[Ip-health] Merrill Goozner on Public and Private Norvir R&D

[Mike Palmedo]

Abbott and AIDS

Merrill Goozner
www.gooznews.com
May 24,  2004

The National Institutes of Health is holding a hearing Tuesday on
citizen demands that the government seize the patent of Abbott
Laboratories' AIDS drug ritonavir, whose initial version was discovered
on a government grant. Here's a few important facts to keep in mind
while reading or listening to the news coverage.

First, between 1985, when President Ronald Reagan was forced to finally
take the AIDS epidemic seriously, and 1996, when the triple cocktail for
controlling the disease finally emerged, the U.S. government spent over
$10 billion on AIDS research. Industry in that 11-year span spent less
than $3 billion.

Second, all of the early drugs for fighting AIDS, which didn't become
effective until protease inhibitors were discovered, were largely
developed by government scientists.

Third, the protease inhibitor class, which includes Abbott's ritonavir,
were developed in industry labs. But those private sector researchers
collaborated with government researchers every step of the way.

Why is this ancient history still important? AIDS therapy in the
advanced industrial world today is a $7 billion a year market. A few
months ago, Abbott raised the price of its protease inhibitor fivefold
in order to gain a larger share of that market. They could get away with
it because virtually every AIDS doctor adds a bit of ritonavir to their
prescribed regimen because of its unique properties -- it inhibits the
metabolism of the other drugs.

Abbott's goal was to force new AIDS patients to take their combination
pill, which has ritonavir built in, instead of combinations made by
competitors. What Abbott's marketers didn't plan on was angry opposition
from existing AIDS patients, who can't easily switch from their existing
drug cocktails without spawning drug-resistant forms of the disease. So
the AIDS activist community, which in recent years had largely turned
its attention to the problem of getting AIDS drugs to the developing
world, once again went on the warpath.

Abbott has already mounted its counter offensive. "We've spent over $300
million developing ritonavir," their spokesman are saying, "while the
government spent only $3.7 million on this drug."

What they won't say is that they wouldn't even pay to have their own
scientist work on the initial stages of the drug's development until the
government ponied up the cash. Nor will they admit that it was only at
the urging of independent researchers that they moved to testing their
drug in combination with others already approved by the Food and Drug
Administration. Nor will they admit that most of that $300 million was
spent AFTER ritonavir was approved by the FDA. It was spent on so-called
seeding trials that are designed to familiarize doctors with the drug,
that is to say, trials that are really part of marketing even though it
is called R&D.

A lot of Tuesday's discussion will revolve around legal interpretations
of the government's technology transfer laws. Industry proponents (which
includes most of the NIH bureaucracy) will argue that the "government
rights" clause does not pertain to unreasonable pricing of government
inventions.

My own reading of the late 1970s debate leading up to passage of the
tech transfer laws says the issue was never really discussed in those
terms. Government advisers like Admiral Hyman Rickover worried more
about subsidizing big business. His close relationship with military
contractors over the years had taught him that price gouging was
inevitable when the government granted exclusive licenses for inventions
discovered on the taxpayer nickel. In those days, it was the $600 toilet
seat. Today, it's the $10-a-day AIDS drug.

There's no doubt that Abbott will escape Tuesday's hearing unscathed.
The drug industry rarely loses when money is at stake and Washington is
the battleground.

But they may wind up losing the war. Generic AIDS medications are
finally on their way to the developing world. Even the Bush
administration couldn't stand up to the pressure mounted by the World
Health Organization, UNAIDS and global non-governmental groups.

One of the industry's main arguments against allowing countries like
India to make generics for Africa was their fear that these drugs would
inevitably leak into the advanced industrial world through the so-called
gray market, thus undercutting domestic prices.

If the industry responds to the arrival of Third World generics with
price gouging a la Abbott, their fears will become reality. And when it
does, they'll have no one to blame but themselves.