Canada Wants To Cut Price Of 'World's Most Expensive Drug'; US Manufacturer Sues To Stop It
from the that's-gratitude? dept
The Turing Pharma case has received widespread coverage, but as Techdirt readers know, it’s hardly a unique example of the pharmaceutical industry taking advantage of a flawed system. In fact, over in Canada, there’s another interesting example of the industry’s sense of entitlement, reported here by CBC News:
A U.S. drug company is taking the Canadian government to court for its attempt to lower the price of what has been called the world’s most expensive drug.
Alexion Pharmaceuticals has filed a motion in Federal Court, arguing that Canada’s drug price watchdog has no authority to force the company to lower its price for Soliris.
According to the article, a 12-month course of Soliris costs about $520,000 in Canada at today’s exchange rates, and a mere $500,000 in the US.
While Soliris is not a cure, it can stop the assault [by two rare blood diseases] on the body’s tissues and organs. Since patients typically need to take the medication indefinitely, it can cost tens of millions of dollars over a lifetime.
Understandably, some Canadian regions are struggling to provide the drug for all the people who need it:
Due to the high cost, some patients in Canada can’t get the drug. Only some provinces will cover the cost of treatment and there are different criteria to qualify for coverage in various jurisdictions.
The pharmaceutical industry likes to argue that, though high, such prices are necessary in order for companies to recoup the research and development costs of new drugs. According to the CBC article, Soliris has already brought Alexion around $4.5 billion in revenues, which ought to be enough to cover any such outlay, not least because of the following important fact:
In case of Soliris, most of the research and development was done by university researchers working in academic laboratories supported by public funds.
“I think the public science is well over 80 or 90 per cent of the work,” said Sachdev Sidhu, a University of Toronto scientist who is also in the business of drug development.
That means that Alexion had to spend less than usual to develop and bring the drug to market. It also means that, once more, a pharma company gets to build on the work funded by the public, but without any sense of obligation to pay that back in the form of lower prices — on the contrary. Perhaps most damagingly, the lawsuit brought by Alexion to defend its exorbitant pricing could have very serious negative consequences for everyone in Canada:
A University of Ottawa professor who specializes in health law said he was shocked that Alexion would challenge Canada’s authority to regulate drug prices. If Alexion’s case is successful, it could end Ottawa’s ability to control the cost of patented drugs, Amir Attaran told CBC News.
“This is the single greatest threat to pricing of drugs in Canada ever,” he said Thursday.
In the pursuit of high profit margins, the world’s dysfunctional drug industry continues to ride roughshod over everything in its path, whether a patient trying to survive a rare chronic disease, or an entire nation trying to provide decent medical treatment to as many of its population as possible.
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Filed Under: canada, drug prices, soliris
Companies: alexion
Comments on “Canada Wants To Cut Price Of 'World's Most Expensive Drug'; US Manufacturer Sues To Stop It”
Mandate that pharma research be done through publicly-funded universities and all of their research and results are public domain.
Drugs should cost about as much as candy.
Re: Re:
Aspirin would cost fifty bucks a pill then. It’s a business.
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Bahahaha, that was funny! 🙂
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Aspirin formula is on the walls of egypt´s pyramids
they are stealing public commons
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The problem in that case is funding, but it is not an inconcievable obstacle to pass.
Problem is the incentive: While students and professors are interested in finding these cures, most of the cost is on mindnumbing repetitive tests for bringing the product to market with little learning value for the students and even less for the professors. You would have to set up a new mechanism for funding the approval requirements. Reducing drug safety standards to reduce that cost would generally not be advisible.
Forget the street-level gangs and smugglers. The real cartels are the goddamn pharma corps.
Re: How dare you molest the sea!
The only difference is a matter of scale. If you’re small, you’re an outlaw. If you’re big, you’re a lord.
An offer they can't refuse...
Pay millions over the course of your lifetime, or die in horrific agony… boy, it’s a good thing the pharma company doesn’t have some sort of leverage over the people in need, otherwise they could use it to drastically increase the price simply because they can.
