The High Price Of Bad Blood

It looks as though Baxter International Inc. is about to take another hit. Within weeks, it may be forced to reserve hundreds of millions of dollars to help redress one of the saddest accidents in medical history: the infection of thousands of hemophiliacs with HIV-tainted blood-clotting products.

The National Hemophilia Foundation, representing more than 10,000 members affected by AIDS, has set a Sept. 30 deadline for Baxter and four other suppliers to lay out a plan for establishing a fund to compensate hemophiliacs who contracted AIDS through clotting agents. Sources involved in the secret negotiations have told BUSINESS WEEK the NHF is demanding $5 billion, of which some $1.5 billion would come from Baxter and three other suppliers, and the rest from the federal government.

Medical suppliers extract clotting agents from plasma, then sell them to hemophiliacs, who inject the products to arrest bleeding. The risk of AIDS infection dropped dramatically after new heating procedures were instituted in 1983.

But in January, a Tampa (Fla.) jury awarded $2 million to the family of 11-year-old AIDS victim Jason Christopher, who died in 1992 after getting AIDS from clotting medication produced by Armour Pharmaceutical Co. Armour is considering an appeal.

Baxter CEO Vernon Loucks acknowledges the NHF negotiations but won't comment on the details. "The issue is what is the size of the pool, and what role should we play," Loucks says. "We have absolutely no indication of how large the pool should be."

Sources involved in the talks, though, indicated that Baxter could be on the hook for $350 million. Other makers negotiating with the NHF include Miles Inc., Alpha Therapeutic Corp., Immuno-U.S., and Armour. Spokesmen for Miles and Alpha say that they do not expect the pool to reach $5 billion. Immuno-U.S. and Armour did not comment.

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