Price of AIDS Drug Intensifies Debate on Legal Imports
By GARDINER HARRIS
Published: April 14, 2004
Original: The New York Times
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 expire.
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 presidential campaign.
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 debates.
"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 City.
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 years."
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.