Follow up : Hepatitis C Drug Sovaldi : Generic version will be available in poor countries


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Maker of Costly Hepatitis C Drug Sovaldi Strikes Deal on Generics for Poor Countries

NEW DELHI The maker of one of the costliest drugs in the world announced on Monday that it had struck deals with seven generic drug makers in India to sell lower-cost versions of the medicine a $1,000-a-pill hepatitis C treatment in poorer countries.

Gilead Sciences, which is based in California, also said it would begin selling its own version of the drug in India and other developing countries at a fraction of the price it charges in the United States.

The company intends to provide greater access to the medicine, Sovaldi, for most of the nearly 180 million infected worldwide with hepatitis C who do not live in rich countries. Some 350,000 people die every year of hepatitis C infections, most of them in middle- and low-income nations.

Sovaldi, in only its initial year on the market after gaining approval in the United States in December, is on pace to exceed $10 billion in sales in 2014, becoming one of the worlds best-selling drugs. Its high price has led to intense criticism even in the United States, where officials say it could drain Medicaid budgets and insurers say it could cause increases in private insurance premiums.

But executives at Gilead say its price is similar to those of other hepatitis C treatments and is a bargain compared with the costs of liver failure and liver cancer, which it may prevent.

The high price of some drugs in the United States, particularly those that treat cancer, has led some of the nations most prestigious cancer hospitals to balk at prescribing some medicines even to insured patients. And news that Gilead, which spends 19 percent of its revenue on research, can profit from sales of Sovaldi even when it cuts the drugs price by 99 percent may further fuel controversy over the companys profits and increase calls for the government to negotiate directly with drug makers for volume discounts in the federal Medicare program negotiations that are presently forbidden by law.

In addition to improving access to Gileads drugs in the developing world, the companys licensing agreements with Indian drug makers may also help forestall efforts by foreign governments to seize or invalidate the companys patents, as happened in 2009 when the Brazilian patent authority rejected the companys patent application for Viread, costing the company millions in sales.

In the United States, Sovaldi costs $1,000 a pill, or $84,000 for a typical 12-week course of treatment. It is likely to be sold for less than $1,800 for a 24-week course of treatment in India, where people are generally infected with a different form of the virus and treatment regimens can take twice as long.

Gilead plans to introduce the drug in India for about $10 a pill 1 percent of the price in the United States, Gregg H. Alton, Gileads executive vice president, said at a news conference. That is likely to force the seven Indian generics companies to price their pills even lower, said Bhavesh B. Shah, director of international marketing at Hetero Drugs Limited, one of Gileads Indian partners.

The seven Indian generic drug makers will pay royalties to Gilead to manufacture the drug for 91 developing countries, where there are more than 100 million people infected with hepatitis C, more than half of the worlds infected population.

The cost of manufacturing a drug is typically a tiny fraction of the price charged in the United States, and pharmaceutical companies price drugs at various levels across the globe, generally based on the wealth of the country.

Gilead and the seven generic firms must obtain licenses to sell the drug in many of the 91 countries.

Really what were trying to do here through the partnerships weve established is expand availability of chronic hepatitis C therapy, particularly in the developing world, Mr. Alton said.

The generic drugs will be available in India the second or third quarter of 2015 at the earliest, Mr. Shah said.

The Indian companies were selected for the partnerships because much of the worlds supply of finished drugs is made in India, particularly for developing countries.

Hepatitis C infections are caused by a virus that is generally transmitted through medical procedures, intravenous drug use or sex. Infections can go undetected and unnoticed for years but can eventually cause liver scarring and failure.

With the announcement on Monday, Gilead executives have sought to ensure that they do not fall into the trap of the expensive HIV/AIDS drugs that became available more than 15 years ago, whose high prices were seen as immoral in Africa and other developing nations where millions were infected but were consigned to die because they could not afford them. Far more people around the world are infected with hepatitis C than are infected with HIV/AIDS, although hepatitis C infections are not as virulent.

Drug makers earn much of their profit in the United States, where prices are uncontrolled and the federal government has forsworn direct negotiations for lower prices in the Medicare program. Steep discounts in poorer countries rarely cut a companys earnings significantly, particularly since the American government bans most prescription drug imports and often seizes individual shipments.

By contracting with generic companies, Gilead avoids any criticism that its price may not reflect the actual cost of making the drug.

Nonetheless, Gileads deals were instantly criticized by some patient advocacy groups as inadequate, because under terms of the deals the companies would not be allowed to sell their drugs in some middle-income countries where patients and governments would struggle to afford the drug.

Gileads licensing terms fall far short of ensuring widespread affordable access to these new drugs in middle-income countries, where over 70 percent of people with hepatitis C live today, said Rohit Malpani of Doctors Without Borders, the international emergency aid group.

Mr. Alton acknowledged that the company would face criticism for failing to include in its licensing deals such countries as Thailand, Brazil and Mexico, which have sought wider access and lower prices for some big-selling crucial medications. But he said the company would provide many such countries discounted prices on its own version of the pill.

There are many people who would like to see more countries added to that list, but that is the list we have agreed upon for these licenses, Mr. Alton said. Pricing for Thailand, Mexico or Brazil will be very different than the U.S. price.

The battle over the license reflects a continuing debate over whether the global patent system is an effective way of both encouraging innovation and ensuring wide access to new discoveries.
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