New hepatitis cure far too costly

A new cure for Hepatitis C has given new hope, but its price is far too high, while a scheme to supply to poor countries excludes middle-income nations.

by Martin Khor

A controversy is brewing over a new cure for Hepatitis C because it is extremely expensive and patients in middle-income countries will find it way beyond their budget.

Worldwide, 170 million people live with the Hepatitis C virus (HCV), and every year 3-4 million more are infected, and there are around 350,000 deaths. Hepatitis C is thus a major public health problem, and called a “silent killer” because it can lead to serious liver ailments, including cancer, for those who are infected.

The good news is that a new drug, sofosbuvir, was approved last year by the American health authorities. The medicine has an effectiveness rate of around 90%, making it superior to the older medicines which have a lower success rate and some serious side-effects.

The bad news is that the producer, the US firm Gilead, put a very high price tag of $84,000 for a 12-week course. Each pill thus costs $1,000.

The price could be set so high because the older and less effective alternatives cost about a third of that level, and the company also argued that a liver transplant (which the new medicine’s cure would make unnecessary) would cost much more. 

Revenues from the new medicine since late last year have already run into many billions of dollars.

At that kind of price, only the very rich can afford the new medicine. Patients in the West have difficulty even if they are insured, as the insurance companies or the National Health Service might not be able to put this expensive drug on their approved list.

There is now a wave of anger among health and patients’ groups throughout the world. Here is a life-saving medicine which is being priced out of reach, because the patents being filed by the company prevent competitors from producing cheaper versions.

Opposition to a patent application was filed in India by a group, Initiative for Medicines, Access and Knowledge, on the ground that the drug made use of an existing compound.  In Indian law, patents need not be given for new uses of existing medicines or their compounds.

Restrictive agreements

Facing mounting opposition, Gilead came up with a new initiative. It entered into agreements with seven companies in India, allowing them to produce their own versions of sofosbuvir as well as another medicine, ledipasvir (which can be taken in combination), at prices these companies will set themselves.

A study at Liverpool University found that a full course of generic sofosbuvir could cost as low as $101 and ledipasvir, $93.  Another estimate is that the cost could be $135-400. Thus the Indian companies’ prices are expected to be well below a thousand dollars.

An example from a decade ago is useful. When medicines for HIV/AIDS sold for $15,000 a patient a year, Indian companies produced generic versions for $350 a patient a year, and their prices have fallen further to about $65 today. 

There is however a major flaw in this new plan. While the agreements allow the Indian companies to sell the medicine in India and in some other countries, they are not allowed to market it in 51 middle-income developing countries, including Argentina, Brazil, China, Malaysia, the Philippines and Thailand. Patients and governments in these countries will thus be blocked from obtaining the cheap medicine coming from India.

The originator company plans to sell its brand in these excluded countries and thus reap high profits. The price it charges may be less than $84,000 but significantly higher than the Indian companies’ prices.  

The medical group Medecins Sans Frontieres has criticized this discrimina-tion. It said: “Hepatitis C is especially prevalent in middle-income countries, with approximately 73% of the burden in these countries.  But disappointingly many of these countries remain excluded from accessing Gilead’s lowest price and the generic versions licensed by these agreements.”

Patients in the excluded countries have expressed their anger. In Malaysia, the Positive Malaysian Treatment Access and Advocacy Group and the Third World Network said the new oral medicines bring new hope for Hepatitis C patients but these hopes were dashed by the restrictive terms of the agreements, thus “condemning to death many of the 50 million HCV patients living in territories excluded from the scope of the voluntary licence such as Malaysia, Thailand, Philippines and China.”

Thirteen Thai non-governmental organizations (NGOs) issued a statement that they are appalled by the agreements that the originator signed with the Indian companies, which they said represented “corporate greed building yet another barrier to access to a new medicine needed by millions of people with HCV infection in middle-income countries”.

“In those middle-income countries not included in the deal, millions of people will be effectively handed a death sentence as the new life-saving medicine will be unaffordable.”

The Brazilian Network for Integration of Peoples said it “vehemently repudiates the agreements which treat medicines as commodities, preventing millions of people to have access to medicines.”

Patients in the affected countries, and their support groups, including the above, are calling on their governments to act to ensure that their citizens have access to the new medicine.

The countries are allowed by the WTO’s intellectual property agreement not to grant patents if the medicines are not new or genuine inventions. If patents have been granted, the governments can issue compulsory licences that allow generic companies or government firms to produce and sell generic medicines at cheap prices.

Alternatively, the governments can ask the company to include their countries among those that the Indian companies can supply to, or else that the prices charged by the company be the same as those of the cheapest generics.

Martin Khor is Executive Director of the South Centre, an intergovernmental policy think-tank of developing countries, and former Director of the Third World Network. This article first appeared in The Star (Malaysia) (13 October 2014).

Third World Economics, Issue No. 578, 1-15 Oct 2014, p13