NIH weighing government authority over drug pricing

Abbott Laboratories and AIDS activists clashed Tuesday during a National Institutes of Health meeting over whether the government should step in to lower the price of a popular drug that was developed in part using government grant money.

AIDS advocates and others urged the NIH to use its authority provided in an often-overlooked provision in a 1980 law to issue a license for the manufacturing of generic copies of patent-protected Norvir, after Abbott increased prices by 400 percent in December.

The advocates are relying on a law that was intended to encourage commercial use of patents developed with government-funded research. Abbott and others -- including one of the primary authors of the bill, former Sen. Birch Bayh, D-Ind. -- told NIH that the statute was never intended to respond to prices. Bayh said the law was aimed at encouraging innovation, not tampering with prices.

The law includes a "march-in" provision, allowing the government to offer generic licenses if a patent developed using government funds was misused. Bayh said the provision could be used "not to set prices, but to ensure competition" and disputed the petitioners' interpretation of the congressional record and congressional intent. He warned that invoking the provision could chill research.

"It would be the ultimate folly to march in and alleviate the problem ... and in doing so dampen the ingenuity and entrepreneurial skill necessary to develop a permanent cure for AIDS," he said.

The NIH hearing was prompted by a petition from Essential Inventions, an advocate of generic drugs, seeking government action to cut the price of Norvir, an AIDS drug used in combination therapies. Essential Innovations President James Love told NIH officials the law's provision was intended as a "safeguard" against abuses by drugmakers and that the price increase violates the statute's requirement that products using government-funded patents be offered on "reasonable terms."

Unless the government acts, Love said, there will be no constraints on what pharmaceutical companies can do with taxpayer-supported patents. He noted the government has never exercised its march-in rights. "It has been zero, and we think zero is the wrong number," he said.

AIDS activists said the jump in prices has not only made the drug unaffordable, but it also will curtail the development of combination therapies that use Norvir. Abbott officials said although the government funded part of the initial research, the company has spent millions more researching, developing and marketing the drug.

In prepared remarks, Jeffrey Leiden, president of the company's pharmaceutical products group, said the drug is widely available -- for free or reduced prices to the needy -- making the march-in provision inapplicable.

NIH officials will decide whether to recommend that NIH Director Elias Zerhouni use the march-in provision. There is no deadline for a decision, and observers doubt the government will invoke the law, though the pharmaceutical industry is watching carefully.

Earlier this month, Senate Commerce Committee Chairman John McCain, R-Ariz., ranking member Ernest (Fritz) Hollings, D-S.C., and Sen. Charles Schumer, D-N.Y., asked the Federal Trade Commission to investigate Abbott's price hike for Norvir, citing possible anticompetitive behavior.