Glaxo-Abbott case handed to the jury

By Reuters
Posted March 25 at 8:39 a.m.

A jury began deliberating Friday morning on whether Abbott Laboratories should pay GlaxoSmithKline hundreds of millions of dollars over allegations of unfair HIV drug pricing.

Lawyers for the two pharmaceutical companies made closing arguments Thursday in a case in which Abbott is accused of improperly hiking the price of one drug to help it preserve sales growth of one of its other HIV blockbusters.

It’s rare for two drug makers to square off against each other at trial, even as several other retailers who had been trying the case alongside Glaxo settled with Abbott mid-trial.

Abbott is accused by GlaxoSmithKline of anti-competitive behavior regarding the drugs Norvir and Kaletra.

Norvir plays a key role in AIDS-fighting cocktails because it can boost the effectiveness of other drugs. Glaxo accuses Abbott of raising Norvir’s price by 400 percent in 2003, as part of an effort to harm competitors whose drugs were dependent on being used in combination with Norvir.

The case has been in trial for the past few weeks in an Oakland, California federal court. Ten jurors heard lawyers for both companies make their final pitch on Thursday.

Glaxo attorney Brian Hennigan said that if more patients used Norvir, then fewer would use Kaletra, leading to the Norvir price hike.

“Norvir was just being used in the background as a weapon to protect Kaletra,” Hennigan said.

But Abbott attorney James Hurst said patients had begun taking fewer doses of Norvir, so Abbott hiked the price to make up for the revenue loss.

Hennigan asked the jury to award damages of $571.6 million, representing lost sales for Glaxo. The company could also seek to triple any damage award.

Responded Hurst: “I do not think you need to reach damages.”

Annual sales of Kaletra hit $538 million in 2007, up from $382 million in 2003, despite side effects associated with the drug like diarrhea, Hennigan said.

Several retailers — including CVS Caremark, Walgreen and Safeway — had been in trial alongside Glaxo, but settled their claims. Terms of that settlement were not disclosed.

Hurst told the jury that the cost of Glaxo’s HIV drug Lexiva is still more expensive when taken alone, as opposed to when it is taken in tandem with Norvir.

“Norvir is out there saving insurance companies money, even at the new price,” Hurst said.

The case in U.S. District Court, Northern District of California is Smithkline Beecham Corporation, doing business as GlaxoSmithKline, v. Abbott Laboratories, 07-5702.

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