Response to Abbott: Governments, not companies, must be able to decide what is an affordable price

Field: Social Sciences (Social Sciences)

Abbott criticizes compulsory licensing as an ‘unproven’ model that endangers research and development. This is an inconsistent statement given that, earlier this year, Abbott applied for a compulsory license for technology related to hepatitis C virus genotyping kits patented by another company (Innogenetics). In this case, Abbott argued that the public interest would be adversely affected if people with hepatitis C could no longer have access to the services provided by the company [1]. This is exactly our concern with respect to antiretroviral medicines. Abbott's view on (other people's use of) compulsory licensing is also contrary to the view of the WHO and several western governments, including the US government, which has stated clear support for Thailand's recourse to compulsory licensing as entirely consistent with the World Trade Organization Trade-Related Aspects of Intellectual Property Rights Agreement [2]. In its recent economic analysis of Thailand's HIV/AIDS treatment programme, the WHO estimated that the cost of treatment will increase fivefold in the next 15 years unless something is done to bring down the price of newer medicines [3]. The World Bank explicitly recommends compulsory licensing as one way to reduce this cost [4]. Abbott argues that compulsory licensing undermines the patent system that is required to recoup research and development costs. Drug development often receives significant government support such as public sector research, financing clinical trials, tax credits, and government research grants. A number of antiretroviral drugs, including abacavir, didanozine, zidovudine, lamivudine, stavudine, nevirapine [5], and lopinavir/ritonavir [6], benefited from such support. We do not know how much Abbott invested in the development of lopinavir/ritonavir, because the company refuses to disclose this information. However, we do know that profits are significant: lopinavir/ritonavir has been marketed since 2000, and last year alone sales exceeded US$1.1 billion. Most of these profits do not come from the developing world, but from western markets: 45% of lopinavir/ritonavir sales were in the USA [2]. Without recourse to compulsory licensing, developing country governments must rely on companies charging reasonable prices for their drugs. This rarely happens spontaneously. Abbott argues that US$1000 per patient per year is a fair price for ‘mid-tier economies’, but provides no justification as to why this is considered fair for a country such as Thailand, where the annual wage is US$1595. In March 2007, Abbott offered US$1700 to Thailand (an offer the Thai government did not accept, as it was conditional on withdrawing the compulsory license); before that, the company was charging US$2200. Were these also considered fair prices by Abbott? Abbott argues that ‘doctors in Africa can treat 100 patients with its branded product for the price of treating 72 patients with the cheapest announced generic price’. However, doctors in Thailand and Brazil – the subject of our article – can treat 100 people with generic lopinavir/ritonavir (US$695 per patient per year) [7,8] for every 70 treated with Abbott's product (US$1000 per patient per year). Moreover, whereas Abbott's price is fixed (the offer is conditional on no further negotiations and no compulsory licensing), the price of generic lopinavir/ritonavir can be expected to decrease further as market competition increases and the generic market expands. The fact that Abbott's own price for lopinavir/ritonavir has more than halved in less than 6 months is a direct result of Thailand's issuing of a compulsory license. This followed years of fruitless negotiations with the company by the Thai government, throughout which the company refused to reduce the price of the drug [9]. The critical question raised by Abbott's response is who should decide what is a fair – or more importantly, affordable – price? We believe that this should not be the sole decision of a multinational pharmaceutical company, who are responsible only to their shareholders, but the decision of Ministries of Health, whose responsibility it is to ensure that people are able to have access to life-saving medicines.