By: Peter Loftus
Dow Jones News Wires
August 22, 2012
Gilead Sciences Inc. (GILD) may get clearance by next week to sell what is expected to become a blockbuster HIV drug, but the company already faces a controversy over how much it will cost.
A nonprofit HIV/AIDS advocacy and care organization, AIDS Healthcare Foundation, is waging a public campaign to pressure Gilead to exercise restraint in setting the initial price for the so-called “Quad,” a single-pill, once-daily combination of four drugs to fight HIV, the AIDS-causing virus.
Gilead hasn’t yet set the price, but Wall Street analysts expect it to come in higher than the $21,000 annual per-patient wholesale acquisition cost for Gilead’s three-in-one HIV combination drug, Atripla. Some analysts predict annual Quad sales will approach $2 billion by 2020.
It is the latest flare-up in a broader debate about prices for brand-name prescription drugs. Many patients and advocacy groups decry high price tags for new drugs, arguing they fuel escalating health-care costs and limit access to lifesaving medicines.
Drug makers, however, say they must recoup their investments in expensive and risky research-and-development, and some high-priced drugs have demonstrable life-extending value. The industry also notes most big drug makers have assistance programs that either provide drugs for free to eligible low-income patients, or help cover out-of-pocket costs for insured patients.
Gilead’s situation illustrates the frequently opposing tugs that companies feel from investors and consumers. Investors generally want drug companies to charge the highest price the market will bear, while advocacy groups argue that companies can still be profitable and conduct research while charging lower prices.
Adding to the Quad debate are the extra financial benefits that Gilead is expected to receive as well as the question of whether the new pill advances HIV treatment sufficiently to command a high price.
In early August, 13 Democratic members of Congress signed a letter to Gilead Chief Executive John C. Martin expressing concern that Gilead may charge as much as $34,000 annually for the Quad in commercial markets. This could further strain government-funded AIDS drug-assistance programs for lower-income patients–some of which have patient wait lists–even assuming Quad is provided at the typical discount for such programs, the letter says.
The letter asks Gilead to consider a more “sustainable” price for the Quad. California state officials and legislators also have made similar requests to Gilead, based in Foster City, Calif.
The AIDS Healthcare Foundation, or AHF, has previously run letter-writing campaigns to petition against price increases for older HIV drugs manufactured by Gilead, Johnson & Johnson (JNJ) and Bristol-Myers Squibb Co. (BMY).
“If Gilead cares about its good name, it will think twice about taking a greedy position when it comes to pricing this drug,” said Michael Weinstein, president of AHF.
Gilead spokeswoman Erin Rau said the Quad isn’t yet approved by the FDA, and the price hasn’t been established. She said Gilead has one of the most comprehensive patient-assistance programs for people with HIV, including a 2008 price freeze on therapies sold to the AIDS drug assistance programs at discounts, which runs through 2013.
The Quad is a single-tablet regimen of four HIV drugs: elvitegravir, cobicistat, emtricitabine and tenofovir disoproxil fumarate. Gilead currently sells the latter two drugs under the brands Emtriva and Viread, respectively, as well as a single-pill combination of Emtriva and Viread called Truvada. The other two components of the Quad haven’t yet been approved by U.S. regulators.
The widely used Atripla is a single-pill combination of Gilead’s Emtriva and Viread and Bristol-Myers Squibb’s Sustiva. Gilead recorded $3.2 billion in Atripla sales last year.
Doctors say single-pill, once-daily regimens like Atripla and the Quad improve patient adherence to prescribed therapies compared with regimens that require multiple pills or dosing more than once a day.
Gilead hopes doctors view the Quad as an improvement over Atripla and certain other therapies, but it also represents an attractive business opportunity for Gilead because it owns rights to all four components, whereas it must share Atripla’s economics with Bristol-Myers. In addition, Gilead will have longer patent protection for the Quad because it includes newer drug components.
In a clinical trial whose results were announced in March, the Quad was as effective as Atripla at suppressing HIV viral loads. The Quad was associated with a lower rate of neuropsychiatric side effects including abnormal dreams and certain other adverse events, but a higher rate of nausea, versus Atripla. Another trial showed Quad was comparable to a therapy that included Truvada and Bristol-Myers’ Reyataz.
An FDA advisory committee voted in May 13-1 in favor of agency approval of the drug. Updated treatment guidelines released by a panel of the International AIDS Society earlier this year list the Quad as an alternate HIV treatment option, pending regulatory approval.
Baligh Yehia, an infectious-disease specialist at the University of Pennsylvania, said the Quad appears to mitigate certain side effects versus Atripla, but provides no significant advantage in efficacy.
“The Quad is definitely a nice addition to our current HIV therapies,” said Dr. Yehia, but “it’s not like a brand new breakthrough.” He said that if cost is an issue for patients, there are other regimens that are less expensive and comparably efficacious.
RBC Capital Markets analyst Michael Yee said he expects the product to capture a significant share of new HIV patients, and some current Atripla users who aren’t tolerating that drug’s side effects well. He thinks Gilead will price the drug in the mid-$20,000 range.
AHF’s Mr. Weinstein said Gilead should charge no more for the Quad than Atripla’s price.
In June, Gilead Chief Operating Officer John F. Milligan told an investor conference that the Quad “would deserve a premium over Atripla,” according to a transcript. But he acknowledged the funding constraints for the government-funded AIDS drug assistance programs, or ADAPs.
“We’re taking a hard look at Quad for the ADAPs to understand what impact it’s going to be having on those patients,” he said. “I think Quad would be a nice option for many patients.”