Saturday, April 17, 2004

Antitrust News: When is one man's need . . .

. . . a mortgage on the life of another? Apparently, when you are infected with HIV. Consider this press release from the AIDS Healthcare Foundation:

LOS ANGELES, APRIL 16, 2004 -- A broad coalition of AIDS advocates and patients will come together in protest over Abbott Laboratories' recent unprecedented 400% price hike on Norvir (ritonavir), their key AIDS drug. The activists and AIDS advocates will hold a 34-hour vigil and protest in front of Abbott's South Pasadena site (820 S. Mission Street). AIDS Healthcare Foundation (AHF), the Southern California HIV Advocacy Coalition (SCHAC), Bienestar, Whittier Rio Hondo AIDS Project (WRHAP) and many individual AIDS activists and patients will join in this vigil. In addition, the Organization of HIV Healthcare Providers, nationwide group of doctors & providers, has lent their support.

Abbott's price hike has prompted an unprecedented outcry from AIDS advocates nationwide, and led to other protests and boycotts of the company by activists and physician groups. This in turn prompted the opening of antitrust investigations by the Attorneys General in Illinois and New York, as well as government hearings on Abbott's actions by the Department of Health and Human Services (HHS) and the National Institutes of Health in Washington, and gave rise to the filing of private antitrust and false advertising lawsuits against Abbott by AHF.

In addition, overburdened and under-funded state Medicaid programs such as Medi-Cal, may be adversely affected by this huge price increase. To date, Abbott has been unwilling or unable to publicly explain how, if at all, this price hike will not affect such Medicaid programs in cash strapped states like California.
Heaven save us if a private business cannot explain how overburdened and under-funded government programs are to endure the free market.

I visited Abbott Laboratories' website to see what the company had to say about this controversy. In one of several press releases, the company wrote:

Norvar plays a central role in the treatment of HIV. While the number of patients receiving Norvar as a booting agent has grown over time, there has been a steady decline in sales due to the significant reduction in dose, with the majority of patients taking 100 mg daily, as opposed to the initial 1200 mg daily. At the same time, the value of Norvar to patients with HIV has increased significantly. Abbott has taken this re-pricing step with Norvar in order to come to terms with these economic realities, while others have addressed thought premium pricing of their new drugs.
Abbott also states that it is not changing the price for AIDS drug assistance programs and has expanded its patient assistance program so patents without drug coverage can receive Norvar for free.

The largest cost for many medicines is the price of their development. Abbott faces a considerable economic challenge because of the dosage reduction for Norvar; clearly, its previous economic models for recouping its investment in Norvar no longer hold water. But to claim that Abbott has a responsibility to keep its medicines at the same price, even if it results in Abbott having to forfeit its profits for a drug that keeps people alive, means that Abbott employees and shareholders do not live and work for their own sake, but instead live and work for the sake of others. The AIDS coalition and government regulators are questioning Abbott's ethics, but I question theirs: by what right to they have to demand that Abbott sacrifice its interests so they can pursue their own?

The most-repeated claim in debates such as this is that because Abbott produces a life-saving medicine, the trader principle of mutual exchange for mutual benefit breaks down; if Abbott's customers do not receive their medicine, they will die. By that standard, the whole world becomes slave to the needs of others. Why is medicine different from other needs such as food, or housing? Why is the first question always how a price hike will affect Medicaid programs in cash strapped California, and not how coercion in the marketplace will affect the lives of producers who create live-giving medicines?

Still, the most troubling issue in my mind is Abbott's response. Abbott has defended itself, but only thinly and vaguely. I had to hunt for the pull quote I used above, yet it is the fundamental statement on the issue. Abbott relies mostly on terms that attempt to show that it is not "heartless," such as its programs to provide its drugs to the needy for free. Yet isn't it the AIDS coalition's point that all those affected with HIV are needy?

Abbott would be better served by refuting its critics at the heart of their claim. There will always be those who attempt to loot their neighbor, but the key is in the response. Abbott should proudly state that it exists to return a profit and that it will not sacrifice itself to anyone--that it exists to save the lives of its customers, for the sake of its investors. Yet I suspect Abbott's leaders would be reluctant to defend themselves in such principled terms; given my long experience with antitrust enforcement in the heath-care industry, I am all but sure of it. The profit-motive is a dirty part of doing business, not something that should be defended proudly and without compromise.

Yet when critics damn corporations such as Abbott for "putting profits ahead of people," they really damn the self-interest of people. For these crtics, life is a hospital, and man's life mission is not the pursuit of his own happiness, but the alleviation of suffering of others. It would be refreshing to see, in response, the genius that creates things such as breakthrough medicines applied with the same intensity in defending the very motives that make such breakthroughs possible.

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