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April 26, 2007

Shareholders Work to Make AIDS Drugs Available Worldwide
    by Anne Moore Odell

Abbott Labs changes its tune and lowers price of AIDS fighting drugs in low-and-middle income countries. -- Abbott Labs (ticker: ABT) announced earlier this month that it is lowering the price on the key AIDS drug Kaletra by 55% in low and middle income countries. This move comes after pressure from many governments and organizations, including stakeholders in Abbott and Doctors without Borders, who called on Abbott to make the drug accessible worldwide.

Abbott’s announcement to offer Kaletra at the new reduced price of $1,000 per patient per year was met with initial approval by many who work to bring medicine to the poorer areas of the globe. However, a coalition of socially responsible stakeholders including Amalgamated Bank Long Views Funds and Christian Brothers Investment Services (CBIS) further called on Abbott to offer all its AIDS fighting drugs and other medicines to people in developing parts of the world.

Earlier this year, Abbott pulled Kaletra and six other drugs from Thailand after the Thai government issued a compulsory license for the drug. CBIS lead a coalition of 13 members of the Interfaith Center on Corporate Responsibility (ICCR) with a total of $35 million invested in Abbott Labs in a statement condemning Abbott’s initial removal of the drug from the Thai market.

"Abbott’s withholding life saving medicines to the Thai people in order to protect its intellectual property rights in developing countries is being perceived by some as retaliation," said Julie Tanner, Corporate Advocacy Coordinator for CBIS. "This stance can tarnish Abbott’s reputation, impact its brands, and affect the bottom line."

A statement by the concerned shareholders indicated that this was the first time they were aware of a drug company withdrawing an AIDS drug from a country because of a pricing or licensing dispute.

Abbott worked with the World Health Organization (WHO) to create a balanced proposal to provide Kaletra to low and middle income countries at a reduced price while still supporting research and development. Currently, most countries in Africa pay $500 per person per year for the drug.

The coalition of shareholders asked Abbott specifically to register Aluvia in Thailand. Aluvia is a new formulation of Kaletra that doesn’t need to be refrigerated or taken with food, an important consideration in hot, rural areas.

"We call on the company to reverse its decision about Thailand and to register Aluvia in countries around the globe," said Tanner. "In addition, we believe that Abbott needs to create and implement a substantive, comprehensive plan that meets the needs of stakeholders and patients in Thailand and other developing countries."

The legal ramifications of both Thailand’s initial action of issuing compulsory licenses allowing for cheaper generic versions of drugs and Abbott’s declaration that it was withdrawing the drug from the Thai market are being fiercely debated with far reaching consequences.

Daniel Rosan, ICCR Program Director for Public Health, points out that cost isn’t the only consideration; "Single source drug suppliers in developing countries create public health risks - shortages, stock-outs, and so on. Generic competition is the only proven way to lower drug prices and Abbott would be better served to allow such competition and reap the licensing fees than court the kind of negative attention shareholders have seen recently."

Kaletra/Aluvia (lopinavir/ritonavir) are important AIDS drugs given to patients who have developed drug resistance or adverse side effects to other AIDS medicines. They are currently registered in 118 countries, making Kaletra the mostly widely registered AIDS drug.

CBIS reports that the market for anti-retroviral drugs is expected to increase from $7.1 billion in 2005 to $10.6 billion by 2015, as new anti-retrovirals are launched and the number of HIV-positive people increases. While pharmaceutical companies are under pressure to decrease prices in developing countries, anti-retrovirals are a lucrative and fast-growing business in Western countries.

The role that pharmaceutical shareholders play is no different from the one shareholders play in any company. However, for socially responsible shareholders like CBIS who believe that every person has the right of access to health care and to an environment that supports health and wellness, the commitment to advocate at pharmaceutical companies is significant. Drug companies have particular issues that do not apply to other industries; for example, every company has to deal with the challenges of AIDS, but not every company has to ensure access to medicines they produce.

Abbott Labs did not respond to requests from for commentary.

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