Abbott Bows, Cuts AIDS Drug Prices
 

By AVERY JOHNSON
April 11, 2007; Wall Street Journal, Page D7

In a sign of compromise, Abbott Laboratories agreed to sell its AIDS medicine Kaletra to many developing nations at a price below generic versions.

But as a show of continued resistance in a dispute with the Thai government, Abbott said it wasn't reversing its decision to pull new drug applications in that country.

Abbott has faced public-relations problems over the pricing of its popular AIDS treatment. Health advocates, the AIDS community and more than a dozen faith-based institutional investors voiced criticism when Abbott pulled its drug applications on seven new medicines last month. That move came after Thai authorities decided in January to allow cheaper copycat versions of Kaletra and Plavix, a blood thinner from Bristol-Myers Squibb and Sanofi-Aventis.

Abbott's decision comes ahead of the Abbott Park, Ill., company's annual shareholder meeting on April 27.

The World Health Organization, which approached Abbott about making the pricing move, applauded the decision. And the AIDS Healthcare Foundation, the largest non-governmental AIDS and HIV health-care provider in the U.S., called Abbott's decision "an enormous victory for AIDS activists." But its president, Michael Weinstein, called it "highly vindictive" on Abbott's part not to reinstate the new drug applications, saying, "They're admitting that they're wrong but they still feel the need to punish Thailand." Abbott defends its decision to suspend new medicines because of concerns about patent integrity and the need to fund ongoing drug research.

Abbott will now offer Kaletra for $1,000 per patient per year in Thailand and more than 40 other low- and middle-income countries. That's still more than the $500-a-year price it gives to poorer nations, including Malawi and Kenya, but far less than the U.S. price of roughly $7,000. Abbott says the $1,000 price is 55% lower than the previous price in those nations.

A new formulation of Kaletra that doesn't require refrigeration, called Aluvia in some countries, is one of the drug applications Abbott pulled last month in Thailand, where it says it agrees with a WHO assessment that more work needs to be done to resolve the conflict. That new formulation will be available in the 40 or so countries at a lower price.

Abbott faced a similar standoff with Brazil in 2005 that was resolved when Abbott agreed to lower the price of Kaletra while preserving the company's patent. Brazil had threatened not to honor Abbott's patent on the drug.

Write to Avery Johnson at avery.johnson@wsj.com1