[Ip-health] The Pharmafocus debate: Is the price of new hepatitis C treatments fair?

Joanna Keenan joanna.l.keenan at gmail.com
Mon Apr 27 07:19:07 PDT 2015

The Pharmafocus debate: Is the price of new hepatitis C treatments fair?
Published on 27/04/15 at 01:26pm

YES - says Richard Bergström, director general of the European Federation
of Pharmaceutical Industries and Associations (EFPIA), who argues that
blaming the pharma patent system for hepatitis C drugs’ prices is a

New hepatitis C treatments have been a regular feature in healthcare news
of late, not least because they offer that most elusive of gifts: a cure.

There has been much discussion about their price, but also a recognition of
the value that these treatments offer to society. If a patient is
successfully treated, ongoing treatment costs are nullified, including
significant expenditure on care – and that patient may return to work,
delivering further economic benefits to society.

Patent challenge

However, in February the charity Doctors of the World (also known as
Médecins du Monde) filed a challenge against the patent for Gilead’s drug
Sovaldi (sofosbuvir). The NGO maintained that while the medicine clearly
represented a real breakthrough in the treatment of hepatitis C, it was not
innovative enough to warrant a patent, particularly at the price that
Gilead was charging.

Doctors of the World argues that if it wins the patent challenge, this
would open the gates for generic companies to enter the field, copy the
drug and sell it for a considerably lower price.

Doctors of the World is not alone in challenging the patent. To date a
total of ten challenges have been registered against the makers of
hepatitis C drugs. What is strikingly obvious, though, is that Doctors of
the World and others who have fi led challenges against the Sovaldi patent
are taking aim at the wrong target.

The bottom line is that without their patents, Sovaldi – and other drugs
such as Janssen’s Olysio (simpeprevir) and AbbVie’s Viekirax
(ombitasvir/paritaprevir/ritonavir) and Exviera (dasabuvir) – would never
have been developed, and millions of people with hepatitis C across the
world would be left without the possibility of a cure for this
often-debilitating condition.

'Selective memory approach'

This selective memory approach to the issue offers no comfort to hepatitis
C patients. In the case of the Doctors of the World patent challenge, it
also points to the lack of affordability of Sovaldi as being a result of
its high price.

However, what this argument ignores is that the manufacturer has
differentiated the price across the range of countries where the drug has
been provided to patients. EFPIA may not be in a position to assess the
validity of the claims against Gilead’s patent, but we have serious
concerns that these proceedings are challenging a patent on grounds that
are wholly unrelated to the patent system. To put it plainly: the price of
a product plays no part in the decision of a patent office to grant a

Medicines prices are in fact determined by those who buy them. This means,
for the most part, that prices are determined by governments – and not
patent offices, who have no influence over prices whatsoever.

EFPIA acknowledges that European governments understandably may be
concerned with debt and liabilities in different areas, including
healthcare. However, the overall medicines bill in Europe is currently
under control and does not pose a threat to the sustainability of
healthcare financing in Europe.

In fact, overall medicines across Europe represent less than 15% of total
expenditure – although variances exist among therapy areas.

To achieve both economic and health care efficiency, it makes sense to
limit spending on low benefit areas and enhance spending on cost-effective
areas, such as primary care and medicines, especially in areas of societal

Pharma must play its part

We must ensure that health spending is as smart as possible, which might
mean greater upfront investment, but higher efficiencies in the long term.
The pharma industry is prepared to play its part in getting this right by
showing flexibility when engaging with payers around the world. The
industry’s objective is not to promote spending on health or medicines at
all costs, but decisions relating to public resource allocation should be
informed by understanding the trade-offs involved where possible.

It must be underscored, though, that healthcare budgets, drug prices and
the patent system are distinct and separate entities. What the patent
system is in fact designed to do is to support the development of new drugs
for patients by offering firms an incentive to invest in innovation.

It also serves to ensure the dissemination of scientific information to
encourage research and the development of further innovative and even more
effective drugs for posterity. No suitable alternative system has so far
emerged that is capable of engaging comprehensively with the clinical
trials process to bring new medicines to patients.

Questions may continue to be raised about the price of innovative drugs,
but mostly this will be done while ignoring the medicine’s significant
value to disease sufferers and the wider society.

There is a need to move away from traditional categorisation considerations
and to embrace a more holistic approach to healthcare issues. This means
abandoning the silo mentality of focussing solely on the price of drugs and
moving towards more joined-up thinking that includes the outcomes and
benefits for patients and society.

NO - says Katy Athersuch, medical innovation and access policy adviser at
the MSF (Médecins Sans Frontières) Access Campaign, who argues that high
hepatitis C treatment prices are hurting us all –and should prompt
fundamental changes to how we fund pharma R&D.

April should have been a month of celebration for people living with
hepatitis C virus in the UK. NICE recommended that the drug Sovaldi – a
faster, more tolerable and more effective treatment for the disease –
should be made available for patients on the NHS.

Until recently, hepatitis C treatments were long and involved weekly
injections. Side effects were so toxic that some people chose to stop
treatment early or never even start. For those that persevered, the cure
rate was only 35-80 per cent.

