[Ip-health] Gilead Sciences seeks to pre-empt affordable generic Hepatitis C medicine

K.M. Gopakumar kumargopakm at gmail.com
Sat Sep 13 06:51:04 PDT 2014

*Title :* Gilead Sciences seeks to pre-empt affordable generic Hepatitis C
*Date :* 12 September 2014


TWN Info Service on Intellectual Property Issues (Sept14/01)
12 September 2014
Third World Network

*Gilead Sciences seeks to pre-empt affordable generic Hepatitis C medicine*

New Delhi, 12 September (Shailly Gupta and K M Gopakumar) – In a manoeuvre
to protect its monopoly, pharmaceutical giant Gilead Sciences is set to
announce voluntary licenses on its Hepatitis C medicine, Sofosbuvir.

This is designed to pre-empt moves which will allow generic production of
generic versions of the medicine which currently costs USD 84,000 for a
12-week treatment.

Gilead Sciences has circulated a press conference invitation for a
strategic announcement in New Delhi on Monday, 15September 2014.

Informed sources said that the press conference will announce the issuance
of a voluntary licence to a few Indian pharmaceutical companies.

The decision on voluntary licensing gained momentum in recent months after
a series of patent opposition cases challenging the patent application for
Sofosbuvir in India and reports that Egypt will not grant a patent for the
essential medicine.  In India, NATCO (a generic pharmaceutical company),
the Indian Pharmaceutical Alliance (an association of large Indian
pharmaceutical companies) and civil society organizations (CSOs) have filed
pre-grant patent oppositions against Gilead’s patent applications on
Sofosbuvir. There are also indications of initiation of patent opposition
proceedings in many other developing countries.

The voluntary licences (VL) are viewed as an attempt to prevent effective
competition as seen in the case of first line anti- retroviral (ARV)
medicines for the treatment of HIV/AIDS.

[In the case of first line ARVs many generic companies, especially from
India, introduced the medicines at a very low price without any licensing
conditions. As a result many other developing countries including
middle-income developing countries such as Brazil and Malaysia could source
the low cost generic medicines using compulsory licences. Gilead wants to
prevent a repetition of the same scenario and to contain the generic
competition through VL.]

Gilead Sciences is under attack from CSOs, patient groups and even from
some governments for charging high prices for Sofosbuvir. A 12-week
treatment, the most commonly required treatment regime, would cost USD
84,000 and this 12-week treatment in combination with pegylated interferon
and ribavirin costs USD 94,078.

[Treatment for Hepatitis C is going through a revolutionary shift due to
the introduction of a new class of drugs. The new oral drugs – direct
acting antivirals (DAA) launched in the market and those in development
having cure rates of more than 90% come with a promise to clear the virus
from the body.  In a recent development, the World Health Organisation
published its first guidelines on screening, care and treatment of
Hepatitis C infection to help government officials and health care
providers in low and middle income countries to provide a framework for
expansion of clinical services and to facilitate the management of patients
with HCV infection.[1] <#1486ae27325ba1ef__edn1> The recommendations do not
just include current standard regimen of pegylated interferon and ribavirin
but also DAA including boceprevir, telaprevir, simeprevir and Sofosbuvir.
The DAAs are supposed to replace the highly toxic interferon and therefore
access to DAA is critical in controlling Hepatitis C.]

To address the criticism over higher prices and to prevent the issuance of
compulsory licences, Gilead announced a differential price by slashing the
price from USD 84,000 to USD 900 in Egypt, India and Pakistan for
government procurement. However, the high chances of rejection of the
patent application in India due to the pre-grant opposition applications by
CSOs and generic companies in India and the potential filing of such
pre-grant applications in many other developing countries prompted Gilead
Sciences to persuade potential manufacturers from India to accept voluntary
licences for the manufacturing of Sofosbuvir.

The differential price announced by Gilead is still very high even though
it is just above 1 % of the original price.  According to a study done by
Andrew Hill from Liverpool University (UK), since Sofosbuvir is a typical
small chemical molecule similar to that of the HIV drugs molecule, the
actual cost of manufacturing of this drug is between US 68 to USD 136.
According to observers, the generic companies can easily market the product
at around USD 150-300 for a 12-week treatment. This would seriously
undermine Gilead’s defence of its so-called special price.

According to sources, Gilead is currently in talks with its HIV drug
partners in India – Cipla, Ranbaxy, Mylan, Strides Arcolab – to finalize
the terms for voluntary licence agreements for Sofosbuvir. The licence
agreements are expected to be finalised in the coming days.

