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Cruising with Lazarus

Abbott Laboratories' Pricing Malfunction

May/June 2004

A note from TheBody.com: Since this article was written, the HIV pandemic has changed, as has our understanding of HIV/AIDS and its treatment. As a result, parts of this article may be outdated. Please keep this in mind, and be sure to visit other parts of our site for more recent information!

David Salyer

In case you were wondering if there could be anything more shocking than a "wardrobe malfunction" during a Super Bowl halftime show, there is. Last December, well over a month before Janet Jackson exposed her breast to 89 million television viewers, pharmaceutical giant Abbott Laboratories increased the U.S. wholesale price of its HIV drug Norvir by 400%. Overnight. Just like that. Biggest price hike in the history of life-saving drugs. That beats Miss Jackson, even when she's nasty.

Norvir is a protease inhibitor that helps suppress HIV, the virus that causes AIDS. Norvir is unique in its class because it seems to boost the effectiveness of other protease inhibitors. Originally approved by the United States Food and Drug Administration (FDA) in 1996 for use in HIV antiretroviral combination therapy, Norvir has generated estimated sales of over $1.3 billion in its eight years on the market. The drug, widely considered too toxic to take at full dose, is used at 1/3 to 1/6 of its original dose to boost the effectiveness of other protease inhibitors, often in people who are treating drug-resistant HIV. Abbott Laboratories makes another protease inhibitor, Kaletra, whose formulation includes Norvir, but the price of that drug was unaffected. Hmmm ... so what's behind the unprecedented price increase of Norvir?

Abbott spokesperson Laureen Cassidy said the higher price helps pay for the development of new drugs and new formulations of existing drugs. "This is about preserving patient choice," she said, then added, "There is an escalating cost for bringing new drugs to market for the world, both domestically and for developing countries, and Abbott has been very much a part of the solution, including increasing access initiatives in the developing world." Cassidy concluded by asserting that the new price of Norvir "better reflects current market value." Sure, Laureen, it's all about the cost of research and development of other drugs. But wait, you forgot to explain how it takes eight years to figure out the market value. And by the way, since Kaletra contains Norvir, why not raise the price of both?

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Poor Laureen Cassidy, she's all confused. Bless her heart, she's out of the loop. She must not know that a National Institute of Allergy and Infectious Diseases (NIAID) grant funded development of Norvir. NIAID is a component of the National Institutes for Health (NIH), which is part of the U.S. Department of Health and Human Services. Government money brought us Norvir, not Abbott money. Manufacturing and marketing costs aside, whatever else Abbott makes off Norvir has been pure profit since the drug was approved eight years ago. So that whole 400% price hike thing just looks blatant, unethical and greedy.

Maybe someone else at Abbott Laboratories can better explain why they boosted the wholesale price of Norvir from $1.75 a day ($52.50 for a 30-day supply) to $8.57 a day ($257.10 a month). "It's allowing us to make investments in future innovations -- novel therapies, drugs with less side effects -- and to bring those to market so patients have access to more and better medicine," said Heather Mason, Vice President, Specialty Operations Pharmaceutical Products for Abbott Laboratories. "We did not make this pricing decision lightly," Mason claimed. "We carefully considered many things, and ultimately our very complex decision process allowed us to reach this difficult conclusion that this new price is necessary to be able to support our ability to continue research to bring the next generation of HIV medications to market." Oh, to be a fly on the wall during their complex decision process!

Is it possible Mason and other Abbott officials never considered that their other protease inhibitor, Kaletra, might benefit from Norvir's price increase? Mason says no. She would have us believe no one at Abbott saw this as an opportunity to steer patients and the doctors writing their prescriptions toward Kaletra, which already contains the amount of Norvir used to boost other companies' protease inhibitors. Switching to Kaletra would ultimately be cheaper than combining Norvir with protease inhibitors like Viracept or Crixivan -- all made by other pharmaceutical giants. The main effect of the Norvir price hike will be to raise the cost of drug combinations that include Norvir. That's not about research and development; it's just a way for Abbott to gain market share for Kaletra.

