Colombia to Novartis: Lower the price of your cancer drug, or else

The Colombian government and Novartis appear to be headed toward a showdown over the widely used Gleevec cancer treatment. In the latest twist, Health Minister Alejandro Gaviria is giving the drug maker a few more weeks to reduce its price for the medicine, or he will issue a so-called “compulsory license” that will allow generic companies to sell lower-cost versions.

“For us, it’s a question of survival,” he told the Associated Press.

The ultimatum comes amid heightened tension over the government’s plan to widen access to the medicine. After Gaviria last month indicated he would issue a license to serve the public good, the Colombian Embassy in Washington DC sent him a letter suggesting that US government support for a peace initiative and a free-trade treaty may be jeopardized.

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A similar letter was sent to another Colombian government minister. The Obama administration recently pledged $450 million for assistance in cementing a peace deal with Marxist rebels and also signaled a willingness to allow Colombia to join the proposed Trans-Pacific Partnership trade zone. Colombia and the United States already have their own trade agreement.

The warnings were prompted after embassy officials met with staff from the Senate Finance Committee and the US Trade Representative’s office. The Senate committee is headed by Orrin Hatch, a Republican from Utah who has close ties to the pharmaceutical industry. And the US Trade Rep recently maintained Colombia’s status on its annual list of countries that fail to sufficiently enforce patent rights.

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Over the past four years, Colombia has tried to negotiate a lower price but without success. The drug maker rejected a proposal to cut the price to less than half of the currently regulated price, which the Associated Press noted would still be above what generics cost before they were banned. In 2012, a Colombian court awarded Novartis an exclusive patent on one of two forms of the drug.

For its part, Novartis has consistently maintained that it is “actively seeking a resolution” to the dispute, while arguing that compulsory license should not be used to force price negotiations. The company has also insisted that the price for Gleevec in Colombia is subject to government controls and that generics are available in the country.

The episode has quickly become another heated example of the clash over intellectual property rights and access to medicines between the pharmaceutical industry and cash-strapped governments. Global drug makers argue that compulsory licenses should be reserved for public health emergencies and as a measure of last resort, not a tool to use in negotiations for a lower price.

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But patient advocacy groups counter that a health emergency is “not necessarily” required to issue a license, according to the World Trade Organization. The right to issue compulsory licenses, which allow a generic company to make a brand-name medicine without the consent of the company holding a patent, was memorialized in a WTO agreement.

Colombia’s health care system guarantees patient access to all approved drugs, and the budget is straining after years of price hikes from drug manufacturers, the Associated Press explained. In 2009, the government declared a public health emergency after spending rose tenfold in a few years. Colombia would save approximately $12 million annually by issuing a license for generic Gleevec production.

To Gaviria, the lobbying pressure reflects anxiety among global drug makers. “They’re very afraid that Colombia could become an example that spreads across the region,” he told the news service.

One consumer advocate, who supports the Colombian health ministry in its quest to obtain a lower price or a license, agreed with his assessment.

“The Colombian health minister is raising the right question,” said Jamie Love of Knowledge Ecology International, a nonprofit group that tracks intellectual property and access to medicines issues. “What can governments do when prices are too high?

“Rather than put the patients at risk, with restrictive conditions on reimbursements and access, Colombia has put the monopoly at risk,” he continued. “This is why Novartis, Senator Hatch and PhRMA (the pharmaceutical industry trade group) are so concerned. The Colombian precedent should be followed not only in Latin America, but also in the US.”