[Pharm-policy] WSJ on Abbott annoucement

[James Love]

Michael Waldholt and Rachel Zimmerman apparently got the scope on
Abbott's announcement to provide discounts on HIV drugs.  The story also
includes some details regarding Roche pricing, the Thai ddI patent suit
that is expected to be filed soon, and the U of Minn student activity on
the Ziagen patent.  Not mentioned in the story about the Abbott products
are the government rights in patents on Norvir and Kaletra, or that
Donna Shalala and Dr. Varmus both refussed to give the WHO or UNAIDS the
rights to use the Norvir patent in poor countries.  

Jamie

http://interactive.wsj.com/articles/SB985644192617434181.htm

March 27, 2001  
 

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Abbott to Cut Prices on AIDS Drugs
Distributed in Sub-Saharan Africa
By RACHEL ZIMMERMAN and MICHAEL WALDHOLZ 
Staff Reporters of THE WALL STREET JOURNAL


In the latest response to the growing public outcry over international
AIDS-drug pricing, Abbott Laboratories is planning to sell its two AIDS
drugs and its HIV diagnostic test at "no profit" in sub-Saharan Africa.

Abbott's decision comes amid a striking round of price cuts for AIDS
drugs in Africa by several major drug companies and two generic-drug
makers. At the same time, however, several other companies, most notably
Pfizer Inc. and Roche Holding Ltd., have yet to reduce the prices of
their AIDS-related medicines as sharply.

Abbott is expected to announce Tuesday that it will sell each of its two
protease-inhibitor drugs, Norvir and Kaletra at a price that will
provide the company "no profit," confirmed a company spokesman. The
spokesman said the company was still determining the exact price for the
drugs, but a source close to the company said each drug will likely be
less than $1,000 a year per patient. That would be about 70% less than
the already-discounted price Abbott began charging for Norvir in Africa
several years ago. But it is still out of the reach of most poor
Africans and is much pricier than other companies' discounted
AIDS-related drugs.

The drug sells in the U.S. for about $7,100 at wholesale. Kaletra, which
was just approved for use in the U.S. late last year, sells at about
$6,500 in the U.S. Last year, Norvir world-wide sales were $200 million;
Kaletra is expected to generate that much this year.

As part of its offer, Abbott, based in Abbott Park, Ill., confirmed it
will also sell its easy-to-use HIV diagnostic kit called Determine at no
profit, according to a company spokesman. Currently, Abbott charges
about $1.20 per test in Africa.

An Abbott spokesman said the price it will be charging for the drugs and
the test will vary among purchasers. That is because Abbott's price will
include its manufacturing costs and other costs related to getting the
drugs to certain locales. The price doesn't account for marketing or
research costs, the spokesman said.

The offer comes two weeks after Bristol-Myers Squibb Co. said it will
sell two of its AIDS drugs below cost in Africa and three weeks after
Merck & Co. said it will sell two of its AIDS drugs "at cost" in Africa
and other poor nations. Two Indian generic-drug makers, Cipla Ltd. and
Hetero Drugs Ltd., have also discounted AIDS medicines.

Abbott's offer differs from the others because it includes a procedure
to facilitate distribution of the drugs. The company has hired Axios
International, a Dublin, Ireland, consulting firm, to set up an office
in Kampala, Uganda, to handle requests from governments, medical
centers, nonprofit groups and employers from anywhere in Africa, to
determine whether they can use the drugs properly.

"Abbott believes it needed to add a feature to get the drugs to people
who need them," said Joseph Saba, chief executive of Axios, which runs
several company-sponsored drug-access programs in Africa. "Still, these
drugs aren't going to be used unless wealthy nations and other donor
groups start providing the money to help pay for them." Dr. Saba said
Axios and Abbott are hoping to enlist Merck, Bristol-Myers and other
drug makers in the project.


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Price Cuts and Policies
Below are various ways drug companies are introducing less expensive
AIDS drugs to Africa.

Company
Region  Price  Purchase Condition/
Distribution Methods  
Pfizer
South Africa  Free donation of Diflucan  Only available at government
hospitals or clinics  
Merck/Bristol
Sub-Sahara and other developing nations-a  At or just below cost 
Available to any purchaser  
Cipla
Sub-Sahara  $350 to $600 a year-b  Available to any purchaser  
Abbott
Sub-Sahara  At 'no profit'  Available to any purchaser  
Roche
Sub-Sahara  15% to 50% discount under certain conditions  Only via
UNAIDS  
Hetero
Sub-Sahara  $347  Available to governments and int'l. organizations  

a-Only Merck is currently offering discounts outside Africa.
b-Cipla's $600 offer is for a three-drug combination to countries; its
$350 offer is only to Doctors without Borders, a private organization.

