Important note: Information in this article was accurate in 2004. The state of the art may have changed since the publication date.
Chicago Tribune - February 8, 2004
Bruce Japsen, Tribune staff reporter
Illinois Atty. Gen. Lisa Madigan's office confirmed it has opened an investigation into whether the North Chicago-based drugmaker engaged in deceptive or unfair pricing practices in its repricing of Norvir, a treatment for the HIV virus.
Meanwhile, New York Atty. Gen. Eliot Spitzer has begun an inquiry into whether Abbott violated antitrust law, Abbott confirmed.
Both probes center on whether Abbott's decision to raise the price of Norvir was designed to make AIDS drug cocktails, which rely on Norvir as a booster, cost-prohibitive and to steer patients to Abbott's newer drug, Kaletra, which is more expensive and has a longer patent life.
"Norvir is not like a hay fever medication that people take to lessen symptoms to be more comfortable," Madigan said. "It is a drug they take to survive. This investigation is aimed at determining the real reason for the price increase and whether it violates Illinois law."
Abbott denies any wrongdoing and said it will vigorously defend its pricing. Abbott has said its price increase for Norvir is long overdue after years of being priced well below rivals.
"Many companies have known the value of Norvir to their drugs and priced their drugs at a premium despite this," said Abbott spokeswoman Melissa Brotz. "Competitors need to price their drugs based on their clinical value. Perhaps those concerned about the cost of therapy should look at the highest cost component of HIV regimens."
Norvir, which came on the market in 1996 and was one of the earlier treatments for HIV, is no longer the top seller it was.
Norvir, however, is commonly used today to boost the effectiveness of other treatments used in so-called AIDS cocktails, which have been hailed in fighting the deadly disease.
In December, Abbott raised the wholesale price of Norvir to $8.57 a day, or $257.10 a month, from $1.75 a day, or $52.50 for a 30-day supply, company records show.
Because various combinations of HIV treatments already cost up to $1,600 a month, consumer groups and AIDS activists believe Abbott could be encouraging cost-conscious health insurers and their doctors to pick Kaletra, Abbott's next-generation AIDS drug.
Kaletra costs about $18.78 a day, or $563.40 a month, Abbott said. Unlike rival drugs, Kaletra does not need a boost from other drugs to be effective because it includes Norvir as an ingredient, but AIDS activists have said Kaletra might not work for all patients.
The suits are the latest assault on the pharmaceutical industry by state prosecutors who have been working on ways to rein in soaring costs of prescription drugs, particularly for government run health insurance programs.
But Abbott said it has frozen the price of Norvir to government health insurers, community clinics and drug assistance programs. Abbott has also committed to give free Norvir to patients who exceed their annual drug coverage maximum.
"Abbott repriced Norvir in December and is committed to ensuring that every patient has unrestricted access to this important compound," the company said in a statement.
Still, Illinois state prosecutors say 40 percent of those who take Norvir are covered by private medical insurance. Another 2 percent to 5 percent pay out of pocket.
"Every consumer is affected by unfair or deceptive practices that drive up the cost of drugs," Madigan said.
In New York, a spokesman for Spitzer's office would neither confirm nor deny the existence of the investigation.
Abbott said it was cooperating with the New York attorney general's antitrust bureau, supplying information pertaining to Norvir and Kaletra.
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