Health Ministry Slaps Drug Company Over Price Gouging

In a clear message to companies spiking prices for a newly-registered drug in Israel, the ministry allows HMOs to keep importing cheaper alternative

Illustration photo: Medications.
© Karin59 | Dreamstime

The Ministry of Health took an unprecedented step last week in an attempt to stop drug companies from gouging prices for medicines used in treating serious illnesses. The ministry sent a clear message to a company that had spiked its price for a drug it had just registered in Israel: It allowed health maintenance organizations to keep importing a much cheaper alternative to the medicine in question, one containing the same active ingredient. This is in contravention of drug registration laws that apply in Israel.

This was the first time the ministry’s director-general used his authority, allowing the importation of a drug not registered in Israel, despite the availability of another alternative registered drug. This was done for economical reasons and for sending a message that there’s a limit to how wild drug companies can run.

The company is now accusing the ministry of having ulterior motives and has asked for a court injunction against the decision. A registered drug is one that is certified for marketing after being found to be safe and effective by the health ministry.

The drug in question is used for treating a rare genetic disorder called CTX, which leads to abnormal accumulation of cholesterol and fatty deposits in various body tissues. The two drugs, Chino and Leadiant, contain an acid called CDCA which reduces the accumulation of these deposits and slows the progress of CTX. The two drugs differ in their non-active ingredients.

There are a few dozen people in Israel with this serious affliction, most of them insured by the Clalit HMO. Until a few years ago there was no drug known to treat CTX, and Clalit bought two drugs containing the active ingredient: Xenbilox, made by the Italian company Leadiant, and later Chino, made by Fujimoto.

Clalit bought Xeniblox for 8,000 shekels ($2,934) per 100 caplets, whereas Chino cost 3,800 shekels for 100 caplets. The two drugs were never in the state health basket since they were never officially registered here. The costs were thus covered by the HMO.

In October 2017 Leadiant was registered and its price jumped to 48,000 shekels. The HMO was no longer allowed to legally import an alternative, even though 24 patients were on the cheaper Chino.

Leadiant filed to have its drug included in the health basket but its inflated new price prevented this from happening. Leadiant appealed to the courts, asking for prohibiting the importation of Chino. Four patients sued Clalit, asking it to continue providing them with the cheaper alternative.

Clalit asked the health ministry for an exemption, allowing them to continue importing the drug. Last week, the ministry agreed, arguing that exceptional circumstances may override the law. “Budgetary considerations are also relevant, since importing this drug affects public coffers” said the ministry’s director-general Moshe Bar Siman-Tov. “The price differential is very large and the alternatives must be examined. Chino is proven to be effective and safe” he said.

Several patients are caught in the crossfire, possibly needing to switch from Leadiant to Chino. They’ve filed a lawsuit asking that Clalit keeps providing them with the more expensive drug they are already on. Their lawyer said that the ministry’s decision is dangerous since Chino may not be as safe or effective. “Patients have become guinea pigs, trying a drug that is not used anywhere for CTX.” Leadiant’s importer, MBI, also said that the decision was strange, since Chino is not intended for use in CTX.