Sources: The companies; Unaids; WSJ research


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Indeed, 10 months after five big drug makers announced an initiative to
make AIDS drugs affordable in sub-Saharan Africa, companies are still
struggling over how best to increase access to their life-saving
treatments. Abbott was not part of the five-company initiative, so this
new offer is its first significant price concession since 1998. About 25
million people in sub-Saharan Africa are infected with HIV, the virus
that causes AIDS.

Roche, the Swiss drug-maker that was part of the initiative last year,
offered its first price reduction only last month, in a letter to
Unaids, the United Nations agency that runs AIDS programs. Roche offered
a rebate worth 50% off the existing price in Africa of its protease drug
Fortovase, and worth a 15% reduction off its price for its protease drug
Viracept. According to a Roche spokeswoman, when the rebates are figured
in, Viracept's price will be $3,467 a year and Fortovase's $2,482.

Ben Plumley, the Unaids official in Geneva handling the drug access,
said the Roche offer won't have much effect unless it is followed by
aggressive outreach to individual countries. Merck, Bristol-Myers,
Boehringer-Ingelheim GmbH and GlaxoSmithKline PLC have reached
agreements with Senegal, Rwanda, Uganda and the Ivory Coast to sell
cheaper AIDS drugs. Roche hasn't been part of those agreements, but the
company says it is in "active negotiations" with Uganda and the Ivory
Coast to supply medicines at the new prices.

In Uganda, Sowedi Muyingo, who buys AIDS drugs for Medical Access Ltd.,
a nonprofit drug distributor, said of the Roche rebate, "It is really
not much of an offer because nobody here can afford even the new price."

Under pressure from AIDS activists last year, Pfizer, based in New York,
agreed to spend $50 million on a two-year giveaway program of its
anti-fungal drug Diflucan, but only in South Africa. Pfizer said it has
no plans to reduce the drug's price, which sells for about $20 a day in
Uganda. Robert Huber, a Pfizer spokesman, did confirm that Pfizer is
talking with several other African nations about donating Diflucan there
as well.

Mr. Huber said Pfizer will supply people in South Africa who need the
drug as long as necessary. But he said the company will re-evaluate the
program in two years; that is when Pfizer's patent expires for Diflucan,
which had about $1 billion in world-wide sales last year. The Indian
company Cipla sells a generic version of the drug for about $3.50 a day
in Uganda.

Although Bristol-Myers said it won't use its patent for its drug Zerit
to block South Africa from buying generic versions, the company is in a
patent battle in Thailand over its other AIDS drug, Videx. Tido von
Schoen-Angerer, a Bangkok pediatrician with the advocacy group Doctors
Without Borders, said 11 HIV-infected people, among others, intend to
file a lawsuit in Bangkok's Intellectual Property Court seeking to
revoke Bristol-Myers's Videx patent.

The original patent on the drug is held by the U.S. National Institutes
of Health. The Thai group is targeting the company's patent on a
reformulated tablet that includes the active medicine plus an antacid
buffer.

GlaxoSmithKline, the United Kingdom-based pharmaceutical company that
has cut the price of its AIDS medicine, Combivir, to $2 a day in Africa,
said it has no plans to reduce the price of its AIDS drug Ziagen or its
new triple combination therapy, Trizivir. A company spokeswoman, Nancy
Pekarek, says GlaxoSmithKline is worried that rare but dangerous
hypersensitivity side effects associated with Ziagen and Trizivir might
be more difficult to deal with in Africa.

Meanwhile, student activists at the University of Minnesota are hoping
to push administrators at the school, which holds the patent for Ziagen,
to discuss with GlaxoSmithKline the possibility of price reductions and
allowing generic competition. "We are at the beginning stages of a
campaign," said Amanda Swarr, graduate student.

-- Mark Schoofs contributed to this article.

Write to Rachel Zimmerman at rachel.zimmerman@wsj.com and Michael
Waldholz at mike.waldholz@wsj.com