[Ip-health] IP Watch: Colombia Asked To Declare Excessive Price For Cancer Drug Contrary To Public Interest, Grounds For Compulsory License

Andrew S. Goldman andrew.goldman at keionline.org
Thu Dec 3 10:51:59 PST 2015


By James Love and Andrew S. Goldman

Colombia has a decision to make. A full year has passed from the November
24, 2014 request by iFarma, Misión Salud and CIMUN for a declaration of the
public interest regarding the cancer drug imatinib (marketed by Novartis as
Gleevec/Glivec), the first step on the path toward a compulsory license in
Colombia. Thus far, Colombia’s Ministry of Health and Social Protection has
failed to act one way or another, leaving patients in limbo and the
government at the mercy of a Swiss pharmaceutical giant that reported
revenue of over $57.9 Billion USD in 2013.

Colombia’s law provides various pathways to a compulsory license, a legal
mechanism that allows for the generic production of a drug without
permission of the patent holder, depending on the circumstances surrounding
the need, all of which are subject to the language in Chapter VII of
Article 65 of Decision 486 of the Andean Community Commission. When the
request is based on a declaration of public interest, the procedure is
governed byDecree 4302 of 2008, which specifies in Article 4(4) that the
competent authority will have three months to make a decision.

So, at nine months past the deadline and counting, why is the Ministry so
late in making its decision?

The evidence supporting a declaration of public interest is self-evident:
imatinib is unquestionably effective as a leukemia drug, and was placed on
the WHO’s Essential Medicines List in 2015. It is also unquestionably
expensive for Colombia, costing $15,161 USD per patient per year — nearly
double the country’s GNI per capita of $7,970 USD (Atlas Method) in 2014 —
for a drug that is taken as a chronic treatment, not as a cure.

Introduction of a generic version of imatinib in Colombia would
dramatically reduce prices, thereby saving the government money on
reimbursements and facilitating the increased treatment of cancer patients
in need. In the United States, the main patent for Glivec has already
expired, and patients in US will see the benefits of generic competition
early in 2016.

In spite of all of this, the Colombian Ministry has thus far balked at
making a decision because of the lack of a fixed legal definition of
“public interest”. While it is understandable that the government would be
cautious on a matter of first impression, at some point the lack of action
will be perceived as an endorsement of the status quo.

High Price of Glivec Undermines Fundamental Right to Health

In approaching the question of whether or not a compulsory license is in
the public interest, one place to start is Colombian Law 1751 of 2015,
which provides that the right to health is a fundamental human right.
Resources for health care, however, are limited. Excessive prices for a
commodity such as the cancer drug Glivec, or for that matter any other
expensive drug, creates a strain on the budget that results in either
limits on access to the excessively priced product, or a budget shortfall
for other goods and services that patients need. So, in this case, the
public interest concerns the need to satisfy the objectives of the
fundamental right to health, and to address excessive prices that undermine
that objective.

The price for Glivec excessive. While the price in Colombia is much cheaper
than the price in the United States, this comparison fails for two reasons:
First, the Colombian per capita income for 2014 was just over 14 percent of
the per capita income for the United States. Second, the US price for
Glivec is considered excessive in and of itself, and has been bitterly
criticized, even by the key figure in its development, Professor Brian

The price for a single drug can be compared against the amount of money
spent, on average, for all health care needs in total, including for drugs,
but also for hospital stays, doctors visits, etc.

According to the World Bank, in 2013, Colombia spent about 6.8 percent of
their GDP on health care outlays. The figure in the United States during
2013 was 17.1 percent, an outlier compared to the world as a whole, where
the figure was 9.9 percent. More relevant to Colombia, for the countries
the World Bank defines as upper middle income, the figure was 6.3 percent.

For Colombia, 6.8 percent of the GNI per capita of $7,970 is equal to $542
per year. For a drug to treat a severe illness like leukemia on a chronic
basis, a price twice as high as that ($1,084 per year) might be considered
reasonable. But, the Novartis price of $15,161 in Colombia is 28 times the
average outlay for all health care goods and services, and this is

Modest R&D Outlays, Astronomical Revenue

There is yet another line of inquiry that leads to the same conclusion.
Glivec is considered a treatment for a rare disease. The question, then, is
this: are high prices necessary to compensate Novartis for outlays on R&D?
Here the evidence is even more overwhelming that the price in Colombia is
excessive. According to Dr. Drucker, roughly 90 percent of early R&D costs
for Glivec were paid for by the NIH or charities, not by Glivec. Novartis
did play an important role in the clinical development of the drug, but the
trials were relatively small and quick. The FDA regulatory approval was the
fastest on record. Even after adjusting for the risks of failures and the
opportunity cost of capital, the Novartis investments in the Phase II
trials are estimated at $38 to $96 million.

In spite of the modest outlays on R&D to obtain the initial FDA approval,
Glivec has been a cash cow for Novartis for fifteen years, earning an
estimated $42 billion in sales through the end of 2014. This year Glivec is
expected to earn an additional $5 billion. Given the massive revenue for
this drug, and the modest cost of obtaining the initial FDA approval, one
cannot justify the high cost of the drug on the grounds that the patient
population is small.

There are thus more than sufficient grounds for a public interest
declaration: Novartis is charging an excessive price for Glivec,
undermining the sustainability of Colombia’s health care system and the
people’s fundamental right to health as written into law.

What about the international consequences?

It is also worth noting that the Colombia Ministry has faced shameful overt
pressure from the Swiss government to deny the request, relying on outright
falsehoods about the viability of compulsory licensing under the World
Trade Organization’s Agreement on Trade Related Aspects of Intellectual
Property Rights (TRIPS). This pressure was met with swift and strong
condemnation in August from a large group of international NGOs including
Knowledge Ecology International, Health Action International, the Berne
Declaration, and Public Citizen. One would hope that the Ministry is not
being swayed by pressure from a government that routinely supports the
pharmaceutical industry over the needs of poorer nations.

We do not know about the less transparent trade pressure on Colombia from
the United States, the European Union, or other countries. However, we do
know that in the Trans-Pacific Partnership Agreement (TPP), the United
States and other TPP members were careful to protect the use of compulsory
licensing, by providing in Article 18.41 of the Intellectual Property
chapter (“Other Use Without Authorisation of the Right Holder”) that
“nothing in this Chapter limits a Party’s rights and obligations under
Article 31 of the TRIPS Agreement, any waiver or any amendment to that
Article that the Parties accept.”

Every day that passes without a declaration of the public interest is a
gift to Novartis at the expense of the people of Colombia, forcing a health
system in financial crisis to continue to bear unsustainable costs.
Reportedly, Novartis is taking advantage of this delay by encouraging
doctors to move patients off of imatinib and onto nilotinib (Tasigna), a
newer, more expensive drug. The effect of that shift away from imatinib
will be twofold: first, it will be difficult if not impossible to move
leukemia patients back to imatinib once they have started on nilotinib;
and, second, there will be even worse financial burdens on the Colombian
health system, which will continue to take its toll on patients in need.

Governments around the world are grappling with high drug prices and finite
resources. Colombia has a chance to act for its people, and to remind the
pharmaceutical industry that patents are a privilege, not an unfettered
right. And, when companies such as Novartis take advantage of that
privilege by charging excessive prices for medicines that determine whether
a patient lives or dies, governments must act to put patents at risk, not

Andrew S. Goldman
Counsel, Policy and Legal Affairs
Knowledge Ecology International
andrew.goldman at keionline.org // www.twitter.com/ASG_KEI
tel.: +1.202.332.2670

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