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] 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 Gilead.

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 67th 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 rights.)  

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]. 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]. 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].

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].  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].  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.+