In case of Soliris, most of the research and development was done by university researchers working in academic laboratories supported by public funds.
“I think the public science is well over 80 or 90 per cent of the work,” said Sachdev Sidhu, a University of Toronto scientist who is also in the business of drug development.
If for no other reason than the resulting screams would be music to the ears of so many, drug patent life needs to be tied into public funding percentages, and adjusted accordingly.
If a company wants to spend 100% of their money developing a new drug, then they get 100% of the patent duration for it. If 50% of the development costs are paid for by public funds, then the patent duration is reduced by 50%, and so on.
And because you know they would try it, the costs would be calculated by an independent third party, and any evidence of the company attempting to modify the numbers to boost the patent duration past what it should be would result in the patent immediately being put into the public domain, and free for anyone to use to create the drug in question.
Re: An offer they can't refuse...
It’s an offer they can refuse.
They can’t afford the drug, so they have no choice but to decline the offer and die in horrific agony.
See? The system works! Yay capitalism! /sarcasm
Re: Re: An offer they can't refuse...
You realize a government granted monopoly is the opposite of capitalism, right? Yay government!
Re: Re: Re: An offer they can't refuse...
It’s the opposite of free-market capitalism, which is only one variety of capitalism.
Re: Re: Re:2 An offer they can't refuse...
Free market capitalism only works in a society where most of the citizens still have a conscience.
Re: Re: Re:3 An offer they can't refuse...
But the market isn’t free, the reason being that capitalism is solely about making money. It’s not the social system its adherents claim it is.
Re: Re: Re: An offer they can't refuse...
Yes, but I like many Americans insist that patents/copyright/social security/medicare are all vital parts of a capitalist society that it couldn’t function without.
Re: Re: Your daily dose of Godwinism
When Hitler wouldn’t fund production of the Me 262 (The first ever operational jet-engine powered fighter aircraft!), a coalition of pilots threated to shoot themselves in protest, arguing that flying against the tight formations of the B-17 Flying Fortresses was essentially a death sentence anyway.
He gave the program light funding, and the Me 262 had limited deployment, but were certainly more effective than the Messerschmitt Bf 109s.
While I cannot speak to the agony of the blood diseases that Solaris inhibits, or the chance of survival, a self-imolation campaign in the lobbies of Alexion Pharmaceuticals by those already doomed might help change their minds.
Or at least secure that no human being will want to work for Alexion Pharmaceuticals.
Re: An offer they can't refuse...
It’s like I said last week: Your money or your life.
Re: An offer they can't refuse...
The problem with that is that even drugs in the public domain can have their pricing abused. Daraprim, the drug that went from $13.50 to $750 per dose is outside of patent protection. The company that made the change simply bought all the producers of the drug. Since it’s not used by a large number of patients, there’s no incentive for another producer to come in, do all the testing necessary to get a generic version to market and actually produce it. So, you end up with a monopoly even without government assistance.
Re: Re: An offer they can't refuse...
It wouldn’t solve all the problems to be sure, but it would at least get rid of the one where the public foots the bill for research, and then has to pay again for the resulting drug, with no real benefit to the public for having paid the initial costs.
Re: An offer they can't refuse...
“And because you know they would try it, the costs would be calculated by an independent third party, and any evidence of the company attempting to modify the numbers to boost the patent duration past what it should be would result in the patent immediately being put into the public domain, and free for anyone to use to create the drug in question.”
All this would do is to increase to “bonus” for those 3rd party companies. Sure they wouldn’t find anything because $10mio a year per person in charge seems to make them think twice about what actually happend and if that + isn’t actually a – .
The solution is better contracts
If a corporation uses public funds to do something, the contract/agreement to get those public funds/resources needs to have provisions to protect against this. Be it the “public” needs to be paid back and share in the profits (which can be used to aid those that can’t afford it), or give the “public” option to buy it out at a reasonable cost.
