Abbott Laboratories Increases Norvir Price Fivefold

by John S. James

Summary: On December 4, Abbott Laboratories increased the price of its drug Norvir fivefold -- possibly the largest out-of-the-blue overnight price increase for a life-critical medicine in history. [revised 2003-12-28]

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In an entirely unexpected move on December 4, 2003, Abbott Laboratories increased the U.S. wholesale price of its 100-mg capsules of ritonavir (Norvir(R)), to five times what it had been the day before -- and increased the price of the liquid formulation comparably. Norvir, originally approved in 1996 and with estimated sales of over $1.3 billion to date, is widely used in small doses to "boost" the effect of other protease inhibitors, and the new price will greatly increase the cost of several widely used treatments. The new price may be the largest overnight, unexpected price jump in history for a life-critical drug.

Abbott did not announce the increase except in a letter to wholesalers stating the new price (we learned about the change through emails from patients). After opposition from doctors' and other organizations, and stories in The Wall Street Journal, Chicago Tribune (Abbott is located outside Chicago), and other news media, Abbott sent a Dear Doctor letter to HIV physicians, saying that it had carefully planned the increases so that they would not block patients' access. It said it would provide the drug free to those who pay out of pocket (about 5% of patients using the drug, according to Abbott) regardless of their financial status -- and would not raise the price for ADAP or Medicaid until June 2005. [Note: It could not raise these government prices much until 2005 anyway, due to existing regulations and agreements]. For those paying through private insurance (about 40%), Abbott said it had contacted "many" health-insurance providers and found that they do not restrict HIV medications through a formulary, nor plan to increase co- pays or premiums. (Prices outside the U.S. are unchanged because of price controls in the major markets.)

In fact, patients are already changing their treatment (especially from full-dose Norvir), despite the risk of switching from a regimen they know is working for them to one they do not know (see "Price of AIDS Drug Soars Fivefold" in the Seattle Times, January 5, 2004). And another problem not visible right away is that some insurance companies keep raising premiums for those who need expensive care, eventually making the insurance prohibitive and abandoning these patients.

Abbott did not raise the price of the small ritonavir dose in Abbott's Kaletra product -- immediately putting competitors' protease inhibitors at a major disadvantage if they use the boosted dosing most doctors now recommend. Abbott just added another $2500, $5000, or $10,000 per year (wholesale cost) to the price of its competitors' products (depending on how much Norvir needs to be taken to slow the body's destruction of the other drug).

The five-fold price increase could also inhibit the development of new boosted protease inhibitors, now becoming increasingly successful treatment options. "Why bother to invest in these areas if Abbott has effectively priced you out of the market in the U.S.?" one scientist asked.(1)

Community Response

On December 18, 2003, the HIV Medicine Association asked Abbott to "reconsider the recent 500 percent price increase of ritonavir (Norvir(R)), a drug which as you know is necessary to the success of virtually all protease inhibitor combinations for the treatment of HIV infection. The HIV Medicine Association (HIVMA) represents 2,600 physicians and other health care providers who practice HIV medicine. While we recognize the value of ritonavir, we are alarmed by your decision to raise the cost of protease inhibitor (PI) regimens to the point where many people who need these life-saving drug combinations will struggle to pay for them or will not have access to them at all."(2)

Efforts have started to organize a boycott across all Abbott products. A five-fold drug price increase speaks to everybody, and opens a Pandora's box for a whole new level of corporate abuses. A boycott could be effective if buying from Abbott becomes something to avoid in the medical community, and major hospitals and other institutions redirect large orders when they have the opportunity, when equally good products are available from competitors. Antitrust avenues are being explored as well (not even Microsoft could raise its competitors' prices); we have heard that state attorney general offices are interested. Also, several ritonavir patents were developed with government support, and under a Federal law known as the Bayh-Dole Act, the government could license a third party to produce the drug if the patent holder fails to make it available on reasonable terms.

And AIDS treatment activists are talking with other groups affected by pharmaceutical-industry abuses.

