NGO Response to Abbott’s announced $1000 price for Aluvia in Low- and Lower-Middle Income Countries

April 10, 2007

Health GAP, Student Global AIDS Campaign, American Medical Student Association, and Essential Action applaud that Thailand’s compulsory license, generic competition, WHO intervention, and activist pressure have forced Abbott to offer a further 55% reduction in its tiered price for low- and lower-middle income countries. However, as clarified further below, the price discounts still do not go deep enough or wide enough, and Abbott has still withdraw Aluvia and six other medicines from the Thai registration process in retaliation for Thailand’s lawful exercise of its right to issue compulsory licenses for priority medicines for government, non-commercial use.

Abbott’s new price announcement confirms the importance of generic competition and the necessity of using compulsory licenses to curb abuses of monopoly power by pharmaceutical companies. Abbott’s price-discount announcement is mostly due to: (1) Cipla’s recent announcement (April 1, 2007) to undercut Abbott’s price and offer Aluvia at $1560/pppy, (2) Thailand’s decision to issue a compulsory license in response to the unaffordable price charged by Abbott in Thailand other low- and lower-middle-income countries of $2200/pppy, and (3) increased civil society and political pressure exerted upon the company in the last four weeks following its decision to de-register seven medicines from the Thai market.

Abbott has not yet agreed to reverse its illegal and unethical withdrawal of seven registration applications from the Thai drug regulatory process, including the application for Aluvia, the heat-stable form of Kaletra that is most appropriate for use in a tropical country like Thailand. Abbott may have violated Thailand’s competition law by withdrawing these products; it has certainly violated patients’ human right of access to essential life-saving medicines.

Although this price is lower than what has been currently offered by generic manufacturers, it is still twice the access price of the medicine(s) in least-developed and African countries ($500/pppy), and will exert a heavy financial burden upon low-income and lower-middle income countries seeking to achieve universal access and treatment. Abbott should provide Kaletra/Aluvia at one, no-profit price to all developing countries.

Although Abbott’s price is temporarily lower than the price offered by generic manufacturers, it is highly likely that generic prices will drop below $1000/pppy as an increasing number of patients require 2nd line anti-retrovirals, as generic producers reach economies-of-scale, and as generic versions of Aluvia are WHO pre-qualified and are thus purchasable with Global Fund money. Abbott’s price discount to Thailand, like its prior discount to Brazil, is primarily designed to reduce market demand that might incentivize efficient generic production.

Abbott must not be permitted to blackmail Thailand into withdrawing any compulsory licenses in exchange for a promise to renew its registration application for Aluvia. Thailand’s decision to issue compulsory licenses was fully consistent with World Trade Organization intellectual property rules and obligations and with Thai law. Likewise, the Ministry of Health should not be forced to withdraw its compulsory licenses for efavirenz or Plavix.

Even if Abbott is offering a lower price for Kaletra/Aluvia, it does not necessarily mean that Thailand should withdraw, or not execute, its government use license. There are strong reasons that Thailand may wish to keep its compulsory license to ensure alternative sources of supply, to develop and support domestic and/or regional pharmaceutical capacity, to incentivize generic competition, and to subsequently procure lower-priced generic versions that are WHO-prequalified and registered in Thailand.

Thailand should only purchase Kaletra/Aluvia from Abbott to ensure no-stock outs and reliable access across the country, and should not enter into any long-term, binding contract that would make Abbott the country’s sole supplier for multiple years and preclude future use/access of generic versions. A prior decision by the Brazilian government to enter into a long-term contract with Abbott for Kaletra/Aluvia has exerted a severe financial burden upon the National AIDS treatment program, and the Brazilian government now pays a price of $1596/pppy that is 60% higher than Abbott’s new $1000 price.

The World Health Organization should be staunchly defending and supporting Thailand’s decision to issue a compulsory license, and should be providing technical support and assistance to the Thai and other governments to enforce and implement compulsory licenses. Any price negotiations conducted by the WHO should be done alongside and through national governments, and not done secretly with pharmaceutical companies. Any price negotiations or transactions with the pharmaceutical industry should be open, transparent and inclusive to avoid any appearance of impropriety or undue influence of the pharmaceutical industry upon the UN body.

Sponsors of this statement are seeking additional sign-ons. Contact Brook Baker: 617-373-3217.

About Search Events Listserves Blogs Publications