INVESTIGATION: The Inside Story Of The Money, The Activists, And The Cure For Hepatitis C

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Rachel Stoltzfoos Staff Reporter
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When Gilead Sciences announced it would charge $1,000 a pill for its breakthrough Hepatitis C cure, activists were infuriated, launching a global campaign to force the company to lower its price.

Other drug companies, such as BioGen and Sanofi, took notice of the severe and public attacks, warily eyeing potential breakthrough drugs they themselves were preparing for market.

Gilead argues the price is justified, given the cost of research and development, the massive benefit it provides to cured patients, and the long-term savings it can provide health care systems. But critics say it’s ridiculous that Gilead is raking in obscene profits by charging an indefensibly high price, while millions of patients are effectively barred from the treatment they need.

The Daily Caller News Foundation has investigated the claims of both sides. Here is their story.

The Activists

“No one’s saying the pharmaceutical industry shouldn’t profit,” Hepatitis C (HCV) activist Tracy Swan told TheDCNF over the phone in early summer. “That’s just stupid. But it’s a question of how much profit.”

Swan is the HIV and Hepatitis director of Treatment Action Group, an activist organization that works to improve treatment for HIV/AIDs patients. “Should a bunch of people die so a company can make an exorbitant profit rather than a good profit?” she asked.

Last year, Treatment Action Group partnered with Doctors of the World to loudly and publicly confront one of Gilead’s vice president’s while he was giving a speech at an International AIDs conference in Melbourne.

“Pills Cost Pennies, Greed Costs Lives,” activists chanted.

“Shame, Shame, Shame! Pharma Greed Kills” they yelled, as they marched into the room while Greg Alton was speaking to present him with a animal’s liver on a silver platter. They carried signs that read “Hep C Criminal” and “Gilead Kills.”

The Virus

Hepatitis C is caused by a sometimes fatal liver virus most often transmitted by intravenous drugs or inadequately sterilized medical equipment, or in some cases by sex. It often advances for years or even decades before it’s detected.

An estimated 150 million people worldwide are chronically infected, and many of them will develop liver cirrhosis or cancer. Hundreds of thousands of people die from the disease each year.

Before Sovaldi, the best patients could do was try to manage the disease by undergoing a series of treatments with unpredictable results and little hope of eradicating the disease. Side effects of the formerly standard weekly injections of anti-viral drugs include fatigue, flu-like symptoms, anxiety and depression, nausea and diarrhea, reduced appetite and hair loss, vomiting and anemia.

Some of the strains of Hep C respond better to treatment than others. And many of the patients also suffer from HIV, which makes determining the right course of treatment more difficult. Some patients opt to discontinue treatment and allow the disease to progress rather than put up with the side effects.

If patients develop liver cirrhosis or liver cancer, which is common, they’ll need a liver transplant that can easily cost half a million dollars and does not eradicate the disease.

Many die after years of what amounts to expensive, painful and ultimately ineffective treatment. That was the reality for everyone infected with Hep C, until the FDA approved Gilead’s Sovaldi in 2013 and its follow up drug, Harvoni, in 2014, both of which have about a 90 percent cure rate — even in patients considered hard to treat.

The Cure (And The Cost)

Instead of enduring up to a year of weekly injections, patients can simply take one or two pills a day for eight to 12 weeks and almost always rid themselves of the disease for good, experiencing minimal side effects in the process.

Still, Gilead shocked the medical world when it announced the $84,000 price tag for a 12-week supply of Sovaldi, which must be taken in combination with a different drug; or $94,000 price tag for a 12-week supply of Harvoni, which can be taken alone.

“It’s more effective; it’s safer; it’s cheaper,” Greg Conko, executive director of the Competitive Enterprise Institute, told TheDCNF. “You would think that people would want to throw Gilead a party. What they did was chastise them.”

While the drugs may be cost-effective in the long run, the immediate surge in demand is overwhelming health care systems. Insurers are refusing to pay until patients are in severe need, forcing them to get worse before they can get better. The only way to get the cure in France is to beg the medical commissions responsible for rationing the treatment.

Some members of Congress asked for an explanation of the price, and in May, Democratic presidential candidate Sen. Bernie Sanders wrote a letter to the Department of Veterans Affairs asking the agency to use a government-use provision to break the patent.

