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Hearing on Price Increase for AIDS Drug
April 14, 2004
By GARDINER HARRIS
The recent decision by Abbott Laboratories to quintuple the
price of its crucial AIDS drug Norvir will be at the center
of a federal hearing today in which AIDS groups and
consumer advocates plan to argue that the government should
begin allowing the import of cheaper drugs.
The hearing, which will be conducted by the Department of
Health and Human Services, is a result of last fall's
Medicare drug legislation, in which Congress called for a
general inquiry into the import question. But the
escalating protest over Norvir, whose average annual dosage
cost rose to about $7,800 in January from $1,500, has
suddenly given the import issue unexpected urgency.
Norvir is a vital ingredient in many of the drug "cocktail"
regimens prescribed for tens of thousands of AIDS patients.
Abbott, which cannot raise its prices overseas where
governments control drug markets, says it has had to raise
prices in the United States to continue financing its
research into H.I.V. and other diseases.
Norvir will also be the focus of a hearing that has yet to
be scheduled. At that session, the National Institutes of
Health will hear arguments over whether federal health
authorities should take the unusual step of allowing
generic versions of Norvir years before Abbott's patents
In the cases of drugs that were developed with federal
money - as
Norvir was - the government has long held the right to
demand "reasonable" prices, but has never done so.
"The taxpayers already paid for this invention, so if
anything it should be cheaper in the United States," said
James Love, director of the Consumer Project on Technology,
a group that pushes for lower drug prices.
Mr. Love plans to testify at today's hearing, as do a
number of consumer advocates and members of AIDS groups who
have protested Abbott's pricing of Norvir.
With total sales of more than $1 billion since its
introduction in 1996, Norvir long ago became profitable for
Abbott. But with the recent price increase, the thousands
of Americans who use Norvir now pay 10 times what the price
is in Europe, where drug prices are regulated under
national health care plans. An annual Norvir dosage in
Belgium, for example, costs less than $720 a year.
Abbott explains its pricing in this country by saying that
patients are using smaller doses of Norvir than originally
expected, and so the price increase is intended to recoup
those losses. Because drug prices are regulated abroad, but
are not in this country, American consumers often end up in
effect subsidizing overseas patients.
"To continue the work in H.I.V. and other therapeutic
areas, we decided the appropriate thing to do to resource
our program was to make up our losses with the price
increase," said Dr. John Leonard, an Abbott vice president
in charge of drug development.
Support for legalizing drug imports is building in
Congress. Last Thursday, Senator Charles E. Grassley, the
Iowa Republican who is the chairman of the Senate Finance
Committee, introduced legislation that would gradually
legalize drug imports from Canada, Australia and Europe.
More bills are expected. Senator John Kerry, the
Massachusetts Democrat and the party's presumptive
presidential nominee, has announced his support for import
legislation - an issue the Democrats hope to exploit in the
Drug makers fiercely oppose all efforts to legalize drug
imports. They argue that bringing in foreign drugs - even
when made in the companies' own factories - would
effectively import foreign price controls, while reducing
profits so much that companies would be unable to continue
much of their research efforts.
Federal drug officials, meanwhile, have argued that with
imported drugs they cannot protect consumers from dangerous
counterfeits that have none of the safeguards that cover
drugs approved for sale in the United States.
But import advocates say that legalizing drug imports is
the only way to make medicines affordable.
All sides have something to say about Norvir, which has
quite suddenly become a touchstone in these swirling
"Norvir is sort of a nexus of all the bad practices that
all the drug companies use," said Senator Charles E.
Schumer, Democrat of New York. "Abbott should understand
that what they're doing invites scrutiny and change."
In 1996, Norvir became the second marketed protease
inhibitor, a class of compounds crucial to most AIDS drug
regimens. The drug's introduction followed an eight-year
research effort at Abbott that began with a grant from the
National Institutes of Health, according to John Erickson,
the former chief of Abbott's AIDS drug research program.
"The grant was critical in allowing us to make the rapid
progress that we made," said Dr. Erickson, who is now
president of Sequoia Pharmaceuticals in Gaithersburg, Md.
Researchers soon discovered that Norvir, in small doses,
had a unique ability to enhance the effectiveness of nearly
all protease inhibitors. So even as other companies
introduced newer drugs with fewer side effects than Norvir,
the older drug became widely used as an adjunct.
Matt Sharp, an AIDS patient in Chicago, takes Norvir in
relatively high doses along with an experimental drug from
Boehringer Ingelheim. Because he is participating in a
clinical trial, his medicine is free. But once the trial
ends, Mr. Sharp said that he worried about how he would pay
for his medicines.
Many AIDS groups have for years resisted criticizing drug
makers' pricing decisions because of their intense interest
in encouraging more discoveries. "Our lives depend on
future research," said Lei Chou, the director of the Access
Project, an AIDS information clearinghouse in New York
But Abbott's surprise decision regarding Norvir, which it
announced in December, led to cries of outrage from AIDS
groups across the country, Mr. Chou said.
Cesar Portillo, a spokesman for the AIDS Healthcare
Foundation, the largest nonprofit provider of H.I.V./AIDS
medical care in the country, said that Abbott's decision
would result in even more patients having to join waiting
lists for care.
"To take a drug that was approved in the mid-1990's and
increase its price by 400 percent to meet some marketing
strategy is outrageous," Mr. Portillo said.
An Abbott spokeswoman noted that the company had not raised
the price it charges publicly financed AIDS assistance
programs. But Lynda Dee, a member of the Maryland AIDS Drug
Assistance Program advisory committee, said that many
assistance programs not only provide drugs directly to
low-income patients, but they reimburse drug co-payments to
patients with private insurance. As Norvir's price rises,
those co-payments will probably go up, too, she said.
"Nobody's saying they shouldn't have a reasonable profit,
but to raise a drug's price like this seven years after
they've already made a fortune is unconscionable," Ms. Dee
said. "Nothing has united the AIDS community like this in
Some physicians who treat patients with H.I.V. have banded
together to urge their colleagues to avoid Abbott medicines
when possible. "If there is a choice in medicines, we are
urging doctors not to choose Abbott drugs," said Howard
Grossman, an internist in New York City who is leading the
boycott effort. "In H.I.V., unfortunately, Abbott has a
monopoly. But in other areas, it doesn't."
That Norvir was discovered with public funds only fuels the
debate. Mr. Love has petitioned the National Institutes of
Health to take advantage of the fine print included in
grant bequests that allows the federal government to insist
upon "reasonable" prices for discoveries made with federal
money. These provisions have rarely been invoked by federal
health authorities, who fear any effort on their part to
control drug prices would lead drug companies to abandon
collaborations with federal health agencies.
Six members of the House, most of them political liberals
including the Democrats Sherrod Brown of Ohio and Henry A.
Waxman of California, recently signed a letter to Tommy G.
Thompson, the secretary of health and human services,
asking him to support the petition.
Yesterday, John Burklow, a spokesman for N.I.H., said that
the agency decided "to provide a venue for public input on
this issue," although the timing and format of that input
is still being discussed.
Alan Holmer, president of the Pharmaceutical Research and
Manufacturers of America, the drug industry's trade
association, said that neither legalized drug imports nor
government price controls would help AIDS patients.
"The cost of AIDS medicines today is what funds the
research for the better treatments and cures for tomorrow,"
Mr. Holmer said. "It's true that other developed countries
are free-riding on American research and we need to address
that, particularly in trade agreements."
Today's meeting will be conducted between 9 a.m. and 5 p.m.
in the Natcher Auditorium at the National Institutes of
Health in Bethesda, Md.
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