Abbott Labs Defends Pricing Policy

Shares of Abbott LaboratoriesABT slipped Monday as the company prepared to defend its pricing policy on an HIV/AIDS drug before a federal agency health care panel.

In early afternoon trading, the stock was down 25 cents to $39.70.

Abbott is scheduled to appear Tuesday before a meeting convened by the National Institutes of Health to discuss a petition by a non-profit group, Essential Innovations, which says Abbott has raised the price of the drug Norvir beyond the reach of many consumers.

The group wants the federal government to implement a never-used provision of a 1980 law that would allow the NIH to license to a generic producer the right to make the drug, even though Abbott's Norvir patent is still in force. The law covers companies that have received government aid for their research.

And although a major drug industry index was also down in afternoon trading Monday, there was little expectation that Tuesday's hearing would ripple through the industry.

"I would be quite surprised if the provision of this law would be used by the Bush Administration," said Ira Loss, senior health care analyst at Washington Analysis and a veteran observer of pharmaceutical regulations and politics.

"There are so many cross-currents that are negative to the drug industry that I couldn't say this one issue would affect the industry," Loss said. "There's a three-hour meeting tomorrow. In the short term, the only company that might be affected is Abbott."

Loss added that he "wouldn't attribute today's [stock] action to the NIH meeting on Abbott." The Amex Pharmaceutical Index of 15 large drug stocks was down 1.70, or 0.6%, to 324.49 in early afternoon trading Monday. The Amex Biotechnology Index was up 1.77, or 0.4%, to 499.14.

"This seems like a fairly unique set of circumstances for Abbott," said Steve Hamill, an analyst with Piper Jaffray, who has an outperform rating on Abbott. (Hamill doesn't own shares; his firm doesn't have an investment banking relationship with Abbott).