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FEATURE-Drug makers face bitter pill over pricing

By Amelia Torres

BRUSSELS, Feb 2 (Reuters) - The pharmaceutical industry may

have to swallow a bitter pill later this year if the European

Union rules that Bayer AG's BAYG.DE and Glaxo Wellcome Plc's

GLXO.L sales practices have broken antitrust law.

The two manufacturers, and the industry as a whole, resist

allowing grey marketeers to take advantage of huge price

differences in the 15-nation EU by buying cheap drugs in Spain

and importing them into high-price Britain.

The problem has close parallels with the controversy over

car prices, where Britain also bears the burden of being one of

the most expensive countries in Europe. British motorists there

have cried foul and ignored showrooms in the hope of legal

action.

But drug manufacturers believe there is a major difference

in their favour: it is governments, not the market, that set the

price of medicines.

"If you are a manufacturer of nuts and bolts it's up to you

what price you charge in each country of Europe...with medicines

it's quite different; every government has some sort of

control," said Richard Ley, spokesman for the Association of the

British Pharmaceutical Industry.

Glaxo spokesman Martin Sutton said: "The Spanish government

indicates to us what prices it is willing to pay. We accept

that. What we object to is selling products at that price for

exports".

Parallel or grey imports are estimated to cost the British

pharmaceuticals industry alone more than 600 million pounds

($975.4 million) a year. They also account for close to 10

percent of the Dutch and Danish markets, industry observers say.

TELL ME WHERE YOU SELL AND I'LL SAY WHAT THE PRICE IS

Faced with complaints from Spanish wholesalers and parallel

importers, Glaxo asked the European Commission's competition

department in March 1998 to approve its dual-pricing policy for

Spain under which it charges one price for products consumed

there and a higher one for exports.

Andreas Mohringer, president of the European association of

parallel traders in pharmaceuticals, EAEPC, said export prices

could be 12 times higher.

Mohringer attended a closed-door hearing organised by the

Commission in December at the request of Glaxo and hopes the EU

watchdog will rule such practices illegal.

"We hope the Commission will stick to its objections," he

said, referring to a formal statement in July in which the

Commission detailed its objections to the Glaxo pricing scheme.

Glaxo is merging with SmithKline Beecham SB.L to form the

world drugs leader.

The Commission has consistently fought manufacturers'

attempts to re-create internal borders in the EU after they were

abolished in 1993. The move created a single market for goods

and services but in some cases the bloc's 370 million consumers

have not yet seen the benefits.

Despite showing some understanding of the fact that prices

are fixed by governments, and that this is aggravated by intense

pressure to cut health service deficits, the EU executive

remains committed to allow parallel imports.

In 1996, the Commission ruled that Bayer had violated EU

antitrust rules by barring wholesalers in France and Spain from

exporting its best-selling heart drug Adalat to Britain,

describing it as a "serious infringement".

But it fined the company only 3.0 million euros ($2.96

million), noting pharmaceutical prices "are not set

automatically by companies".

Mohringer dismissed the picture of intransigent government

officials imposing their will on big multinational companies,

arguing that prices were set according to a bargaining process

in which manufacturers also found some advantage. He said the

impotence drug Viagra was the most expensive in Spain despite

being very popular there.

"Both parties in the end agree to a common price. It's no

diktat," Mohringer said.

VERDICTS LATER THIS YEAR

The European Court of First Instance, the EU's lower court,

will have the last word when it rules, probably before the

summer, on Bayer's appeal of the 1996 Commission decision.

Following the statement of objections in July and the

December hearing, the Commission is now also in the last leg of

the antitrust procedure against Glaxo Wellcome.

But even if the decision goes against the British firm, the

EU Commission will not at this stage be able to punish it, since

the firm notified its pricing policy for formal regulatory

approval.

Commission antitrust decisions can be challenged in the

Luxembourg-based Court of First Instance, whose rulings can be

appealed to the European Court of Justice.

U.S. study finds treatment beats Lyme disease

(Release at 4 p.m. EST (2100 GMT)

CHICAGO, Feb 1 (Reuters) - People with Lyme disease who

receive conventional antibiotic therapy can be as healthy years

later as those who never had the disease, according to a study

released on Tuesday.

"This study does not indicate that all patients with Lyme

disease have favourable outcomes," said the report from the Yale

University School of Medicine.

"Indeed, there is good evidence that in rare instances they

may experience complications -- particularly recurrent

arthritis in patients who are not treated promptly and who have

a genetic predisposition to develop an autoimmune-mediated

arthritis.

"However, the large size of our sample and the generally

excellent overall outcomes of the patients should reassure both

patients and physicians that the prognosis for most patients

with Lyme disease who receive conventional antimicrobial

treatment is excellent," it said.

The disease, first recognised in Old Lyme, Connecticut, in

1975, is spread by ticks that live on deer and sometimes on

dogs. It causes joint inflammation, fatigue and flu-like

symptoms.

