[Ip-health] The Intercept: Coronavirus treatment developed by Gilead Sciences granted "Rare Disease" status, potentially limiting affordability

Thiru Balasubramaniam thiru at keionline.org
Wed Mar 25 00:53:04 PDT 2020



Sharon Lerner, Lee Fang

March 24 2020, 3:03 a.m.

ON MONDAY AFTERNOON, the Food and Drug Administration granted Gilead
Sciences “orphan” drug status for its antiviral drug, remdesivir. The
designation allows the pharmaceutical company to profit exclusively for
seven years from the product, which is one of dozens being tested as a
possible treatment for Covid-19, the disease caused by the new coronavirus.

Experts warn that the designation, reserved for treating “rare diseases,”
could block supplies of the antiviral medication from generic drug
manufacturers and provide a lucrative windfall for Gilead Sciences, which
maintains close ties with President Donald Trump’s task force for
controlling the coronavirus crisis. Joe Grogan, who serves on the White
House coronavirus task force, lobbied for Gilead from 2011 to 2017 on
issues including the pricing of pharmaceuticals.

“It’s absurd that this would happen in the middle of an epidemic when
everything is in short supply.”
“The Orphan Drug Act is for a rare disease, and this is about as an extreme
opposite of a rare disease you can possibly dream up,” said James Love,
director of Knowledge Ecology International, a watchdog on pharmaceutical
patent abuse.

“They’re talking about potentially half the population of the United
States,” said Love, adding that “it’s absurd that this would happen in the
middle of an epidemic when everything is in short supply.”

The 1983 Orphan Drug Act gives special inducements to pharmaceutical
companies to make products that treat rare diseases. In addition to the
seven-year period of market exclusivity, “orphan” status can give companies
grants and tax credits of 25 percent of the clinical drug testing cost. The
law is reserved for drugs that treat illnesses that affect fewer than
200,000 people in the U.S. But a loophole allows drugs that treat more
common illnesses to be classified as orphans if the designation is given
before the disease reaches that threshold. As of press time, there were
more than 40,000 confirmed cases of Covid-19 in the U.S, and some 366,000

The distinction could severely limit supply of remdesivir by granting
Gilead Sciences exclusive protection over the drug and complete control of
its price. Other pharmaceutical firms, including India-based pharmaceutical
firm Cipla, are reportedly working toward a generic form of remdesivir, but
patients in the U.S. could be prevented from buying generics with lower
prices now that Gilead Sciences’s drug has been designated an orphan.

Today, Gilead abruptly announced that it would no longer provide emergency
access to remdesivir, telling the New York Times that “overwhelming demand”
left it unable to process requests for the drug through its compassionate
use program. Hours later, the FDA gave the drug orphan status. Almost
immediately, Gilead’s stock price shot up. Gilead did not immediately
respond to a request for comment. The White House, on behalf of Grogan,
declined to comment on the record.

The special orphan designation, which can also be granted to drugs when
there is little reasonable expectation that a company will recoup its
research costs, was given to remdesivir despite hefty support by the
government for the development of the drug.

Gilead Sciences’ remdesivir was developed with at least $79 million in U.S.
government funding, according to a paper published last week by KEI. The
origins of the drug came after the 2014 Ebola outbreak in western Africa,
which spurred research into potential antiviral medications to control
future potential pandemics. Early promising results from the U.S. Army
Medical Research Institute of Infectious Disease revealed that Rhesus
monkeys infected with Ebola survived after undergoing an antiviral
treatment using GS-5734, the compound now known as remdesivir.

The U.S. National Institute Allergies and Infectious Diseases continued
providing significant taxpayer funding to subsidize the development of
remdesivir. NIAID grants to Columbia University, Vanderbilt University,
University of North Carolina-Chapel Hill, and the University of Alabama
subsequently found that remdesivir prevents virus replication in a range of
coronaviruses in human lung cells.

Although the Orphan Drug Act was designed to solve a real problem — a lack
of treatments for uncommon illnesses — pharmaceutical companies have for
years exploited it for gain. Rather than treating AIDS or HIV infection,
drugs were framed as treating diarrhea or tuberculosis in HIV-infected
people, thus narrowing their scope. And companies have extended their
exclusive marketing rights by repurposing drugs that are already patented
for other purposes to treat rare diseases. Orphan drugs now generate more
than $100 billion in annual sales, and even though companies are
increasingly using the law, more than 90 percent of rare diseases lack
treatments approved by the FDA.

Grogan, who in 2016 earned over $800,000 in salary and bonuses at Gilead,
came under scrutiny in 2018 for his work, also at Gilead, on a Medicare
payment model for a cancer treatment.

The company has also come under fire for its pricing schemes. In 2014,
Gilead sparked a controversy over listing its hepatitis C drug, Sovaldi,
for $84,000 for a 12-week course therapy. The company had purchased the
patent from another firm and proceeded to nearly triple the price. Gilead
also sells Truvada, a drug to help prevent the transmission of HIV, for
almost $2,000 a month despite the fact that it costs only $6 to manufacture.

Gilead Sciences presented earlier this month at the Cowen & Co. Annual
Health Care Conference, an investor event for major pharmaceutical and
health care corporations. The Intercept previously reported that investment
bankers at the event quizzed Gilead Sciences executives over whether they
could develop a “commercial strategy for remdesivir” in the near future.

In response, Johanna Mercier, executive vice president of Gilead, noted
that the company is focused on increasing capacity to meet demands for
patients and government access. “Commercial opportunity,” Mercier added,
“might come if this becomes a seasonal disease or stockpiling comes into
play, but that’s much later down the line.”

“Gilead probably feels like now’s the time to cash in before somebody comes
up with a better drug or a vaccine is done,” said Love. “They’re going to
be very aggressive in how they go after this.”

Update: March 24, 2020
The orphan designation can also be given in cases in which there is little
expectation that the company will be able to recoup the cost of the drug’s
development. (Remdesivir, which was reportedly developed using at least $79
million in federal funding, is expected to generate up to $2.5 billion in
revenue.) This story has been updated to reflect this possibility under the

Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org

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