Glivec price cut by Government was revoked by Court

The court applied a rule (Ministerial Decree) which was revised on December 29, 2006. According to the rule, adjustment of the ceiling price can be rendered by the Minister of Health when the ceiling price is "highly unreasonable."

http://www.tradingmarkets.com/news/stock-alert/nvs_south-korean-court-oks-pricing-of-novartis-anti-leukemia-drug-720347.html

SEOUL, Jan 22, 2010 (AsiaPulse via COMTEX) --

A Seoul court on Friday said the price of Gleevec, an anti-leukemia drug developed by Swiss pharmaceutical firm Novartis, is not "unreasonable," ruling in favor of the drugmaker in a years-long battle with the local government over the cost of the medicine.

Last September, the Ministry for Health, Welfare and Family Affairs notified Novartis of its decision to reduce the price of Gleevec to 19,818 won (US$17.3) per capsule from 23,045 won, the initial price agreed to by the government and Novartis under a deal reached in January 2003. The move came one year after a group of civic activists and patients appealed to the ministry, complaining that leukemia patients were forced to pay up to 2 million won per month for the medicine.

Following the ministry's notification, the Swiss pharmaceutical giant filed a suit with the Seoul Administrative Court, seeking to nullify the government's move to lower the price.

"As Gleevec's upper-ceiling price was set as the average price of the drug in the seven most advanced countries, including the United States, it is hard to conclude the price was considerably unreasonable," the court said in its ruling.

Gleevec is used to treat patients with chronic myelogenous leukemia (CML), a form of blood cancer in which the body produces too many abnormal white blood cells. The deadly disease afflicts about 500 people in Korea each year, according to the ministry.

Major foreign pharmaceutical firms and the Korean government have battled over the pricing of several other essential drugs. Civic groups say that charging the same price in Korea as in the world's richest countries is unfair considering that per capita GDP is a lot higher in those countries.

The health ministry said it will review the ruling and decide whether to appeal the case or not in two weeks.

"This ruling is a regrettable decision as it could set a bad precedent in nullifying the ministry's administrative order," a health official said.

Novartis said it respects the court's decision, declining to elaborate further.