I don’t have problems with companies, even drug companies, making a profit. But when it seems extortionate like this, it is a problem.
In Profits We Trust.
Two questions:
1. If 80 or 90 percent of the work was done and funded by public science, how the hell did this company get the patent?
2. If 80 or 90 percent of the work was done and funded by public science, and they do give the patent to a private business, why doesn’t a representative of the people sue the government for their 80 or 90 percent back? The people have already paid for the research and development, they should only be charged for materials and manufacturing now right?
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Because the pharma lobby has bought off congress.
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Look up Bayh-Dole Act. I don’t know if it applies for this drug, but it is perfectly legal for research done with public funds to be patented by the institution that did the research and then that institution can make whatever deals it wants for whatever price it wants.
Yup , this is an example of jumping into bed with the US corporation on treaties, keep giving up your rights Canada, this is what it’ll get ya.
discovery process
Wouldn’t filing a lawsuit like this open up Alexion to discovery? Couldn’t that include a full review of their accounting? Wouldn’t that reveal the full depth of this ripoff? Of course, if Canada’s courts are as bad as US courts, that won’t happen.
So, Here’s a question … If someone dies because they don’t have the ability (money) to get these drugs can a big pharma company be charged with murder.
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According the the non-attorney spokespersons I see on TV all the time your loved one must first take the drug and then die before you can sue the pharma company.
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Depends, do you want to be charged with murder for the homeless in your town dying of exposure? You presumably have the shelter and did not give it to them to share.
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I hope not, because that isn’t murder (at least not according to the legal or common definition).
Why do you hate capitalism?
/s
Re: Why do you hate capitalism?
There is nothing wrong with capitalism in and of itself if properly regulated. It’s our corrupt government that is preventing the regulations that would fix these types of issues. Our government is corrupt to it’s core, I can’t imagine giving them yet MORE power and control over the people by handing off heath care or pharma. We have mass surveillance, an out of control patent system, out of control police force.. I could go on and on… yet some people still thing the Government is the answer!!?? It’s insanity!!
If we could remove all personal benefit politicians can receive based on their office/decisions.. you would only get the idealists in office. THEN we may be onto something. When politicians are allowed to lobby, take lucrative jobs, and get paid really well when they leave office, by the very people that they were supposed to be regulating while in office, you get corruption. It’s that simple.
Re: Why do you hate capitalism?
On one hand if I can profit $3.50 for ever $3.95 bottle of water I sell, great that I found many suckers to over pay. Thats capitolism.
On the other hand, if I can profit $499,000 for every $500,000 prescription I sell, great that I am willing to watch others suffer while I become mega rich. Thats inhumane capitolism.
The question that is difficult to answer is where do you draw that line in the sand?
Pharma companies are entitled to make profits just as much as bottled water companies.
From my point of view the real problem here is drug patents AND the difficulty in taking a drug to the market.
In this example, if another company could make a nice profit selling that same drug at $1000, they would do so if the barrier to entry was not so high or prevented by patents.
So maybe the real problem is not capitolism, maybe its too much regulation of capitolism that is allowing such inhumane behaviour.
Re: Why do you hate capitalism?
It’s not really capitalism when a government grants a monopoly and thus chooses who can and can’t sell the product.
If it was a free market, and no corporate protections (patents), then another company would come along and sell the same drug for less – because there’s clearly plenty of money to be made. Eventually, this becomes a “race to the bottom”, until the price the drug sells for is slightly more than the cost to produce.
That is the nature of a free market… and everyone benefits over time.
Just wait until ISDS come into play…
One would think that religious people would be outraged at life-saving drugs being kept at sky-rocketing prices so that most can’t use them.
Then again, according to some, Jesus loves the free market even more.
Re: First Quarterly Report 3:12
“And lo, Jesus said to all gathered around him, both his disciples and those strangers that had come to receive wisdom, ‘If the poor or sick among you cannot afford the food, shelter, or medicine that they need to live, then screw ’em, they had it coming for being poor and/or sick.’ “
…
That’s in there somewhere, right?