Comment: Drug Development

In addition to specific remedies, we also need a new look at the big picture of how medicines are developed.

People died in the clinical trials and clinical experience that led to the modern use of boosted protease inhibitors. Patients need options, but now one company wants to take away much of the benefit of what has been learned, in order to increase its market share and profit. Congress has given big pharmaceutical corporations a monopoly on life and death, but this system cannot work unless the power is used with some restraint and respect for public interest.

Americans are told they must suffer exorbitant prices for critical drugs to provide incentive to develop new medicines. But in fact, the industry's record in creating medical breakthroughs is remarkably poor in light of the great advances in biological sciences, and the great resources pharmaceutical companies have at their disposal. The biggest reason, we believe, is one that gets far too little attention -- that the pharmaceutical industry does nothing to develop non-patentable treatments, and very little to develop even proprietary treatments if the rights are unclear or scattered among competitors, who seldom cooperate well. Many if not most of the best medical and scientific leads are off the table entirely under the current system, simply because of ownership and rights issues. Nothing can be done without a clearly visible hook of something to sell -- a way to build a business, perhaps, but not a way to discover new knowledge or create new medicines.

Pharmaceutical companies are marketing organizations, not research organizations. They conduct or fund only a little basic research (much of it for public-relations purposes), and usually farm out clinical research to specialized companies.

And increasingly pharmaceutical companies are lobbying organizations, with more Federal lobbyists, 623, than members of Congress, 535. These lobbyists include 23 former members of Congress, who have special access to their colleagues. The industry spends over $78 million a year on Federal lobbying(3) - - an average of over $145,000 every year to influence each member of Congress, with all this money often targeted to changing just a small number of key votes. Campaign contributions, real and fake "issue" ads, and monies to change public discussion by influencing academics, medical journals, think tanks, physicians, reporters, activists, and other "thought leaders" are not counted in this total.

This is why an unworkable system that threatens everyone's life is so hard to change.

Meanwhile, government, university, non-profit, and public/private groups sometimes develop new drugs (a recent example is the emergency contraceptive, Plan B). But they have been discouraged from doing so by the ideology that this is industry's job -- even while "open source" development in other fields is showing new ways to organize the work of thousands of individuals and teams around the world to create and run large projects successfully.

Pharmaceutical pricing has become a serious issue everywhere in the world (even where there are price controls -- which have worked less well for new drugs because there is no baseline price, and in any event are under attack by the U.S. government). A five-fold, out-of-the-blue price increase sets a precedent that can hurt anyone. And it moves us further toward a world where the big advances of 21st-century medicine for cancer, Alzheimer's, autoimmune, infectious, and other diseases will routinely be reserved for rich or well-insured minority, while others live or die without them.

The first step toward a better way is to open drug development to a variety of teams, structures, and institutions, not just one. What big pharma can do, and do well, is to bring together the loose ends left by others to accomplish the critically important and intensely political task of getting proprietary drugs into rich or well-insured bodies. Today's pharmaceutical industry can make a better Viagra. But will not develop medicines for diseases of poor countries -- or non-proprietary treatments for anyone, even when they are the best at any price.

For More Information, and How to Help

A place to start is the AIDS Treatment Activist Coalition (ATAC). It has posted materials on the Norvir price increase on its site: http://www.atac-usa.org/

Treatment activists who join ATAC can participate in ongoing discussions on the Norvir price increase, ADAP funding, drug development options, prison health care, and other issues.

References

(1) Unnamed pharmaceutical-company scientist quoted by Keith Alcorn of AIDSMAP, in "Ritonavir price increased: What are the consequences in 2004?" at: http://www.aidsmap.com/news/newsdisplay2.asp?newsId=2466 (follow the link to Part 2).

(2) A press release and the letter to Abbott from the HIV Medical Association are at: http://www.hivma.org

(3) America's Other Drug Problem: A Briefing Book on the Rx Drug Debate, prepared by Public Citizen's Congress Watch, at: http://www.citizen.org/rxfacts

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