IAPAC Monthly - Vol. 10, No. 6, June 2004
Bob Roehr

The storm over Abbott Laboratories’ 400 percent price increase of its protease inhibitor, ritonavir (RTV), blew into the US National Institutes of Health (NIH) May 25, 2004, when the US government agency held an extraordinary meeting to consider allowing other companies to produce generic versions of the antiretroviral drug.

The NIH contributed approximately US$3.5 million to the very early development of RTV and holds four of the six patents on the drug. This brings RTV under the purview of the Bayh-Dole Act, a law passed in 1980 to encourage commercialization of basic scientific research funded by the US government.

On the heels of public protest, the nonprofit group Essential Inventions charged that Abbott Laboratories’ price increase violated the public benefits section of the Bayh-Dole Act, and that the company should no longer have exclusive use of the patents to manufacture RTV. In January 2004, Essential Inventions petitioned the NIH to consider using the law to let others manufacture and market RTV.

Mark L. Rohrbaugh, Director of the NIH Office of Technology Transfer, said the meeting was to gather information from constituents “that might warrant the exercise of march-in rights” under the Bayh-Dole Act. He will make a recommendation to NIH Director Elias Zerhouni, who in turn will decide whether such regulatory action should be initiated.

Charges...

“Abbott Laboratories holds a virtual monopoly stake in the life expectancy of the majority of Americans living with HIV,” said Benjamin Young, a Denver physician. Young, a member of several US-based HIV care provider groups, including the International Association of Physicians in AIDS Care (IAPAC), testified before the NIH panel on behalf of the Organization of HIV Healthcare Providers, an independent group of HIV treatment providers created in direct response to the RTV price increase.

He called the increase “unprecedented in the history of the pharmaceutical industry,” and noted the public outcry years ago that greeted a 40 percent increase in the price of azidothymidine (AZT) by Burroughs-Wellcome that ultimately led to it being rescinded.

Young said Abbott’s example of “unmitigated corporate greed and monopolistic behavior” at a time of high profits “is patently unethical and violates any semblance of [good] corporate citizenship.”

Bob Huff, Treatment News Editor at the Gay Men’s Health Crisis (GMHC), offered a pointed and devastating critique of Abbott Laboratories’ “abuse of their patent.” According to Huff, increasing RTV’s price, but not that of its co-formulated PI, lopinavir/ritonavir (LPV/RTV), made it clear that “the practical and intended effect was to position [LPV/RTV] in advantage to its competitors.”

Perhaps most crucial is the effect the price increase will have on the development of future PIs that use the boosting approach, Huff said. It will greatly increase the cost of conducting post-approval phase IV clinical trials that are most useful in determining the best use of all drugs.

Huff argued it leaves other antiretroviral drug manufacturers at the mercy of Abbott Laboratories in terms of the total market cost of their drug. “It’s difficult enough to project market conditions for new HIV drugs that don’t need [RTV]; it’s very unlikely that a corporate market analysis will ever again justify investment in drugs of this type,” Huff said.

According to Huff and other critics of Abbott Laboratories’ pricing action, this is contrary to the very purpose of the Bayh-Dole Act, which is to foster innovation and move products into the marketplace.

James Love, President of Essential Inventions—the group that filed the march-in motion—questioned the justification for a price increase “eight years after the product hit the market.” Ritonavir had generated a billion dollars in sales in the first five years on the market and remained profitable at the time of the increase. “It’s become a blockbuster product,” Love said.

The December 2003 price increase “only applied in America”—not in Canada, Australia, or Europe. Love asked, “Is it appropriate to take a government-funded invention and price it five to 10 times higher in the United States than you charge in other high-income countries?” He said it was “an attempt to monopolize the [PI] market” in this country. Eight members of the US Congress, led by Senators John McCain and Fritz Hollings, have asked the US Federal Trade Commission to investigate.

Love called the march-in clause “the safeguard of Bayh-Dole.” If Abbott Laboratories can do this, “Is there anything that you can’t do to trigger the march-in provision?” he asked. “Then what signal does that send” to the pharmaceutical industry about how they are going to price drugs in the future?

The march-in provision has not been used in the 24 years in which the Bayh-Dole Act has been in effect. Love said this extraordinary case demands action. He warned that failure to take action would lead to additional legislation at the recommendation of a patient and provider public that is outraged by Abbott Laboratories’ actions.

The defense

Several speakers familiar with the legislative history of the Bayh-Dole Act said it was never intended to regulate price. (But, it must be said, the legislation did not consider a situation other than that of a stand-alone drug. None of the speakers addressed the issues raised when a drug is used in combination with other agents, which is a matrix of issues that was not envisioned during that earlier debate when the legislation was passed two decades ago.)

Jeffrey Leiden, President of Abbott Laboratories’ Pharmaceutical Products Group, defended his company’s pricing action. He said RTV was entirely the product of Abbott Laboratories’ research, and added that the company spent more than US$300 million to bring it to market. In the past, the pharmaceutical industry has claimed it takes an average of US$802 million to bring a typical new drug to market.

He outlined the “extraordinary steps” his company has taken to ensure access to the drug for those who cannot afford it because they are medically indigent. Leiden did not acknowledge, however, that many of those problems were themselves created by the direct and indirect impact of the 400 percent RTV price increase.

Leiden said that when his company reviewed the effectiveness of PIs using an RTV boost, “What was particularly striking to us was the disparity of value of the various components.”

Speaking with reporters after the meeting, Rohrbaugh said he had no timeline for deciding whether to recommend proceeding to a formal march-in procedure. That provision of the Bayh-Dole Act has never been used before, so there is no precedent to guide the participants. Any decision from the regulatory process would be subject to legal review and appeal through the federal court system.

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