Gilead's U.S. pricing on HIV meds draws fire

Gilead Sciences chief John Martin (photo) figures his HIV drugs won't earn much in under-developed countries. And if the drugs won't earn much there, then the patents on them aren't worth much, either. That's why Gilead gives away those patents, Martin told CNN Money in an interview. And doing so gets sorely needed AIDS drugs to patients in the developing world much faster.

The company trains Indian generics makers to make Gilead HIV fighters and allows those companies to distribute them in certain markets. That approach gets Gilead's meds on the market quickly, Martin says. "When an Indian generic company develops its version of a drug that's on the market, it can take about two years," he told CNN Money. "By us transferring the technology, it can be done much more cheaply by them and in only about five months."

But the company is coming under pressure from AIDS activists and state governments for its pricing. Atripla, a commonly used three-way combo drug, costs more than $20,000 per year. The cash-strapped state of California recently asked Gilead to lower Atripla's price--now $10,000 for state drug-access programs--saying patients could lose access to treatment. Indeed, programs across the country are struggling as budget cuts eat into their ability to provide medications to clients.

Today, at the company's annual meeting, activists are planning to protest outside. The AIDS Healthcare Foundation is also planning to question Gilead executives during the meeting, according to a statement. AHP claims Gilead sells Atripla "at cost" for $600 per year in developing countries, suggesting that there's plenty of wiggle room to drop U.S. prices.

Of course, pricing is a complicated subject in pharma. Developing countries need cheap drugs, and governments in the developed world are pressuring prices downward. And even though healthcare reform and other factors may be pressuring U.S. prices, the American market still bears higher drug costs and accounts for a huge portion of worldwide sales. Cost versus price isn't as clear cut as it looks. Then again, if state programs can't afford the higher prices, then lower sales volume could cut into revenues, too.

- get the release from AHP
- see the interview at CNN Money