Normally, a high price for a medication prompts outrage and accusations from consumers, politicians, doctors and insurers. Now, though, there is the courtroom spectacle of an attorney for GlaxoSmithKline charging Abbott Labs with being greedy, stifling competition and creating an illegal monopoly after more than quadrupling the price of its Norvir med. The pill is used in AIDS cocktails.
The background: Abbott sells a combo pill called Kaletra that includes Norvir and its own protease inhibitor. Glaxo claims Abbott raised Norvir’s price - but not the Kaletra price - in 2003 in order to boost Kaletra sales at the expense of other protease inhibitors that require Norvir as a booster. In other words, Abbott allegedly tried to use Norvir to create an illegal monopoly.
A Glaxo lawyer told a federal court in San Francisco yesterday the price hike caused Glaxo’s Lexiva, which includes Norvir, to cost 75 percent more a day than Kaletra. The Norvir price, by the way, was raised about a month after Lexiva was introduced. Consequently, Glaxo claims to have lost $570 million in profits, because Lexiva was sold at only half the rate the drugmaker believed was possible.
“This was about money for Abbott and they wanted to make sure Kaletra stayed on top,” Brian Hennigan, a lawyer for Glaxo, told the jury in closing arguments. "Norvir was just being used in the background as a weapon to protect Kaletra" (here is the lawsuit filed by Glaxo). He asked the jury to award damages of nearly $572 million, which would represent lost sales, although the drugmaker can also seek triple damages.
As for Abbott, which raised the wholesale price for a 100 mg Norvir capsule from $1.71 to $8.57, the drugmaker insists Kaletra lost market share and had only 30 percent of the market for similar meds. James Hurst, an attorney for Abbott, told jurors the price was raised "to make more on Norvir" because Bristol-Myers Squibb introduced a rival med, Reyataz, that needed one Norvir pill instead of four.
“That explains the price increase,” he said, according to Bloomberg News. “It was a different use, so it needed a different price.” Norvir went from the lowest-priced HIV drug “on the market by far to still the lowest even after the price increase.
Earlier this week, Rite Aid, CVS, Safeway and several wholesalers settled their own lawsuit in which they maintained the higher cost penalized them for wanting to buy other meds that competed with Kaletra and, ultimately, were overcharged $1 billion (see this and here is the Rite Aid lawsuit).
This is not the first time that Abbott has faced these allegations over its Kaletra pricing. In 2004, the Service Employees International Union Health & Welfare Fund filed a class-action lawsuit alleging the price hike violated antitrust laws, but Abbott agreed to settle the case for between $10 million to $27.5 million on the eve of the trial (back story).