Yet instead of celebrating, patients are left waiting. In an unprecedented
move, the NHS is delaying the introduction of the treatment for all but the
most severe cases.

Why is this occurring when the treatment is so clearly needed? The answer
is the sheer exorbitance of the price. At £35,000 per patient just for
Sovaldi, it would cost £1 billion for every 20,000 patients treated.

The NHS has responded by saying that this is simply too much. So why is
Sovaldi so expensive? Peer-reviewed estimates indicate that a full
three-month treatment course could be manufactured for around £68 – well
under £1 per pill, compared to the astonishing £670-per-pill price tag in
the US.

Pharma monopolies

The high price is completely unrelated to the cost of manufacture, and
entirely related to the monopoly that pharmaceutical company Gilead has on
the sale of the drug.

We often hear that high prices are necessary for pharma firms to recoup the
investments they make in developing drugs. While we don’t know the exact
costs of drug research and development – because companies won’t provide
transparent data – economist Jeffrey Sachs estimates total private R&D
costs for Sovaldi are as low as £200 million. Even with limited access to
treatment, in one year Gilead has already earned in sales revenues 34 times
that estimated level of investment.

Having presumably recouped its R&D costs long before reaching almost £7
billion in sales of Sovaldi last year, Gilead now argues that the price of
Sovaldi represents the ‘value’ of cost savings from ‘averted’ future
treatment needs, including rare, end-stage treatments like liver

Why should we accept Gilead’s ‘value’ defence of their prices? We certainly
don’t expect the price of a root canal to be based on the price of a full
set of dentures, or the price to remove a pre-cancerous tumour to be based
on the price for a full course of chemotherapy for late-stage cancer.

Value vs price of patents

Crucially, the value these drugs provide to the millions who can’t access
them is zero. In reality, Gilead’s pricing strategy attempts to reap as
much profit as possible under a system that allows unfettered profiteering,
regardless of the repercussions for public health. Gilead can charge these
exorbitant prices because it has been granted patents that give it monopoly
control over sales of the drug. But these patents are not even valid under
the laws of some countries.

In India for example, the patent office rejected Gilead’s application for
one of Sovaldi’s key patents because it did not meet India’s patentability
criteria, which allows patents for demonstrably ‘new’ drugs but not for
incremental innovations.

Additional patent oppositions are ongoing in India and elsewhere. As
Doctors of the World (Médecins du Monde) explained when filing their patent
opposition in Europe, “the improvement in the quality of life that
[Sovaldi] offers to patients is a breakthrough, but the molecule that
comprises the drug is not.”

And it isn’t just UK patients losing out. Chronic hepatitis C infection
affects an estimated 150 million people worldwide, and is responsible for
approximately half a million deaths each year. While Gilead has made the
treatment available at lower prices in some countries through ‘tiered
pricing’, and through a voluntary licence that permits generic competition
in other countries, the discounts offered are not sufficient to allow
widespread treatment scale-up by ministries of health or other providers.

An estimated 75% of the world’s poor and over 70% of people living with
hepatitis C live in middle-income countries (MICs). But prices for Sovaldi
in 50 MICs locked out of Gilead’s voluntary license –where more than 49
million people live with hepatitis C – can range from £1,300 to £10,000 per
treatment course.

Some countries will have access to prices of £200 per month or less through
generic companies with which Gilead has entered a licensing agreement, but
for countries with low per capita income and high inequality, this
significant mark-up is unaffordable.

Though it may sound like a discount compared to the colossal prices in the
US and UK, Gilead’s tiered pricing still unduly impedes access. We
shouldn’t be comparing the cost-effectiveness of liver transplants; we
should be testing and treating everyone in need. This is an infectious
disease and reducing the reservoir of the virus in the population should be
a public health priority.

New models for R&D

Delayed and denied treatment due to unaffordability has ignited a global
outcry, but the reasons we continue to face high drug prices are rarely
discussed or challenged.

We are trapped by the way we finance the development of medical products.
Instead of asking how pharma companies accountable to shareholders should
price treatments of public health importance when the sky is the limit, we
should ask why we accept an R&D system that allows companies to charge high
prices indiscriminately.

How can we develop drugs that don’t threaten to bankrupt our national
healthcare systems or exclude millions from affordable access in other
countries? Doing this will mean rethinking how we fund the costs and risks
of drug development, rather than relying on monopolies to incentivise the
industry to deliver new treatments.

Unless we start to look at new models for financing R&D, we will remain
beholden to a system that inevitably leads to higher and higher drug
prices. We must have greater transparency about R&D costs, as well as
greater accountability, oversight and intervention to ensure that drug
companies do not simply sell drugs at the prices they choose.

We all want drug companies to successfully develop new medicines, but this
success cannot come at the expense of ensuring access to the innovations
that people everywhere need.

What’s your opinion? Have your say @Pharmafocus with the hashtag #pfdebate

Joanna Keenan
Press Officer
Médecins Sans Frontières - Access Campaign
P: +41 22 849 87 45
M: +41 79 203 13 02
E: joanna.keenan[at]geneva.msf.org
T: @joanna_keenan


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