Fair Price Working Group

Two new pricing actions by pharmaceutical companies are likely in the next few months that may threaten the viability of funding programs and could initiate another round of price increases overall by industry. Please consider having your organization sign onto the attached Consensus Statement to advise the manufacturers against these actions. The two actions concern the expected price of a reformulated version of ddI by Bristol Myers Squibb, known as the enteric coated (EC) version, and the new Abbott protease inhibitor Kaletra ô (generic name, lopinavir, formerly known as ABT-378).

The reformulation of ddI into an enteric-coated tablet is welcome news since it should finally simplify the use of this drug, which has been on the market in various forms for nearly 10 years. Although Bristol Myers Squibb hopes to position the improved formulation as a virtually "new drug" (and thus justify a major price increase) it is simply a new version of an old drug that solves a long-standing problem in its formulation. Discussions with the company suggest that they hope to be pricing the EC ddI as much as 35 - 40 % above price of the current version of the drug. This increase of approximately $1,000 per year will come in addition to increases approximating 22% in the price of ddI since 3/98 and over a 40% increase since the drug was first introduced. Such a move would substantially increase the cost of health care for a great number of people with HIV. The ability of public programs such as ADAP and Medicaid to support HIV treatment would be further limited, and even private HMOs may be stressed. We need to send a loud, clear and united message - immediately - before the final pricing decisions are made by Bristol Myers Squibb.

Abbott Laboratories' new protease inhibitor, Kaletraô (lopinavir/ABT-378), may also offer some advantages over previous drugs in its class, but the company's record on pricing suggests there will be a high price to pay for what it offers. Abbott's first protease inhibitor, ritonavir (Norvirô,) was priced far above the other protease inhibitors, even though it was generally considered the most toxic. Even poor sales of the original ritonavir product failed to motivate Abbott to lower the price. The new drug, lopinavir, contains a modest dose of ritonavir in each capsule along with a new compound. Though Abbott hasn't yet mentioned price, there is every reason to expect a very high price.

We hope that this statement becomes a concrete step in the effort to stop the increase in the cost of HIV treatments. Some companies in recent years have quietly and repeatedly raised prices on drugs that already bore high price tags, without strong protest from the HIV-affected community. There is no justification for these increases other than "what the market will bear." It is all but impossible to calculate any true relationship between research and development costs, materials, distribution costs and the eventual price charged for drugs. This kind of information is never made available by industry, and even if it were, few would trust the numbers. One thing we know for sure, however, is that that companies continue to make enormous net profits year after year, while still being able to fund research and development.

Many of us are very concerned these days with the cost of drugs for developing nations and may not see the price of drugs in the US, Canada or Europe as a critical issue. But remember that the prices set in the developed nations become the reference point for setting prices elsewhere in the world. When a company offers to sell its drugs to a developing nation at a 60% or 70% "discount," the selling price is inherently linked to the prices set in the developed nations. Thus, the prices charged here or in Europe do indeed matter.

As combination regimens become ever more elaborate, people with HIV as well as their third-party payers will likely face medical costs over the course of a lifetime rising into the stratosphere. These costs are almost certain to challenge the willingness of Congress and the States to adequately fund programs like ADAP. The picture is grim even for those with private insurance, as the constant high cost of drugs is beginning to exhaust the lifetime limits on health insurance policies.

Please join with us in putting this urgent issue on the front burner of AIDS activism and support our efforts by asking your agency or organization to sign-on to the attached consensus statement now. In addition, we urge as many people as possible to write personal letters to the key executives at Bristol Myers Squibb and Abbott Labs. And please watch for further communiques on this important issue.

Time is of the essence! Please send endorsement by

e-mail to lgrinberg@aol.com

or fax to (310) 471-4565.

Thanking you in advance for your prompt attention.

