Gilead: Caught Between A Rock And A Hard Place In India

I had mentioned in my blog post of August 4, 2014, titled “Hepatitis C: A Silent, Deadly Disease: Treatment beyond reach of Most Indians” that in line with Gilead’s past approach to its HIV medicines, the company would offer to license production of sofosbuvir (brand name Sovaldi) to a number of rival low-cost Indian generic drug companies. They will be offered manufacturing knowhow, allowed to source and competitively price the product at whatever level they choose.

Sovaldi (sofosbuvir) is a once-a-day patented drug of Gilead for cure of chronic hepatitis C infection in most patients. Sovaldi has been priced at Rs 60,000 (US$ 1,000) per tablet in the developed markets with a three-month course costing Rs1.8 Crore (US$ 84,000), when it reportedly costs around U$130 to manufacture a tablet. This treatment cost is being considered very high even for many Americans and Europeans.

Gilead has also announced that it has set a minimum threshold price for Sovaldi of US$ 300 (Rs.18,000) a bottle, enough for a month. With three months typically required for a full course and taking into account the currently approved combination with interferon, the total cost of Sovaldi per patient would be about US$ 900 (Rs.54,000) for a complete treatment against its usual price of US$ 84,000 (Rs1.8 Crore). The company would offer this price to at least 80 countries.

Breaking-news in India:

On September 15, 2014, International media reported that Cipla, Ranbaxy, Strides Arcolab, Mylan, Cadila Healthcare, Hetero labs and Sequent Scientific are likely to sign in-licensing agreements with Gilead to sell low cost versions of Sovaldi in India.

It was also reported that these Indian generic manufacturers would be free to decide their own prices for sofosbuvir, ‘without any mandated floor price’.

Indian companies would require paying 7 per cent of their revenues as royalty to Gilead, which, in turn would ensure full technology transfer to them to produce both the Active Pharmaceutical Ingredients (API) and finished formulations. The generic version of Sovaldi is likely to be available in India in the second or third quarter of 2015, at the earliest.

Another reason of Gilead’s selecting the Indian generic manufacturers could possibly be, that of much of the global supply of generic finished formulations is manufactured in India, especially for the developing countries of the world.

Patent status, broad strategy and the possibility:

It is worth noting here that the Indian Patent Office (IPO) has not recognized Sovaldi’s (sofosbuvir) patent for the domestic market, just yet. This patent application has been opposed on the ground that it is an “old science, known compound.”

It is interesting that the Indian Pharmaceutical Association (IPA) and others, such as, Delhi Network of Positive People and Natco have reportedly opposed Sovaldi’s (sofosbuvir) patent application. If the patent for this drug does not come through, low priced generic versions of Sovaldi, without any licensing agreement with Gilead, would possibly capture the Indian market.

Conversely, due to unaffordable price of Sovaldi for most of the Hepatitis C patients, even if a patent is granted for this drug in India, the sword of Compulsory License (CL) on the ground of ‘reasonably affordable price’ looms large on this product.

To negate the possibility of any CL, in the best-case scenario of a patent grant, Gilead seems to have decided to enter into licensing agreement with seven other Indian generic manufacturers to create a sense of adequate competition in the market, as many believe.

However, if the IPO considers sofosbuvir not patentable in India, it would indeed be a double whammy for Gilead. Without any patent protection, all these in licensing agreements may also fall flat on the face, paving the way of greater access of much lesser priced generic sofosbuvir to patients, as indicated above.

The action replay:

If we flash back to the year 2006, we shall see that Gilead had followed exactly the same strategy for another of its patented product tenofovir, used in the treatment of HIV/AIDS.

1. Voluntary license:

At that time also Gilead announced that it is offering non-exclusive, voluntary licenses to generic manufacturers in India for the local Indian market, along with provision for those manufacturers to export tenofovir formulations to 97 other developing countries, as identified by Gilead.

Gilead did sign a voluntary licensing agreement with Ranbaxy for tenofovir in 2006.

The arrangement was somewhat like this. Gilead would charge a royalty of 5 percent on the access price of US$ 200 a year for the drug. Any company that signs a manufacturing agreement with Gilead to manufacture API of tenofovir would be able to sell them only to those generic manufacturers that have voluntary license agreements with Gilead.

Interestingly, by that time Cipla had started selling one of the two versions of tenofovir, not licensed by Gilead. Cipla’s generic version was named Tenvir, available at a price of US$ 700 per person per year in India, against Gilead’s tenofovir (Viread) price of US$ 5,718 per patient per year in the developed Markets. Gilead’s target price for tenofovir in India was US$ 200 per month, as stated above.

2. Patent challenge:

Like sofosbuvir (Sovaldi), Gilead had filed a patent application for tenofovir (Viread) in India at that time. However, the ‘Indian Network for People Living with HIV/AIDs’ challenged this patent application on similar grounds.

