[Ip-health] Crain's Chicago Busines - Abbott CEO Fights Back in Dispute Over AIDS Drug

[Mike Palmedo]

http://www.chicagobusiness.com/cgi-bin/news.pl?id=3D24765

Abbott CEO fights back in dispute over HIV drug - White defends action
in Thailand at shareholder meeting

April 27, 2007

(Crain=92s) =96 Abbott Laboratories CEO Miles White on Friday offered a
stern defense of the drugmaker=92s handling of a dispute with Thailand
over the patent on its top-selling HIV medication.

Mr. White offered new details of Abbott=92s decision to withhold seven
drugs from Thailand =97 including a heat-resistant version of HIV
medication Kaletra =97 to protest the Thai government=92s move to break the
drug=92s patent to give patients access to cheaper generic versions.

Responding to a Thai activist=92s critical comments at Abbott=92s annual
shareholder meeting, Mr. White said the Thai government broke the patent
even after Abbott agreed last fall to a price cut. Abbott lowered the
drug=92s price to $1,700 a year from $2,200.

=93(The Thai) government told us no price that we would offer would
matter. They told us they already had a supplier lined up,=94 Mr. White
said. =93Why would we need to provide the product if a generic company is
providing the product?=94

Abbott=92s decision in February to withhold the medications from Thailand
has been sharply criticized by AIDS activists and patient-advocacy groups.

Last week, Mr. White softened his stance, saying Abbott would sell the
new version of Kaletra at a discount if Thailand honored the patent,
though he still refuses to sell the six other new medications. He said
Friday that Thai officials have not responded.

Jon Unghakorn, a former Thai senator and executive director of the AIDS
Access Foundation, told Mr. White during the meeting that Abbott is
=93retaliating by withdrawing drugs. You are putting patients as
hostages.=94 His comments drew a smattering of applause and boos from the
crowd of 1,400 shareholders.

World Trade Organization rules allow governments to issue generic
licenses for patented drugs =96 called =93compulsory licenses=94 =96 in cas=
es of
national emergency. Mr. White said he worries Thailand and other nations
could use those rules to break patents on dozens of other medications.

The financial risk to Abbott over the Thailand flap is minimal despite
the bad publicity, said Chicago-based Morningstar analyst Heather
Brilliant. The country reportedly accounts for just $30 million of
Abbott=92s $22.5 billion in annual revenue.

=93Any business risk to Abbott would be a problem for all of Big Pharma:
How are they going to deal with patent issues in emerging countries?=94
Ms. Brilliant said.

CEOs OF UAL, CORN PRODUCTS ELECTED TO BOARD

Shareholders also voted down two resolutions brought by faith-based
institutional investors. One, which would have given shareholders a
non-binding vote on executives=92 pay, was defeated, though 40% of voters
favored the measure. Another urging separation of the CEO and chairman
roles was voted down by an 84% majority.

Shareholders also elected two new board members: Glenn Tilton, chairman
and CEO of United Airlines parent company, UAL Corp.; and Samuel Scott
III, chairman and CEO of Corn Products International Inc.

Many investors voiced their pleasure at Abbott=92s stock price, which has
risen sharply as sales of the anti-inflammatory drug Humira surge and
the firm readies a launch of its new drug-coated stent to clear clogged
heart arteries. Its stock climbed 24% last year and is up 17% so far
this year.

Abbott=92s stock was essentially unchanged Friday afternoon at $56.96.

First-quarter net earnings fell 19% from a year earlier to $697.5
million, or 45 cents a share, mostly on acquisition costs. Revenue rose
16% to $5.3 billion, driven by sales of Humria, which jumped 46% to $571
million.

For 2006, Abbott=92s net earnings fell 49%, to $1.7 billion from $3.4
billion a year earlier, also on acquisition expenses. Revenue grew less
than 1% to $22.5 billion.

--
Mike Palmedo
Research Coordinator
Program on Information Justice and Intellectual Property
American University, Washington College of Law
4910 Massachutsetts Ave., NW Washington, DC 20016
T - 202-274-4442 | F 202-274-0659
mpalmedo@wcl.american.edu