AIDS Healthcare Foundation Files Suit Against Abbott Alleging False Advertising After 400% Price Increase on AIDS Drug

The AIDS Healthcare Foundation on Wednesday filed suit against drug maker Abbott Laboratories claiming that the pharmaceutical company used false advertising to say that state Medicaid programs would not be affected by a recent price increase for its antiretroviral drug Norvir, the AP/Biloxi Sun Herald reports (AP/Biloxi Sun Herald, 3/18). In December 2003, Abbott increased by 400% -- from $54 per month to $265 per month -- the per-patient wholesale price of Norvir, which is known generically as ritonavir. Norvir is used primarily as a booster for other protease inhibitors, such as Bristol-Myers Squibb's Reyataz and Merck's Crixivan. On Feb. 6, Illinois Attorney General Lisa Madigan (D) announced that her office had opened an investigation into whether the price increase of Norvir was designed to increase the price of antiretroviral drug combinations that use Norvir as a booster and steer patients toward Abbott's newer antiretroviral drug Kaletra. Kaletra, which does not need a booster for other protease inhibitors because it includes ritonavir, costs about $18.78 per patient per day, or $563.40 per patient per month, and has a longer patent life (Kaiser Daily HIV/AIDS Report, 2/11). The AHF suit alleges that Abbott falsely stated the impact the price increase would have on California's Medicaid program, Dow Jones/Chicago Tribune reports. The suit states, "Abbott's assertions that state Medicaid programs would be unaffected by the increase were fraudulent, false and/or misleading and constituted unfair business practices that induced consumers, including AHF, to continue buying its products, despite its contemptible conduct" (Dow Jones/Chicago Tribune, 3/19).

Details, Previous Suit
In the suit, which was filed in Los Angeles Superior Court, AHF also alleges that Abbott has not "honored its pledge" to allow public aid and charity groups to purchase Norvir at the old price, according to Reuters (Reuters, 3/18). The false advertising suit comes after AHF in February filed a federal antitrust suit against Abbott (Kaiser Daily HIV/AIDS Report, 2/11). That suit seeks unspecified damages and a court order establishing a price for Norvir that is within "reasonable financial reach of the HIV-infected public" (Associated Press, 3/18). An Abbott spokesperson said that AHF "continues to file frivolous lawsuits," adding that the false advertising suit "is part of an ongoing misinformation campaign by this organization with no respect for the facts" (Dow Jones/Chicago Tribune, 3/19). In a statement, Abbott said the company and the state of California have signed a contract affirming that Medi-Cal, the state's Medicaid program, "is not affected by the recent re-pricing of Norvir," Reuters reports. The statement also said that AHF only needs to show that it meets federal regulations as a public health provider to purchase Norvir at the price offered to Medi-Cal, according to Reuters (Reuters, 3/18).

Reaction
Abbott spokesperson Laureen Cassidy said, "Abbott complies with federal laws overseeing Medicaid." She added that a representative from Medi-Cal's Medical Services Branch in testimony to the California Senate health budget subcommittee confirmed the price increase had "no impact" on Medi-Cal (AP/Biloxi Sun Herald, 3/18). AHF -- which operates seven pharmacies and several clinics in the United States, Africa and Central America -- is one of the country's largest purchasers of antiretrovirals, according to AHF, Reuters reports (Reuters, 3/18). AHF President Michael Weinstein said, "The federal antitrust complaint that we filed last month deals with what we see as the 'crime' -- Abbott's initial, egregious and unprecedented 400% price hike on Norvir back in December," adding, "This new complaint ... deals with the 'cover up' -- the fact that Abbott is now engaging in deceptive business practices, false advertising and fraud by misrepresenting how, or even if, Medicaid programs will actually be held harmless and not be charged more as a result of this price hike as Abbott asserts" (AHF release, 3/18).

Boycott
Approximately 250 doctors and other health care workers throughout the United States currently are participating in a boycott against Abbott because of the Norvir price increase, the Boston Globe reports (Smith, Boston Globe, 3/19). Doctors in February at the 11th Conference on Retroviruses and Opportunistic Infections in San Francisco agreed that until Abbott reduces the price of Norvir, they will resign from all Abbott advisory boards and lecture faculties, prohibit all Abbott representatives from visiting their offices and not participate in any future Abbott-sponsored clinical trials. In addition, the doctors will consider non-Abbott drug treatment alternatives for their patients unless an Abbott drug would be in the patient's best interest. The physicians have extended the boycott to other Abbott products and have encouraged other physicians to join the boycott (Kaiser Daily HIV/AIDS Report, 2/11). Participants in the boycott include physicians associated with AHF and Boston-based Fenway Community Health Center, among others. Fenway Executive Director Dr. Stephen Boswell said that he understands Abbott's desire to obtain a "reasonable profit," according to the Globe. "But this is beyond any reasonable, justifiable increase," Boswell said, adding, "People depend on these drugs for their lives. We're going to object whenever we think what drug companies are doing is unreasonable and not in the best interest of the patients we're caring for" (Boston Globe, 3/19).

Back to other news for March 19, 2004