Abbott Is All Thai'd Up in Kaletra Crisis

May 2, 2007

Pharmaceutical Executive

Volume 0, Issue 0

Activist protests steal thunder from Abbott's shareholder meeting.

Emerging markets are key to pharma's long-term growth strategy, but shaky patent protection continues to create tension there. The debate over intellectual-property rights intensified last week as AIDS advocates wrote letters, staged press conferences, and finally crashed the annual shareholder meeting of Abbott Labs in Illinois to call for a global boycott of the drug giant.

Although companies like Merck and Novartis have also battled moves by developing nations--most notably Brazil and India--to break patents and allow the sale of cheaper generics, Abbott's frustration reached the boiling point recently. The company set off a firestorm when it said it would no longer register its new products in Thailand, a stance it had seemed to back away from soon after. But according to the Chicago Tribune, Abbott CEO Miles White told the meeting that the firm would stand by its decision to withhold drug applications, an announcement that was greeted with cheers from shareholders.

The controversy centers on the World Trade Organization's compulsory licensing rules, which--put simply--allow generics makers to produce copies of patented drugs for public health crises, like HIV, in hard-hit, resource-poor nations. Innovator drug companies, however, would prefer to address the crisis through their already-established drug discount programs. Abbott, for example, had previously dropped the annual per-patient cost of Kaletra to $2,200 in Thailand, but local officials argued that that tab remained out of reach. By contrast, the price tag Abbott had set for Kaletra for AIDS patients in Africa is $500 a year.

Before the Abbott dustup, Thailand had strong-armed Merck into offering deeper discounts by threatening to break the patent on Sustiva (efavirenz). Brazil took up the same demand just this week.

IMS Health's recent state-of-the-industry report found that while growth has slowed in Europe to 4.4 percent (or $126.9 billion), sales in Latin America grew 12.7 percent to $33.6 billion, and Asia (outside Japan) and Africa grew 10.5 percent to $66 billion. But Murray Aitken, IMS' senior vice president of corporate strategy, noted that pharma hasn't yet overcome the "tension" between the business opportunities in emerging markets and their evolving patent laws.

The drug industry appears to have the support of US officials, even if its position has been unpopular. The Thai News Agency reported that Ralph Boyce, US ambassador to Thailand, addressed journalists in Bangkok after meeting with Mongkol Na Songkhla, the country?s Public Health Minister. "We respect the Thai government decision to issue compulsory licensing," Boyce said, "but what we would like to see is the negotiations between the Thai government and representatives of major drug companies."

USA for Innovation is running full-page ads in The Wall Street Journal and Roll Call, urging Congress to intervene against Thailand's "draconian measures on foreign-owned companies." The nonprofit, which is led by former ambassador Ken Adelman, a member of the Defense Policy Board and senior counselor at Edelman Public Relations--whose clients include Abbott Labs--is also releasing a video about the issue to the "people of Thailand" via YouTube, the video-sharing Web site.

Abbott representatives did not respond to requests for comment. But in a statement they noted that they are compromising with the Thai government by further reducing the price of antiretroviral drug Kaletra/Aluvia (lopinavir/ritonavir). The new price is $1,000 per patient.

Not everyone agrees that drug makers are being victimized in what advocates for people with AIDS have dubbed a "patent vs. patient" battle. Groups ranging from Doctors Without Borders to the AIDS Healthcare Foundation to the Interfaith Center on Corporate Responsibility are pressing drug makers to approach access to antiretrovirals as a human-rights issue.