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article image'Orphan drug' maker sues Canada for trying to lower cost of drug

By Karen Graham     Sep 25, 2015 in Health
A U.S. pharmaceutical company is taking the Canadian government to court, arguing the country's drug price watchdog does not have the authority to force the company to lower its price of the drug, Soliris.
Cheshire, Connecticut-based Alexion Pharmaceuticals filed a motion in federal court, reports CBC News, arguing the price of their product, Soliris has not changed since it went on the market six years ago.
Court documents also claim the difference seen in the price of the world's most expensive drug is a reflection of the exchange rate between the U.S. and Canada.
The medication is used to treat two rare diseases that affect about one in every one million people worldwide, paroxysmal nocturnal hemoglobinuria (PNH). and atypical hemolytic uremic syndrome (aHUS). A 12-month treatment costs $700,000 in Canada, and $669,000 in the United States.
In both diseases, the immune system is prompted to destroy red blood cells. This causes anemia, blood clots, organ failure and eventually, death. While eculizumab, the generic name for Soliris, is not a cure for these diseases, it does stop the assault on the body's tissues and organs.
Canada's Patented Medicine Prices Review Board is arguing that due to the medicine's high cost, some Canadian patients can't get the drug, and only a few provinces cover the cost of treatment, which can amount to millions of dollars over someone's lifetime.
Vice is reporting that, In turn, Alexion has argued the price of Soliris in Canada has neither increased or decreased the cost of the drug in other countries where it is used. In court documents, Alexion says, "The Board's allegations of excessive pricing between 2012 and 2014 are not based on price increases in Canada...but, rather, on exchange rate fluctuations in the value of Canadian currency."
The watchdog agency is challenging the cost of the drug, citing the fact that Soliris costs more in Canada than any other place in the world. The review board opened hearings in June to force Alexion to lower its price on the drug. This could result in Ottawa being reimbursed by the company for over-payments. Provinces that have covered the cost to patients could then apply to recoup some of the money.
Amir Attaran, a professor of health law at Ottawa University told CBC News he was shocked that Alexion would challenge Canada's authority to regulate drug prices. Should Alexion be successful in this case, it would end the government's ability to regulate patented drugs. "This is the single greatest threat to pricing of drugs in Canada ever," he said Thursday.
Soliris is called an "orphan drug"
According to the U.S. Food and Drug Administration, "an orphan drug is defined in the 1984 amendments of the U.S. Orphan Drug Act (or ODA) as a drug intended to treat a condition affecting fewer than 200,000 persons in the United States, or which will not be profitable within 7 years following approval by the FDA.”
The ODD allows a company to reap several benefits, in both-premarketing and post-marketing phases of production, For example, orphan drugs receive tax credits on clinical investigation expenses, funding, and other aid in developing orphan drugs as well as a guaranteed exclusive market for seven years after FDA approval of the drug.
There is a reason for the benefits afforded a company that has developed, or is developing an orphan drug. According to the regulations, orphan drugs are used to treat diseases that are considered rare, and it is thought the drug company will not expect to make a great return on the sales of these drugs. However, Alexion has earned revenues of over $6 billion in the past eight years.
Yes, there are patents, as well as government incentives available to the makers of orphan drugs, and they argue that this is why they cost more than "traditional" medications. But it is the patents, usually seven years in length, that allow companies to claim "premium" pricing for the drugs.
More about Alexion, Soliris, most expensive drug, orphan drug market, rare diseases
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