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Colombia's MoH vs Novartis

27 June 2016 Angelica Kershaw

Earlier this month, the Colombian health ministry put an end to a debate that had extended for more than a year with the decision to unilaterally lower the price of Novartis' cancer drug Glivec (imatinib) instead of granting a compulsory licence.

This battle began in November 2014, when several Colombian public institutions and non-governmental organisations (NGOs) - the IFARMA Foundation, the Drug Information Center of the National University, and Fundaciones Misión Salud - requested a compulsory licence for Glivec arguing that due to the high price of this cancer treatment, the Colombian government has paid more than USD390 billion to have access to Glivec during the last six years.

After several months of discussion with strong local support for granting the compulsory licence together with international pressure from some parts of the pharma industry, including the Swiss and US government, the MoH has now decided to take the middle ground by issuing Resolution 2475/2016. In this regulation, the MoH declares that Glivec's price is a matter of public interest and decides that it would be placed under a special direct pricing control stricter than the one introduced through the international reference pricing (IRP) system implemented since 2013 in Colombia.

Specifically, Resolution 2475/2016 authorises the Inter-ministerial Medicines and Medical Devices Pricing Commission (CNPMD) to reduce Glivec's price, which according to several Colombian media sources, is likely to be cut between 40 and 50%.

Novartis' position

Novartis has pointed out that the declaration of public interest was not possible in this case, as there are no shortages or access issues in the Colombian market for Glivec. María Cristina Álvarez, Novartis's representative for Colombia, stated that this MoH measure leaves Colombia in a very weak position at the international level.

Álvarez added that the price of Glivec had previously been controlled twice in the past three years in Colombia and highlighted that Glivec is currently priced significantly below what it should be under Colombia's international reference pricing methodology.

Although Novartis has not yet decided on its next steps, the company has 10 days to appeal against the decision, according to Resolution 2475/2016.

International reactions

Novartis is not the only one disagreeing with the Colombian government's decision. The US Chamber of Commerce claimed that issuing the public interest declaration was inconsistent with the spirit of the United States-Colombia free trade agreement. Furthermore, Patrick Kilbride, the executive director of international intellectual property at the Chamber's Global Intellectual Property Center (GIPC), pointed out that more important than whether Colombia was in violation of international trade commitments was the fact that this action reduced legal certainty and hindered innovation in Colombia.

Similarly, the Pharmaceutical Research and Manufacturers of America (PhRMA) said that Colombia's MoH decision sets a precedent that could hamper future investment.

Final decision?

Once the Colombian pricing commission sets Glivec's price, Novartis will be legally obliged to sell the drug at that price, if they want to continue supplying this cancer treatment to the Colombian market. Although, this will negatively affect Novartis, a positive side of the MoH's measure is that Novartis will keep marketing exclusivity for supplying Glivec in Colombia as the MoH did not grant the requested compulsory licence.

However, some of the Colombian institutions that requested the compulsory licences such as Mision Salud, IFARMA Foundation and the Drug Information Center of the National University have already stated that this measure of reducing Glivec's price will not be enough to reduce pharmaceutical spending for a country where the nation's per capita gross national income is around USD8,000. Thus, the Colombian government is likely to continue facing local pressure to pursue a compulsory license.

Measures such as this one are highly unwelcome by the innovative pharma industry, especially taking into account that this industry has been dealing with several rounds of price controls during the last three years. The full list of medicines currently under direct control in Colombia is available through our IRP database.

Angelica Kershaw is a Life Sciences Analyst for IHS
Posted 27 June 2016

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