[Ip-health] WSJ: Abbott Lifts Price of Norvir 400%

[Mike Palmedo]

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tion=3Dautowire%2F30day&vql_string=3Dnorvir%3Cin%3E%28article%2Dbody%29

Abbott Lifts Price of Norvir 400%

Cost of Longtime HIV Drug Jumps, Reigniting Debate Over Drug Pricing
Policies

by VANESSA FUHRMANS
WALL STREET JOURNAL
December 19, 2003

Abbott Laboratories has raised the U.S. price of a key AIDS drug by
400%, a move that could roil the market for HIV treatments and has
already reignited the debate over drug pricing policies.

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
eithe Bristol-Myers Squibb Co.'s Reyataz orGlaxoSmithKline
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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."