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.

M&A: a crit­i­cal dri­ver for sus­tain­able top-line growth in health­care

2021 saw a record $600B in healthcare M&A activity. In 2022, there is an anticipated slowdown in activity, however, M&A prospects remain strong in the medium to long-term. What are future growth drivers for the healthcare sector? Where might we see innovations that drive M&A? RBC’s Andrew Callaway, Global Head, Healthcare Investment Banking discusses with Vito Sperduto, Global Co-Head, M&A.

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Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

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