Abbott & Glaxo Go To Court Over AIDS Drug Price
2 CommentsBy Ed Silverman // March 1st, 2011 // 8:39 am
In December 2003, Abbott Labs raised the price of its Norvir AIDS drug, which is commonly used in HIV drug cocktails, by 400 percent, infuriating the AIDS community. But patients were not the only ones who were angered - GlaxoSmithKline, the Rite-Aid pharmacy chain and several wholesalers claim Abbott wanted to crowd them out of the market and a trial has just begun over $1.5 billion in damages.
Abbott sells a combo pill called Kaletra that includes Norvir and its own protease inhibitor. The lawsuit claims Abbott raised Norvir’s price - but not the Kaletra price - in order to boost Kaletra sales at the expense of other protease inhibitors that require Norvir as a booster. In other words, Abbott allegedly tried to use Norvir to create an illegal monopoly over the market for protease inhibitors. The stakes are high, though, because the damages can be tripled.
In court yesterday, a Glaxo lawyer told a jury the price hike caused Glaxo’s Lexiva, which includes Norvir, to cost 75 percent more a day than Kaletra. The Norvir price, by the way, was raised about a month after Lexiva was introduced. Consequently, Glaxo claims to have lost $570 million in profits, because Lexiva was sold at only half the rate the drugmaker believed was possible, Bloomberg News writes.
As for Rite Aid and other pharmacies, they maintain the higher cost penalized them for wanting to buy other meds that competed with Kaletra and, ultimately, were overcharged $1 billion (here is the lawsuit filed by Glaxo and here is the lawsuit filed by Rite-Aid). An Abbott spokeswoman tells Bloomberg the damages calculation is “deeply flawed and inaccurate. The plaintiffs cannot establish that they were damaged in any way by Abbott’s pricing actions.”
This is not the first time that Abbott has faced these allegations over its Kaletra pricing. In 2004, the Service Employees International Union Health & Welfare Fund filed a class-action lawsuit alleging the price hike violated antitrust laws, but Abbott agreed to settle the case for between $10 million to $27.5 million on the eve of the trial (back story).
jason
I realise that these companies must make a profit to maintain their investments for future drug developement but we are talking about life saving drugs not some new beauty-care product.Stop being greedy and focus on the position you are in,you have someones life in your hands. I rely on this drug to keep me alive,not because my life style was of one sexual conquest after another but because I trusted someone who I had formed a relationship with and I shouldn’t have. Fight hiv-aids,don’t focus on the company profits.
Paul
When this 400% increase in Norvir was being discussed at Abbott, someone in the room should have stood up and said no!! I can not believe that everyone thought this was a swell idea. How can any of the good that pharma does, including the development of Kaletra by Abbott, be seen in a positive light when this kind of greed and competitive action happens. And when this happened, Miles White was Chairman of the PhARMA board. What does that say about the industry?