Colombia makes good on Gleevec pricing threat with plans for 45% cut

Pictured is the city of Cartagena in Colombia, courtesy of Norma Gòmez.

A tense, months-long pricing standoff with Novartis escalated late last week as Colombia decided to take the radical step it had been threatening: The country plans to cut the price of leukemia med Gleevec by about 45%, citing "public interest" in access to the drug.

Late last week, Colombian health minister Alejandro Gaviria said the country would “proceed without delay” with the price cut, according to Latin American business magazine América Economía. The decision came months after initial reports that Colombia was considering a compulsory license to extract savings, and after that, a failure by the parties to reach a price agreement.

Novartis ($NVS) and other drugmakers fear that government pricing moves such as Colombia's--as well as its compulsory license threat--might extend to other drugs in that country. Government muscle-flexing on prices could also spread to other countries, if slowly; India's first compulsory license, on Bayer's Nexavar, was issued more than four years ago.

U.S. trade officials have been active in the case. According to a Stat update, the U.S. Trade Representative has now submitted a 30-day petition that Gaviria and others are now studying.

Novartis is contesting Colombia's move, saying the measure isn’t warranted given the circumstances surrounding Gleevec in Colombia, according to AE. The Swiss pharma contended that there’s no shortage of the drug or problems with patient access.

The new price will be calculated following an examination of prices in 17 reference countries, the magazine said. The health ministry last week set forth a policy that would allow similar reference pricing for other drugs Colombian officials see as necessary for public health.

Earlier this year, the issue drew international attention when memos written by Andrés Flórez, deputy chief of mission at Embassy of Colombia in Washington, D.C. were leaked. In one, Flórez wrote that he and others had met with Everett Eissenstat, chief international trade counsel at the Senate Finance Committee. According to Flórez's take on the meeting, Eissenstat conveyed that if Colombia proceeded, the “pharmaceutical industry in the United States and related interest groups could become very vocal and interfere with other interests that Colombia could have in the United States.”

The U.S. pharmaceutical industry was “very worried” that the move “might become a precedent that could be applied for any patent in any industry,” Eissenstat told the group, according to one memo by Flórez. The letters also tied in a perceived threat that hundreds of millions in aid funding for Colombia could be lost.

If true, those statements could represent a “threat of retaliation" against a country seeking to use trade flexibilities in intellectual property cases, a type of action highlighted in a new UN report that specifically mentions Colombia's move to reduce Gleevec's price. Issued last week, the report “strongly” recommends “WTO to take immediate and appropriate punitive actions against such violations.”

Gaviria has said that preserving “savings in the health system," is protected under such trade flexibilities, according to Semana. Reports have said Gleevec costs about twice the average Colombian’s income at $15,000 per year.

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