[Ip-health] WSJ on tommorow's NIH Norvir march-in meeting

[Mike Palmedo]

http://online.wsj.com/article/0,,SB108508935006117328-search,00.html?collection=autowire%2F30day&vql_string=nih%3Cin%3E%28article%2Dbody%29

Drug-Pricing Rules Face Review

Leila Abbound
Wall Street Journal
May 24, 2004; Page A3

For the first time, the U.S. government will weigh whether it can
require drug companies to lower prices on drugs developed with the help
of taxpayer dollars.

The question, which will be debated tomorrow at a U.S. National
Institutes of Health meeting, was sparked by Abbott Laboratories' 400%
price increase on one of its older AIDS drugs, Norvir, in December. The
move set off a firestorm; AIDS activists picketed the U.S. company's
annual meeting, some doctors are boycotting Abbott drugs and the
attorneys general of several states have launched investigations.

Now the battle is moving to Washington. Prompted by a petition from a
liberal group, the NIH is considering whether to invoke a little-known
1980 law to issue a license allowing the manufacture of cheaper generic
copies before Norvir's patents expire.

The group that petitioned the NIH, Essential Inventions, contends that
Norvir's price is unreasonable and "threatens the health and safety of
people with AIDS" because fewer will be able to get needed treatments.
Abbott defends the price as reflecting the drug's true market value and
a way to finance the development of new medications.

U.S. regulators aren't expected to make a decision tomorrow, and there
is little indication the Bush administration is inclined to take a step
that would be anathema not only to Abbott, but to the entire
pharmaceutical industry.

Nevertheless, the meeting reflects continued consumer frustration and
will provide another forum for critics to gripe about high drug costs.
It comes at an awkward time for the industry, which is trying to halt
U.S. congressional efforts to legalize cheaper drug imports from other
countries.

Additional Licenses

The 1980 law, called the Bayh-Dole Act, 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
patent holders somehow misuse their patents. The government has never
invoked these so-called march-in rights.

The meeting will center on two questions: Should the U.S. federal
government use the law to prevent companies from charging whatever they
want on drugs developed in part with taxpayer money? And does the Norvir
price increase represent an "unreasonable" use of the patent that limits
patients' access to the drug?

Those expected to urge the NIH to take action to lower the drug's price
include John Erickson, a former Abbott scientist who received an NIH
grant to do the work that led to Norvir, and AIDS activists.

On the other side, former Senator Birch Bayh, who co-wrote the Bayh-Dole
Act, is expected to argue that the law wasn't intended as a way to
dictate prices. An Abbott representative likely will warn against any
move that could prompt drug companies to forgo federal money altogether
and crimp innovation.

Some early work on Norvir, an early protease inhibitor first 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.

Combination Dosage

Initially, Norvir was usually taken alone and at a high dose, but later
became more widely used in combination with other protease inhibitors. A
low dose of Norvir boosts the effectiveness of other protease inhibitors.

When Abbott raised the Norvir price to $8.57 a day from $1.75 in
December, critics noted that the move effectively raised the costs of
combination therapy that relies on Norvir and rival protease inhibitors.

They argued that the price increase was a bid by Abbott to induce people
to turn to Kaletra, another Abbott product that contains Norvir and
wasn't affected by the price change.

One Republican senator, John McCain, and two Democratic senators,
Charles Schumer and Ernest Hollings, recently called on the Federal
Trade Commission to investigate the price increase and whether the
company might be engaging in anticompetitive behavior.

Jeffrey Leiden, who heads Abbott's drug division, denied that the price
increase was intended as a way to boost Kaletra's sales, and said that
the increased revenue from the price increase -- $50 million to $70
million this year -- would help speed the development of new drugs.

Abbott has said that it won't impose the price increase on government
health programs for low-income people, and that it is giving away the
drug to needy patients.