How a drugmaker took advantage of slow walking with a promising HIV therapy

In 2004, Gilead Sciences decided to stop pursuing a new HIV drug. The public explanation was that it was not sufficiently different from an existing treatment to warrant further development.

Privately, however, something else was going on. Gilead had devised a plan to delay the release of the new drug to maximize profits, even though executives had reason to believe it could prove to be safer for patients, according to a host of internal documents made public in lawsuits against the company.

Gilead, one of the world’s largest drug makers, seemed to be embracing a common industry tactic: to abuse the US patent system to protect lucrative monopolies on top-selling drugs.

At the time, Gilead already had a few blockbuster HIV treatments, both of which were backed by a version of a drug called tenofovir. The first of those treatments would lose patent protection in 2017, after which competitors would be free to introduce cheaper alternatives.

The promising drug, then still in the early stages of testing, was an updated version of tenofovir. Gilead executives knew it was the may be less toxic kidneys and bones from patients than the earlier iteration, according to internal memos unearthed by attorneys suing Gilead on behalf of patients.

Despite those potential benefits, executives concluded that the new version risked competing with the company’s existing, patent-protected formulation. If they delayed the release of the new product until shortly before the existing patents expired, the company could significantly extend the period during which at least one of its HIV treatments remained patent protected.

The “patent renewal strategy,” as the Gilead filings repeatedly called it, would allow the company to keep prices high for its tenofovir-based drugs. Gilead could switch patients to its new drug just before low-cost generics hit the market. Putting tenofovir on the path to remain a money-making juggernaut for decades, the strategy was potentially worth billions of dollars.

Finally, Gilead introduced a version of the new treatment in 2015, nearly a decade after it would have become available had the company not paused development in 2004. until at least 2031.

The delayed release of the new treatment is now the subject of state and federal lawsuits in which some 26,000 patients taking Gilead’s older HIV drugs allege that the company unnecessarily exposed them to kidney and bone problems.

In court cases, Gilead’s lawyers said the allegations were baseless. They denied that the company halted development of the drug to boost profits. They cited an internal memo from 2004 that estimated that Gilead could increase its revenue by $1 billion in six years if it released the new version in 2008.

“If Gilead had been motivated only by profit, as plaintiffs allege, the logical decision would have been to expedite development of the new version,” the attorneys wrote.

Gilead’s top attorney, Deborah Telman, said in a statement that the company’s “research and development decisions have always been guided by our focus on providing safe and effective medicines for the people who prescribe and use them.”

Today, according to IQVIA, an industry data provider, a generation of expensive Gilead drugs containing the new iteration of tenofovir represents half of the HIV treatment and prevention market. A common product, Descovy, has a sticker price of $26,000 per year. Generic versions of its predecessor Truvada, whose patents have expired, now cost less than $400 a year.

If Gilead had continued developing the updated iteration of the drug in 2004, the patents would have expired by now or will soon expire.

“We should all take a step back and ask ourselves, How did we let this happen?” said James Krellenstein, a longtime AIDS activist who has advised lawyers to sue Gilead. He added: “This is what happens when a company deliberately delays the development of an HIV drug for monopolistic purposes.”

Gilead’s apparent maneuver with tenofovir is so common in the pharmaceutical industry it has a name: product hopping. Companies ride out their monopoly on a drug and then, shortly before the advent of generic competition, they switch — or “hop” — patients to a more recent patented version of the drug to extend the monopoly.

For example, the drugmaker Merck is developing a version of its blockbuster cancer drug Keytruda that can be injected under the skin and will likely extend the company’s revenue streams for years after the drug’s infused version first faces competition from other companies in 2028. (Julie Cunningham, a spokeswoman for Merck, denied it engages in product hopping, saying the new version is “a new innovation aimed at bringing greater convenience to patients and their families”).

Christopher Morten, an expert in pharmaceutical patent law at Columbia University, said the Gilead case shows how the US patent system creates incentives for companies to slow down innovation.

“Something has gone seriously wrong here,” said Mr. Morten, who provides pro bono legal services to an HIV advocacy group that in 2019 in vain challenged Gilead’s efforts to extend the life of its patents. “The patent system actually encouraged Gilead to delay developing and launching a new product.”

David Swisher, who lives in Central Florida, is one of the plaintiffs suing Gilead in federal court. He took Truvada for 12 years starting in 2004 and developed kidney disease and osteoporosis. Four years ago, when he was 62, he said, his doctor told him he had “the bones of a 90-year-old woman.”

It wasn’t until 2016, when Descovy was finally on the market, that Mr. Swisher took out Truvada, which he believed was causing him harm. By then, he said, he had become too ill to work and had given up his job as an airline operations manager.

“I feel like that whole time has been taken from me,” he said.

First synthesized in the 1980s by researchers in what was then Czechoslovakia, tenofovir was the springboard for Gilead’s dominance of the HIV treatment and prevention market

In 2001, the Food and Drug Administration first approved a product containing Gilead’s first iteration of tenofovir. Four more would follow. The drugs prevent the replication of HIV, the virus that causes AIDS.

These became game-changers in the fight against AIDS, which have saved millions of lives worldwide. The drugs were used not only as a treatment, but also as a prophylactic for those at risk of becoming infected.

But a small percentage of patients taking the drug to treat HIV developed kidney and bone problems. It proved particularly risky when combined with booster drugs to increase its effectiveness – a practice that was once common but has since fallen out of favour. The World Health Organisation and the US National Health Institutes discourage use of the original version of tenofovir in people with brittle bones or kidney disease.

The newer version does not cause these problems, but it can lead to weight gain and increased cholesterol levels. For most people, experts say, the two tenofovir-based drugs — the former known as TDFcried the second TAF — offer approximately equal risks and benefits.

Internal company records from the early 2000s show that Gilead executives sometimes struggled with whether to rush the new formulation to market. At some points, the documents throw the two iterations of tenofovir at odds from a safety point of view.

But other memos indicate that the company believed the updated formula was less toxic, based on lab and animal studies. Those studies showed that the newer formulation had two benefits that could reduce side effects. It was much better than the original at delivering tenofovir to the target cells, meaning much less leaked into the bloodstream, where it could travel to the kidneys and bones. And it could be given at a lower dose.

The new version “may translate to a better side effect profile and less drug-related toxicity,” read an internal memo in 2002.

That same year, the first human clinical trial of the newer version started. A Gilead employee mapped out a development timeline that would have brought the newer formulation to market in 2006.

But in 2003, Gilead executives began to sour with the rush. They feared this would “ultimately cannibalize” the growing market for the older version of tenofovir, according to minutes of an internal meeting. Norbert Bischofberger, Gilead’s chief of research at the time, instructed business analysts to investigate the new formula’s potential as an “expansion strategy” for intellectual property, according to a colleague’s email.

That analysis resulted in a Memo from September 2003 that described how Gilead would develop the newer formulation to “replace” the original, with development “timed to launch in 2015”. At best, business analysts calculated, their strategy would generate more than $1 billion in annual profits between 2018 and 2020.

Gilead moved to revive the newer formulation in 2010, putting it on track for release in 2015. John Milligan, Gilead’s president and future CEO, told investors it would be a “friendlier, gentler version” of tenofovir.

After obtaining regulatory approvals, the company embarked on a successful marketing campaign targeting physicians that promoted the new iteration is safer for kidneys and bones than the original.

By 2021, nearly half a million HIV patients in the United States will be using Gilead products containing the new version of tenofovir, according to Ipsos, a market research firm.

Susan C. Beachy contributed research.