In debate on price of new medicines, a middle ground needs finding

Conflict over profits and poverty sees many missing out on breakthroughs

PUBLISHED : Sunday, 20 April, 2014, 5:53am
UPDATED : Sunday, 20 April, 2014, 5:53am

An announcement of a cure for a disease that affects millions across the globe is naturally greeted with relief and enthusiasm.

So when California-based Gilead Sciences said last December that its Sovaldi tablet had been approved to treat hepatitis C, the reaction was enthusiastic.

Hepatitis C affects 185 million people and is a bigger killer than Aids in some countries. The blood-borne disease can go undetected for years, which means it might be more prevalent than official statistics suggest.

With no effective cure, a liver transplant is the ultimate answer as the disease can lead to cirrhosis of the liver or cancer.

Sovaldi promised a 90 per cent chance of recovery for those affected by hepatitis C.

[Drug firms' policies] are simply putting profits before people's lives
Dr Jennifer Cohn

But the euphoria that followed the announcement turned to gasps of disbelief a few weeks ago when the company announced the price of the drug - US$84,000 for a 12-week course. Or US$1,000 per pill.

According to the Centres for Disease Control and Prevention, about 3.2 million Americans are infected with hepatitis C. Based on the cost of the drug, it would cost US$260 billion to treat all those sufferers.

ISI Group analyst Mark Schoenebaum has estimated that Gilead's US sales of Sovaldi this year alone will total as much as US$9 billion.

Gilead is also seeking to patent Sovaldi in India to block cheaper, generic versions of the drug being produced there.

Health activists have slammed the company's policy, saying that the high price makes Sovaldi unaffordable to millions.

US health insurance companies have warned they would be wiped out if the treatment becomes widespread.

Dr Jennifer Cohn, of Medecins sans Frontieres, and the organisation Doctors of the World have slammed the pricing as being "corporate greed" and accused Gilead of ignoring the needs of patients in developing countries.

Gilead responded by saying it would have a multi-tiered pricing policy. It has a deal with Egypt to sell Sovaldi for just US$900 for a 12-week course.

But that programme is not available to countries like China and Ukraine, which are classified as "middle-income economies". The company hasn't announced any price for the Chinese market, though it has applied for registration in Hong Kong.

Cohn said so-called middle-income nations were home to 75 per cent of the world's poor and the cost of the drug would put it out of reach of the most vulnerable groups. This "is simply putting profits before people's lives", she said.

In the US, protests by insurance companies and activist groups prodded some lawmakers into action, with three Democrats from the House of Representatives writing to Gilead asking it to explain the pricing policy.

This unnerved the market, and Gilead's shares started edging down on the fear that the company's revenue may be capped by any governmental intervention. Some investors started moving out of the biopharma sector as they feared trouble ahead for other companies too.

Analysts who defend Gilead say several rival drugs are in the offing and it has to recoup its investment within a limited time. Drug companies say they have to spend an average of US$800 million on research and trials to find new drugs and investors will stay away if they feel the companies will not turn a handsome profit.

Medicine manufacturing is now just like any other big business. Gone are the days of Jonas Salk, the man behind the polio vaccine, who famously retorted "who can patent the sun" when asked about patenting the vaccine.

The influence of market forces in the pharmaceutical sector is evolving into a classic clash between patients' and drug companies' needs.

Health activists say companies are putting profits before the patients' needs, while the companies say breakthroughs are costly and there is a price to pay for that. Until these two arguments find some middle ground, new cures will reach only those with the means to buy them and not necessarily those who need them most urgently.