TWN Info Service on Health Issues (May 07/01)

8 May 2007

Abbott sought compulsory licence while criticising Thai licence

When Thailand decided to issue a compulsory licence on Abbott’s patents on the AIDS drug Kaletra, a vigorous public relations assault and lobbying attack on the Thai government followed. However, none of the news reports related Abbott’s own attempts to obtain a compulsory licence in the US.

The article below describes Abbott’s efforts to obtain a compulsory licence for itself. It is reproduced with permission from South-North Development Monitor (SUNS) #6246, 7 May 2007.

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Health: Abbott itself sought compulsory license, while criticising Thai license

By James Love*, Washington, 3 May 2007

The drug company Abbot Laboratories has strongly criticized the Thai government for recently issuing compulsory licenses on drugs. But during the same period, when the shoe was on the other foot, Abbott was asking for a compulsory license for itself.

On 12 January, Abbott lost a bid in a US District Court (the Western District of Wisconsin) for a compulsory license on a patent held by Innogenetics, Inc. that a judge and jury said Abbott infringed to manufacture and sell Hepatitis C virus (HCV) genotyping test kits.

The compulsory licensing request was an effort to avoid an injunction that would prevent Abbott from using the Innogenetics patent without permission from the patent owner.

Abbott was using a new legal doctrine in US law set out in a May 2006 US Supreme Court decision, eBay Inc v. MercExchange, L.L.C., which makes it harder to obtain injunctions when a Court-ordered royalty payment is more equitable or less damaging to the public interest.

The term "compulsory licensing" is used to describe a wide range of legal mechanisms to provide non-voluntary authorizations to use patents, including for example, government or crown use provisions in patent laws (such as the dispute in Thailand involving the use of Abbott patents on the AIDS drugs ritonavir and lopinavir), remedies to anti-competitive practices (such as the 2005/2006/2007 Italian and 2003 South African cases involving refusals to license and excessive pricing), or compulsory licenses justified on public health or public interest grounds.

The term also describes cases like this, where a judge is asked to give a defendant in an infringement case the right to use a valid patent, in return for a royalty approved by the court.

The District Court rejected the Abbott request and issued the injunction on January 12. But on January 19, Abbott obtained a temporary stay from the Federal Circuit, and began its appeal of the District Court's decision.

Meanwhile, on January 29, the Ministry of Health (MOH) in Thailand announced that it was issuing a compulsory license on Abbott's patents on the AIDS drug Kaletra (a combination of ritonavir and lopinavir). At this point, Abbott continued its appeal in the Innogenetics case, while mounting a vigorous public relations assault against the Thai MOH.

None of the subsequent news reports about the Thai action mentioned Abbott's own efforts to obtain a compulsory license in the US.

On the Abbott/Innogenetics case, in September 2005, Innogenetics filed a lawsuit claiming that Abbott was infringing claims in Patent No. 5,846,704 ("the '704 patent") concerning a method of genotyping the Hepatitis C virus ("HCV"). On September 1, 2006, a jury agreed with Innogenetics. Innogenetics then sought an injunction to prevent Abbott from using the patent to manufacture and sell HCV genotyping test kits.

Abbott sought to prevent Innogenetics from obtaining the injunction, arguing that the court should grant Abbott a non-voluntary authorization to use the patent, under the four-part standard set out by the May 15, 2006 US Supreme Court Decision in eBay Inc v. MercExchange, L.L.C.

Before granting an injunction to enforce a patent, the party asking for the judgment must demonstrate that it has suffered an irreparable injury; that other possible legal remedies, including the payment of royalties, are inadequate to compensate for that injury; that considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and that the public interest would not be disserved by a permanent injunction.

In asking the District Court to reject the injunction and grant a non-voluntary authorization to use the patent, Abbott said that the patent owner's rights could be protected by the payment of a royalty, and that the public interest would be affected adversely if persons with Hepatitis C could no longer have access to the services provided by Abbott products.

Abbott's temporary stay of the District Court injunction was lifted by the Federal Circuit on March 8, but Abbott continues its appeals. Abbott's Kaletra product, which combines two protease inhibitors, ritonavir and lopinavir, was invented by Abbott on a government grant. Ritonavir and the combination product ritonavir+lopinavir (LPV/r) has generated billions of dollars in global sales for Abbott.

In January 2007, before Thailand issued the compulsory license, Abbott was reportedly charging more than 11,500 baht per month for the drug, or nearly $ 4,000 per year, a price far beyond the ability of the Thailand government to afford for it's large AIDS population.

The Thailand government's January 29, 2007 decision to issue a compulsory license on Abbott's Kaletra patents followed two earlier compulsory licenses (Merck's efavirenz, and Sanofi's clopidogrel), and set off a well- financed public relations and lobbying attack on the Thailand government, featuring a large number of pharmaceutical industry supported groups and industry-funded consultants and "experts".

On March 14, a story in the Wall Street Journal reported that Abbott had retaliated by announcing that it would pull the registration of seven new products (including a new formulation of Kaletra) from the Thailand market.

An Abbot spokeswoman was quoted as saying that because the Thai government "decided not to support innovation by breaking the patents, Abbott will not submit applications or register new medicines and will withdraw current applications in Thailand until the government changes its position."

Abbott has withdrawn its applications for seven medicines, including a new formulation of Kaletra, the AIDS treatment, according to Ms. Smoter. Abbott notified the Thai government a few weeks ago, after talks between the two sides broke down, a person familiar with the matter said.

On April 10, Abbott cut the price of Kaletra and its new heat stabilized version marketed under the trade name Aluvia to $1,000 per year for NGOs and governments of 40 countries, in order to compete with the price of generic products from India. Abbott claimed that the price cut was the result of an agreement with the WHO, which issued a statement welcoming the price cut.

The price cut, however, will not be automatically available, and comes with strings.

The $1,000 price was about $300 below the initial generic offer, but probably 5 times the price at which generic suppliers could produce the product (assuming the finished product can be manufactured for less than $400 per kilo, as is the case for Triomune), if they have sufficient economies of scale and some improved processes.

Abbott also said that it would not register its new products, including a new heat-stabilized version of Kaletra, marketed by Abbott under the trade name Aluvia, unless Thailand agreed to not issue further compulsory licenses.

Throughout this dispute, Abbott has not been asked to reconcile its own efforts to obtain a compulsory license on the Innogenetics patents with it's harsh rhetoric about the Thai compulsory licenses.

(* James Love is Director of Knowledge Ecology International based in Washington.)