Ruling that the United Kingdom's health-care review agency had not acted arbitrarily and capriciously, that country's High Court left intact the policy decision to deny access to top-selling Alzheimer's drugs except in advanced stages of dementia.
The decision means that the National Institute for Health & Clinical Excellence (NICE) can limit access to drugs that can help temporarily restore cognitive function to Alzheimer's patients. The NICE policy had been challenged by Japanese pharmaceutical Eisai and its distribution partner Pfizer (NYSE: PFE) on behalf of about 97,000 people whose access will be limited.
Last November NICE decided to stop paying for treatment of Alzheimer's patients with early stages of the degenerative disease because they said it was too expensive for the benefits derived. Often called "the long goodbye," Alzheimer's disease is noted for the slow decline of its sufferers' cognitive abilities in the early onset of the illness and the virtual incapacitation of patients in later stages, which can take years and years to progress. There is no cure for Alzheimer's, only drugs which can temporarily halt and seemingly reverse the effects.
Pfizer and Eisai's Alzheimer's drug, Aricept, is one of the drugs that could be affected by this decision. Others include Razadyne by Johnson & Johnson (NYSE: JNJ) and Exelon by Novartis (NYSE: NVS). Another drug that had been considered for the ban, Ebixa, by H. Lundbeck, will only be allowed in clinical trials in cases involving moderate to severe forms of Alzheimer's. Ebixa is the trade name for memantine, which is also sold in the U.S. as Namenda by Forest Labs (NYSE: FRX) and is not affected by the decision.
The High Court had not been asked to rule on whether NICE made the right decision, but rather to find that the agency's procedures for collecting and assessing evidence were proper. Eisai had been denied the chance to review NICE's calculations for determining the value of the drug to patients. In only one instance was the NICE decision found wanting, and that was as it was applied to patients with Down's Syndrome, who are particularly susceptible to developing Alzheimer's. The agency will be required to review its procedures for this class of patients.
The case marked the first time a NICE decision was challenged in court, and Eisai has said it will appeal the High Court's ruling. It's a bit of a high-stakes gamble. The United Kingdom accounts for just a small portion of Eisai's profits from Aricept. The whole of Europe accounts for only 14% of the total, with most of the company's profits deriving from sales made in the U.S. But in challenging the decision, the company hopes to thwart attempts by other governments to impose similar limitations on the drug's sale.
The drugs are comparatively expensive, although advocacy groups say they can be had for as little as 2.50 pounds per day. In the meantime, however, only patients who have advanced to more moderate symptoms will have access to the drugs through the British health agencies.
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Fool contributor Rich Duprey owns shares of Eisai but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.
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