke and mirrors. This is unacceptable.

Five of your fellow companies have already come forward and offered substantial discounts on their products. Abbott, Boehringer Ingelheim, Gilead, Hoffmann-LaRoche, and Merck have all stepped up to the plate, with a combined $25 million dollars in price discounts for ADAP. You, the remaining three, Bristol-Myers Squibb, GlaxoSmithKline, and Pfizer/Agouron, have not. With a combined 70% market share in HIV drugs, your failure to respond in a meaningful way to these vital negotiations casts a harsh light on your respective corporations, and on the drug INDUSTRY as a whole.

Surely you realize the seriousness of the financial crisis currently facing public funded programs in the United States. Operating under a $145 million dollar federal shortfall, ten ADAPs have already shut their doors to new enrollees, just one month into the new fiscal year. As state budgets become finalized, more will have joined the ranks due to additional shortfalls resulting from their fiscal crisis. Over 500 people living with HIV are already on waiting lists to get into the program. You know better than most the importance of identifying HIV infected individuals and promptly bring them into care, yet you chose to ignore this crisis, as indicated by your failure to act.

Your inaction will lead to the irreversible dismantling of ADAPs, by forcing the programs to lower their financial eligibility, by the creation of barrier to needed medications through prior authorization procedures, and by the removal of drugs from ADAP formularies. Turning away people in need of care and life-saving medication will result in the decline of their health status, leading to their premature illness and death. While your companies"™ patient assistance programs can help alleviate some of the pressure, the fact of the matter is, these programs are only available to people with a good doctor or case worker, who are willing to jump through the application and re-application hoops.

1.7 million Americans are losing their Medicaid coverage this year due to state cuts. Additionally, the Administration and Congress are currently drafting legislations to dismantle the Medicaid entitlement. On the chopping block is mandatory prescription drug coverage of all FDA approved drugs. States will be given free rein to choose which drugs they will cover, and who will be eligible for coverage. There is no other recourse for those HIV positive people losing their Medicaid other than ADAP.

We call on you to return to the negotiations with the ADAP Crisis Task Force. Instead of intimidation tactics and shell games, you must bring back to the table a serious offer of additional discounts to help stop this public health disaster. You must negotiate in good faith with the ADAP directors to provide meaningful drug cost savings, and the discounts must be made available to all state and territorial ADAP programs. While the AIDS community in the U.S. has engaged with the drug INDUSTRY in a transparent manner with constructive dialogue, the same cannot be said of many of our INDUSTRY partners. Your current failure to do your part to help solve the ADAP Crisis threatens to break this fragile relationship.

In order to discuss this and other concerns with your companies, the Fair Pricing Coalition is requesting meetings to be held with decision-makers who have the ability to affect the prices of these important new drugs. We would like to hold these meetings in New York City or in Washington, D.C., at mutually convenient times as soon as possible. To follow-up on this letter and our request for meetings, please contact Rob Camp at the Treatment Action Group (TAG) at 646-331-4323 (email: rc00001@terra.es) or Lynda Dee at AIDS Action Baltimore at 410-332-1170 (email: lyndamdee@aol.com ). Please respond to this letter within three weeks. Unless and until otherwise agreed, all the responses and interactions with the Fair Pricing Coalition will be shared publicly.

We await your response.

Yours truly,

May 16, 2003

Dear [to the CEOs of Bristol-Myers Squibb, GlaxoSmithKline, and Gilead, with cc:s to AIDS community relations staff and others]:

We, the undersigned, have serious concerns regarding the growing costs of therapy for HIV disease. While we are heartened by the progress made in moving toward simpler, easier to use regimens, we are dismayed by the fact that prices of new drugs are escalating ever higher, with each new price increase setting new, unacceptably high benchmarks. As new therapies might facilitate better adherence and possibly more durable long-term treatment, manufacturers should be planning to lower or at least contain the daily cost of their regimens, not increase them, because more individuals will stay on the same anti-HIV regimen for longer periods of time. The health and survival benefits provided by the present generation of anti-HIV therapies makes it possible for manufacturers to set lower, or at least stable prices, while maintaining an adequate return on investment and retaining sufficient incentives to reinvest in continued development of new anti-HIV drugs.

