AEGiS-WSJ: NIH Rejects Move Against Abbott: Agency Won't Force Firm To Cut Price of AIDS Drug Funded Partly by Taxpayers

Important note: Information in this article was accurate in 2004. The state of the art may have changed since the publication date.

NIH Rejects Move Against Abbott: Agency Won't Force Firm To Cut Price of AIDS Drug Funded Partly by Taxpayers

Wall Street Journal - August 5, 2004
Leila Abboud , Staff Reporter of The Wall Street Journal

The federal government decided against forcing drug maker Abbott Laboratories to roll back a fivefold price increase on an AIDS drug developed in part with taxpayer money.

(See Corrections & Amplifications item below.)

Abbott, based in North Chicago, Ill., raised the price of a daily dosage of Norvir to $8.57 from $1.75 in December, setting off a firestorm of protest from doctors and AIDS activists and prompting calls from several lawmakers for the National Institutes of Health to examine the case.

The issue: Should the government allow drug companies to charge any price for inventions funded in part by public money?

Some early research on Norvir, one of the first protease inhibitors marketed in 1996, was funded by NIH grants to Abbott. The company says the grants totaled $3.47 million, and that it has spent more than $300 million to conduct clinical trials and bring the drug to market.

The 1990 Bayh-Dole Act gives the NIH so-called march-in authority to ensure scientific discoveries funded and supported by the federal government are properly used by companies. The law was designed to encourage companies and universities to commercialize inventions developed with government help by giving them patent rights to the products. But the law also permits the U.S. government to issue additional licenses if the licensee misuses the patent. The government has never taken such a step.

Prompted by a petition from one group, the NIH considered whether to invoke the law to issue a license allowing the manufacture of less costly generic copies of the drug before Norvir's patents expire.

In rejecting the petition filed by the advocacy group Essential Inventions, the NIH said that Abbott had fulfilled its obligations under the law. "We think the issue of drug pricing is more appropriate left to Congress or the administration as opposed to using march-in," said Bonny Harbinger, the deputy director of the NIH Office of Technology Transfer. Dr. Harbinger declined to say whether price was a legitimate factor for the NIH to consider in Bayh-Dole deliberations.

The NIH said there would be no appeals of the decision although the activist group said it would appeal to Health Secretary Tommy Thompson.

Abbott welcomed the decision saying it was "good for patients." The company also said that the Federal Trade Commission told the company that investigation or action would be taken on the Norvir price increase.

In 4 p.m. composite trading yesterday on the New York Stock Exchange, Abbott was at $39.13, off four cents.

Corrections & Amplifications:

Abbott Laboratories said the Federal Trade Commission told the company that investigation or action would not be taken on the price increase of its AIDS drug Norvir. An article in Thursday's paper said the commission told the company that investigation or action would be taken on the price increase

Write to Leila Abboud at leila.abboud@wsj.com
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