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Imagine this. Your health insurer pays $700,000 annually to buy the drug prescribed to assist with your rare disease. However, it only costs the manufacturer one per cent of that figure — $7,000 — to make the drug.
This is the story behind the drug Soliris and a Canadian drug review board is not too pleased.
Soliris, the sole drug manufactured by U.S.-based Alexion, helps treat rare blood conditions that affect one in every million people. These are conditions where the immune system attacks red blood cells that can ultimately result in death.
The Canadian public healthcare system pays for Soliris in some provinces. It does not in others. Some patients may use private healthcare plans to access it, but many simply can’t afford it. To give you a better idea, Alexion is charging the federal government $700,000 for a year’s worth of Soliris per patient.
In June, Canada’s Patented Medicine Price Review Board started conducting hearings into Soliris’ pricing. The board is calling the price excessive and wants to lower it. Canada is being charged the most for this drug anywhere in the world and the review board wants Alexion to reimburse the federal and provincial governments for the overpayments.
The PMPRB is an independent quasi-judicial body that regulates the price of patented medicines sold in Canada. Patented medicines include those that are accessed by prescription or over-the-counter.
The system we have in Canada in relation to patented drugs has a few key players. Health Canada approves drugs for safety and effectiveness under the Food and Drugs Act and Regulations. Provincial drug plans approve drugs to go on their formularies for reimbursement purposes. The PMPRB serves to ensure prices are not excessive.
When reviewing a price, the PMPRB conducts public hearings. If the price of a drug is found to be excessive, the board can order the patentee to reduce it. The PMPRB may also demand that excess revenues from the sale of a drug be offset through additional price reduction or a payment to the Canadian federal or provincial governments. It cannot, however, block the sale of the drug. Only Health Canada has the power to delay or block the sale of a patented medicine.
Alexion attributes the high price to exchange rates. The company has now brought an action before Federal Court to stop the PMPRB from holding more hearings and from issuing an order lowering the price. At its core, this action is questioning Canada’s authority to regulate pricing of patented medicines.
According to scientists like the University of Toronto’s Sachdev Siddhu, the cost of research and development of drugs like Soliris are not that high, contrary to popular belief. Most of the research and clinical trials are undertaken by universities and academic labs.
In relation to Soliris, public resources were used to understand the biology of these rare blood diseases. Public resources were also used to develop ways to make the antibodies. The manufacturing costs are not high enough to rationalize $700,000 either. According to Siddhu, it costs less than one per cent of this price to manufacture Soliris.
It will be interesting to see how a federal court handles Alexion’s action against the board. One expert in health law has dubbed this battle: “the single greatest threat to pricing of drugs in Canada ever.”