Colombia Asked To Declare Excessive Price For Cancer Drug Contrary To Public Interest, Grounds For Compulsory License

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 by Decree 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 Druker.

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 excessive.

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 patients.

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James Love is Director of Knowledge Ecology International. On twitter: @jamie_love

Andrew S. Goldman, Esq. is Counsel for Policy & Legal Affairs at Knowledge Ecology International. On twitter: @ASG_KEI

Knowledge Ecology International is a 501c3 NGO based in Washington D.C. that searches for better outcomes, including new solutions, to the management of knowledge resources.