While a Patented Medicine Prices Review Board hearing panel has ordered Alexion Pharmaceuticals Inc. to lower the price of the drug Soliris, it has rejected a bid by the Canadian Life and Health Insurance Association to make the company reimburse private payers for the overcharges.
“Employers have borne the brunt of the overly high pricing, so of course, we are disappointed that there will not be any opportunity for them to recoup some of these excess payments,” said CLHIA president and chief executive officer Stephen Frank of last week’s ruling. “That being said, we are pleased the price for Soliris will be reduced as this will benefit all payers going forward.”
The comments follow last week’s ruling in the long-running case by a panel convened to hear the regulator’s complaint about Alexion’s prices for Soliris. The panel determined the company had, in fact, been charging too much for the drug in Canada. “No explanation or justification was provided to the panel as to why Canadians should be paying significantly more for Soliris than comparable developed countries, including the United States and the United Kingdom,” the panel wrote in its Sept. 27 decision. Alexion has already said it will seek judicial review of the decision.
The list price of Soliris when it came on the market in Canada in 2009 was $224.73 per unit, the panel noted. In comparison, the maximum average potential price, based on the median price of the seven comparator countries (Italy, France, Germany, Sweden, Switzerland, Britain and the United States) the regulator looks at, was $217.68 per unit.
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Soliris is a breakthrough drug that treats paroxysmal nocturnal hemoglobinuria, a rare blood disorder characterized by the destruction of red blood cells. As part of its defence in the case, Alexion argued it hadn’t changed the price of Soliris since its introduction in Canada and blamed any subsequent issues with the cost on fluctuations in exchange rates. The regulator, however, responded that issues with exchange rates are the responsibility of the company holding the patent. While the panel accepted that exchange rates aren’t within a company’s control, it found that to be an irrelevant issue and, further, it noted Alexion was aware of the impact of currency on its business. “In any event, Alexion was aware during the relevant time of the potential impact of currency exchange rate fluctuations on its business and has adopted business strategies to hedge against this risk,” it wrote.
After finding the company had been overcharging for the drug, the panel ordered Alexion to cut the price of Soliris in Canada to no higher than that charged in the lowest-price comparator country, which in this case is Britain. And as for the excessive revenues Alexion earned from overcharging for the drug in the meantime, the panel ordered the company to pay that amount to the federal government.
It was that second component that the CLHIA took issue with in its efforts to intervene in the case. Noting the payment to the government does nothing to help plan sponsors or insurers that have been covering the drug, it suggested the panel should order Alexion to cut the price for Soliris even further in order to compensate private payers for the excessive amounts already paid out. It argued that, rather than Alexion making a payment to the government, the extra price cut should continue until it had fully reimbursed private payers.
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The panel, however, rejected that argument. “Such an order would be punitive to Alexion, would be difficult to implement, and is not necessary, in the panel’s view, for it to fulfill its consumer protection mandate in this case. . . . The panel also notes that section 83(2) [of the Patent Act] specifies the payment being made to the federal Crown, as opposed to any entity that ultimately covered the cost of the medicine at issue, reflecting Parliament’s acceptance of the fact that a remedy may not ‘compensate’ the ultimate payors of the excess revenues.”
For its part, Alexion notes it strongly disagrees with the decision and pointed out the regulator had deemed the price to be within its guidelines in 2010 and 2011. “The PMPRB panel wants to penalize Alexion for changes to currency exchange rates, which are beyond our control, and seeks to apply a newly invented pricing structure that is not supported by applicable law,” said Daniel Palmqvist, Alexion’s general manager for Canada.
“If upheld, the panel’s decision will have serious implications for future innovations and investments in the development and availability of therapies for Canadian patients with devastating rare and ultra-rare diseases.”
Noel Courage, a patent lawyer at Bereskin & Parr LLP in Toronto, echoes those concerns, suggesting the regulator changed the rules for Soliris after initially accepting the price. The result is uncertainty for companies developing drugs for rare diseases, he says. “We do want these medicines in Canada,” he says.
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“They don’t have to do it,” he adds.
Rather than going through regulatory proceedings that have essentially resulted in new rules for drugmakers, the board could instead have held consultations on the issues, says Courage.
“It’d be better to have fair notice . . . and then evolve the guidelines,” he adds.