Re: Re: First Quarterly Report 3:12
Google “Supply-Side Jesus.”
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Religious people are outraged at that and a lot of other things. You are probably referring to the social clubbers, the ones described by Matthew in the following passage.
https://www.biblegateway.com/passage/?search=Matthew+13&version=NIV
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How does a government-granted monopoly on publicly-funded technology even remotely resemble a free market? (Hint: It doesn’t.) This is the exact opposite of the free market. The free market requires competition, which means no government picking and choosing who gets to sell and compete.
I wish the next superhero movie was about a pirate selling medication just above cost to poor families.
Corporate sovereignty
Corporate sovereignty. Thanks NAFTA.
Re: Corporate sovereignty
I came here to say exactly this.
Time to repeal corporate sovereignty, instead of creating MORE treaties that include it. How can Harper & co. really be pushing for acceptance of international corporate sovereignty when Canada has already been damaged so much by a single agreement with the US and Mexico?
Trudeau, if you’re reading this… time to add this to your war chest of campaign issues.
I want the new Tesla SUV, but I can’t afford it. Should it be given to me?
Canada has a very easy choice, either pay the price or don’t have it on formulary. A company has the right to set the price, the buyer has a right to agree or not. It is pretty easy.
Want to change the equation? Start your own fucking company and come up with this yourself. Why the fuck doesn’t Canada have their own companies doing this? Why doesn’t Canada as a government, run their own R&D, Clinical Trials and manufacturing?
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Will you die if you don’t get a Tesla SUV? No? Then clearly the comparison is rubbish. Want is very different than need, especially when the need is life-threatening if unmet.
If a company wants to sell their products in a country, then they have to follow the laws and regulations of the country. If they don’t want to deal with the ‘hassle’ of a government agency having the audacity of getting between them and the profits they are ‘owed’, then they are welcome to use zero public funding/research for their drugs, not file for a patent in that country, and not sell anything at all in the country.
Don’t want the downsides of government ‘interference’? Then you don’t get the upsides of government ‘protection’.
Why doesn’t Canada as a government, run their own R&D, Clinical Trials and manufacturing?
Funny you should mention that…
‘In case of Soliris, most of the research and development was done by university researchers working in academic laboratories supported by public funds.
“I think the public science is well over 80 or 90 per cent of the work,” said Sachdev Sidhu, a University of Toronto scientist who is also in the business of drug development.‘
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University researchers…bla bla bla, who cares? Did university researchers bring the drug to market? Why not? Did university researchers run the required clinical trails that show that the drug is safe and effective? That is where the big costs are. Hell, scientists are a dime a dozen, drug companies have been laying them off recently, development is where the big costs are.
That isn’t the point. Canada can choose to not buy the drug. People can choose to not take the drug. Governments are free to research, develop and get a drug on the marketplace. For some reason, they have not.
Why is that? You say it is a public good, then why isn’t a public entity actually doing this?
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Your rhetoric would be convincing, except for one fact:
Canada is saying “We aren’t willing to buy this drug unless it’s at least X cost, which seems like a more than reasonable price based on the drug investment costs of the company.”
The company is responding with “Corporate sovereignty states that you HAVE to allow us to sell our drug to ANYONE in Canada at whatever price WE want!”
So they’re basically suing because Canada is refusing to buy the drug at the price they want for it. Think about that for a moment. That’s NOT free market.
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Did university researchers bring the drug to market? Why not?
Because it’s a university, the only drugs sold at places like those tend to be the recreational kind.
Did university researchers run the required clinical trails that show that the drug is safe and effective?
Given the quote mentions ‘research and development’, quite possibly. However, if you’re so dismissive of the university’s ‘contribution’, then how about the patent for the drug is revoked until the drug company can do all of the work themselves, going through all steps, and paying entirely with their money. Shouldn’t be that expensive right, I mean the university just did the R&D, and as anyone knows, it’s not like that’s an important step or anything.
