Chicago Tribune - May 10, 2007

Abbott charges dozens of the poorest countries of the world, including all of sub-Saharan Africa, a break-even $500 per patient per year for an earlier version of Kaletra. The company also cut the price of Kaletra to $1,000 a year for some 40 other developing countries that are several steps up from the poorest. That's still a big discount: A year's regimen costs $7,500 in the U.S.

But instead of reaping worldwide gratitude, Abbott is being attacked as a price-gouging capitalist indifferent to the suffering of the poor.

That's because Abbott is caught up in an escalating intellectual property battle over the licensing of Kaletra in Thailand. The outcome of this and similar battles being waged by Merck and Sanofi-Aventis go beyond any one drug or the borders of any one country. How this plays out will affect the ability of all drugmakers to develop new medicines and make them available in poor lands. Adding to the pressure faced by drugmakers was the announcement Tuesday by former President Bill Clinton's foundation that it had negotiated deep price cuts from some drug companies for AIDS drugs.

That's good for AIDS patients, but in public comments Clinton went further, seeming to support Thailand's threat to break patents on drugs that have cost drugmakers fortunes to develop.

Here's the convoluted context:

Last fall, Abbott cut the average annual price of Kaletra in Thailand from $2,200 to $1,700. In January, Thailand's military rulers said even the lower price was still too expensive for the more than 500,000 Thais suffering from AIDS. So the Thais were going to break Abbott's patent and make their own, generic Kaletra.

How so? Under World Trade Organization rules, countries are allowed to break patents this way so they can make or import generic drugs to combat public health emergencies. Countries rarely do this, though. They understand that commandeering a drug's patent protection today means their citizens could be denied other drug therapies developed in the future.

In February, Abbott responded to the Thai government's move by withdrawing license applications in Thailand for seven new drugs -- including the new and desirable Aluvia.

In April, Abbott, facing international criticism (essentially for defending its patent), did an about-face and said it would sell Aluvia in Thailand. It was about this time that Abbott also cut the price of all its Kaletra drugs, including Aluvia, to $1,000 a year in Thailand and other nations in its economic tier.

Thai officials said Abbott's actions didn't matter: They would still make generic Kaletra. So far they haven't done so. But their stance suggests that this isn't just about price. It's about power. And it's a direct challenge to intellectual property protection -- which makes drug research and development viable for companies like Abbott.

So Abbott stands virtually friendless: It has been hammered by health and human rights activists for threatening to withhold lifesaving drugs from Thailand, and then by conservative editorial writers for caving in to Thailand.

What to believe? That Abbott is trying to navigate these shoals by ceding on price while drawing the line at protecting its intellectual property. Abbott insists it won't budge on that issue.

If Thailand stops short of overriding the Kaletra patent, Abbott at least will have made its point. But if Thailand ignores the patent and still gets access to discounted Aluvia, other countries will be emboldened to follow suit.

The world's poor should hope Abbott prevails. They'll suffer if Abbott and other companies no longer have incentives to invest in new drugs that would mainly help the developing world.

A case in point: a half-strength pediatric version of Kaletra. Abbott has spent millions developing one and plans to submit it for licensing soon. Abbott won't make much money from this new dosage in the developed world because relatively few kids suffer from AIDS in rich countries. But the drug could be a real boon to poor countries, where pediatric AIDS is rampant.

If the Abbotts of the world can't protect their intellectual property, Thailand likely won't have as much opportunity to violate it in the future: Some other new drugs won't even be developed.
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