Ethical Criteria for Patent Extension

Be it Resolved:
Shareholders request the Board of Directors to develop ethical criteria for the extension of patents on prescription drugs and to issue a report on the implications of such criteria. The Report, prepared at reasonable cost and omitting proprietary information, will be made available to all shareholders by September 2003.
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We believe that every person has the right of access to health care; access to needed health care services and products is essential to human development and well being;

Advances in pharmaceutical products play a significant role in countering disease and enhancing human health; approved generic pharmaceuticals, lower in cost but equally effective alternatives to brand names, expand access to needed treatments;

A National Institute for Health Care Management Study, May 2002, found that:
· Two-thirds of drugs approved by the FDA (1989-2000) were modified or identical versions of existing drugs - "me too" products;
· The percentage of new innovative drugs is decreasing;
· Modified medicines were often more expensive than older medicines, even where the FDA had found that they offered no significant advantages;

There has been much publicity about excessive marketing of "me-too" drugs and about strategies to extend patents on brand name pharmaceuticals. Changing a small aspect of a patented drug, suing generic companies or paying generic companies not to market their pharmaceuticals have been called "devious tactics" by critics and "gaming the patent system" by the chair of the Federal Trade Commission. Such actions harm a pharmaceutical company's image and affect shareholder value;

The net result of such actions is not new innovative treatments or cures but:
· Lost cost savings for consumers, including health plans and providers:
· Lost public image when a company appears to renege on the original patent agreement;
· Lost value for shareholders when short term financial gain is chosen over long term value;
· Diminution in the number of truly innovative pharmaceutical products;

A July 2002 Federal Trade Commission Report reveals that over the course of several years, Abbott Labs filed five lawsuits involving several patents, against one generic company. Ultimately, our company agreed to pay the generic company $4..5 million per month for more than a year, in order to keep a generic version of Hytrin off the market. This agreement gave rise to an FTC investigation and potential costs of hundreds of millions of dollars a year to consumers.

We believe that the requested policy and implementation report would be beneficial to health care consumers and shareholders, and would enhance our company's image of transparency and accountability.

Please vote for this proposal.