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In 2004, Gilead Sciences decided to stop looking for a new HIV drug. THE public explanation was that it was not sufficiently different from an existing treatment to warrant further development.
Privately, however, something else was at stake. Gilead had devised 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 trove of internal documents made public in litigation against the company.
Gilead, one of the world’s largest drugmakers, appears to be adopting a well-known industry tactic: playing on the US patent system to protect lucrative monopolies on top-selling drugs.
At the time, Gilead already had a pair of successful HIV treatments, both backed 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 leaders knew he had the potential to be less toxic to patients’ kidneys and bones than the previous version, according to internal memos uncovered by attorneys who are suing Gilead on behalf of patients.
Despite these possible 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 significantly increase the period that at least one of its HIV treatments would remain under patent protection.
The “patent extension strategy,” as Gilead documents repeatedly called it, would allow the company to keep prices high for its tenofovir drugs. Gilead could switch patients to its new drug just before cheap generics hit the market. Putting tenofovir on a path to remain a lucrative juggernaut 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 been available had the company not halted development in 2004. Its patents now extend until at least 2031.
The delayed release of the new treatment is now the subject of state and federal lawsuits in which some 26,000 patients who took Gilead’s old HIV drugs say the company unnecessarily exposed them to kidney and bone problems.
In court filings, Gilead’s attorneys said the allegations were baseless. They denied that the company halted development of the drug to boost profits. They cited a 2004 internal memo that estimated Gilead could increase revenue by $1 billion over six years if it released the new version in 2008.
“If Gilead had been driven solely by profit, as plaintiffs claim, the logical decision would have been to accelerate” development of the new version, the lawyers wrote.
Gilead’s lead attorney, Deborah Telman, said in a statement that “the company’s research and development decisions have always been, and continue to be, guided by our goal to provide 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 per year. Generic versions of its predecessor Truvada, whose patents have expired, now cost less than $400 a year.
If Gilead had moved forward with development of the updated iteration of the drug in 2004, its patents would have already expired or would soon.
“We should all take a step back and ask ourselves: how did we allow this to happen? said James Krellenstein, a longtime AIDS activist who has advised attorneys suing Gilead. He added: “This is what happens when a company intentionally delays the development of an HIV drug for monopoly gain.”
Gilead’s apparent tenofovir maneuver is so common in the pharmaceutical industry that it has a name: product skipping. Companies get rid of their monopoly on a drug and then, shortly before generic competition arrives, they switch – or “jump” – patients to a more recently patented version of the drug to extend the monopoly.
Drugmaker Merck, for example, is developing a version of its flagship 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 faced its first competition from other companies in 2028.
Christopher Morten, an expert in pharmaceutical patent law at Columbia University, said the Gilead case shows how the US patent system incentivizes companies to slow down innovation.
“There is something profoundly wrong that happened here,” said Mr Morten, who provides pro bono legal services to an HIV advocacy group which in 2019 without success challenged Gilead’s efforts 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 says, his doctor told him he had “the bones of a 90-year-old woman.”
It wasn’t until 2016, when Descovy finally hit the market, that Swisher turned off Truvada, which he said was hurting him. By then, he said, he had become too ill to work and had retired from his position as director of flight operations.
“I feel like all that time has been 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 in 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 would follow. The drugs prevent the replication of HIV, the virus that causes AIDS.
They have become decisive players in the fight against AIDS, credited with having saved millions of lives around the world. 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 who took the drug to treat HIV developed kidney and bone problems. It has proven to be particularly risky when combined with booster medications to improve its effectiveness – a practice that was once common but has since fallen out of favor. THE World Health Organization and the United States National Institutes of Health discourage the use of the original version of tenofovir in people with weak bones or kidney disease.
The newer version does not cause these problems, but it can cause weight gain and elevated cholesterol levels. For most people, experts say, the two tenofovir drugs – the first known as TDFthe second called job — offer roughly equal risks and benefits.
Internal company records from the early 2000s show that Gilead executives sometimes debated whether to rush the new formulation to market. At times, the documents present the two iterations of tenofovir as similar from a safety standpoint.
But other memos say the company believed the updated formula was less toxic, based on lab and animal studies. These studies showed that the new formulation had two advantages that could reduce side effects. It was much better than the original at delivering tenofovir to its target cells, which meant that much less tenofovir leaked into the bloodstream, where it could get to the kidneys and bones. And it could be given at a lower dose.
The new version “could result in a better side effect profile and less drug-related toxicity,” read an internal memo in 2002.
That same year, the first human clinical trial of the new version began. A Gilead employee mapped out a development timeline that would have brought the new formulation to market in 2006.
But in 2003, Gilead executives began to downgrade by rushing it. They feared it would ‘end up cannibalizing’ 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, asked the company’s analysts to explore the new formulation’s potential as an intellectual property “extension strategy,” according to a colleague’s email.
This analysis resulted in a note from september 2003 which described how Gilead would develop the new formulation to “replace” the original, with development “timed to launch in 2015”. In the best-case scenario, the company’s analysts calculated, their strategy would generate more than $1 billion in annual profits between 2018 and 2020.
Gilead decided to resurrect the new formulation in 2010, putting it on track for release in 2015. John Milligan, president and future chief executive of Gilead, told investors it would be a “milder, milder version” of tenofovir.
After securing regulatory approvals, the company embarked on a successful marketing campaign aimed at physicians that promoted its new iteration safer for kidneys and bones than the original.
In 2021, according to Ipsos, a market research company, nearly half a million HIV patients in the United States were taking Gilead products containing the new version of tenofovir.
Susan C. Beachy contributed to the research.
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