Canada: Alexion Ordered To Significantly Reduce Cost Of Soliris

On September 27, a two-member panel hearing of the Patented Medicine Prices Review Board (PMPRB) issued a rare excessive-pricing decision relating to the drug Soliris (eculizumab), manufactured by Alexion Pharmaceuticals Inc. (Alexion).

What You Need To Know

  • The panel found Soliris had been priced excessively on the basis of the Lowest International Price Comparison test—a methodology not described in the board's guidelines.
  • As a result, Alexion is required to reduce the price of Soliris and to make a payment to offset excess revenues.
  • This decision affirms that, in the context of a hearing, both the board staff and the PMPRB may depart from its published guidelines when considering the appropriate pricing thresholds for patented medicines sold in Canada.
  • The adoption of a Lowest International Price Comparison test is significant as the board considers a reformulation of the basket of comparator countries.
  • The decision is in line with statements made by PMPRB in the context of re-formulating the guidelines. It's also in line with communications from the Federal Minister of Health who emphasized the need to control drug costs in Canada, in particular for expensive drugs that treat rare diseases.
  • Amended regulations are expected to be published soon, and will likely reflect the novel tests and considerations of this decision.

Background

Under the Patent Act and Patented Medicine Regulations, the PMPRB can order manufacturers of patented drugs to reduce the average price at which a drug is sold in Canada to a price not considered "excessive", and to pay the government back any excess revenue generated. The factors to consider when determining if a price is excessive are set out in the Act; a pricing assessment is performed by the board staff using published guidelines (the guidelines).1

Soliris is considered to be a 'breakthrough' drug which treats a rare and life-threatening blood disorder. It's also within a category of costly drug products that have been increasingly scrutinized by the PMPRB. In reaching its conclusion, the PMPRB indicated it's not confined to the tests set out in the guidelines and "has no choice but to deviate from the guidelines" if the application would be unreasonable.

The PMPRB created a new test for Soliris, indicating its price must be reduced to the lowest of seven comparator country prices; the guidelines only indicate that the Canadian drug price cannot be the highest of these seven countries.

Alexion maintained throughout the hearing the actual price of Soliris had not changed and the perceived pricing changes resulted from fluxes in currency exchange beyond its control. While the PMPRB indicated currency exchange is beyond the control of a patentee, its view was that Alexion was well aware of the exchange issues—noting the guidelines provide currency exchange fluctuations are the responsibility of the patentee—and could have amended its Canadian pricing accordingly. Alexion's argument that it had "done nothing wrong" was ruled irrelevant.

Analysis

The decision demonstrates why patentees will typically attempt to avoid a PMPRB panel hearing and instead negotiate directly with board staff, which can only apply the tests as set forth in the guidelines. In a hearing, neither the board staff nor the PMPRB is confined to the guidelines; thus subject to the (apparently loose) constraints of administrative law, it may consider various factors and apply novel tests in order to assess whether a price is "excessive".

Alexion's launch price in 2009 was initially investigated by board staff and adjusted to meet the tests set out in the guidelines. A low Canadian dollar and fluctuation in currency rates in 2012 resulted in the price of Soliris being deemed excessive under the guidelines as the Canadian price appeared to be higher than corresponding international prices, even though Alexion did not raise the Canadian list price during this time. After failed negotiations with board staff, a hearing was called in 2015. Before the hearing panel, the pricing of Soliris from its launch was re-examined by PMPRB where it determined that in order to fulfil its 'consumer protection' mandate, the price paid by Canadians for Soliris should be the lowest of the seven international jurisdictions used for comparison under the regulations. Even though the historical price of Soliris was deemed excessive, the order of the PMPRB with respect to repayment of excess revenue would be calculated on the basis of the Highest International Price Comparison test (which is set out in the guidelines) so the remedy would not be overly punitive to Alexion.

This adoption of a Lowest International Price Comparison test is significant as the board considers a reformulation of the basket of comparator countries. Currently, the basket includes seven members (in order of pricing from highest to lowest): United States, Germany, Switzerland, Sweden, U.K., Italy and France. The board has recommended the adoption of a new basket of comparators. The new basket recommends excluding high priced countries such as the U.S. and Switzerland, and including Australia, Japan and countries which have lower prices than France, including Belgium, Netherlands, Norway, South Korea and Spain. Whether a highest, median or lowest comparative test is applied, it is readily apparent the new mix of countries will have a drastic effect on pricing—particularly on the floor set by the lowest price in the group.

One interesting issue that arose during the hearing was in relation to Alexion's attempted reliance on rebates given to provincial health insurance plans in order to reduce the effective average price of Soliris. Alexion's confidential product listing agreements (PLAs) with these provincial bodies were provided to PMPRB in the course of the hearing. A previous board decision held that provincial insurers were not customers of a patentee under the Act. Affirming this position, the PMPRB held these rebates would not be taken into account for the purpose of considering excess revenues.

Alexion has indicated it intends to seek judicial review of this decision.2

Footnotes

1 See: http://www.pmprb-cepmb.gc.ca/view.asp?ccid=492

2 See: https://beta.theglobeandmail.com/news/national/canadian-regulator-orders-price-cut-of-expensive-us-drug-soliris/article36418703/?ref=http://www.theglobeandmail.com&

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions