Important note: Information in this article was accurate in 2003. The state of the art may have changed since the publication date.
Wall Street Journal - December 19, 2003
Vanessa Fuhrmans, Staff Reporter of The Wall Street Journal
The medication is called Norvir, a protease inhibitor that hasn't been a lucrative seller for Abbott but is widely used in small doses to boost the potency of some AIDS combination-drug therapies. Earlier this month, the Abbott Park, Ill., company notified doctors, AIDS groups and pharmacies that it would raise Norvir's wholesale price for a month's treatment to $265 from $54. The increase, Abbott Laboratories says, adjusts Norvir's price to better reflect the drug's importance in treating AIDS and the costs for improving Norvir's formulation.
The increase triggered a furor that is fast gaining intensity. Because of the special booster role that Norvir plays in HIV treatment, Abbott's move sharply raises the price of a number of combination regimens, which already usually cost between $800 and $1,300 a month.
Critics say Abbott's intention is to push patients away from using Norvir in drug cocktails and switch to its newer AIDS treatment, Kaletra, instead. That would also have the effect of gaining market share for Abbott. Norvir typically is used with other drugs including either Bristol-Myers Squibb Co.'s Reyataz or GlaxoSmithKline PLC's Lexiva. Kaletra, which includes Norvir, is a competitor to both of those drugs.
Reyataz and Lexiva have been making inroads on Kaletra's market share. But with Norvir's price jump, drug cocktails using it suddenly become far costlier than Kaletra. Reyataz's wholesale price is $684 a month and Lexiva wholesales for $480 a month, compared with Kaletra, which Abbott has priced at $580 a month wholesale.
Abbott denies it is raising Norvir's price to shift patients to Kaletra. Rather, the drug maker says, the sharp price increase is a long-overdue adjustment after years of being priced below other protease inhibitors, the class of drugs that has transformed the treatment of AIDS by extending the lives of patients by years. What's more, the company says it invested a substantial amount in reformulating the drug a few years ago after problems with its chemistry temporarily stopped the drug's production.
HIV doctors say they worry that the move could prompt many private insurers to steer patients away from other cocktails toward Kaletra by requiring doctors to get special permission to use the more expensive combination therapies with Norvir.
Or, the higher cost could translate into higher co-payments for patients who take a more expensive regimen with Norvir. "That's likely to happen if insurance companies are smart enough to understand what's happening," said Charles Farthing, chief of medicine at the AIDS Healthcare Foundation.
The higher price for those combined drugs could influence the development of future drugs: At least one widely anticipated AIDS treatment currently is being tested by Germany's Boehringer Ingelheim GmbH, with the idea that it would be used in combination with Norvir.
Critics also say that Abbott's decision belies the drug industry's primary rationale for high drug prices -- that pharmaceutical companies need to recoup their research and development costs and to fuel innovation. Norvir has been on the market for seven years and has enjoyed a relatively long product life compared with most AIDS drugs.
"This really puts a lie to the idea that companies set drug prices to fund their R&D," says Michael Weinstein, president of the AIDS Healthcare Foundation, an AIDS group that operates clinics in the U.S., Africa and Central America.
The price increase doesn't affect drugs bought by government programs such as Medicaid or community clinics or AIDS Drug Assistance Programs, which collectively cover the majority of Norvir prescriptions written in the U.S. The state-run drug assistance programs, or ADAPs, have negotiated price discounts and freezes for Norvir and other AIDS drugs with companies through the end of 2005.
"We will be very willing to talk through those issues again," when the current ADAP price contracts expire, said Melissa Brotz, an Abbott spokeswoman.
In the past, critics of the drug industry had few complaints about Abbott's pricing policies. In fact, two months ago, the AIDS Healthcare Foundation publicly praised the company for a recent decision to sell Norvir, Kaletra and other drugs at cost in poor countries. That will continue despite the U.S. cost increase.
Norvir was the second protease inhibitor to come on to the market in 1996 and the first to show that it increased patients' survival chances. At the time it was priced at $20.52 a day for 1,200 milligrams. But Norvir had harsh side effects for many patients and doctors discovered that the drug worked better in a lower dose that boosted the potency of other protease inhibitors. Of the HIV patients who take Norvir today, 80% use it at the much smaller dose of 100 mg, which until recently cost $1.75 a day.
Abbott currently has another formulation of Norvir in development that wouldn't require refrigeration and would allow patients to take in tablet form -- changes that could help patients better adhere to the drug regimen. Once the new formulation comes to the market, possibly in 2005, the company says the price will be close to Norvir's new price today.
Abbott acknowledges its move has set off a storm of protest. "It's a decision that we did not take lightly, which is why we reached out to [AIDS groups] so proactively," Ms. Brotz said.
"They've got a P.R. problem," said Bill Arnold, chairman of the ADAP working group, which helps advocate for more funding to AIDS Drug Assistance Programs. With such a huge increase, "people will be livid about that no matter what."
Write to Vanessa Fuhrmans at vanessa.fuhrmans@wsj.com
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