[Ip-health] Stat+ PHARMALOT: Chile takes several measures to push back on drug prices (including regulating prices, easing the mechanism for issuing a compulsory license, and creating a government web site to monitor pricing), angering pharma

Thiru Balasubramaniam thiru at keionline.org
Wed Mar 20 01:04:49 PDT 2019


Chile takes several ‘unorthodox’ steps to push back on drug prices,
angering pharma
MARCH 18, 2019

Searching for ways to beat back rising drug costs, the Chilean legislature
is advancing three measures — regulating prices, easing the mechanism for
issuing a compulsory license, and creating a government web site to monitor
pricing —that have alarmed the pharmaceutical industry.

One of the initiatives in particular has drug makers concerned. The
proposed law, which last week passed the Health Commission, will allow the
government to determine the price of a patented medicine based on whether
the buyers have “economic accessibility.” In other words, if the drug is
priced out of reach, the health ministry will have the right to cap its

The moves come as a growing number of cash-strapped governments push back
against rising drug prices, an issue that was once confined to poorer
nations, but increasingly is playing out in the wealthiest countries,
including the U.S. In South America, Chile became more aggressive last
year, but the latest law seems to have set it apart, at least in the eyes
of the pharmaceutical industry.

“This policy adds a new, quite powerful framework for the government with
no checks or balances in place. It is pretty unorthodox and unseen across
the emerging markets I work with,” said one industry source who asked not
to be named. “I see this more like the Chilean legislature doubling down on
introducing complex criteria to the country’s healthcare policy framework.”

Sen. Guido Girardi, who led the group of lawmakers that introduced the
bill, could not be reached.

Apart from economic accessibility, another litmus test that could be used
for regulating prices is for preventing “abusive exploitation of a
dominant” market position. Drug makers fear that if the health ministry has
limited resources, it is theoretically possible that any medicine might
face price caps. The Chilean government is the main purchaser of medicines,
by the way.

Moreover, the legislature is also seeking to significantly widen the
ability of the health ministry for issuing compulsory licenses to encompass
all medicines, rather than only hepatitis C treatments. Last year, several
lawmakers pushed licensing for these medicines, due to their cost, and the
health minister later endorsed the idea, but it was never formalized.

Countries may grant these licenses to a public agency or a generic drug
maker, allowing it to copy a patented medicine without the consent of the
brand-name company that owns the patent. This right was memorialized in an
amendment to a World Trade Organization agreement known as the
Trade-Related Aspects of Intellectual Property Rights, or TRIPS (here is a

Drug makers argue that licensing eviscerates patent rights and have urged
the U.S. Trade Representative to scold countries that have taken steps to
pursue licenses. “A compulsory license on hepatitis C treatments would
weaken Chile’s health system by disrupting a delicate balance between
efficiently serving patient needs while hosting an attractive innovation
ecosystem for developing life-saving innovations,” Our Health Latin
America, an industry trade group, said in a statement.

For their part, patient advocacy groups counter that the industry efforts
to enforce intellectual property rights may come at the expense of patients
who cannot afford increasingly costly medicines.

“There’s no way Chile can allow universal access to new drugs without
transforming the patent system,” said Jamie Love, who heads Knowledge
Ecology International, an advocacy group that tracks access to medicine and
patent issues. “If you’re looking to support innovation, having unfettered
prices on cancer drugs, for instance, is a pretty inefficient way to do it.
Every dollar you spend on an overpriced cancer drug doesn’t translate into
invested R&D. If you’re really concerned about innovation, you can
subsidize research, or grant awards. You don’t have to grant monopolies.”


Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org

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