In fact, best do this for all future drug patents, bar pharma companies from using R&D from anywhere but their own teams, got to make sure the quality is the best after all, can’t be taking shortcuts like letting the public fund it.
Canada can choose to not buy the drug. People can choose to not take the drug. Governments are free to research, develop and get a drug on the marketplace.
Or Canada can tell the company ‘You’ll either sell it at a lower rate, or you won’t sell it at all in this country’, which is apparently exactly what they did, and what’s got the drug company throwing fits. The company only has the patent on the drug thanks to a government granted monopoly, and what they grant, they can also revoke.
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…If a company wants to sell their products in a (jurisdiction), then they have to follow the laws and regulations of the (jurisdiction)…
Like what’s happening with Uber, Lyft, AirBnB, and others of their kind.
And a new one I just found out about: http://www.azcentral.com/story/entertainment/dining/wine/2015/09/29/arizona-wine-shipment-crackdown/72755478/
(Warning: may be paywalled; you only get a few free looks.)
Re: Response to: Anonymous Coward on Sep 30th, 2015 @ 10:01am
Dumbass ™
We do but somehow the big US companies manage to buy them out, strip them clean and then close them down.
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You can’t with patents in place; that’s why I keep saying there is no such thing as the free market.
The research work, or the R in the R&D, is mostly done by scientists, be it at universities, companies or governmental agencies.
The R is the cheap part, the D, which consists of clinical trials, is the expensive part. That is done by drug companies. Why doesn’t universities and governmental agencies get into the business of running clinical trials too? Once they do that, get approval, they could outsource the manufacturing and then sell the drug for whatever price they wanted to?
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Dunno where your from but here, drug trials are done by hospitals and research institutions as companies are considered unreliable for drug trials.
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Nonsense, what possible conflict of interest could there be having a drug company running the trials on a drug they are looking to sell? I mean surely if a drug that they are expecting to make them millions is shown to be ineffective and/or dangerous during trials, they would be quick to take note, and drop the trials, going back to testing to fix the problems.
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Research may (or may not) be less expensive than development, but it’s a far, far cry from cheap. It’s just that drug companies aren’t footing a lot of that bill.
And governments can and do violate patents. Canada violated Cipro’s patent in 2001 (anthrax scare) and the US also considered doing the same when there was doubt that Bayer could provide enough of the drug.
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That’s where corporate sovereignty comes into play. Threaten corporate profits for some trifle like ‘saving lives’? Oh you better believe you’re getting dragged to ‘court’ and fined billions.
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What happens when Canada threatens corporate profits by not buying from them?
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so explain why Canada is trying to do this when it has signed up for CETA, i believe which allows Pharma companies and others charge basically whatever prices they want and also allows the country to be sued if it doesn’t agree with what the company/industry/business is doing but would affect profits
Competition!!
The problem with the system is that it completely removes competition, which is absolutely required for a healthy functioning market.
Anybody should be allowed to manufacture even patented drugs, but to cover patent holders R&D there should be a small percentage of the sale price paid to the patent holder.
This would give the patent holder a small cost advantage over competing suppliers but if they get to greedy, other manufactures will step in and compete. it’s called capitalism and competition isn’t a feature, it’s a requirement!
Re: Competition!!
That’s a great call. Compulsory licensing of pharma patents based on a standardized rate would go a long way toward fixing pharma cost problem without eliminating pharma profits.
Best solution
One of the best solution I have found is a loophole that drug companies exploit for evergreening their patents on old drugs, they add a protein and renew the original patent claiming this new protein makes the drug better.
Well in india, one philanthropic entrepreneur started a drug company, they would add inert proteins to costly drug and sell them at nominal profits. They even won court cases, the big pharma caved in else they would loose their ability to evergreen.
Sorry the name slips my mind right now.
price something to high and guess what after awhile no one will buy it. then the price drops and people buy it again
Re: Re:
Price food or critical medicine too high and people suffer and even die, as unlike many other things, like TV, doing without has consequences for the person doing without.