The Yale study, published in this week's Journal of the

American Medical Association, looked at 678 Lyme disease

victims in Connecticut, 212 of whom were compared to 212 people

who had never had the disease.

It found that those Lyme disease victims who complained of

worsening symptoms or more trouble with daily activities one to

11 years after diagnosis did so at about the same rate as

people in the study who were free of the disease.

Most of the Lyme disease patients in the study were treated

with antimicrobial agents.

The American Medical Association said a coauthor of the

study, Eugene Shapiro, had received research support and

consulted for Pasteur Merieux Connaught Laboratories RHON.PA

and had given lectures supported by Glaxo-Wellcome PLC GLXO.L

and by Smithkline Beecham SB.L -- all companies that make

products to prevent or treat Lyme disease.

In an editorial in the same issue commenting on the study,

Pierce Gardner, a physician at the State University of New York

at Stony Brook, said research about the disease remains

complicated by difficulties in making exact diagnoses.

"Although Lyme disease was first recognised 25 years ago,

serologic methods of diagnosis have not been well standardised,

and there is significant variability between laboratories," he

said.

Small babies underachievers, U.S. researcher finds

Release at 4 p.m. EST (2100 GMT)

By Michael Conlon

CHICAGO, Feb 1 (Reuters) - Underweight babies suffer no

long-term emotional or social damage as adults, though they are

more likely than infants of normal weight to be academic and

professional underachievers, a study published on Tuesday

said.

"It's a mixed conclusion," said the study's author, Richard

Strauss of the University of Medicine and Dentistry of New

Jersey-Robert Wood Johnson Medical School. But one important

finding, he said, is that parental tutoring and education can

help reverse the intelligence deficits that accompany low birth

weight.

The report, published in this week's Journal of the

American Medical Association, was taken from a long-term study

of 14,189 children born in the United Kingdom in 1970, of whom

1,064 weighed about 5.5 pounds or less (2.5 kg).

Normal births average 7.5 pounds (3.4 kg). None of the

births in the study was premature.

A common cause of low birth weight is cigarette smoking

during pregnancy, Strauss said in an interview, along with high

blood pressure, poor placental blood flow, low maternal weight

gain throughout or in any one trimester, and lack of prenatal

care.

"These results demonstrate that those born small for

gestational age have increased academic difficulties persisting

into adolescence," the study said.

"As young adults (they) also have deficits in professional

and economic attainment. However, measures of social and

emotional outcomes in midadolescence and early adulthood were

normal," it said.

The study found that the low-birth-weight infants were less

likely as adults to have professional or managerial jobs and

had lower weekly incomes.

But Strauss said the majority of adults in the study who

began life as low-birth-weight infants were employed, married

and generally satisfied with life.

"The positive messages of this study are twofold. First,

that parents of (such) children can enrich the educational

experiences of these children through activities such as

reading with them or enrolling them in academic support

programmes," Strauss said in a statement.

"The second positive message is that low birth weight does

not appear to interfere with an adult's quality of life," he

said.

Anxious mothers can be a factor in anorexia-study

By Patricia Reaney

LONDON, Feb 1 (Reuters) - Anxious mothers who are

overprotective of their infant daughters could be an important

contributing factor to anorexia when the girls are teenagers,

British psychiatrists said on Tuesday.

Their study of girls with the eating disorder showed many of

the mothers were anxious during pregnancy and the child's early

years and a quarter had a previous stillbirth or miscarriage.

"They are so distressed and unresolved emotionally about the

loss of their first child they project their fears very

powerfully in the relationship with their child," Dr Philip

Shoebridge said in a telephone interview.

The child and adolescent psychiatrist at the North Bristol

National Health Service Trust in western England said the

mothers' concerns were legitimate following their loss but it

was very difficult for the child that followed.

"It is a contributing factor to a very complicated disorder

which is useful therapeutically and also in helping child

psychiatrists recognise what powerful effects these sorts of

experiences can have on children," Shoebridge said.

"There are a lot of very complicated psychological

difficulties that all families have to negotiate when they have

this kind of loss."

Shoebridge and his colleague, Dr Simon Gowers of the

University of Liverpool, also found that mothers of anorexic

teenagers had difficulties allowing the child to mature and

become independent.

The researchers compared 40 girls with an average age of

16.9 and an equal number of healthy girls in a control group.

They compared medical records and information about previous

pregnancies and interviewed mothers about the children's infancy

and early childhood.

The study, which is published in the British Journal of

Psychiatry, found that 25 percent of the mothers of the anorexic

group had experienced a miscarriage or stillbirth before the

birth of the child compared to 7.5 percent in the control group.

Mothers of the anorexic girls also experienced more distress

when they left their daughters at nursery for the first time.

Their daughters were also much older when they were allowed to

spend their first weekend away in the care of other adults.