The voluntary licence often comes with certain conditions. The main purpose
is to bind generic producers in order to prevent the supply to countries
outside the territory of the licence (which is expected to cover 80-90
countries), in particular to middle income countries (where the majority of
the world’s poor people live). Thus, the primary aim is to exclude the
licensed companies from exporting medicines beyond the countries mentioned
in the licences. Some of the countries that are expected to be kept out of
the licenced territories include China, Brazil, Thailand, Indonesia, Egypt,
Ukraine and Russia. Some of these countries have large parts of their
population co-infected with HIV and Hepatitis C. For instance, in China
alone nearly 18 million people have Hepatitis C.

In the past, there was no patent right for medicines in most developing
countries. But these countries having joined the World Trade Organization
are now at the mercy of their international obligation to provide patents
on medicines. Furthermore, the 80 to 90 countries in the Gilead Sciences
discount list do not include the major developing countries.  Thus the main
purpose of the voluntary licences is to sanitise the lucrative markets of
middle income developing countries from generic competition.

In addition the voluntary licence is to prevent an effective competition in
the market by obligating the potential companies to comply with certain
stringent licensing conditions such as restriction on manufacturing or
sourcing the active pharmaceutical ingredient for Sofosbuvir.  For
instance, VL would restrict the licensee companies from sourcing APIs from
open market and also would restrict the selling of API to a third party.
 Thus VL would facilitate the control of production of API in the hands of

According to some CSOs the proposed VL also has the potential to prevent
the licensed companies from making fixed dose combinations. The current
treatment regime as well as the future regime is based on combinations of
drugs.  Therefore a fixed dose combination can simplify the treatment by
reducing the number of pills as well as ensure affordable prices. However,
Gilead Sciences refuses to carry out the clinical trails with the DAAs
developed by other companies. Therefore CSOs have the apprehension that
Gilead may prevent licensees from producing fixed dose combinations using
drugs of other companies such as the recently EMA (European Medicines
Agency) approved Daclatasvir from Bristol Myers-Squibb which has shown 100%
cure rates in combination with Sofosbuvir in some cases.

The VL provisions may be used to prevent the licensee companies from
supplying the excluded markets through compulsory license. Thus the VL can
effectively reduce the potential of using compulsory licences and forces
middle income countries to obtain the product at a negotiated price. The 67
th World Health Assembly of governments adopted a resolution on Viral
Hepatitis, which urged the Member States to “to consider, as necessary,
national legislative mechanisms for the use of the flexibilities contained
in the Agreement on Trade - Related Aspects of Intellectual Property Rights
in order to  promote access to specific pharmaceutical products”.  Further
it urged the Member States “to consider, whenever necessary, the use of
administrative and legal means in order to promote access to preventive,
diagnostic and treatment technologies against viral hepatitis”.  The
resolution asked the WHO Director-General to support Member States with
technical assistance in the use of the flexibilities in the Agreement on
Trade - Related Aspects of Intellectual Property Rights when needed, in
accordance with the Global Strategy and Plan of Action on Public Health,
Innovation and Intellectual Property.  According to an observer Gilead
Sciences is trying to neutralise the mandate of the World Health Assembly
through issuing VL.

Another observer points out that the attempt to issue VL is based on the
pending patent application. Since there is a high chance of rejection of
Gilead’s patent application, Indian pharmaceutical companies are advised to
not rush for VL and to wait for the decision on patent opposition cases.
According to this observer, there is an urgent need to process the patent
opposition application considering the public health importance.

(Gilead in the past had used the idea of VL in a bid to contain generic
competition through promoting VL for Tenofovir in the absence of patent

Meanwhile governments in the developed world have started to feel the pinch
of the extremely high cost of the Sofosubuvir

Sofosbuvir which is being heralded as the backbone for the treatment
regimen of Hepatitis C due it pan genotypic effectives is not easily
accessible even to the patients in the developed countries. In the U.S.,
Gilead is charging USD 84,000 for a 12-week treatment course. Simeprevir
(Brand Name Olysio), another DAA has been pegged by its originator company,
Janssen at a high cost of USD 66,360 for a 12-week course.  Medicaid, the
US state health plan for poor, which is expected to treat up to 30 percent
or more of the patients in need of Sovaldi, will have to spent USD 1
billion or more just this year to cover these patients[2]
<#1486ae27325ba1ef__edn2>. Unable to bear such heavy cost burden, states in
US including Pennsylvania, Colorado and Illinois have started to put
tighter restrictions in place to access this drug through the government
program[3] <#1486ae27325ba1ef__edn3>. The rules include limiting the drug
to sicker patients to barring people having a history of drug or alcohol
abuse within the past year. The high price of the drug is keeping it out of
reach of prisoners too in the US. With nearly one third of the population
affected with Hepatitis C in US jails, prison administrators are finding it
tough to make a call on whether to save the budget for other ailments or
treat Hepatitis C with this drug. Even with a heavy discount of 44%
received for the new drugs, the Government may have to spend billions of
dollars to treat inmates infected with Hepatitis C. As The Wall Street
Journal reported in April
many states are rationing the drug or refusing to provide it to inmates[4]

