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How Gilead slowly cashed in on a promising HIV therapy




In 2004, Gilead Sciences decided to stop pursuing a new HIV drug. The public explanation was that it was not sufficiently different from an existing treatment to justify further development.

Privately, however, something else was at play. Gilead had drawn up a plan to delay the release of the new drug to maximize profits, even though executives had reason to believe it might prove safer for patients, according to a series of internal documents made public in lawsuits against the company.

Gilead, one of the world’s largest drugmakers, appeared to be embracing a well-worn industry tactic: gambling on the US patent system to protect lucrative monopolies on top-selling drugs.

At the time, Gilead already had a couple of popular HIV treatments, both of which were underpinned by a version of a drug called tenofovir. The first of these treatments was due to lose patent protection in 2017, when competitors would be free to introduce cheaper alternatives.

The promising drug, then in the early stages of testing, was an updated version of tenofovir. Gilead executives knew it had the potential to be less toxic to patients’ kidneys and bones than the previous iteration, according to internal memos unearthed by lawyers suing Gilead on behalf of patients.

Despite the potential benefits, executives concluded that the new version risked competing with the company’s existing, patent-protected formulation. If they delayed the release of the new product until shortly before the existing patents expired, the company could increase the period of time during which at least one of the HIV treatments remains protected by patents.

The “patent extension strategy,” as the Gilead documents repeatedly called it, would allow the company to keep prices high for its tenofovir-based drugs. Gilead can switch patients to its new drug just before cheap generics hit the market. By setting tenofovir on a path to remain a moneymaker for decades, the strategy was potentially worth billions of dollars.

Gilead ended up introducing a version of the new treatment in 2015, nearly a decade after it might have become available had the company not halted development in 2004. The patents now run until at least 2031.

The delayed release of the new treatment is now the subject of state and federal lawsuits in which about 26,000 patients who took Gilead’s older HIV drugs claim the company unnecessarily exposed them to kidney and bone problems.

In court documents, Gilead’s lawyers said the allegations were unfair. They denied that the company stopped development of the drug to increase profits. They cited an internal memo from 2004 that estimated Gilead could increase its revenue by $1 billion over six years if it released the new version in 2008.

“Had Gilead been motivated by profit alone, as the plaintiffs claim, the logical decision would have been to accelerate” the development of the new version, the lawyers wrote.

Gilead’s top lawyer, Deborah Telman, said in a statement that the company’s “research and development decisions have always been, and continue to be, guided by our focus on delivering safe and effective medicines to the people who prescribe and use them.”

Today, a generation of expensive Gilead drugs containing the new iteration of tenofovir accounts for half of the HIV treatment and prevention market, according to IQVIA, an industry data provider. A widely used product, Descovy, has a sticker price of $26,000 annually. Generic versions of its predecessor Truvada, whose patents have expired, now cost less than $400 a year.

If Gilead had gone ahead with the development of the updated iteration of the drug back in 2004, the patents would either have expired by now or soon would.

“We should all take a step back and ask: How did we let this happen?” said James Krellenstein, a longtime AIDS activist who has advised lawyers suing Gilead. He added, “This is what happens when a company intentionally delays the development of an HIV drug for monopolistic purposes.”

Gilead’s apparent maneuver with tenofovir is so common in the pharmaceutical industry that it has a name: product hopping. Companies get rid of the monopoly on a drug, and shortly before generic competition arrives, they switch – or “jump” – patients to a newer patented version of the drug to extend the monopoly.

Drugmaker Merck, for example, is developing a version of its blockbuster cancer drug Keytruda that can be injected under the skin and is likely to expand the company’s revenue streams for years after the infused version of the drug faces its first competition from other companies in 2028. (Julie Cunningham, a spokeswoman for Merck, denied that it is engaged in a new version of the innovation. out of convenience for patients and their families.”)

Christopher Morten, an expert on pharmaceutical patent law at Columbia University, said the Gilead case shows how the US patent system creates incentives for companies to slow innovation.

“There is something profoundly wrong that happened here,” said Morten, who provides pro bono legal services to an HIV advocacy group that in 2019 unsuccessfully challenged Gilead’s attempt to extend the life of its patents. “The patent system actually encouraged Gilead to delay the development and launch of a new product.”

David Swisher, who lives in Central Florida, is one of the plaintiffs suing Gilead in federal court. He took Truvada for 12 years, starting in 2004, and developed kidney disease and osteoporosis. Four years ago, when he was 62, he said his doctor told him he had “the legs of a 90-year-old woman”.

It wasn’t until 2016, when Descovy was finally on the market, that Mr. Swisher switched off Truvada, which he believed was harming him. By that time, he said, he had become too ill to work and had resigned from his job as operations manager for the airline.

“I feel like the whole time was taken away from me,” he said.

First synthesized in the 1980s by researchers in what was then Czechoslovakia, tenofovir was the springboard for Gilead’s dominance of the HIV treatment and prevention market

In 2001, the Food and Drug Administration first approved a product containing Gilead’s first iteration of tenofovir. Four more were to follow. The drugs prevent the replication of HIV, the virus that causes AIDS.

They became game changers in the fight against AIDS, credited with saving millions of lives worldwide. The drugs came to be used not only as a treatment, but also as a prophylactic for those at risk of becoming infected.

But a small percentage of patients taking the drug to treat HIV developed kidney and bone problems. It proved especially risky when it was combined with booster drugs to increase effectiveness — a practice that was once common but has since fallen out of favor. The World Health Organization and the US National Institutes of Health advise against the use of the original version of tenofovir in people with osteoporosis or kidney disease.

The newer version does not cause these problems, but it can lead to weight gain and elevated cholesterol levels. For most people, experts say, the two tenofovir-based drugs — the first known as TDF, the other called TAF — present roughly equal risks and benefits.

Internal company records from the early 2000s show that Gilead executives at times wrestled with whether to rush the new formulation to market. At some points, the documents suggest that the two iterations of tenofovir are similar from a safety standpoint.

But other memos indicate that the company believed the updated formula was less toxic, based on laboratory and animal studies. These studies showed that the newer formulation had two advantages that could reduce side effects. It was much better than the original at delivering tenofovir to target cells, meaning much less of it leaked into the bloodstream, where it could travel to the kidneys and bones. And it can be given in a lower dose.

The new version “may translate to a better side effect profile and less drug-related toxicity,” read an internal memo in 2002.

In the same year, the first human clinical trial of the newer version began. A Gilead employee mapped out a development timeline that would have brought the newer formulation to market in 2006.

But by 2003, Gilead executives began to fret about rushing ahead. They worried that this would “ultimately cannibalize” the growing market for the older version of tenofovir, according to minutes of an internal meeting. Gilead’s head of research at the time, Norbert Bischofberger, instructed company analysts to explore the new formulation’s potential as an “intellectual property expansion strategy,” according to a colleague’s email.

This analysis resulted in a September 2003 memo that described how Gilead would develop the newer formulation to “replace” the original, with development “timed to launch in 2015.” In a best-case scenario, the company’s analysts calculated, their strategy would generate more than $1 billion in annual profits between 2018 and 2020.

Gilead moved to revive the newer formulation in 2010, putting it on track for release in 2015. John Milligan, Gilead’s president and future CEO, told investors it would be a “kinder, milder version” of tenofovir.

After winning regulatory approvals, the company launched a successful marketing campaign, targeting doctors, promoting its new iteration as safer for kidneys and bones than the original.

By 2021, according to Ipsos, a market research firm, nearly half a million HIV patients in the United States were taking Gilead products containing the new version of tenofovir.

Susan C. Beachy contributed research.



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