[1]thx to duckiemonster flicker creative commons
The latest skirmish over prescription drug pricing is unfolding in a Canadian court where a government agency and a U.S. drug maker are battling over the cost of an expensive medicine that is used to treat a pair of rare diseases.
Last month, Alexion Pharmaceuticals filed a lawsuit [2] to stop the Patented Medicine Prices Review Board, a Canadian government agency, from imposing a price cap on Soliris, which costs either $375,000 or $525,000*, depending upon the ailment being treated. The move came after the board last January asked Alexion to lower its price [3] and repay sales generated by the drugs from 2012 through the first half of 2014.
The conflict is the latest instance in which a government is pushing back against the cost of prescription medicines, an issue that has become increasingly controversial in a number of countries. In the U.S., drug prices were the subject of national debate last week and the topic is showing signs of becoming a factor in the upcoming U.S. presidential campaign.
In Canada, some patients are unable to obtain Soliris due to its high cost, according to a patient support group. Soliris, by the way, is used to combat paroxysmal nocturnal hemoglobinuria, or PNH, a genetic disease that destroys red blood cells, and also atypical hemolytic uremic syndrome, or aHUS, which is a progressive and life-threatening disease that affects the immune system.
But this particular battle is being closely watched for its wider implications. Beyond disputing specific allegations made by the board, Alexion is taking the unprecedented step of challenging the agency’s power to impose pricing caps. And health policy experts say this development raises questions about the extent to which other drug makers may follow suit.
“This is the first time we have seen something like this,” said Marc AndreGagnon an associate professor at Carleton University in Ottawa, who specializes in pharmaceutical policy. “Usually, drug makers have no problem respecting the caps put in place. It hasn’t been a problem before. The company is arguing that it is not the role of the federal government to set price of drugs. I think this could be problematic.”
The dispute stems from a comparative pricing mechanism used by the board. Canadian rules require that drug prices should not be higher than the median price found in seven other countries – the U.S., the U.K., Germany, France, Italy, Sweden, and Switzerland. And the board determined that Alexion set “the highest international price” for Soliris.
For its part, Alexion argued in court documents that Soliris pricing has not changed or increased in Canada or dropped elsewhere since the medicine was introduced in Canada six years ago. The drug maker also maintains that the difference in pricing is due to exchange rate fluctuations, which are outside of its control. The Canadian dollar, we should note, has been dropping as the price of oil, a major Canadian commodity, has dropped.
For aHUS patients, dosing is based on weight, but the overall price per patient, on average, is similar to PNH. An Alexion spokeswoman noted that, for aHUS, a high proportion of patients are babies and children, and the average cost per year for this patient group is $80,000. The board, she added, is citing the highest price in the highest weight category for aHUS.
Soliris is the only product marketed currently by Alexion and generated about $1.2 6 billion in sales through the first six months of this year, a 14.5 percent increase.
[UPDATE: Richard Gold, a professor at McGill University who specializes in intellectual property, writes us to say that “if the most controversial sections – from a constitutional point of view – were upheld in the past, I fail to see a basis for the challenge now. Further, as the basis of the claim was not spelled out, it is uncertain whether this actually goes further than previous cases.”]
[*EDITOR’S NOTE: The statement of allegations lists the drug prices in Canadian dollars $500,000 and $700,000, while we have converted the amounts to U.S. dollars.]