Abbott Laboratories Reduces Prices on 2 AIDS Drugs, Test in Africa
Abbott Laboratories said Tuesday it would offer two AIDS drugs and a diagnostic test at “no profit” in Africa, making it the latest pharmaceutical company to slash prices in response to international pressure.
Abbott is reducing prices of two protease inhibitors, Novir and Kaletra, and is discounting the price of its Determine diagnostic test for the human immunodeficiency virus, which causes AIDS.
The company did not announce a price for either drug but said its prices would be in line with other AIDS drugs in Africa. That would push the annual cost of each drug to less than $1,000, a significant reduction but still too high for people in many African countries. In the United States, Kaletra costs $6,500 annually and Novir costs $7,000.
Abbott’s action comes two weeks after Bristol-Myers Squibb announced it would sell its AIDS drugs below cost in Africa. A week before that, Merck & Co. said it would sell two AIDS drugs there at cost. The industry has come under pressure to lower the cost of AIDS drugs in Africa, where 70% of the world’s HIV-positive people live. In South Africa, nearly one in five adults carry the virus.
In announcing the price cuts, Abbott Chairman and Chief Executive Miles D. White said he hopes governments and international agencies will step forward to fund AIDS treatment. The pharmaceutical industry has maintained that lower prices are merely a first step in countries that lack funds to pay for drugs and health-care networks to administer them.
“The next step in the global response is to develop the infrastructure necessary to deliver effective treatment,” White said.
Abbott said it hired Axios International, an Irish consulting firm, to field requests for its drugs in Africa. It said Axios would determine whether governments, agencies or other organizations had the resources to distribute them.
“We will pick up whatever institutional program is ready,” said Joseph Saba, chief executive of Axios, which administers an AIDS drug distribution program in Africa for Boehringer Ingelheim. “But you will not solve the problem in Africa without donors to provide funds and expertise and public health programs to provide access to drugs.”
AIDS activists said Abbott’s price cuts were long overdue. The company did not participate in the first round of cuts announced last May by five AIDS drug makers, including Bristol-Myers and Merck. Activists said Tuesday’s announcement marked Abbott’s first price cuts in Africa since 1998.
“They’ve been kind of slow to the dance on this one,” said James Love of the Consumer Project on Technology, a Ralph Nader-affiliated organization. Love and other activists expressed disappointment that Abbott’s offer did not include other developing countries with AIDS problems, as Merck’s did.
“The problem is that it is not just Africa,” said Love, noting that such Asian countries as India and Thailand, as well as poor nations in South America, cannot afford AIDS drugs.
Abbott’s move “is a step in the right direction, but it is fairly limited,” Love said.
A representative of Act Up in New York, which has been planning demonstrations against Abbott over pricing of its AIDS drugs in Africa, called the company’s announcement a PR ploy.
Act Up spokesman Eric Sawyer said Abbott’s use of Axios as an intermediary could drive up the cost of the drugs and prolong negotiations for the medications. He said Abbott’s decision not to disclose its new prices is a sign of bad faith.
However, Abbott spokeswoman Ann Fahey-Widman said prices would vary by country. She said the prices would include the cost of supplying the drug to specific destinations but not marketing or research costs. And she said that Axios, which has an office in Uganda, would ease distribution of drugs in Africa, where Abbott has less direct experience.
Industry analysts said the cuts would have a minimal effect on Abbott’s bottom line. The company derives little of its $200 million in annual sales of Novir from Africa, analysts said. Sales of recently introduced Kaletra are expected to be in the same range as Novir.
“In terms of total dosage, Africa is not significant, because people can’t afford it,” said Mark Ravera, a pharmaceutical industry analyst with Mehta Partners in New York. “At this point, they are trying to help their public image,” which has been hurt by the controversy over AIDS drug pricing.
Shares of Abbott Laboratories closed Tuesday at $44.78, up 53 cents, on the New York Stock Exchange.
