May 17, 2004
Pricing AIDS drugs
Yesterday’s announcement that the Bush administration is finally willing to provide generic AIDS medications to the developing world is welcome news. Previously, the administration’s Third World AIDS czar, former Eli Lilly executive Randall Tobias, had pushed for U.S. aid to buy patented drugs at near-market prices.
Before we break out the champagne to congratulate the administration (and heave a sigh of relief that our taxpayer dollars will go a bit farther), a few salient facts are in order. Between 1985 and 1996 when the AIDS triple cocktail emerged from research labs, the U.S. government poured more than $10 billion into AIDS research. European governments and Japan spent billions more. Industry spending, meanwhile, totaled less than $3 billion, well under a quarter of the total.
So it should come as no surprise that every one of the first AIDS drugs, most of which are still on the market, emerged from those early government efforts. Even several members of the first generation of protease inhibitors, the drugs that made the triple cocktail work, began their lives on government grants or relied on government-funded clinical trials to pass Food and Drug Administration muster.
I don’t bring up these facts merely to harrumph over the Bush administration’s reversal. Access to affordable medicines is a problem here, just as it is in Zimbabwe and South Africa. AIDS therapy in the advanced industrial world is now estimated to be a $7 billion a year market, much of which is picked up by Medicaid and other government assistance programs. The drug industry invested significant sums in developing the first and subsequent generations of AIDS drugs, to be sure. But they have been and continue to be well reimbursed for their efforts.
The question now is this: If the developing world can have affordable AIDS drugs, why not here? A few months ago, Illinois-based Abbott Laboratories quadrupled the price on its protease inhibitor, Norvir, which was approved in 1996 and is the direct descendant of a drug invented on a government grant.
Why the massive price increase? Norvir (the generic name is ritonavir) has some peculiar properties. It makes all the other AIDS drugs stay in the blood stream longer. So many physicians prescribe it in small doses to go along with the triple cocktail. As an old-time ward heeler from the city that gave birth to Abbott once put it, “I saws my opportunity, and I took it.”
The price increase drew howls of outrage from the AIDS activist community. One group sued. The Consumer Project on Technology, a Nader spin-off, petitioned the National Institutes of Health to exercise a "government rights" clause that is attached to every invention made with government funds. If CPT had its way, the government would seize the ritonavir patent and give it to a generic manufacturer.
On May 25th, NIH will hold a hearing on that petition. Don’t expect much action from the government. But it should provide an entertaining glimpse into industry thinking. We’ll keep you posted.