The latest drama over the cost of medicines features a bruising showdown between one of the world’s largest drug makers and a large Latin American country. And both sides may come out losers.
For the past several weeks, Colombian Health Minister Alejandro Gaviria has vowed to find a way to force Novartis (NVS) to lower the price of its Gleevec leukemia treatment. At first, he threatened to sidestep the drug patent to ensure low-cost generic production, but last week he took steps to unilaterally lower the price the government will pay for the medicine.
So far, Novartis is not budging. The company argues that any move to jeopardize its patent would distort world trade rules, which, under certain circumstances, permit governments to overlook patents and secure a supply of needed medicines. Moreover, the drug maker notes there are several generic alternatives available to Colombians, so there is no need to haggle over the cost of its cancer medicine.
Both sides have legitimate concerns, but the episode has quickly become an unfortunate litmus test in the struggle over patients and profits.
“At the end of the day, it’s an epochal issue,” said Warren Kaplan, a Boston University assistant professor at the Center for Global Health and Development. “And it’s also a very complicated situation.”
Sorting it out won’t be easy.
The squabbling began four years ago, when Colombia denied Novartis a patent for Gleevec. The company responded by successfully going to court to win a patent, which prevented generic versions of the cancer treatment from being produced. But there are actually two forms of the drug, and the other form is available as a generic. Several companies, including Abbott Laboratories (ABT), sell this version.
Normally, this might have been the end of the story. But an aide to the Colombian health minister told us he’s worried Novartis might go to court to halt generic sales. The company has indicated that any trace of its own version that appears in a generic would be considered a patent violation, according to a letter sent last year to the health ministry.
“It is clear that no manufacturer can guarantee that their product does not have [a trace of the Novartis version] and therefore infringe the patent owned by Novartis,” Fernando Ruiz, Colombia’s vice minister of public health wrote us. The drug maker did have a dispute with one generic supplier four years ago.
Meanwhile, the Colombian Medical Federation recently noted that sales of generic Gleevec have declined in the country, which the organization suggested was due to a drop in the number of available generics. It’s not clear how many patients are going without treatment because of the pricing dispute.
“Novartis chooses a different argument when it is convenient,” said Andrea Carolina Reyes Rojas, a director at Mision Salud, a patient advocacy group in Bogota, Colombia, that has urged the health minister to confront the drug maker. “When they are criticized, they say there is no monopoly. But then they suggest they may eliminate competition.”
A Novartis spokesman said the company is not threatening litigation against any of the generic companies, but he did not say what steps it might take now that Gaviria has fixed the price.
For the moment, the drug maker may have to tough it out and provide Gleevec at a lower price.
But it’s not surprising that Novartis refused to give in. Doing so may have defused the crisis, but created a different problem. Drug makers worry that acceding to such demands might create a precedent that would encourage other countries to pursue the same tactic on other drugs. Similar battles have occurred in other countries, notably India, where drug patents have been sidestepped in a few instances.
“This may appear to be an isolated situation, but the implications can extend beyond Colombia,” said Vince Suneja of the Suneja Law Group, an attorney who advises drug makers on international markets. “Looked at this way, [Novartis] had no incentive to lower the price, and it’s why they stuck to their guns.”
Whether drug makers will think twice before registering some medicines for sale in Colombia remains to be seen. But the pharmaceutical industry is already doing its own version of sabre rattling.
Last month, staffers from a US Senate committee and the US Trade Rep’s office told Colombian embassy officials in Washington DC that their health minister’s stance might jeopardize a free-trade agreement and $450 million in backing for a peace initiative.
Such strong-arm tactics may be business as usual in Washington, but they don’t help burnish Novartis’s reputation. The company is certainly entitled to chase profits, but it will have to do some damage control after this mess is cleared up.
After all, who would want to have to choose between a peace deal and access to a life-saving medicine?