The debate around extremely high drug prices is once again in the spotlight. This is especially true for medicines that treat rare and severe diseases, for which pharmaceutical companies often demand exorbitant prices. André den Exter, Associate Professor of Health Law at Erasmus School of Law, and Wilbert Bannenberg, chair of the Farma ter Verantwoording foundation, write in a joint opinion piece in Nederlands Dagblad: "Extreme prices for medicines are unfortunately not the exception." The government has little to no control over the pricing of new drugs. Even the Dutch Medicines Pricing Act proves inadequate, particularly when it concerns orphan drugs - medicines intended for rare diseases - not yet available elsewhere. In such situations, manufacturers can set prices without benchmarks or transparent justification. And that is where things often go wrong.
Lawsuits as a pressure tactic
When pharmaceutical companies demand excessive prices, patient organisations and regulators sometimes have no choice but to take legal action. However, that is not a structural solution. Den Exter and Bannenberg remark: "Excessive medicine pricing has previously led to several lawsuits, but is litigation the solution to the problem? Probably not, but it can pressure manufacturers and developers to consider socially responsible pricing." The recent court case against pharmaceutical company Leadiant shows that pressure can work. Leadiant marketed an existing drug for the rare metabolic disorder CTX for €13,090 per package, while it had previously cost only €46. The court ruled that Leadiant had abused its dominant market position. This sends an important message: extremely high drug prices without valid justification can be punished. It signals that excessive pricing, without solid backing, can be challenged in court.
Do pharmaceutical companies have a duty of care?
However, Leadiant is not the only one under fire. Farma ter Verantwoording (FtV) has also filed a lawsuit against pharmaceutical company Abbvie. This case is not about an orphan drug but Humira - a drug used to treat various chronic conditions. According to FtV, Abbvie earned over €1 billion in profits in the Netherlands between 2004 and 2018. The foundation argues that this is unlawful and accuses the company of abusing its economic power. In this case, the court must address a fundamental question: Do pharmaceutical companies have an unwritten societal duty of care? Den Exter and Bannenberg believe they do: "Pharmaceutical companies, like banks and financial institutions, should have a special societal duty of care, particularly because of their unique role and the essential nature of their products. That duty requires socially fair, not maximised, pricing." The outcome of this case could have far-reaching consequences for the entire pharmaceutical sector.
Public institutions are not always innocent
However, pharmaceutical companies are not the only ones responsible for the problem of excessive drug pricing. In a new case involving the drug Tiratricol, an academic hospital has come under scrutiny. The case concerns a rare genetic thyroid disorder in children, which often leads to death before the age of eighteen. Doctors discovered that an existing drug from the 1950s was also effective in treating this condition. After approval by the European Medicines Agency, the drug was renamed Tiratricol. The hospital then licensed the drug to the pharmaceutical company Egetis in exchange for a percentage of the profits. Den Exter and Bannenberg argue: "This is a medicine further developed by a publicly funded institution, with production outsourced to a third party without negotiating a fair price. Such a course of action is indefensible." The price charged by Egetis is now known as up to €270,000 per year in Germany. "And this while the ingredient costs €22 and the original version of the drug sold in 1950 for €240 annually. A similar price can be expected for the Netherlands," say Den Exter and Bannenberg.
Extortion
According to Den Exter and Bannenberg, the hospital should have considered socially responsible licensing when the agreement was signed in 2018, even though formal guidelines were not yet in place at the time. They are clear in their position: "Assuming a fair price, the Dutch annual cost should be around €10,000, which is much lower. By offering a non-existent service (modification instead of innovation), failing to demand a fair price, and fixating on financial gain, the hospital is partly responsible for what amounts to extortion." When patient welfare is subordinated to financial incentives, a grave injustice occurs.
Pharmacists as an alternative
However, going to court is not always necessary to challenge unreasonable prices. There is an alternative: Pharmacists can prepare medications themselves for individual patients. This can serve as an effective pressure tactic against pharmaceutical companies charging exorbitant prices. Den Exter and Bannenberg explain: "Compounding by pharmacists for individual patients can be an effective means of pushing parties toward fair pricing." Such a pharmacy can produce the drug for a fraction of the manufacturer's price. They continue: "The manufacturer then prices itself out of the market without needing costly and protracted legal proceedings."
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Den Exter is a member of the Expert Advisory Board of Farma ter Verantwoording, an organisation that advocates for accessible and affordable medicines. The foundation promotes socially responsible and sustainable access to medications and medical technologies, with fair pricing and distribution according to national and international legal standards. FtV informs and advises governments, stakeholders, professionals, and the general public. Legal action is considered when necessary to combat excessive drug pricing.
More information about FtV? Click here.
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