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New lawsuit against activists shows CEO Miles White maverick MO
Abbott Labs has waded deeper into a media quagmire this week, pursuing a risky PR strategy that casts the drug giant as Goliath to the AIDS-activist community's David.
A Paris judge has set October 3 as the start date for the Chicago-based company's lawsuit against ACT UP-Paris. The French AIDS activists are charged with launching a cyberattack--or "zap" in activist lingo--on Abbott's Web site in April on the eve of the company's annual shareholder's meeting. ACT UPers from several countries logged on to the site for several hours, overloading Abbott's server and shutting the site down for at least half an hour.
The group said it was protesting an offer by Abbott in its contentious negotiations with the Thai government to cut the cost of its anti-HIV powerhouse Kaletra (lopinavir/ritonavir) on condition that the nation block generic versions from its market. The group was also demanding that Abbott reverse its decision not to market its newest drugs in Thailand.
The suit is the latest development in a months-long, high-profile battle over patents and prices that Abbott is waging against Thailand and activists--and, increasingly, public opinion. Although the drug maker is standing tall against threats by the Thai ministry of health to issue a compulsory license--or "bust the patent" in pharma parlance--for the company's second-line HIV treatment of choice, the fighting strategy may have hurt it--and Big Pharma's image--in the court of public opinion.
According to a Harris Interactive poll for the Wall Street Journal, 61 percent of Americans think developing nations should be able to break patents on AIDS drugs. A smaller survey on pharmalot.com revealed that 68 percent of that blog's readers thought Abbott was wrong to sue.
The Abbott lawsuit also breaks pharma's tacit rule of steering clear of controversies, especially those involving access to HIV drugs in the developing world. Most HIV drug makers have learned the hard way that working with, rather than against, global advocates for patients with a life-threatening disease is the path to progress.
But Abbott CEO Miles White has frequently bucked this trend. And the prospect of other nations following Thailand's lead in overriding drug patents seems only to have stiffened his spine. "[The Thai] government told us no price that we would offer [for Kaletra] would matter. They told us they already had a supplier lined up," White said. "Why would we...provide the product if a generic company is providing the product?"
Abbott insists that pursuing the case against ACT UP-Paris is no less a matter of principle. "While our organizations can disagree on various matters, it is important to convey those disagreements in a respectful, appropriate, and legal manner," the company said in a statement. The French protestors shouldn't be treated differently from American scofflaws, added Abbott Public Affairs Director Jennifer Smoter. "In the US, cyberattackers face prison time and are sought after by the FBI," she said. ACT UP-Paris could face a fine of $100,000 and disbandment.
Mark Harrington, head of the Treatment Action Group (TAG), a leading AIDS-advocacy-and-policy group widely respected by industry insiders, disagrees. "Every company has its own corporate culture," he said. "Some respect people's right to live, but the only other culture Abbott respects is that of its shareholders." Harrington called the lawsuit "a bullying attempt to distract" from the Thailand controversy.
The current shaky deal between Abbott and Thailand could shatter if the two sides cannot agree on price. The Thai ministry of health insists that Abbott put the price tag no higher than 5 percent more than the generics annual cost per person--about $695. Abbott won't go lower than $1,000; the drug costs $2,200 in the US. Thai officials are expected to make a final decision in the middle of next month.
The media dustup hasn't hurt Abbott financially, according to Morningstar analyst Heather Brilliant. "There won't be any material effect on the company for now," she said. And she doubted that the cyberattack affected the company's sales, though Abbott said online sales of its nutritional products were disrupted.
Yet more strife is likely in store, given that Abbott is still withholding six other drugs, including one for cancer, and the Thai health ministry has announced that it may next target cancer drugs for compulsory licensing."If conflicts like this keep popping up with countries and groups, there could be some damage to every pharma company, especially Abbott," Brilliant said.