Competition law challenge to orphan drug prices in the Netherlands

Some months back, we reported on an initiative by the Dutch Council for Public Health and Society which considered measures for containing high drug prices.  Of particular note were the proposals for compulsory licensing, and the application of the new measures to orphan drugs as well as to more mainstream products (orphan drugs are those which are applicable to rare diseases affecting less than 0.05% of the population).  

Now a newly formed Dutch foundation for “pharmaceutical accountability” (the Stichting Farma ter Verantwoording, or SFV) has announced that it has presented a dossier to the Dutch competition authority requesting that it take action against Leadiant Pharmaceuticals in relation to the price of chenodeoxycholic acid (CDCA) which is used for a metabolic disease affecting around 60 people in the Netherlands (report in English here).  The focus of the complaint is on the difference between the current price of CDCA (€140 per capsule), and the price of the same drug which was formerly used in the treatment of gallstones (c. €0.28 per capsule).  According to the SFV’s report, the orphan designation was secured in Leadiant only  last year, following a two-year period when the drug was not on the market.  The orphan designation means that Leadiant will have market exclusivity for a 10-year period.  However, unlike some orphan drugs, CDCA was not a new product, but was used off-label for the disease in question for a number of years before withdrawal.  

This complaint highlights the competing policies of effective protection and incentivisation of drug development, including for small patient populations, and that of cost containment for health budgets.  Assuming the Dutch Competition Authority agrees to investigate, it will have to grapple with questions as to the appropriate return on an orphan product (bearing in mind the limited patient population which presumably means that fixed costs of producing the drug will have to be allocated at a much higher rate than for non-orphan drugs), and the question of whether the drug’s previous use for treatment of gallstones is comparable to its current use under the orphan designation.  There is no doubt that the prior off label use was more cost effective for treating Dutch patients, but on the other hand the orphan designation should assure the continued availability of the drug in circumstances where it was otherwise withdrawn from the market, and will have involved additional testing to ensure that appropriateness of the treatment.  

Whether these policy tensions are questions that are appropriately answered through the application of competition law is a wider question that will no doubt continue to stimulate discussion and dissent.

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