China revokes patent on Gilead's Viread

Gilead Sciences ($GILD) reportedly saw the writing on the wall a year ago when China created a compulsory licensing law. Its popular HIV and hepatitis B drug Viread (tenofovir) was seen as a potential target, and so Gilead started offering it at a discount. But apparently that was not enough. In another swipe at the intellectual property of drugmakers in emerging markets, China's State Intellectual Property Office (SIPO) has yanked the patent for Viread, saying it lacks novelty.

"It is a fairly groundbreaking decision," Robert McTiernan of IHS Healthcare told BioWorld. He sees it as another move by China to gain negotiating power over drug prices in the face of a burgeoning healthcare budget. "The big trend is that they want pharma companies to be more flexible on pricing. They will likely be able to use this decision to negotiate lower prices on more drugs."

The revocation came on a challenge from Chinese API maker Aurisco. Because China invalidated the patent instead of using its compulsory licensing law, any drugmaker will be able to produce tenofovir. The move is expected to at least halve the cost of the drug from its current ¥1,470 ($240) a month price, according to BioWorld. China's healthcare system covers about half of its citizens' healthcare costs, with the rest generally coming out of their pockets. The country has a growing HIV/AIDS population and as many as 30 million people with chronic hepatitis B. "There is a really serious [problem] in the country," McTiernan said.

Gilead spokesman Nick Francis said in an email, "We are currently reviewing the notice (which we received late July) from the Chinese Patent Review Board and evaluating our options. The notice from the PRB refers to one of the patents covering TDF. There is an additional patent covering the compound that is not affected by this ruling."

Branded drug makers are finding themselves in a very complex dance with authorities in emerging markets, which have growing middle-class populations that can afford drugs but also large segments that are impoverished. With governments, or nongovernmental organizations, often footing the bills for drugs, there is a constant agitation to make life-saving medicines available to the poor at the lowest possible prices. Gilead reportedly began offering the government a two-for-one deal on Viread last year, agreeing to donate as much as the government agreed to buy. But it also cut China out when it made the drug available in some other markets for a small royalty through the Medicines Patent Pool, BioWorld reported.

It has been a particularly tough week for Western drugmakers when it comes to IP rights. India's Kolkata Patent Office a few days ago pulled divisional patents for Roche's ($RHHBY) breast cancer drug Herceptin, saying they were not filed correctly. That came days after India stripped GlaxoSmithKline ($GSK) of the patent on Tykerb, also a breast cancer drug. The move on Herceptin came even though the Swiss drugmaker has partnered with Indian drugmaker Emcure Pharmaceuticals to produce cheaper versions of Herceptin and MabThera, known elsewhere as Rituxan. The company had indicated recently that Herceptin's price in India would be cut by 31% to $1,366 per month. Roche said it was considering its options after authorities pulled the patents.

For years, Gilead has been fighting patent challenges on tenofovir, its third-best-selling drug, with $849 million in sales last year. Brazil declared the patent invalid there in 2008. Early this year, Gilead settled a long-running patent challenge from Teva Pharmaceutical Industries ($TEVA), granting the generics maker the right to launch its version in December 2017.

- read the BioWorld story

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