Given the impact Sofosbuvir’s cost on Medicaid, Medicare and other federal
spending, the US Senate Finance Committee has launched an investigation
into Gilead’s high pricing of Sofosbuvir. As part of this investigation,
the Committee has asked for documents and information related to the merger
of Gilead Sciences and Pharmasset (the original developer of Sofosbuvir),
the cost involved in research and development of Sofosbuvir by both
companies, the price estimates for a fixed dose combination of Sofosbuvir
with other drugs for which Gilead has applied for FDA approval. The
Committee has questioned the price of Sovaldi set by Gilead which appears
to be higher than expected given the costs of development and production,
and the steep discounts offered in other countries. The letter from
Senators Ron Wyden and Charles E Grassely, Chairman and member of the
Committee respectively, sent to Gilead on 11 July 2014 has asked the
company to submit all the documents within two months[5]

European nations such as France too have started to feel the brunt of the
astronomical cost of treatment with Sofosbuvir at 50,000 euros for a course
of 12 weeks. According to a report by Medicins Du Monde, to put people with
F3 to F4-stage liver disease at the price set by Gilead would take up the
entire budget of public hospitals in Paris (7 billion euros). Worried that
Sovaldi (Gilead’s brand name for Sofosbuvir) would cost the country's
already heavily-indebted welfare system billions of euros, France has
joined forces with 13 other nations to negotiate the price with Gilead.
“For the first time, 14 European countries have made a commitment together.
We will, therefore, negotiate country by country, as that’s how it’s done.
But we will exchange information and discuss things between European
countries,” Marisol Touraine, French health minister told Agence
France-Presse[6] <#1486ae27325ba1ef__edn6>.

Amid these actions being taken by several governments across the world,
Gilead continues to justify its high price with the near guarantee of a
cure, far fewer side effects and the treatment's ability to help patients
avoid far more expensive hospital treatment, including potential liver
transplants. As reported by New York Times, Gilead has already earned USD
3.48 billion in the first quarter of this year alone through sales of
Sovaldi which is proving to be a bona fide blockbuster.

Gilead’s pricing strategy in lower and middle income countries seem to be
debatable too. Egypt has managed to negotiate a price of USD 900 for a
12-week course for public procurement, which is seen as a big achievement
to be given a 99 percent discount on the global price. However, this
negotiated price is being questioned as many believe that treating all
Hepatitis C patients with this treatment will actually cost the Egyptian
government five times more than its whole health expenditure (as spent in
2011)[7] <#1486ae27325ba1ef__edn7>.  Sovaldi is expected to reach Egypt by
next month.

In India, Gilead has announced USD 900 as the price for Sovaldi similar to
that of Egypt[8] <#1486ae27325ba1ef__edn8>.  However, clarity is needed as
to who will be able to access the drug at this price and when it will be
available in India. The Indian Government is currently not providing any
sort of screening or treatment for Hepatitis C so it is definitely not a
public procurement price. If this is a private sector price would the
majority of patients suffering from Hepatitis C, who are from a low
economic background, be able to access this price?

Clinical trials for this drug in India are being carried out as of now and
Gilead is not expected to launch the drug in India before end of 2015. Yet,
a few doctors have already started to prescribe the drug in India and
asking the patients to import it. Those who can afford by some means have
started to importthe medicine from countries like Canada spending, in some
cases, up to Rs 1 crore (about USD 164,000).

Other companies such as AbbVie, Bristol-Myers Squibb and Merck & Co are
also developing oral treatment regimens for Hepatitis C that have shown
dramatic results in clinical trials, which expect to reduce the need for
debilitating interferon injections. However, the accessibility and
affordability of these drugs in the pipeline remain a big question.

Gilead’s move is not surprising. Other companies also follow the voluntary
licence strategy to contain competition and use of patent law flexibilities
like compulsory licenses.+


[1] <#1486ae27325ba1ef__ednref1>

[2] <#1486ae27325ba1ef__ednref2>

[3] <#1486ae27325ba1ef__ednref3>

[4] <#1486ae27325ba1ef__ednref4>

[5] <#1486ae27325ba1ef__ednref5>

[6] <#1486ae27325ba1ef__ednref6>

[7] <#1486ae27325ba1ef__ednref7>

[8] <#1486ae27325ba1ef__ednref8>

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