China rejects Gilead patent for hep C cure Sovaldi

China has upended a Gilead Sciences' ($GILD) patent on its pricey hep C drug Sovaldi, a move that health advocacy groups loudly applauded today. The patent overturned was not the only IP Gilead holds on Sovaldi, but when Gilead found itself in a similar position with China two years ago, it allowed discounted copies to be made.

China rejected Gilead's prodrug patent for the inactive form of Sovaldi which is converted in the body to the chemically active compound, Reuters explained, citing the information from New York-based Initiative for Medicines, Access & Knowledge (I-MAK). A notice on the website for China's State Intellectual Property Office appeared to confirm the rejection, the news service said.

But Gilead continues to hold the China patent to active ingredient sofosbuvir so the the prodrug decision does not immediately open the floodgates to sales of copies there, Reuters said. Gilead has been in a similar position with China before. In 2013, China's State Intellectual Property Office (SIPO) yanked a patent for its popular HIV and hepatitis B drug Viread (tenofovir). In that situation, Gilead still held the patent on the compound. A year later it allowed copies of the drug to be made in China and India by putting it into a patent pool.

Gilead, facing pressure over the $1,000-a-pill price for Sovaldi before discounts, has struck deals with generics makers to provide discounted copies of Sovaldi in 91 developing countries. But it exempted 5 from that offer, China, Argentina, Brazil, Russia and Ukraine. I-MAK has challenged its patents in those countries.

Médecins Sans Frontières (MSF), which has also been a critic of Gilead's pricing of the hepatitis cure, said in a statement that "China's rejection of a key patent on sofosbuvir goes to show that there are serious questions about whether this drug merits patenting, and sends a strong signal to other countries that are currently reviewing patent applications for the drug."

Gilead has already run into IP problems in India, when the country's intellectual-property police rejected a key patent on Sovaldi, opening the door for cheap generic copies from domestic drugmakers such as Natco Pharma. And the cost of $84,000 for a 12-week regimen, has resulted in backlashes even in the U.S. and Europe, where Gilead has had to negotiate significant discounts for the drug, particularly since a competing treatment from AbbVie ($ABBV) hit the market late last year. Gilead has defended the prices by curing most patients, they will prevent health programs from having to pay for complications like liver transplants but the pressure has been constant.

Just last month, Sen. Bernie Sanders asked Veterans Affairs Secretary Robert McDonald to break the patents on Gilead's hepatitis C treatment Sovaldi relying on a wartime provision for fighting profiteering. The request came after he discovered the VA had stopped treating new hep C patients with Gilead's drugs because it didn't have the money to pay for them.

But Gilead has already reaped huge rewards from its hep C breakthroughs. Revenue in Q1 soared 52% to $7.59 billion, with sales of Sovaldi and Harvoni combined raking in $4.55 billion of that amount. That was $1 billion more than analyst consensus.

- read the Reuters story