Gilead raked in $2.27 billion from Sovaldi in the first quarter of 2014. And Harvoni brought in a whopping $3.6 billion in the first full quarter of 2015, after the FDA approved it in October. Gilead reported a combined $4.6 billion in sales from the two drugs in that quarter, and stock prices recently hit an all-time high.

The activists chanting “Gilead Kills” are appalled at the level of Gilead’s profit and are upset because the cure — which did not exist 10 years ago — is not immediately available to every infected patient. Critics of the activists say the activists would actually pin the death of patients who cannot access the cure on the very company that risked billions of dollars and years of research to come up with the cure in the first place.

“Biology is a bitch,” Dr. Thomas Stossel, a senior physician and visiting scholar at the American Enterprise Institute, told TheDCNF, referring to the difficult and time-consuming process of developing effective new drugs. “It’s not like building a jumbo jet. We’re dealing with evolution, and the reason we have survived is because we’re unpredictable.”

Stossel is an inventor on 13 issued patents, is the founder and scientific director of two biotechnology start-ups, and is an elected member of the National Academy of Sciences. “I’ve worked on developing a drug,” he said. “I know exactly what it costs, and [Gilead’s] numbers make absolute perfect sense.”

“You want to beat up the company and make them drop the prices? Be my guest,” he added. “Just understand that means there will be fewer of these drugs in the future.”

The vast majority of new drugs never win approval from the FDA, let alone turn a profit. Companies routinely invest hundreds of millions of dollars and many years of research and testing in a failed drug, leaving them with no return on their investment.

In the past 50 years, the cost of getting a new drug approved has increased dramatically because the agency began requiring more extensive testing to prove that a drug is safe and that it works. About half of the $1.2 billion a company spends on average getting a drug from the lab to the market is spent in clinical trials.

Here’s how it works: Scientists analyze thousands of compounds, searching for just one or two with potential therapeutic value. Once discovered, a drug goes through up to 10 years of initial testing for safety and effectiveness, before an Investigational New Drug Application is filed with the FDA.

If approved, the drug then enters clinical trials, a process that takes six years on average and proves the drug a failure about 90 percent of the time. If the drug gets through the trial process, a final application is submitted to the FDA. After a final review process that takes a year or two, the FDA might approve the drug for sale. Of course, approval does not guarantee it will turn a profit.

So the rare drug that is profitable must subsidize the failure of the many that are not. And companies often have a relatively short window of time to maximize those profits before a competitor comes up with a rival drug or the patent expires and generic production can begin.

A spokeswoman for Gilead told TheDCNF the company believes the price reflects the increasing cost of research and development, and will save health care systems money over the long term. The company is working on more than 400 ongoing and planned clinical studies evaluating new drugs, she said.

Gilead is also allowing generic production of the cure in developing countries worst-affected by Hep C, such as India, and has developed a three-tiered pricing system for developing, middle-income and upper-income countries. In addition to that, patients without insurance or with high co-pays in the U.S. can apply for a reduced price.

But maybe Gilead is charging an obscene price that will pad the pockets of a few rich investors and company executives, while effectively barring tens of millions of very real people from receiving the cure they need.

“They could treat many more people, and still get a great amount of money,” Luis Santiago, a member of AIDS activist organization ACT UP New York, told TheDCNF. “But instead they’re going to prolong this for — God knows — 16 or 20 years, when you could eradicate Hepatitis C all over the world if you just reduce the price.”

Malaysian AIDS Council policy manager Fifa Rahman agrees: “Twenty years of this drug being expensive is preposterous given the burden of disease.”

Still, without Gilead and companies like it there is no cure for Hep C. And if those capitalists choose to invest their money elsewhere, there could be a very real price to pay in terms of undiscovered drugs that could relieve suffering and save lives.

“There’s this sense that health care should be free, which would be great if it just didn’t cost so much and wasn’t so hard to get,” Stossel told TheDCNF. “No drugs have ever been developed by the church, so we need greedy capitalists in order to make it work.”

“Everybody is patient focused — on their own problem, their own disease — and the fact is there are a lot of diseases we don’t have drugs for, and we want them,” he added. “We need to keep the ball rolling.”

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