With people living longer and the continuing new infection rates, public funded programs are stretched to the breaking point. Under the current economic climate, we are clearly in a new era that demands a complete rethinking about the pricing of HIV drugs. There has been nothing extraordinary about the cost of clinical trials required to bring these new formulations and drugs to market — indeed, thanks to accelerated approval, development costs may be lower for anti-HIV drugs than for many others — while the duration of their use by patients may be greatly extended.

For example, the fact that the new, once-daily protease inhibitor atazanavir (Reyataz) from BMS may not produce the cholesterol and triglyceride elevations associated with other PIs increases the likelihood that it will be used as first-line therapy, for people switching from other PI-based regimens due to toxicity or adherence issues from other PI-based regimens. Thus, the price of atazanavir should be price- and cost-neutral for ADAP, Medicaid, and private insurers.

Similarly, the introduction of extended release stavudine (d4T, Zerit XR), the new nucleoside analogue emtricitabine (FTC, Coviracil), and fos-amprenavir will mainly result in the potential substitution of the newer drugs for already marketed equivalents. These three new drugs provide mainly increases in convenience, rather than major new advances in potency or tolerability. This argues even more strongly for their prices to be cost-neutral, if not actually discounted from existing products (to encourage providers to switch patients from less convenient, virologically equipotent drugs).

AIDS Drug Assistance Programs (ADAPs) across the country are struggling under a $145 million dollar shortfall in the current fiscal year. State Medicaid programs are suffering severe funding cuts, causing 1.7 million Americans to lose their coverage. Both of these programs have been put under strict rules that require any new additions must be "cost neutral." In addition, private insurance premiums are soaring far above what most working people can afford. The INDUSTRY's practice of pricing new drugs and new formulation of old drugs at the upper limit of what the market will bear has intensified the public health crisis of access to HIV/AIDS care in the United States, and increased fiscal pressure on health care funding programs which are already experiencing double-digit inflation in spite of the current economic slowdown.

Bristol-Myers Squibb, Gilead, and GlaxoSmithKline have expressed a strong desire to create goodwill and cooperative working relationships with the community. No one wants to see those relationships jeopardized over this issue, but that surely will occur if pricing is inappropriate. Exploitative pricing will trigger widespread mistrust, contentious debate, and closer scrutiny of INDUSTRY practices in general.

Though we call for a major reduction in the price of HIV therapies in general, these new drugs must at least be priced fairly and in accordance with other drugs of their respective classes. None of these drugs represent a major advance in therapy that might otherwise reduce the overall cost of care. We urge manufacturers to rethink their plans for pricing and to act as responsible citizens plying a key role in the fight against a global epidemic. Without responsible pricing, there can be no constructive dialogue between INDUSTRY and the HIV affected populations worldwide.

Unless INDUSTRY shows immediate, serious restraint and self control on pricing, we will have no choice but to make drug pricing an even greater priority for direct action within the HIV community's legislative, regulatory and public relations agenda. It is not too difficult to remember the days when more aggressive forms of activism led to substantial reductions in the price of AZT and other HIV/AIDS drugs. From your perspective, self-restraint is undoubtedly your best solution.

In order to discuss this and other concerns with your companies, the Fair Pricing Coalition is requesting meetings to be held with decision-makers who have the ability to affect the prices of these important new drugs. We would like to hold these meetings in New York City or in Washington, D.C., at mutually convenient times as soon as possible. To follow-up on this letter and our request for meetings, please contact Rob Camp at the Treatment Action Group (TAG) at 646-331-4323 (email: rc00001@terra.es) or Lynda Dee at AIDS Action Baltimore at 410-332-1170 (email: lyndamdee@aol.com). Please respond to this letter within three weeks. Unless and until otherwise agreed, all the responses and interactions with the Fair Pricing Coalition will be shared publicly.

Thank you for your time and attention

Yours truly,

* What is the Fair Pricing Coalition (FPC)?
In a broad sense, the Fair Pricing Coalition is made up of any community-based organization or individual who signs onto this letter. The organizing work of the Coalition is done by a core group of treatment activists, including representatives from AIDS Action Baltimore, AIDS Treatment Data Network, Project Inform, Treatment Action Group, and many other organizations.

The Fair Pricing Coalition also works closely with the National Association of State & Territorial AIDS Directors (NASTAD), and its work is guided and informed by many key ADAP directors and people working with other government health care payment programs. The FPC also works in cooperation with the Coalition for Salvage Therapy (CST), the AIDS Treatment Activist Coalition (ATAC), and community members of the ADAP Working Group.