Gilead Deal to Sell Sovaldi in Poor Countries Meets Criticism

Source: Wall Street Journal

By ED SILVERMAN

In a bid to forestall criticism over the price of its expensive Sovaldi hepatitis C treatment, Gilead Sciences GILD -2.58%has reached licensing deals with seven large generic drug makers based in India to sell lower-cost versions in 91 developing countries.

The goal is to provide greater access to the estimated 185 million people who live in low and middle-income countries, and avoid the reputational damage the pharmaceutical industry sustained more than a decade ago in South Africa over litigation surrounding access to costly AIDS medications.

The deal calls for the generic drug makers – including Cipla, Ranbaxy Laboratories and the Indian unit of Mylan Laboratories to pay royalties to Gilead for the right to make both Sovaldi and ledipasvir, which the biotech hopes to sell very soon along with Sovaldi as a fixed-dose combination in the U.S.

Sovaldi costs $84,000 for a 12-week course of treatment and clinical studies indicated it has a 90% cure rate. Gilead has argued the price is a bargain compared with older treatments that are less effective, although state Medicaid programs and private insurers worry the drug will become a budget buster.

Such concerns have spread to other countries where patient incomes are much lower than in the U.S., but by striking the deal with the generic drug makers, Gilead hopes to avoid criticism that the price of a copycat version does not fairly reflect the actual manufacturing cost of its drug.

The 91 countries covered by the deal – including Egypt, Vietnam, India and many countries in Africa – have a per capita income of nearly $1,900 and account for about 54 percent of those with hepatitis C, according to Knowledge Ecology International, a non-profit that tracks drug access and patents.

Nonetheless, more than three dozen patient advocacy groups say the licensing deals do not go far enough, because the deals excludes many middle-income countries – such as Brazil, China, Turkey, Thailand and Ukraine – where governments and individuals may not be able to afford the Gilead drug.

The patient groups are concerned the licenses will preclude the generic drug makers from selling lower-cost versions to those countries and potentially excluding millions of patients with hepatitis C from gaining access to treatment. For this reason, Doctors Without Borders says the deal “falls short.”

Some provisions of the deal are also generating concern. The generic drug makers are allowed to make and supply countries that were excluded from the 91-nation deal – even if a patent does not exist in, or if a compulsory license has been issued, by a country that was not named in the agreement.

But a Gilead spokesman confirms the licensing deal would be breached if a generic drug maker attempted to sell a copycat version of Sovaldi in any of the excluded countries – if a patent is still pending in India and that excluded country. And Gilead patents on Sovaldi are being challenged in India.

Tamir Ahin of the Initiative for Medicines, Access & Knowledge says this is designed to thwart generic competition in middle-income countries, since the deal involves some of the largest generic suppliers in the world. “In one fell swoop, Gilead has locked up the main competition” for generics. I-MAK filed some of the patent challenges in India.

Rohit Malpani, director of policy and analysis at Doctors Without Borders, maintains the wording of this particular provision – which emphasizes pending patent filings and challenges – takes advantage of the uncertainty in the Indian legal process.

“They’ve taken steps to make it difficult for Indian generic drug makers to sell in those other countries until a patent is ultimately rejected in India and in those [excluded] countries,” says Malpani.

“They’re exploiting uncertainty in the Indian legal process. As long as Gilead can says there’s a pending patent, a generics company can’t sell outside the [countries named in the] licensing agreement.”

Nonetheless, Jamie Love of Knowledge Ecology International believes the deal offers several benefits, such as working with what he termed seven “very strong” generic drug makers, and he suggests that competition between these companies will drive the price down for the Gilead drugs.

But he also chastised Gilead for failing to include more middle-income countries in the agreement. “In each of these areas, there are a significant number of persons living with HCV who will not receive treatment at Gilead’s prices,” he says in a statement. “Addressing these access gaps will be important.”

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