Very truly yours,

Martin Delaney, Founding Director, Project Inform
Linda Grinberg, President, FAIR/Foundation for AIDS & Immune Research
Mark Harrington, Senior Policy Director, Treatment Action Group
Carlton Hogan, University of Minnesota
Richard Jeffreys, Access Project Director, AIDS Treatment & Data Network
Yvette Delph, Antiviral Policy Director, Treatment Action Group
Dave Gilden, Director of Treatment Information, AmFAR
Lynda Dee, President, AIDS Action Baltimore
Ken Fornataro, Executive Director, AIDS Treatment Data Network
Bill Arnold, Title II Community AIDS National Network, Inc.
Michael Marco, Director, Infections and Oncology, Treatment Action Group
Ben Cheng, Assoc. Director Information & Advocacy, Project Inform

Consensus Statement on the Pricing of EC ddl and ABT-378

We, the undersigned, have serious concerns regarding the growing costs of therapy for HIV disease. While we are heartened by the progress made in moving toward simpler, easier to use regimens, we are dismayed by the possibility that prices of new drugs and price increases of approved drugs are escalating ever higher, and with each new price increase setting new benchmarks. As drugs become available which might facilitate better adherence and possibly more durable long-term treatment, manufacturers should be planning to lower or at least contain the daily cost of their regimens, not increase them. The long-term survival afforded by the present generation of therapies makes it possible for manufacturers to set lower, or at least stable prices, and still have adequate incentive to reinvest in continued development of HIV/AIDS drugs.

Recently cited reductions in the overall cost of health care for HIV infected people will almost certainly be reversed in coming years if manufacturers continue to increase or maintain current pricing levels. We are in a new era in the treatment of HIV disease and rethinking drug pricing which reflects this changing reality is long overdue.

To the best of our knowledge, the development costs of Bristol Myers Squibb new enteric-coated formulation of ddI and Abbott Labs' new protease inhibitor, Kaletraô (lopinavir), do not justify a leap in prices. There has been nothing extraordinary about the cost of clinical trials required to bring these new formulations and drugs to market, while the duration of their use by patients may be greatly extended.

Enteric coated ddl is likely to be used by both treatment- naÔve and treatment-experienced patient populations, making its potential market very large. The tolerability profile of the earlier versions of this drug has long suppressed its sales, resulting in pent-up demand for an effective nucleoside analogue drug. If the price is as high as current indications suggest, and
the drug is used in naÔve populations in place of existing drugs, the overall cost of therapy will go up substantially. Similarly, if the price of lopinavir reaches new heights for a protease inhibitor and it is used by both treatment-naÔve and treatment-experienced people, the overall cost of therapy will escalate dramatically. We cannot stand idly by while the price of living with HIV disease rises so rapidly. ADAP programs and other forms of government funding support have limited amounts of money allocated to them each year. Moreover, the long-term use of extremely expensive drugs is threatening the lifetime limits of many private insurance policies.

Some state ADAP and Medicaid programs have removed vital medications to prevent and treat opportunistic infections from their formularies. State ADAP and Medicaid programs are under close scrutiny by governmental panels in order to cut costs. The price of one drug can affect the availability of other medications. Increasingly, this same sad scenario is beginning to affect the availability of drugs within HMO settings. The price of these drugs will have a pervasive impact on the overall quality of care people with HIV/AIDS receive in this country.

Bristol Myers Squibb and Abbott Labs have expressed a strong desire to create goodwill and cooperative working relationships with the community. No one wants to see those relationships jeopardized over this issue, but that surely occur if pricing is inappropriate. Exploitative pricing will trigger widespread mistrust, contentious debate, and closer scrutiny of industry practices in general and give comfort to those who think that AIDS is simply a scam designed to line the coffers of the pharmaceutical industry. This will have far reaching consequences.

Though we call for a major reduction in the price of HIV therapies in general, these drugs must at least be priced fairly and in accordance with other drugs of their respective classes. Neither represents a major advance in therapy that might otherwise reduce the overall cost of care. We urge manufacturers to rethink their plans for pricing and to act as responsible citizens playing a key role in the fight against a worldwide epidemic. Without responsible pricing, there can be no constructive dialogue between industry and the HIV affected populations worldwide.


LIST of endorsers
June 13, 2000


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see also: Pharmaceutical companies are in the business of making money from people's sickness