Bristol-Myers Isn't Really Trying to Kill 7,000 Babies With AIDS, It's Just Bad at PR
Bristol-Myers Squibb (BMY) wants to kill 7,000 babies who need its Videx HIV drug by closing the factory that makes it and abandoning the kids who are dependent on the product! OK, so it's not quite that simple, but that's what many people will understand from this UNITAID letter, which asks the company not to close a French factory that makes the HIV drug Videx (didanosine).
The flap comes on the heels of a separate protest by activist AIDS clinics demanding that BMS lower the price of a different HIV drug, Reyataz, which costs $13,000 a year -- more than twice that of competing drugs.
But before you commission that "BMS Kills Babies!" T-shirt from CafePress, let's show some sympathy for the devil. BMS might be bad at PR -- name a pharma company that isn't! -- but this mess isn't entirely its fault. Here's the case BMS's bosses failed to make before this controversy erupted:
The letter from UNITAID to BMS CEO Lamberto Andreotti (pictured in a protest leaflet by the AIDS Healthcare Foundation) says:
Closing this factory means that 4000â€"7000 babies currently enrolled in treatment plans in developing countries through UNITAID could be left without the medicines they need. Didanosine is the last therapeutic option for these babies and without it they could die.OK, sounds serious. But this Reuters story shows that BMS is aware of this. BMS is closing the French factory in order to open a U.S. facility, and has stockpiled the drug to fill the gap:
... the company ramped up production of the medicine to create an inventory of the drug equal to twice the demand for the medicine in 2009."Supply strains" aren't ideal, but unless BMS is about to make a Genzyme-sized screwup, 7,000 babies probably won't die.But [BMS] said there will likely still be a "supply strain" because of an unexpected recent surge in demand for the product, although the company is now still able to fulfill current demand.
Also, what UNITAID isn't trumpeting in its letter is a separate effort to persuade BMS to enter an HIV patent pool. UNITAID wants companies to donate their patents to a group facility that will allow any company to manufacture the drugs in poor countries. BMS is skeptical. Giving up your patents is pretty much the same as giving up your revenues -- and BMS isn't a charity.
But does it need to charge more than twice the going rate for Reyataz, thus angering the AIDS Healthcare Foundation? I noted a year ago that the price of Reyataz is in part controlled by Abbott Labs (ABT), which owns a legal monopoly on an ingredient of Reyataz. Abbott sells that ingredient (Norvir) to BMS at five times the rate it sells the same drug under its own label. There's not much BMS can do about that.
So here's BMS's problem: It's trying to move a factory from A to B. Its customers want it to give its drugs away for free, and its competitors control the manufacturing cost of its other drugs. Surely, BMS UNITAID and AHF can come to some sort of honorable compromise that will get HIV drugs to patients who need them without bankrupting the company in the process? (After all, Gilead Sciences (GILD) recently achieved exactly that.)
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