A few policitcal donations will fix that
I think a few political donations to key politicians will resolve the issue. There will be an internal review & a commercial agreement reached which can’t be disclosed to the public & the pharma company will keep charging the same fees but another government program will chip in to make it appear the drugs are costing less. Win Win for everyone but the taxpayer.
Sounds like the DEA is confused about the war on drugs to me. These companies are no better than the cartels, and the number one cartel is the congress. What our congress does is called aiding and abetting.
A lot of misinformation in the original article. Canada is arguing that the price of the drug is too high. The company is arguing that the price of the drug, which had been approved by Canada since it went on the market 6 years ago, has not changed. They argue that the excessive price that Canada is claiming is based on currency fluctuations (years 2012-2014) and not based on the cost of the drug itself.
Canada would be free to not reimburse people for the drug, lawsuit or no. They companies lawsuit is more along the lines of “hey, you didn’t have a problem with the cost earlier, why now?” Your logic stated in the review board to lower the cost was faulty.
If you think that drug companies don’t run and fund clinical trails that are required to achieve regulatory approval, you obviously don’t know what you are talking about and really should remove yourself from any conversation that talks about pharmaceutical products.
Really, you should.
All of this evidence suggests that, across industries, a high average level of intellectual property protection is economically beneficial. But the benefits of strong IP protection are even greater in the pharmaceutical industry than they are in other industries, because pharmaceutical firms rely more on patents to protect IP than firms in other industries.
• Richard Levin and others surveyed high-level R&D executives in more than 100 manufacturing industries, and found that “In only one industry, drugs, were product patents regarded by a majority of respondents as strictly more effective than other means of appropriation…. . Comparatively clear standards can be applied to assess a drug patent’s validity and to defend against infringement,” whereas such standards cannot be applied to assess other kinds of patents (e.g., patents on components of complex systems).
•As the figure shows, Edwin Mansfield found that 65 percent of pharmaceutical inventions would not have been introduced if patent protection could not have been obtained; for the 11 other industries he studied, this percentage was only 8 percent.
•Congress has recognized the importance of patent protection as an incentive to pharmaceutical R&D. For example, as part of the Hatch-Waxman Act, Congress provided for patent term extensions to offset some of the time that drugs spend in clinical testing and in the FDA review process.
Here is a fact. If you have a rare disease or condition, you will have problems. Companies don’t want to come up with treatments for conditions that do not affect a large number of people. There just isn’t any money in that, unless you charge a very high price.
Lipitor was a pretty good drug that could be used by millions of people, so the cost didn’t have to be that high to generate profits. Who would invent drugs that only treat a relatively small number of people? What company would do that? The FDA came up with the Orphan drug act for exactly that reason.
Investment chases return, it is really that simple. Remove the return and you will not see the investment.
There are actually quite a few drugs that are very good, best in class treatment in their category, have been off patent for quite a while, and are currently in short supply. Why is that? They are generic, anyone could make them, but no one does. Why is that?
BCG is the best treatment for bladder cancer. It is generic, and it is in short supply. Why do you think that is? People will die of bladder cancer because this drug is not available. That is a shame.
Profits drive investment.
If they feel so strongly about their drug why don’t they file their motion in Canada?
No link to pleadings?
It would really be nice to know the legal grounds on which Alexion is challenging the Patented Medicine Prices Review Board’s constitutional authority to regulate drug prices.
A couple of observations:
* The government’s deadline for responding is apparently Monday 12 October, one week before Canadian federal elections. Stephen Harper’s Conservatives are running neck and neck with the social-democratic NDP, and Harper has got to be weighing the electoral consequences of his response.
* If the PMPRB is using US prices as a benchmark, I have to wonder if this dispute (over a 4% or 5% price difference) isn’t faux-regulatory theater. It would be interesting to know what prices France, the UK, the Netherlands, and Japan have negotiated (or dictated) for Soliris.