Hepatitis C: the Madness of Paying for a Treatment 800 Times More Than its Production Cost

[This article was written by Gonzalo Fanjul and Elena Villanueva, director and coordinator of Analysis at ISGlobal, respectively]

May brought bad news for hepatitis C patients worldwide. After several months of litigation, India granted the patent of the active ingredient Sofosbuvir (Sovaldi) to the pharmaceutical company Gilead. This decision was reached barely one year after the same Indian Government refused the patent on the grounds that it was not an innovative molecule.   

The main obstacle to Hepatitis C treatment is the high price of the drugs

This measure opened the possibility of producing and exporting generic treatments at an estimated price per patient of 100 to 200 USD every three months. However, the pharmaceutical company fought tooth and nail against the Indian Government’s position and managed to secure in the last minute an amendment, subject to appeal, that will limit the access to an affordable treatment for many low and middle income countries.

After the Indian’s decision, these countries will pay even more attention to the arrival in the market of the treatment announced a few weeks ago by the Drugs for Neglected Diseases initiative (DNDi). DNDi has signed an agreement with the Egyptian manufacturer Pharco Pharmaceuticals to develop a treatment against all Hepatitis C subtypes based on the therapeutic combination of two drugs – Ravidasvir and Sofosbuvir – and that will be sold at a price under 300 USD per patient. If the treatment’s efficacy is confirmed by the last phase of clinical trials, this agreement could represent a turning point similar to that of generic antiretroviral treatment production in the 90’s, whose introduction in the market lowered the price of HIV/AIDS treatment by 90% and facilitated its access for millions of people, particularly in developing countries.  

Although 7 out of 10 Hepatitis C patients live in poor countries, the disease also affects rich economies like Spain, where there are more than 700,000 patients. The Hepatitis C virus is estimated to kill more than half a million people per year worldwide, and most of them die without having received any effective treatment.

The prices are differentially applied according to each government’s capacity to negotiate with the patent-holding pharmaceutical, in this case the Gilead Company

Even though disease diagnosis, cost of infrastructure and lack of trained personnel are a problem in many countries, the main obstacle to treatment is the high price of the drugs, whose prices are differentially applied according to each government’s capacity to negotiate with the patent-holding pharmaceutical, in this case the Gilead Company.  The exit price in the USA, established by the pharmaceutical company, was 84,000 USD per treatment course (around 1,000 USD per pill).  Although lack of transparency is a common feature in the sector, it has been estimated that, after negotiations with Gilead, Spain agreed to a cost of 25,000 euros per person and treatment, leading health authorities to establish selective criteria for its administration.    

While global sales of Sofosbuvir have soared above 10 billion dollars only in 2014 (2000 times what they originally paid for the drug), a study conducted by the University of Liverpool showed that the real production cost of the drug is around 101 USD for a three month treatment, or anything between 68 and 168 USD for a 12-week treatment.  

On the basis of these numbers, there is no need to be a radical activist in order to realize that Gilead’s price policy goes beyond recovering its investment with reasonable benefits, but that it seeks the maximum benefit given its privileged position in the market, even at the expense of the patients. The strategy may be acceptable from a shareholder’s point of view but it certainly does not fit with the fair regulation of drugs considered as common goods.

The innovation priorities must be aligned with the general public interest

Hepatitis C represents one of many battles in the global struggle for access to essential drugs and the right to health, and in ISGlobal we have published an analysis called “Hepatitis C: the New Battle-Field for Access to Medicines” which is part of our line of work on innovation and access to medicines. It is a battle where the response of high-income countries has been defined by their meekness in facing pharmaceutical companies and the astonishing lack of imagination when it comes to conceiving alternative models. 

The fact that their own citizens start to fall victims to the model’s limitations will undoubtedly help to change this attitude and will encourage seeking new incentives that will align innovation priorities with those of general public interest.