3. Patent grant refused:

In September 2009, IPO refused the grant of patent for tenofovir to Gilead, citing specific reasons  for its non-conformance to the Indian Patents Act 2005. As a result, the voluntary license agreements that Gilead had already signed with the Indian generic manufacturers were in jeopardy.

Current status:

In 2014, while planning the launch strategy of sofosbuvir (Sovaldi) for India, Gilead seems to have mimicked the ‘Action Replay’ of 2006 involving tenofovir, at least, in the first two stages, as detailed above. Only the patent status of sofosbuvir from the IPO is now awaited. If IPO refuses patent grant for sofosbuvir, Gilead’s fate in India with sofosbuvir could exactly be the same as tenofovir, almost frame by frame.

Gilead and the two top players in India:

Very briefly, I would deliberate below the strategic stance taken by two top generic players in india, from 2006 to 2014, in entering into voluntary licensing agreements with Gilead  for two of its big products, as I understand.

Ranbaxy:

In my view, the stand of Ranbaxy in Gilead’s India strategy of voluntary licensing in the last eight years has remained unchanged. It involves both sofosbuvir and tenofovir.Thus, there has been a clear consistency in approach on the part of Ranbaxy on this issue.

Cipla:

Conversely, an apparent shift in Cipla’s strategic position during this period has become a bone of contention to many. For tenofovir, Cipla did not sign any voluntary license agreement with Gilead. On the contrary, it came out with its own version of this product, that too much before IPO refused to grant patent for this drug.

However, unlike 2006, Cipla decided to sign a voluntary license agreement with Gilead for sofosbuvir (Sovaldi) in 2014, though no patent has yet been granted for this product in India.

Has Cipla changed its position on drug patent?

I find in various reports that this contentious issue keeps coming up every now and then today. Some die-hards have expressed disappointments. Others articulated that the new dispensation in Cipla management, has decided to take a different stance in such matter altogether.

In my view, no tectonic shift has taken place in Cipla’s position on the drug patent issue, just yet.

The owner of Cipla, the legendary Dr.Yusuf Hamied has always been saying: ‘I Am Not Against Patents … I Am Against Monopolies’

He has also reportedly been quoted saying: “About 70 per cent of the patented drugs sold worldwide are not invented by the owning companies”.

He had urged the government, instead of having to fight for CL for expensive lifesaving medicines by the generic drug makers, where voluntary licenses are not forthcoming, the government needs to pass a law giving the generic players “automatic license of rights” for such drugs, making these medicines affordable and thereby improving access to patients. In return, the local generic manufacturers would pay 4 percent royalty on net sales to patent holders. He was also very candid in articulating, if Big Pharma would come into the developing markets, like India, with reasonable prices, Cipla would not come out against it.

According to Dr. Hamied, “When you are in healthcare, you are saving lives. You have to have a humanitarian approach. You have to take into account what it costs to make and what people can pay.”

Considering all these, I reckon, the core value of Cipla and its stand on patents have not changed much, if at all, for the following reasons:

  • The voluntary license agreement of Cipla with Gilead for sofosbuvir (Sovaldi) along with six other generic manufacturers of India, unlike tenofovir, still vindicates its strong opposition to drug monopoly, respecting product patents.
  • Cipla along with manufacturing of sofosbuvir, maintains its right to market the product at a price that it considers affordable for the patients in India.

Conclusion:

Indian Patents Act 2005 has the requisite teeth to tame the most aggressive and ruthless players in drug pricing even for the most feared diseases of the world, such as, HIV/AIDS, cancer, Hepatitis C and others.

Many global drug companies, resourceful international pharma lobby groups and governments in the developed world are opposing this commendable Act, tooth and nail, generating enormous international political pressure and even chasing it in the highest court of law in India, but in vain. Glivec case is just one example.

Some pharma majors of the world seem to be attempting to overcome this Act, which serves as the legal gatekeeper for the patients’ interest in India. Their strategy includes not just voluntary licenses, but also not so transparent, though well hyped, ‘Patient Access Programs’ and the so called ‘flexible pricing’, mostly when the concerned companies are able to sense that the product patents could fail to pass the scrutiny of the Indian Patents Act 2005.

It has happened once with even Gilead in 2006. The drug was tenofovir. Following the same old strategy of voluntary licenses and relatively lower pricing, especially when its drug patent is pending with IPO post patent challenges, Gilead intends to launch Sovaldi in India now.

Carrying the baggage of its past in India, Gilead seems to have been caught between a rock and the hard place with sofosbuvir (Sovaldi) launch in the country. On the one hand, the risk of uncertain outcome of its patent application and on the other, the risk of CL for exorbitant high price of the drug, if the patent is granted by the IPO. Probably considering all these, the company decided to repeat its 2006 tenofovir strategy of voluntary licenses, yet again in 2014, for Sovaldi in India.

As of today, Sovaldi strategy of Gilead in India appears to be progressing in the same direction as tenofovir, the way I see it. However, the final decision of IPO on the grant of its patent holds the key to future success of similar high-voltage, seemingly benign, marketing warfare of pharma majors of the world.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

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