Canada's ability to control the price of patented drug prices could be at risk after a U.S. company challenged the constitutionality of a federal patent drug price regulator.
Alexion Pharmaceuticals has filed a lawsuit in Federal Court against the Patented Medicine Prices Review Board, which has determined the price of the company's Soliris medication was "excessive."
The company challenged the federal board's authority to order a reduction to prices, saying that it intrudes on provincial jurisdiction.
The drug – dubbed the world's costliest treatment for two rare, life-threatening blood and genetic disorders – is reportedly priced at between $500,000 and $700,000 annually per patient.
University of Ottawa health law professor Amir Attaran said the impact of the lawsuit goes beyond one drug.
If Alexion is successful, he said it could put a stop to the federal government's ability to control the cost of all patented drugs.
"(It is) undeniably the single greatest threat to medical price stability in Canada in its history," he said in an interview.
Attaran said the company is trying to force Canada to adopt a U.S.-style drug pricing system which is the most costly in the world. Of all OECD countries, only the U.S. and Chile don't control drug prices.
That has prompted some Americans to cross the border in search of cheaper medications in Canada.
Canada began to regulate the price of patented drugs as part of a "grand bargain" with the pharmaceutical industry during the adoption of NAFTA, he said. In exchange for price regulations, Canada would respect patents which were previously frequently overridden.
"Alexion is trying to undo that bargain with the government single handedly," Attaran said.
Alexion said in its lawsuit that the price of Soliris has not increased since being introduced to Canada in 2009, nor decreased in other countries.
The company said the board's allegations of excessive pricing between 2012 and 2014 are the result of the fluctuations in the value of the Canadian dollar.
"The board is thus seeking to use its alleged price control powers to confiscate a significant portion of Alexion's revenues based upon international market forces over which Alexion has no control."
The Canadian dollar slipped from about equal with the U.S. dollar at the start of 2012 to around 85 cents (U.S.) US at the end of 2014.
The drug generated $2.2-billion (U.S.) of revenues last year, up 44 per cent from 2013.
A spokeswoman for the board said it couldn't comment on the suit because it is before the court. Alexion didn't immediately respond to requests for comment.