Abbott Labs (NYSE: ABT) lost the battle, but won the war. A jury ordered the company to pay GlaxoSmithKline (NYSE: GSK) $3.5 million. It could have been a lot worse.
Glaxo sued Abbott for increasing the price of Norvir, used as a booster in many HIV cocktails. At the same time, Abbott didn't raise the price of Kaletra, which contains Norvir. That allowed Kaletra to undercut Glaxo's Lexiva, which requires Norvir to be effective.
Glaxo claims that it cost 75% more to use Lexiva than Kaletra, and of course Glaxo wasn't seeing any of that higher price since it was going to Abbott for the Norvir booster. Glaxo was seeking $570 million in damages, which could have been tripled as a punishment.
The jury didn't buy it. They only awarded a measly -- on the scale of things -- $3.5 million to Glaxo, finding that Abbott had breached the companies' contract.
Retailers including Safeway (NYSE: SWY) and Rite Aid (NYSE: RAD) also sued Abbott for increasing the price and trying to gain a monopoly for Kaletra. Abbott settled that suit for an undisclosed amount of money. Let's call that battle a tie.
What's the lesson here? If your drug requires another company's drug to be effective, it's probably best to team up, something HIV drugmakers seem to have figured out. Gilead Sciences (Nasdaq: GILD) sells Atripla, which combines its drugs with one from Bristol-Myers Squibb (NYSE: BMY) and also has one in the works combined with a Johnson & Johnson (NYSE: JNJ) drug. Glaxo has teamed up with Pfizer (NYSE: PFE), selling their HIV meds through a joint venture called ViiV Health care.
This war might be over -- assuming neither side appeals -- but Glaxo can of course strike back by developing new medications, taking away Abbott's business the more traditional way.
