E-DRUG: Abbott's Blackmail Against Thailand Continues
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Abbott's Blackmail against Thailand Continues - Lives Hang in the Balance
Professor Brook K. Baker, Health GAP
April 12, 2007
Abbott Laboratories has attempted to temporarily regain lost ground in its
ongoing compulsory license dispute with Thailand by granting a further
price concession on Kaletra/Aluvia for forty-five low- and lower-middle
countries, including, in principle, Thailand. The new price, $1000 per
patient per year, is still twice Abbott's no-profit price to least
developed and African countries, but it is $1200 less than the "discount"
price Abbott offered under activist pressure last year on August 13 during
the International AIDS Conference in Toronto. At the same that time Abbott
promises a price discount, it has announced plans to register
Kaletra/Aluvia broadly, though it has not done much in this regard so far.
However, the price discount and registration promise are doubly illusory in
Thailand because Abbott has withdrawn its registration application for
Aluvia, the new heat-stable, Meltrex form of Kaletra that is vastly
superior in tropical countries like Thailand. Not content with withdrawing
one key AIDS medicine that could adversely affect treatment options for
8,000-20,000 patients in the next year alone, Abbott has also withdrawn six
other registration packets and threatened to withhold all new medicines
from the Thai market. Abbott has initiated this new-product boycott of
Thailand in retaliation for Thailand's lawful issuance of a compulsory
license for public, non-commercial use of Kaletra/Aluvia calling this a
"failure to honor intellectual property rights." Contrary to Abbott's
claim, compulsory licensing is an essential part of the intellectual
property regime having been recognized in national laws for over a century,
having been used on thousands of occasions by the U.S. alone, and having
been expressly ratified in the WTO TRIPS Agreement and the Doha Declaration
of 2001.
As part of its long-term strategy, Abbott is attempting to realize three
goals simultaneously. First, in concert with the entire industry and with
the assistance of the United States Trade Representative, Abbott is
attempting to enshrine even higher standards of intellectual property
protection in an escalating series of "free" trade agreements. These
monopoly-enhancing agreements extend patent terms beyond 20 years, extend
patent rights to new uses of existing products, delay registration of
generic equivalents through data exclusivity rule and patent/registration
linkage rules that prevent drug regulatory authorities from relying on or
referring to safety and efficacy data submitted by the data holder,
restrict compulsory licensing and parallel importation rights, and revoke
price control mechanisms like reference pricing and therapeutic-value
formularies. Although U.S./Thai negotiations were suspended last year,
partially over access-to-medicines issues, a leaked version of the U.S.
proposal exposed the U.S/Pharma effort to treat a very TRIPS-plus patent
and data regime in Thailand.
Second, Abbott is trying to discover the price discount that will reduce
pressure from developing countries, AIDS activists, and multilateral
institutions like the WHO and Clinton Foundation. Rest assured that Abbott
has attempted to extract premium prices from low- and lower-middle income
countries in the past, charging between $3000 and $5000 per year as
recently as last August. But the AIDS crisis and widespread poverty in
middle-income countries confound Abbott's effort to extract thousands of
dollars of profit from each AIDS patient each year, and thus Abbott has had
to respond with a series of face-saving price cuts designed to relieve its
public relations nightmare. As part of this strategy, Abbott is trying
undercut the entry price of generic manufacturers that have not yet reached
efficient economies-of-scale. Abbott's effort to buy off the bigger
middle-income markets in Brazil and Thailand is predictably undermining
incentives for generic entry.
Third, Abbott is trying to punish Thailand severely for using a fully
TRIPS-compliant flexibility for accessing cheaper medicines. Its product
boycott represents a new low in Pharma's perverse pursuit of unassailable
monopoly protections. By intimidating Thailand, like it did Brazil two
years ago, Abbott hopes to dissuade other developing countries from
following Thailand's lead. Big Pharma would like to draw a boundary around
Africa and around AIDS drugs and declare a regional and disease-specific
cease fire in its ongoing Pharma Wars. But, by the same token, Big Pharma
would like to eliminate utilization of TRIPS flexibilities and
disincentivize the development of a robust generic industry that would
compete with regard to newer, more broadly patented medicines.
The price cuts offered by Abbott are insufficient to meet the long-term
needs of Thailand and other developing countries. As can be seen, price
cuts are conditioned on disavowal of key TRIPS-compliant flexibilities.
Although the price discounts might temporarily beat start-up generic
prices, the eventual prices of multiple generic producers manufacturing at
efficient economies-of-scale will always beat the price of higher-cost
Western manufacturers. Likewise, relying on single-source suppliers
unavoidably raises the risk of stock-outs and product interruptions.
Finally, developing countries have their own national and regional interest
in promoting local manufacturing capacity.
Although gaining a better price from Abbott is an important short-run
victory, Thailand should not relinquish its compulsory license on
Kaletra/Aluvia or other medicines. The license can always be held in
abeyance for use when generic prices drop further and when the generic
versions of Aluvia are WHO-prequalified and registered in Thailand.
Moreover, Thailand and other developing countries should continue to
pressure Abbott for voluntary access licenses, given to patent pools or to
multiple producers, so that generic pharmaceutical companies can begin to
manufacture and register more cost efficient forms of this very important
AIDS medicine. In fact, Thailand and other countries should go even
further and grant compulsory licenses on ritonavir as a separate product so
that it can be co-formulated with other protease inhibitors that might be
superior to lopinavir.
Abbott's crude and unlawful boycott of Thailand cannot be made palatable by
a unilaterally granted and unilaterally revocable price discount. The
stakes of this boycott are death. It's hard to understand why a company
that makes $1.1 billion a year from Kaletra sales is willing to kill people
to secure more profits. Hopefully this question will be asked at the
Abbott shareholder meeting in Chicago on April 27.
Professor Brook K. Baker, Health GAP
Northeastern U. School of Law
Program on Human Rights and the Global Economy
400 Huntington Ave.
Boston, MA 02115
617-373-3217 (office)
617-259-0760 (cell)