Gilead Sciences' ($GILD) new hepatitis C drug sofosbuvir won preliminary backing from European regulators on Friday, with marketing approval expected to follow soon. The FDA is expected to clear the drug for takeoff Dec. 8, if not sooner. All good for the California-based drugmaker, best known for its HIV treatments.
But there's a battle over sofosbuvir brewing in India. Patient advocates have filed to block patent protection for the drug. The Initiative for Medicines, Access & Knowledge (I-MAK) says sofosbuvir's price tag--estimated at $80,000 in the U.S.--will put it far out of reach of Indian patients. Even if the drug is heavily discounted for that market, most patients still won't have access to the treatment. And with millions of people infected and other treatment alternatives both difficult to administer and difficult to tolerate, most would go untreated.
The justification for petitioning Indian patent officials to turn away Gilead's patent application? "Old science, existing compound," I-MAK director Tahir Amin said in a press release from Médecins Sans Frontières. "India's patent law doesn't give monopolies for old science or for compounds that are already in the public domain. We believe this patent on sofosbuvir does not deserve to be granted in India and have the legal grounds to prove it."
That idea is in stark contrast to the story line in the U.S and Europe, where sofosbuvir is seen as a breakthrough treatment that will not only shorten the duration of therapy and make it more tolerable, but improve cure rates as well. Doctors have been warehousing patients in anticipation of its approval, along with a raft of other new-generation hep C pills. And Gilead has put sofosbuvir through its paces with an ambitious--and costly--development program.
MSF doesn't dispute sofosbuvir's benefits for hep C patients; it protests only against barriers to its use. Fighting IP protections is a logical choice, especially in India, where patent officials and courts have been skeptical of foreign drugmakers' patents--and the pricing power they convey. Novartis ($NVS) fought for a patent on its blood-cancer treatment Glivec for years, and all the way to the Indian Supreme Court, only to be turned away in the end. The Swiss drugmaker is still locking horns with Indian officials over the country's approach to pharma IP.
Meanwhile, the Indian government forced Bayer to license its on-patent drug Nexavar to local drugmaker Natco Pharma, which is turning out a discount-priced version. And the Indian patent office has revoked patents on a series of Big Pharma drugs, including Roche's ($RHHBY) hep C treatment Pegasys.
The patent wrangle is just a manifestation of the larger question: How much should multinational drugmakers charge for their cutting-edge products in poor countries? Do companies have an obligation to provide low-cost treatments to the developing world? Should brand-new products sold at a premium in the U.S., Europe and Japan be available immediately at a fraction of the price in India and Africa?
MSF says "not much," "yes," and "yes." Drugmakers agree--but only to a point. Companies have made deals to open access to their products, such as GlaxoSmithKline ($GSK) and Merck's ($MRK) arrangements to sell their human papillomavirus (HPV) shots to GAVI at vastly reduced prices. Gilead itself has set up partnerships with generics makers to turn out discounted HIV meds. A variety of drugmakers participate in a patent pool designed to allow generics makers to knock off brand-name meds sooner in the developing world. Glaxo and Sanofi ($SNY), among others, have slashed prices in emerging markets, not just to get more treatments to more people, but as a market-share strategy.
Just last week, the IMS Institute for Health Informatics released its annual report on drug spending, and once again, the report reinforced pharma's need to tap growth in emerging markets. These developing countries, particularly China, are putting Europe to shame on the growth side, and percentage-wise, they far outstrip increases in U.S. spending. If drugmakers can only sell their branded products there at pennies on the dollar, will that be enough to counteract the sluggish growth elsewhere?
The bottom line is whether Gilead and its peers can be expected to plow billions into new drug development, with only the promise of profits in the U.S. and other wealthy markets. MSF and other advocacy groups point to Big Pharma's profit margins, dividends and buyback programs, suggesting that drugmakers can afford to be magnanimous in needy nations. Unless drugmakers can make the market-share case as GSK and Sanofi have, investors are unlikely to agree.
- read the release from MSF
Special Reports: Top 10 Drugmakers in Emerging Markets - GSK - Sanofi | Top 10 Generics Makers by 2012 Revenue