The Netherlands Authority for Consumers and Markets (ACM) has established that drug manufacturer Leadiant charged far too high a price for its prescription drug CDCA-Leadiant. As such, Leadiant abused its dominant position. ACM has therefore imposed a fine on Leadiant of 19,569,500 euros.
Martijn Snoep, Chairman of the Board of ACM, explains: ‘Drugs manufacturers that introduce affordable, innovative prescription drugs make important contributions to society. And it’s okay to make money on such contributions. This situation however was something entirely different. After a small, low-risk investment, Leadiant implemented a huge price increase for a drug that had already existed for years. In this case, there was no innovation at all. We consider this to be a very serious violation. The price increase offers Leadiant a very high return, but it offers patients very few additional benefits, and it drives up the costs to society.’
What was the case about?
The drug chenodeoxycholic acid (CDCA)-Leadiant is used for the treatment of patients with the rare hereditary metabolic disorder cerebrotendineous xanthomatosis (CTX). In the Netherlands, approximately sixty patients suffer from this disease. These individuals need to use the drug for the rest of their lives.
For years, this drug had already been used for the treatment of CTX patients under various trade names and at much lower prices. In 2008, Leadiant acquired a CDCA-based drug from another manufacturer. At the time, the maximum price in the Netherlands was 46 euros for a package of 100 capsules. In late 2009, Leadiant changed the trade name of the drug to Xenbilox, and raised its price, as a result of which the selling price became 885 euros.
In 2014, Leadiant decided to apply for an orphan drug designation and marketing authorization for its CDCA-based drug for the treatment of CTX. In that context, Leadiant raised the price of Xenbilox, as a result of which the selling price went up from 885 euros to 3,103 euros. The orphan drug designation was granted in late 2014. When Leadiant in April 2017 was also granted the marketing authorization, the company was granted the exclusive right for ten years to supply a CDCA-based drug for the treatment of CTX to the European market. Shortly thereafter, in June 2017, Leadiant introduced CDCA-Leadiant on the Dutch market, and the company stopped selling Xenbilox. Although those two drugs do not differ in efficacy, safety, and form, and Leadiant had already recouped the application costs at that point, Leadiant increased the selling price to 14,000 euros. As a result, the drug costs approximately 153,000 euros per patient per year. This high price provoked a large public outcry, after which Amsterdam UMC made an attempt to manufacture the drug themselves (compounding). Leadiant charged this price of 14,000 euros in the Netherlands until Amsterdam UMC succeeded in manufacturing the drug in its own pharmacy in January 2020.
What are ACM’s conclusions following the investigation?
ACM has established that, in the period from June 2017 through December 2019, Leadiant enjoyed a dominant position in the Netherlands for CDCA-based drugs for the treatment of CTX. During that period, there were no available alternatives to CDCA-Leadiant. Therefore, CTX patients were dependent on CDCA-Leadiant, and health insurers were required to continue funding the drug. Leadiant charged and collected an excessive price for CDCA-Leadiant. According to ACM, the price that Leadiant charged was exorbitantly high and unfair. It was exorbitantly high because the price in combination with the low costs and the low risks resulted in an exorbitant return for Leadiant. And it was unfair because the drug, under a different trade name, had already been on the market for years at a much lower price, while patients benefited very little from the registration as an orphan drug.
According to Leadiant, the company wanted to agree on a lower price in negotiations with health insurers and the Dutch Ministry of Health, Welfare, and Sport (VWS). According to ACM, however, Leadiant in that context had, considering its dominant position, a special responsibility to negotiate actively and effectively with the aim of achieving an outcome at a price that is not excessive. ACM is of the opinion that Leadiant did too little in this respect. By charging and collecting an excessive price, Leadiant abused its dominant position and violated competition rules.
ACM has imposed this fine after an extensive investigation in which Leadiant was given the opportunity to respond. Objections and appeals can be filed against ACM’s decision.