Hong Kong's cheaper prices for Sovaldi, Herceptin and other drugs draw throngs

Gilead Sciences' ($GILD) hep C drug Sovaldi is not yet available on mainland China, at least not legitimately. But it is in Hong Kong, and buyers who ask quietly at small pharmacies along Nathan Road can expect to get it, and many other top-tier drugs, without a prescription.

With lifesaving drugs often unavailable, or too costly for many Chinese, a gray market in Hong Kong has grown up around some of the world's most in-demand drugs like Sovaldi, or AbbVie's ($ABBV) competing hep C drug treatment Viekira Pak, Novartis' ($NVS) Glivec for leukemia, or Bayer's Nexavar for liver cancer, Bloomberg reports.

Prices may run about the same as what the drugs cost in the U.S., but usually are much cheaper than what it would cost on the mainland. Neil Wang, managing director for Frost & Sullivan in China told the news service that a 17% duty on drugs and additional costs tied to distribution make premium drugs in China some of highest priced in the world. That puts them out of reach of many Chinese, who must pay themselves for such meds. When they can be found at cheaper prices there, chances are they are fakes.

It is a different story in Hong Kong, where the import duty is not applied. And because it has its own drug approval process, drugs not available on the mainland often can be found there. One woman in a pharmacy told Bloomberg she had bought a 440-mg vial of Herceptin for her cousin, who was just diagnosed with cancer. The HK$20,000 ($2,580) it cost her was about 30% cheaper than it would have cost her at home.

Probably 90% of the drugs the pharmacies sell are to tourists from the mainland, William Chui, president of the Society of Hospital Pharmacists of Hong Kong, told Bloomberg. Local patients get their meds direct from their doctors. The pharmacies are not supposed to sell drugs to people without prescriptions, and drugmakers and Hong Kong regulators try to monitor the situation. Pharmacists caught violating the law can face a HK$100,000 fine and a couple of years in jail. But 4,775 inspections between 2011 and 2014 resulted in 67 convictions.

China is not the only country seeing medical tourists, and Chinese citizens are not the only ones willing to travel for a chance to get cheaper meds. Gilead priced Sovaldi at $84,000 and combo med Harvoni at $94,500 for a 12-week regimen in the U.S. In some developing countries where patients often lack insurance, it agreed to allow Indian generics makers to sell them at drastically reduced prices. Sovaldi can reportedly be bought in India for $1,000 for a full course instead of $1,000 a pill like in the U.S. So companies that have been in the business of arranging medical-related trips abroad for things like joint replacements are now offering channels for those looking to get their hepatitis C treatments cheaper.

- read the Bloomberg story

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