Under fire for Truvada US pricing at House hearing, Gilead chief O’Day touts R&D costs, asserts governments patents are void

Gilead chief Daniel O’Day spent more than three hours defending the $2000 monthly price of its HIV prevention pill, Truvada, at a US House committee on oversight and reform hearing Thursday, in response to a tsunami of rage from AIDS activists, lawmakers and patients regarding its pricing policy.

Image: Daniel O’Day at the hearing. C-SPAN

Truvada — emtricitabine/tenofovir disoproxil fumarate (TDF/FTC) — was approved in 2004 to treat HIV. In 2012, it was sanctioned by the FDA as a preventative treatment or PrEP (pre-exposure prophylaxis), in which individuals at high risk for HIV take medicines daily to lower their chances of contracting the infection. According to the CDC, daily PrEP reduces the risk of getting HIV via sexual intercourse by more than 90%.

A coalition of HIV/AIDs activists — the PrEP4All Collaboration — estimates that fewer than 10% of at-risk individuals in the United States receive Truvada as PrEP, and infection rates remain high (roughly 38,700 Americans became newly infected with HIV in 2016, according to US government estimates) particularly among people of color and men who have sex with men. Gilead sells Truvada for PrEP at about $1,600 to $2,000 per month in the United States, while generic versions are available elsewhere for as little as $6 per month, advocacy organization Health GAP said in its testimony to the committee: “While under-utilization of PrEP is caused by multiple factors, it is clear that price is a barrier that inhibits broad access.”

In March, the Yale Global Health Justice Partnership published a report that found CDC scientists were the first to determine that the drugs Gilead’s Truvada comprises could be used to prevent HIV transmission. As such, the agency was granted a patent in 2015 that covers HIV PrEP with a combination of emtricitabine and tenofovir disoproxil fumarate, the two drugs that make up Truvada. Two other patents were granted later. The Yale analysis concluded that Truvada appeared to infringe the CDC’s patents for PrEP and that the US government could assert the patents and seek monetary damages.

“Gilead bore the risk and certainly the vast majority of the cost of research and clinical studies to demonstrate Truvada’s efficacy and safety as part of combination HIV therapy,” a Gilead spokesperson told Endpoints News last month. “The HHS patents on the drug’s use for PrEP were filed more than a year after the drug had been discussed by scientists for PrEP, had been recommended and even prescribed off-label by physicians for prevention of HIV infections, and appeared in guidelines published by the CDC and other health care organizations for post-exposure prophylaxis (PEP) and PrEP. As such, the government did not invent PrEP, Truvada or Truvada for PrEP and its patents should not have been granted.”

O’Day on Thursday reiterated Gilead’s position on Truvada’s patents — in prepared testimony, he referenced instances in which scientists had researched use of the drug for PrEP, before the CDC filed its patent application in 2006. Gilead has not challenged the CDC patents because the Foster City, CA-based company values the “collaborative relationship” with the agency, he told lawmakers.

In April, a cadre of US senators in a letter to the US government asked why Gilead was marketing Truvada for uses patented by the US government. “Although Secretary Azar has stated that negotiations are ongoing, Gilead has reportedly reached no agreement with the government that would allow them to make use of these patented methods,” they wrote. At the time, a Gilead spokesperson told Endpoints News that there were “no ongoing negotiations between Gilead and HHS with respect to the patents owned by the government.”

However, a Washington Post report suggested that the US Department of Justice is reviewing the government PrEP patent, citing a source.

Gilead generated global Truvada sales of nearly $3 billion last year, of which about $2.6 billion came from the United States. A generic version of Truvada is sold by Mylan $MYL in high-income European countries and Australia, and the CDC is collecting a “small” royalty on those sales, after the generic drugmaker unsuccessfully challenged the CDC patent in the European Patent Office, STAT reported in April.

Earlier this month, Gilead $GILD agreed to allow one generic drugmaker Teva $TEVA to begin selling a copycat version of the drug by 2020 — about one year ahead of three other companies who have attempted to launch their own versions (Amneal, Aurobindo and Mylan). A coalition of AIDS activists also disrupted Gilead’s annual general meeting of shareholders, with demands that Gilead stop obstructing access to Truvada.

“Typically, with only one generic on the market, its price is only set about 20% lower than the brand name drug. Teva can expect to become PrEP4All’s next target if they don’t launch their own patient assistance programs. This sweetheart deal with Teva is likely unconstitutional, as are the deals keeping the other three generics off the market until 2021,” HIV activist and PrEP4All co-founder Peter Staley wrote in a Facebook post.

One day later, Gilead notched a deal to provide the CDC with up to 2.4 million bottles of the HIV-prevention pill annually for uninsured Americans at risk for HIV.  The donation, which extends up to 2030, will transition to its improved HIV drug Descovy if it is approved for use as PrEP. At the time, Gilead acknowledged that only about 200,000 of the estimated 1.1 million Americans at risk for HIV currently receive Truvada for PrEP.

On Thursday, Health GAP chastised the CDC deal:

Gilead’s donation program is deceptive and insufficient in several ways. First, it provides free TDF/FTC and subsequent TAF/FTC for 200,000 uninsured people, which is admittedly useful, but Gilead will continue to charge full price for the remaining 800,000 to 900,000 eligible for PrEP. In essence, in terms of potential market earnings, Gilead has offered a 20% price reduction off its list price of $20,000 per patient per year. The net price for all PrEP users, especially after they have been switched to the patent- and data-protected TAF/FTC will be $16,000 per person per year times 800,000 users equals $12.8 billion per year. Additionally, Gilead will most certainly receive a major tax break on the donation value of the donated PrEP, which might also add as much as $1 billion a year to their bottom line.

Alexandria Ocasio-Cortez

At the hearing, O’Day emphasized that since 2000, Gilead has spent $6 billion on HIV/AIDS research, and has effectively relegated the disease from a death sentence to a manageable condition.

Democratic representative Alexandria Ocasio-Cortez told O’Day that the committee wasn’t out to question his character, but the incentive system in the United States that has engendered the norm of astronomical drug pricing.

“I’m not here to vilify the work that you’ve done, because you are responding to set of incentives,” she said. “You could resign today, and there will still be someone that would occupy this seat, using the same incentives, making the same decisions […] So this isn’t about you, this is about the system of incentives that we have set up […] I don’t blame you, I blame us.”

Jim Jordan

Meanwhile, the ranking Republican on the committee, Jim Jordan, accused his Democratic colleagues of crucifying Gilead.

“Folks are alive today because of the work you’ve done, and we’re going to beat you up,” he said to O’Day.

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