A union health plan can press on with a class-action lawsuit accusing pharmaceutical giant Abbott Laboratories of artificially inflating the price of an HIV "booster" drug in an illegal attempt to leverage its monopoly in the marketplace.
Illinois-based Abbott is one of several drug companies that manufacture protease inhibitors, the most potent class of drugs used to combat HIV. Abbott patented, made and sold the prescription drug Norvir. When Norvir is prescribed in tandem with other protease inhibitors, it "boosts" the antiviral effect of the PIs and reduces their harmful side effects.
In September 2000 Abbott introduced Kaletra, its own boosted PI regimen containing both Norvir and the Abbott-made PI lopinavir. Kaletra can cause significant side effects, such as increased cholesterol and pancreatitis, according to the Food and Drug Administration. By June 2003 Kaletra had secured a 75 percent share of the market for protease inhibitors.
After that time, two competing drug companies began making inroads into Kaletra's dominant share of the PI market when they each introduced a PI capable of being boosted by Norvir.
In December 2003 Abbott increased the wholesale price of Norvir by 478 percent, according to court records. By doing so Abbott significantly raised the cost of using all PIs in the boosted market. However, it did not impose a similar price increase on Kaletra. As a result, it became substantially cheaper to use Kaletra than to use the PIs from other manufacturers.
In October 2004 the Service Employees International Union's Health and Welfare Fund, which provides health coverage to thousands of union members and their families, sued Abbott, alleging the Norvir price increase was an illegal attempt by the company to leverage its monopoly in the PI market.
The class-action complaint said Abbott violated the Sherman Antitrust Act; engaged in fraudulent, unfair or deceptive business practices under California law; and was unjustly enriched.
The SEIU seeks to represent a nationwide class of consumers, health insurers, and union health and welfare funds who have paid increased prices for Norvir, according to court records.
Although Abbott moved for summary judgment, U.S. District Judge Claudia Wilken of the Northern District of California refused to dismiss the case. She said the SEIU has standing to seek injunctive relief under the Sherman Act, even though it is neither a consumer nor a competitor in the market.
"Here, plaintiff alleges that it was injured in the relevant marketplace by having to pay artificially inflated prices for Norvir for its use in conjunction with other PIs," the judge said.
In addition Judge Wilken rejected Abbott's argument that its patents preclude liability under federal antitrust law.
"The court is not willing, at this early juncture in this litigation, to rule that defendant can patent a procedure in which HIV patients take a drug manufactured and sold by a third party along with defendant's own," she said.
Judge Wilken also sustained the SEIU's claims for unfair competition and unjust enrichment.
The SEIU represents 1.8 million workers in various service-related industries, including health care, building services and government.
By Rae Theodore
Service Employees International Union Health & Welfare Fund v. Abbott Laboratories, No. C 04-4203 CW, 2005 WL 528323, order issued (N.D. Cal. Mar. 2, 2005). Infectious Disease Litigation Reporter Volume 18, Issue 08 03/24/2005
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