Thanks to a number of new Hepatitis C drugs (Sofosbuvir Ledipasvir, Ladispavir) the disease is curable for many patients. While this is an undeniable victory for patients and payers, the innovators who made this possible have been villainized and undermined. At a time when the public health community should celebrate the tremendous health benefits these breakthrough drugs have brought to patients around the world, they are instead organizing to ensure the destruction of the incentives that made these drugs a reality. A recent study from the Centers for Disease Control and Prevention estimates that 2% – 3% of the world’s population is living with hepatitis C. The World Health Organization states that globally an estimated 71 million people have chronic hepatitis C infection and approximately 399,000 people die each year from the disease.
First, the good news! Sovaldi (sofosbuvir) drastically changed the landscape of this disease for patients and payers. Therapeutic regimens have evolved rapidly in the past few years, providing patients suffering with Hepatitis C with improved treatment options and delivering significant cost savings to individuals, payers and society. Gilead’s Sovaldi is a safe, effective treatment that demonstrably adds value to the healthcare system and transforms patients’ lives with a cure for the disease in approximately 95% of all cases. Sovaldi is safer, more effective, and accompanied by fewer side effects than existing first-line treatments. Notably, the previous standard-of-care, Incivek costs roughly 20 percent more than Sovaldi. Moreover, reports indicate that when combined with two other drugs (interferon and ribavirin), Incivek claims a cure rate of no-more-than 80 percent through a 24 week treatment regimen that included significant toxicity and side effects.
As noted in an earlier IPWatchDog post, Sovaldi also has the potential to save money and lives in the long run. Hepatitis C may result in conditions that are much more expensive to treat: liver cancer, cirrhosis and liver failure. With a cure rate close to 95 percent and a treatment time of half that required by current therapies, Sovaldi seems very cost effective. In contrast, studies show that liver transplants can cost $300,000 and then require $40,000/year anti-rejection drugs that must be taken for the rest of the patient’s life. Such long term savings are only possible through breakthrough innovations that fundamentally change the healthcare system. Weakening the patent system for modest short-term cost savings will only eliminate the incentives that encourage the investment and risk taking that deliver the monumental healthcare gains that revolutionize treatment options and transform patient lives. It is a tradeoff that should be eschewed rather than sought after.
Second, the bad news! While such innovation should be celebrated, rewarded and emulated, instead critics celebrate the dismantling of the intellectual property rights that made the innovation possible. Ironically, it appears that the critics are never happy. Critics of the pharmaceutical industry frequently denounce the resources spent for so-called “follow on innovation”, incremental advances, insisting that the industry should focus on truly innovative drugs that significantly enhance or extend life. Ironically, Sovaldi does exactly what patient advocates and industry critics have been asking for, but instead of acknowledging this as a success, the company has been vilified for their pricing decision.
Fundamentally, this is an issue of price and access. While drugs – including Hepatitis C drugs – are expensive, it is difficult to justify the criticism heaped upon the Hepatitis C innovators. In early 2016 The Chicago Tribune published an article on Sovaldi titled, “The same pill that costs $1,000 in the U.S. sells for $4 in India”. At first glance this appears to readers as appalling. However, the numbers only tell part of the story. Let’s dig a little deeper. The drug costs $1,000 in the US, but only $4 in India – a price differential that strikes US consumers as inconceivable. At the same time, global critics claim that Sovaldi is unaffordable to patients in middle-income countries. (The World Bank classifies India as a “lower middle income country”.) Now for some perspective: Sovaldi sells for only 3.6% of the income-adjusted price ($110) in India. Per-capita income in the United States is $58,700 and $6,490 (PPP adjusted for 2016) in India. That is, while adjusting for income differentials relative to the United States, the drug is sold at a 96.4% discount in India.
Now, the worst news! The development and pricing of Hepatitis C drugs has re-energized the global fight over biopharmaceutical patents. As a result, the innovators who have delivered an incredible drug and amazing hope to patients are under tremendous attack. The efforts are expansive and extend to IP rights is numerous countries. Please consider:
- As noted in the international science journal, Nature, in February 2017 alone, no less than five suits were filed in India and Argentina claiming that the treatments for Hepatitis C do not warrant the 20-year patent monopoly that manufacturers have sought in those countries.
- In December 2017 the National Institute of Industrial Property (INPI) of Argentina rejected a patent application on the sofosbuvir (Sovaldi) prodrug, an essential medicine in the treatment of hepatitis C. The decision opens the door to local production of generic versions of the drug and was described as a “major victory” for patients. In the short run this may be true – the decision may increase access to generics – but in reality, the decision undermines the incentive to innovate and frustrates the development of future treatments and cures. The decision in Argentina is symptomatic of a frightening trend: the undermining of the patent system and destruction of the incentives to innovate.
- In March 2018, Chile’s Ministry of Health announced that there are sufficient public health reasons to support a compulsory license on medicines for the hepatitis C virus and presented a resolution taking the next step.
- In January 2018, the Colombian government moved to unilaterally lower the prices of Hepatitis C drugs or, eventually, issue compulsory licenses. Importantly, the move could jeopardize the efforts of the Colombian government to join the Organization for Economic Cooperation and Development (OECD), an intergovernmental group of three dozen countries that was created to stimulate economic progress and world trade.
- In August 2017, Malaysia’s government issued a compulsory license in an effort to offer a less-expensive version of Gilead’s hepatitis C drug and increase access.
- An October 2017 report by Bloomberg (and here in the New York Times) notes that Initiative for Medicines, Access & Knowledge (I-Mak), has challenged Sovaldi patents in India, China, Ukraine, Argentina, Brazil and Europe.
These nations should be celebrating the discovery of Sovaldi and other revolutionary Hepatitis C treatments, rather than advocating for the destruction of the incentives that made them possible. The biopharmaceutical companies that develop life-saving medications, cures, and compounds that transform lives, should to be rewarded with favorable pricing and the provision of incentives that facilitate future innovation. In their absence, biopharmaceutical research and development will continue to contract and fewer such breakthroughs will be discovered.