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Profiting from Delayed Release of a Promising H.I.V. Therapy by a Drug Maker

In 2004, Gilead Sciences decided to discontinue the development of a new H.I.V. drug. The public explanation was that it wasn’t different enough from an existing treatment to justify further investment. However, internal documents revealed a different motive – Gilead wanted to delay the release of the new drug to maximize profits, even though it had the potential to be safer for patients. This tactic by Gilead is a common strategy used in the pharmaceutical industry to protect monopolies on profitable drugs.

Gilead already had successful H.I.V. treatments based on a drug called tenofovir. The first of these treatments was set to lose patent protection in 2017, allowing cheaper alternatives to enter the market. The new drug, an updated version of tenofovir, was in the early stages of testing and had the potential to be less toxic to patients’ kidneys and bones. However, Gilead decided that releasing the new drug would risk competition with its existing formulation, and opted to delay its release until shortly before the existing patents expired.

This “patent extension strategy” allowed Gilead to keep prices high for its tenofovir-based drugs. By introducing the new drug just before generic alternatives became available, Gilead could maintain its monopoly and continue to generate significant profits. The delayed release of the new treatment has resulted in lawsuits from patients who claim that Gilead unnecessarily exposed them to kidney and bone problems.

Gilead’s lawyers have denied the allegations, stating that the company’s decisions were not solely driven by profit. They argue that releasing the new version earlier would have been the logical choice if profit was the sole motive. Gilead maintains that its focus has always been on delivering safe and effective medicines.

Today, the Gilead drugs containing the updated version of tenofovir constitute half of the market for H.I.V. treatment and prevention. These drugs come with a high price tag, with one product called Descovy costing $26,000 annually. Generic versions of the older formulation, Truvada, cost less than $400 per year. If Gilead had proceeded with the development of the updated drug in 2004, its patents would have expired by now or in the near future.

This case involving Gilead highlights a common practice in the pharmaceutical industry known as “product hopping.” Companies switch patients to a newly patented version of a drug shortly before the arrival of generic competition, extending their monopoly and maximizing profits. This practice raises questions about the U.S. patent system and its impact on innovation and patient access to affordable medications.

A patient named David Swisher, who took Gilead’s older H.I.V. drug for 12 years, experienced kidney disease and osteoporosis as a result. He believes that his health suffered due to the delayed release of the new treatment. Similar cases have led to state and federal lawsuits against Gilead.

Tenofovir, the drug at the center of this controversy, was the foundation of Gilead’s success in the H.I.V. market. Its introduction in 2001 revolutionized the treatment and prevention of H.I.V., saving millions of lives. However, a small percentage of patients experienced kidney and bone problems while taking the drug. The newer version of tenofovir does not have these issues, although it can cause weight gain and elevated cholesterol levels.

Internal company records from the early 2000s indicate that Gilead executives recognized the potential benefits of the updated version, including reduced toxicity. However, they chose to delay its release to protect their existing market share. Gilead eventually introduced the newer formulation in 2015, several years after it could have been available.

The case of Gilead exemplifies how the U.S. patent system can incentivize companies to hinder innovation. The system creates opportunities for companies to prolong monopolies and impede the development and launch of new, potentially safer drugs. The consequences of these actions are borne by patients who may suffer unnecessary health issues and higher costs.

It is essential to reassess the flaws in the patent system and consider the impact on patients’ well-being and access to affordable medication. This case serves as a reminder of the ethical and societal implications associated with delaying drug development for profit-driven motives.

Susan C. Beachy contributed research.

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