"That's simply not the case," declared yet another Abbott spokesperson, Ann Fahey-Widman. "This action is specific to Norvir. It does not impact Kaletra." And you know what belched out of her mouth next: "This pricing action supports our ability to continue research and development." Quite a few people have disagreed with Mses. Fahey-Widman, Mason and Cassidy -- Abbott's Axis of Evil Mouthpieces. Attorneys General for Illinois and New York are investigating whether Abbott Laboratories' 400% price increase for Norvir violated antitrust law. The Los Angeles-based AIDS Healthcare Foundation (AHF) -- one of the nation's largest AIDS-care providers -- filed a federal antitrust lawsuit claiming the hike threatens the lives of HIV-infected people. Even the AIDS Treatment Activists Coalition sent a letter to thousands of HIV physicians, researchers and pharmacologists across the United States, urging them to consider boycotting Abbott drugs and diagnostics when it does not present a risk to patient safety.

What does Abbott spokesperson Ann Fahey-Widman have to say about all that? It's all "without merit." "Abbott has acted lawfully," Fahey-Widman proclaimed. She's smart enough to know American pharmaceutical companies like Abbott have never had to disclose exactly how they set the price of their drugs for the U.S. marketplace. Yet, they sell the same drugs to Europe and Canada for considerably less. Why? Europe and Canada negotiate lower prices for their citizens. Canadians, for instance, pay an average of 45% less for the same drugs your doctor routinely prescribes here in America.

The United States government does not hold pharmaceutical companies accountable for much of anything. According to Public Citizen, a national nonprofit consumer advocacy organization, the drug companies spent over $91 million on federal lobbying activities and another $29 million on political campaign contributions to Republicans and Democrats alike in 2002. Number of Big Pharma lobbyists in 2002: 675. Members of Congress: 535. Do the math. Pharmaceutical companies, like Abbott, have a powerful, incalculable influence on politicians.

Abbott spokespersons Fahey-Widman, Mason and Cassidy repeatedly argue that raising the price of Norvir 400% is necessary because the research and development costs of new drugs are so high. Every spokesperson for every U.S. pharmaceutical company regurgitates this bogus double-talk every time they're forced to defend their increasingly repugnant manipulation of the prescription drug market. The amount of money they spend buying off Congress is a matter of public record, but not once have they been forced to reveal the true research and development cost of a drug or present a formula for setting its price. It's like that secret recipe for Kentucky Fried Chicken -- they won't give it up.

Sit down in front of your television for one hour and count the number of prescription drugs ads you see. It won't be less than a half dozen, guaranteed. Since the Food and Drug Administration relaxed direct-to-consumer advertising regulations for prescription drugs back in 1997 (thanks to expensive lobbying efforts), Big Pharma has bludgeoned Americans with commercials directing us to ask your doctor or tell your doctor, effectively turning your health care provider into something like a pusher. They spent more than $2.5 billion on that kind of advertising in 2002 -- approximately 15% of all U.S. advertising! (Source: Associated Press.)

One last thing misinformation mavens like Cassidy, Mason and Fahey-Widman don't want to talk about: profits. According to Fortune magazine's annual analysis of America's 500 largest companies, drug companies had $35.9 billion in profits in 2002, compared with $37.2 billion in 2001, a drop of 3.5%. By comparison, all companies in the Fortune 500 suffered a combined loss of 66.3% in profits from 2001 to 2002. Stunningly, profits registered by the top ten drug companies were equal to more than half of the $69.6 billion in profits netted by the entire list of Fortune 500 companies. In 2002, drug companies made a profit of 17¢ on every dollar of revenue. The median profit for all other Fortune 500 companies that year was 3.1¢ for every dollar of revenue.

Year after year, pharmaceutical companies like Abbott Laboratories are the most profitable companies in the world. Acknowledging this indisputable fact, how can Abbott possibly justify a 400% price increase for an eight-year-old drug they spent nothing to develop in the first place?

P.S. A little research turns up an interesting development: in 2003, Abbott Laboratories' Chief Executive Miles White received a 4.5% salary increase and bonus, raising his total pay to $3.4 million, up 20% from 2002. (Source: Chicago Tribune.)

David Salyer is an HIV-positive journalist and AIDS educator living in Atlanta, Georgia. He leads safer sex presentations for men and has facilitated workshops for people infected or affected by HIV since 1994. Reach him by e-mail at CubScout@mindspring.com.

A note from TheBody.com: Since this article was written, the HIV pandemic has changed, as has our understanding of HIV/AIDS and its treatment. As a result, parts of this article may be outdated. Please keep this in mind, and be sure to visit other parts of our site for more recent information!



  
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This article was provided by AIDS Survival Project. It is a part of the publication Survival News.
 
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