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Abbott Tells Jurors Kaletra Was ‘Clobbered’ by Competitors

March 1 (Bloomberg) -- Abbott Laboratories’ HIV medicine Kaletra has been “completely clobbered” by competitors since the company quadrupled the price of a boosting agent in the drug, a company lawyer told a jury today at a multibillion-dollar civil antitrust trial against the drugmaker.

Abbott’s attorney, Jim Hurst, said Kaletra has consistently lost market share since 2003 to other protease inhibitor drugs and has been displaced as a best-seller. He was countering allegations by GlaxoSmithKline Plc and drug retailers that Abbott used the price increase for its boosting agent, which other drugmakers purchase to add to their HIV medicines, as a “weapon” to stifle competition.

“Kaletra has gotten completely clobbered, completely clobbered, it is no longer No. 1,” Hurst said in opening arguments today in federal court in Oakland, California. “Kaletra has no power to exclude competition, it’s more like the competition has the power to exclude Kaletra.”

Glaxo, Rite Aid Corp. and other drug retailers and distributors are seeking as much as $4.5 billion in damages on allegations that Abbott Park, Illinois-based Abbott quadrupled the price of its AIDS drug Norvir in 2003 to monopolize the HIV treatment market and harm competition. Norvir is a boosting agent for other HIV medicines including Kaletra.

Abbott increased the wholesale price of a Norvir capsule containing 100 milligrams from $1.71 to $8.57, the company said in court documents.

Compete on Price

The price increase meant that other drugmakers that used Norvir in their medicines couldn’t compete on price with Kaletra, Brian Hennigan, an attorney for London-based Glaxo, told the jury yesterday. He said Glaxo’s Lexiva, which uses Norvir, was introduced about a month before the price increase and that Glaxo lost an estimated $570 million in profit on sales of Lexiva because it was sold at only half the rate that the company believed was possible.

The higher cost or Norvir also penalized drug customers such as Rite Aid that wanted to buy medicines that competed with Kaletra, lawyers for the drugstore chain and other distributors said in court filings. Those companies said in court filings that they were overcharged $1 billion as a result of Abbott’s monopoly on Norvir and Kaletra.

The plaintiffs are seeking triple damages at the trial, which is expected to last about three weeks.

Worldwide sales of Kaletra last year were $1.26 billion, down 8 percent from 2009, said Adelle Infante, a spokeswoman for Abbott.

In 2009, a federal appeals court in San Francisco ruled that the company’s pricing for the HIV drugs wasn’t unlawful because Kaletra wasn’t priced below its cost. Abbott settled a similar antitrust lawsuit in 2008 filed by patient groups for $10 million.

Abbott fell 62 cents, or about 1.3 percent, to $47.48 at 3:40 p.m. in New York Stock Exchange composite trading.

The case is SmithKline Beecham Corp. v. Abbott Laboratories, 07-5702, U.S. District Court, Northern District of California (Oakland).

To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

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