The New York Times
By Andrew Pollack
January 27, 2016
The attorney general of Massachusetts said on Wednesday that she had opened an inquiry into whether Gilead Sciences had violated state consumer protection laws by charging too much for its hepatitis C drugs.
The notification, which was contained in a letter to the company from the attorney general, Maura Healey, is the latest challenge to the practices of Gilead, which has become the largest and most profitable biotechnology company by dominating the market for drugs used to treat both H.I.V. and hepatitis C.
On Tuesday, the AIDS Healthcare Foundation, a nonprofit organization that treats patients with H.I.V. and AIDS, filed a lawsuit seeking to invalidate patents covering the new version of Gilead’s mainstay H.I.V. drug, tenofovir. The lawsuit also says that Gilead, to maximize product life span but to the detriment of patients, delayed the introduction of the new, safer version of tenofovir until the old version was about to lose patent protection.
The hepatitis C drugs, Sovaldi and Harvoni, are widely considered breakthroughs — curing most patients in 12 weeks with few side effects. But Sovaldi has a list price of $1,000 per daily pill, or $84,000 for 12 weeks, and Harvoni costs $94,500. Those prices, and the great demand for the drugs, have strained the budgets of state Medicaid programs and prison systems, forcing many of them to restrict treatment to those most seriously ill.
In her letter to Gilead’s chief executive, John C. Martin, Ms. Healey said her office was examining whether Gilead’s pricing would be an “unfair trade practice,” in violation of Massachusetts law.
“Because Gilead’s drugs offer a cure for a serious and life-threatening infectious disease, pricing the treatment in a manner that effectively allows H.C.V. to continue spreading through vulnerable populations, as opposed to eradicating the disease altogether, results in massive public harm,” she wrote, referring to the hepatitis C virus by its initials.
The letter does not go into detail on how Gilead’s pricing might violate the state law. A lawsuit filed by the Southeastern Pennsylvania Transportation Authority, which said Gilead’s high prices violated a California law against unfair competition, was dismissed by a federal judge.
However, Ms. Healey’s letter suggests her real intent was not to sue Gilead but to persuade it to voluntarily lower its prices.
Gilead said on Wednesday that it had contacted the attorney general to request a meeting to address questions and “ensure a mutual understanding of the work we are doing to deliver a cure for H.C.V. to as many patients as possible.”
Gilead has argued that the prices are justified by the value provided by the drugs, curing a disease that gradually destroys the liver. Use of Sovaldi or Harvoni can stave off more expensive ailments, like liver cancer or the need for a liver transplant, down the road.
The company has also argued that there are usually substantial discounts offered from the list prices, though these are typically kept secret. Insurers and others have bargained for discounts by pitting Gilead against its main competitor, AbbVie. Such bargaining should intensify with the expected regulatory approval this week of a new hepatitis C pill from Merck.
One motivation for Ms. Healey’s letter was a class-action lawsuit filed against Massachusetts’ Department of Correction asking for more inmates to be treated for hepatitis C. Ms. Healey’s letter said that treating everyone at the list price of Sovaldi would “easily exceed our entire budget for prisoner health care.”
In the H.I.V. area, Gilead has become the leading vendor based on products that combine three or four drugs into a single pill taken once a day. The bedrock drug in all those combinations has been tenofovir, which will lose patent protection in December 2017, allowing lower-priced generics to be sold.
Gilead is moving to replace tenofovir in the combination pills with a modified version called tenofovir alafenamide, usually called TAF, which will have longer patent protection. TAF is more potent than tenofovir and it causes fewer side effects, particularly kidney and bone damage. The Food and Drug Administration approved the first drug containing TAF, called Genvoya, in November.
In its lawsuit, filed in Federal District Court for Northern California, the AIDS Healthcare Foundation says that TAF is an obvious modification of tenofovir intended to stave off generic competition and therefore does not deserve patent protection.
The lawsuit also claims that Gilead is not releasing TAF as a stand-alone drug because its patents would be too easily challenged by generic companies. By contrast, the original tenofovir is sold as a single drug under the name Viread. The lack of a stand-alone TAF makes it impossible for doctors to use that one drug in a combination with non-Gilead drugs, the suit says.
The foundation, which has had a series of disputes with Gilead, also says that the company did not start clinical trials on TAF until 2011, despite presenting animal data 10 years earlier.
“They waited 10 years to actually release this, and coincidentally it’s one year before the patent on tenofovir expires,” Michael Weinstein, president of the AIDS Healthcare Foundation, said in an interview. “You consider how many people have suffered kidney damage and bone loss during that time.”
A Gilead spokeswoman said that the company believed the patents on TAF were valid. She said the company had recently filed for regulatory approval of a stand-alone version of TAF — albeit as a treatment for hepatitis B, not H.I.V.
“TAF is a novel compound,” she said. “We have been and continue to work hard to develop improved H.I.V. therapies, without delay.”