Maths of Gilead's hep­ati­tis C drug

Why US firm's su­per ex­pen­sive drug so­fos­bu­vir costs so much and how it can be made at a tenth of cur­rent price

Down to Earth - - COLUMN - DOWN TO EARTH

TPa­tent Of­fice’s re­jec­tion of one of Gilead HE IN­DIAN Sciences’ patents on so­fos­bu­vir, which is used to treat the killer hep­ati­tis C (hep C) in­fec­tion, has put the spot­light back on the whop­ping cost of this drug. Treat­ment over a 12-week pe­riod costs $84,000, or an eye-pop­ping $1,000 per pill per day, a price that not many even in the pros­per­ous parts of the world can af­ford.

So­fos­bu­vir, sold un­der the brand name So­valdi, is a block­buster drug that has rev­o­lu­tionised the treat­ment of hep C since it was ap­proved in 2013. The new ther­apy is vastly more ef­fec­tive than the ear­lier weekly in­jec­tion reg­i­men spread over a year. Be­sides, un­like the ear­lier drugs, so­fos­bu­vir is said to have less side ef­fects.

But this good news is off­set by the pro­hib­i­tive price of the drug, which is mak­ing even the UK’s Na­tional Health Ser­vice baulk at pre­scrib­ing it. One es­ti­mate puts the tab at £1bil­lon ($1.5 bil­lion) for ev­ery 20,000 peo­ple treated. Gilead’s “price goug­ing”, as some health ac­tivists have termed it, re­vives the de­bate on how much it costs to bring a drug to the mar­ket and what pharma com­pa­nies are jus­ti­fied in charg­ing to re­cover their in­vest­ment in re­search and devel­op­ment. For long, drug com­pa­nies have claimed that it costs at least $1 bil­lion to launch a suc­cess­ful drug but th­ese claims have been ex­posed by many in­dus­try an­a­lysts.The most fa­mous ex­pose was by Mar­cia An­gell whose 2004 book, The Truth About the Drug Com­pa­nies: How They De­ceive Us and What to Do About It, showed that in­vest­ment on R&D was less than half of the amount spent on sales, mar­ket­ing and lob­by­ing.

While pharma com­pa­nies may swear that their pri­mary mo­ti­va­tion is drug dis­cov­ery and peo­ple’s health, they would find it im­pos­si­ble to deny they are profit-driven en­ti­ties driven by the mar­ket. In 2011, Gilead bought Phar­mas­set, a Prince­ton-based pharma com­pany en­gaged in the devel­op­ment of oral ther­a­pies for treat­ing hep C in­fec­tion. It paid an as­tro­nom­i­cal $11 bil­lion for a com­pany which was val­ued at just $5 bil­lion. Yet, Gilead made a strate­gic ac­qui­si­tion, bor­row­ing money for an all cash deal.One mar­ket an­a­lyst pointed out acidly at the time that a com­pany “can do a lot of re­search for $11 bil­lion”—if it wanted to do so, that is. In­dus­try in­sid­ers agree. Jeff Wil­liams, who heads Clin­i­pace, a con­tract-re­search or­gan­i­sa­tion, was quoted in a re­cent ar­ti­cle in The Econ­o­mist as say­ing that the small-to-medium com­pa­nies that his firm works for man­age to de­velop their drugs for less than $500 mil­lion.

But Gilead was clear it wanted to strad­dle the ex­pand­ing anti-vi­ral space, and buy­ing Phar­mas­set is a gam­ble that has paid off hand­somely. So­fos­bu­vir is a block­buster that has sent its rev­enues and prof­its sky­rock­et­ing. In 2014, rev­enues more than dou­bled to $24.2 bil­lion, and, ac­cord­ing to an­a­lysts’ es­ti­mates quoted by Bloomberg, earn­ings are pro­jected to touch $12.8 bil­lion. This is four times the 2013 fig­ure.

Now comes a most in­ter­est­ing re­port from Liver­pool Uni­ver­sity, UK. A re­search project led by An­drew Hill of the uni­ver­sity’s Depart­ment of Phar­ma­col­ogy and Ther­a­peu­tics, says that af­ford­able generic ver­sions of so­fos­bu­vir can be pro­duced at less than a tenth of the cur­rent price charged by Gilead if there are “no patent re­stric­tions on pro­duc­tion and pro­cure­ment of large or­ders for drug man­u­fac­ture by generic com­pa­nies”. Their pro­jec­tion: $68-136 to make so­fos­bu­vir in about 15 years.

Gilead, mean­while, is ap­peal­ing In­dia’s re­jec­tion of the patent on its base com­pound on the ground that it lacked nov­elty. There are other un­cer­tain­ties be­cause more claims on So­fos­bu­vir are pending. For In­dia’s 18 mil­lion hep C pa­tients it’s go­ing to be a long wait.

TARIQUE AZIZ / CSE

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