GlaxoSmithKline P.L.C. may need a giant Tums to help cope with the backlash from senior-citizen and other groups urging a boycott of the drugmaker after it cut supplies to Canadian pharmacies that sell medicines to Americans at discount prices.
Lambasting Glaxo's decision as mean-spirited and detrimental to the health of older people, a coalition of seven American and three Canadian groups took out a full-page newspaper ad in yesterday's New York Times urging U.S. consumers to sell their Glaxo stock and stop buying Glaxo's over-the-counter products.
London-based Glaxo, which yesterday reported 2002 revenue of $31.8 billion - and a profit of $5.8 billion - makes Tums antacid, Aquafresh toothpaste, Contac cold remedy, and such prescription medicines as antidepressants Paxil and Wellbutrin and asthma drug Advair.
Organizers of the protest, including Action Alliance of Senior Citizens of Greater Philadelphia, are planning a rally next Thursday outside Glaxo's Philadelphia offices. The company employs about 6,000 in the region.
"Glaxo is slapping us around, so we are going to hit back," said Pedro Rodriguez, who heads the city's Action Alliance of Senior Citizens. "Their appetite for higher and higher profits shows no bounds. It is the most greedy corporation in the U.S. right now."
Glaxo announced on Jan. 3 that it would end drug shipments to Canadian companies that sell drugs to American consumers. Late last month, Glaxo began reviewing drug orders of some Canadian pharmacies that it thought may be selling to Americans.
"We did this because of our concern for patient safety," Glaxo spokeswoman Patty Seif said. "Drugs coming from Canada are not FDA-approved, not labeled for sale in the United States. People can't be certain of where those drugs are coming from when ordering on the Internet."
Rodriguez contends that Glaxo's action was prompted by profit, not safety. The advocates for senior citizens and patients and the online pharmacies in the coalition say thousands of Americans, especially senior citizens, buy from Canadian pharmacies because prices are often 50 percent lower because of government regulation and the value of the Canadian dollar, which trades at 65 U.S. cents. Additionally, Canada has a large generic-drug industry, manufacturing lower-price chemically equivalent versions of brand-name drugs.
The groups' ad in the Times said: "Glaxo is taking away your right to affordable prescription drugs." It warned that, if Glaxo succeeded, "all drugmakers will follow its lead and eventually strip seniors of their well-established right to access affordable drugs from alternative sources."
The groups urged patients who buy Glaxo drugs through Canadian pharmacies to ask their doctors if other medicines would also be appropriate. And they suggested that U.S. consumers sell their Glaxo stock and share their concerns with members of Congress.
Glaxo in Canada has begun requiring pharmacies and mail-order prescription businesses exporting outside Canada to fax drug orders directly to Glaxo for approval.
If Glaxo approves the order, a wholesaler can supply the pharmacy, said Wayne Rivers, president and chief executive officer of Canadian wholesaler United Pharmacists Ltd. "I have 10 or 12 pharmacies I don't supply anymore," Rivers said, noting that the pharmacies were "cut off" because they did not comply with Glaxo's policy.
He said Glaxo sent out a second letter Jan. 30 to suppliers and pharmacies targeting 29 other, smaller Canadian pharmacies that might be selling medicines via the Internet and mail.
"They [Glaxo] are now catching the smaller players, people providing some international component, but who also provide pharmacy services to the communities in which they operate," Rivers said. "These are not large international brokers."
AARP, the senior citizens' advocacy group, said it was not involved in the boycott but sympathized with the coalition's concerns. "This exemplifies the need for affordable drug coverage in this country," said Angela Foreshaw, spokeswoman for AARP in Pennsylvania. "One of our top priorities in 2003 is to work with the President and members of Congress to enact a Medicare drug prescription benefit."
Glaxo has "been very vocal in support of the Medicare drug benefit," Seif, the company spokeswoman, said, adding: "In terms of a boycott or protesting, the company is very sorry to see that seniors have chosen to take this action. We believe the answer to affordability of medicines is a Medicare drug benefit."
In its earnings conference call with analysts in London yesterday, Glaxo said fourth-quarter profit, reported in British pounds, fell 4.1 percent because of the decline in value of the U.S. dollar and slumping demand for the antibiotic Augmentin, the company's second-best-selling product, which lost sales to lower-price generic versions. Net income was 935 million pounds, compared with 975 million pounds in the same period of 2001. But when converted to dollars, the net income reflects an increase.
Glaxo's top-selling drug, Paxil, also is facing a patent challenge in federal court in Chicago from a maker of generic drugs. Glaxo reported a 13 percent increase in earnings per share, beating its own earlier estimate of at least a 10 percent increase. For 2003, the company said it was expecting earnings growth in the high single digits.
Pharmaceutical sales were up 8 percent for the year, even though U.S. sales of Augmentin declined 20 percent in 2002 as a result of generic competition that began in the third quarter.
The company said it had 123 drug compounds in clinical development, seeking to ease analysts' concerns about Glaxo's research-and-development drug pipeline.