January 09, 2007
WSJ examines Abbott AIDS drug pricing
Abbott tried to “diminish the attraction” of antiviral drug Norvir by raising its price, according to previously undisclosed documents and e-mails reviewed by The Wall Street Journal.
Norvir, a protease inhibitor, boosts the effectiveness of other drug manufacturers’ protease inhibitors when taken in combination with them. Documents and e-mails show that, in 2003, Abbott executives became concerned about new competition to the firm’s flagship AIDS drug, Kaletra. Launched in 2000, Kaletra (ritonavir) combines a newer Abbott-made protease inhibitor with Norvir in one pill. They began discussing how to “diminish the attraction of Norvir, with the goal of forcing patients to drop the rival drugs and turn to Kaletra.”
They decided to quintuple the per-patient wholesale price of Norvir. Kaletra US sales rose 10% over the next two years.
While Abbott’s price hike elicited condemnation from patients who paired Norvir with non-Abbott pills, “the criticism faded, partly because Abbott exempted government health plans and AIDS drug-assistance programs from the Norvir price increase,” the WSJ notes.
Abbott told the Journal that the price increase was intended to better reflect Norvir’s medical value after years of being underestimated and that it did not increase the drug's price to promote Kaletra.
Abbott’s strategy has prompted an investigation by the Illinois attorney general, who says it may be an example of unfair pricing that violates the state's consumer-fraud law. And two AIDS patients and the Service Employees International Union Health and Welfare Fund filed a lawsuit in federal district court alleging that Abbott broke antitrust law by using its market power to boost Kaletra sales.
The company “took advantage of its monopoly over one drug to protect sales of another, more profitable one,” according to the piece.