LOS ANGELES -- More than a decade ago, researchers at Gilead Sciences developed a new version of the company's key HIV medicine that was less toxic to kidneys and bones.
Clinical trials of the new compound on HIV-positive patients in Los Angeles and several other cities were positive for the drug. It was effective and seemingly produced far fewer dangerous side effects.
But in 2004, just as the Northern California biotech firm was preparing for a second and larger round of patient studies, Gilead executives stopped the research. The results of the early patient studies would go unpublished for years as the original medication -- tenofovir -- became one of the world's most-prescribed drugs for HIV, or human immunodeficiency virus, with $11 billion in annual sales.
More than six years later, though, in 2010, Gilead restarted those trials. The new version of the drug, which the company said is safer, was approved in November under the brand name Genvoya.
The executives' decisions stand to extend Gilead's domination of the global HIV medicine market for years. Analysts project the company will reap tens of billions of dollars in sales that otherwise would have vanished with the expiration of tenofovir's patent in 2018.
That has pleased the company's investors. But it has stirred criticism among patients and caregivers, and prompted a lawsuit. The critics believe the new drug could have been developed sooner, and wasn't, because the company wanted to extend its patent-protected profits.
Today, tenofovir is taken by more than 627,000 Americans, or about 80 percent of those being treated for HIV, and 9 million more around the world.
Looking back, Tim Horn of the Treatment Action Group, which advocates for AIDS patients, said: "That's a decade of potentially avoidable kidney and bone toxicity."
Horn said Gilead's decision to resume trials as the original drug's patent was nearing expiration "suggest that this is much more about market dominance than it was about finite resources for research and development."
Gilead executives say the drug's patent expiration had nothing to do with their decision to halt trials in 2004.
"It's simplistic to look back and say, well, TAF is a safer version and why didn't you develop it sooner," said Norbert Bischofberger, the company's chief scientific officer, using the shorthand name for the new drug.
Bischofberger said Gilead stopped the project to shift money to looking for another type of HIV medicine, known as an integrase inhibitor. The company restarted the research years later, he said, after it saw a need for a less toxic drug for aging HIV patients, who are more susceptible to kidney and bone problems.
"It was then we said, 'Let's revisit TAF,'" Bischofberger said.
With billions of dollars of revenue at stake, pharmaceutical companies are motivated to keep their blockbuster brands protected by patents, which prevent generic drugs from flooding the market and driving down prices.
A patent permits a company to exclusively sell a drug for 20 years, giving it time to recover the cost of discovery and make a profit. By modifying a drug's formula, combining it with other medicines or even changing its dispenser, a company can file for additional patents and extend the period when it can charge premium prices.
Just before the patent expired on AstraZeneca's blockbuster drug Prilosec, for example, the company tweaked the formula to create Nexium. The company said Nexium was more effective at treating complications of chronic heartburn, though that is a claim some critics dispute. Other companies have created longer acting or controlled-release formulas such as the sleeping pill Ambien CR.
But the high prices of brand-name medicines have put drug companies under scrutiny in recent years, and Congress has held hearings to investigate. U.S. drug spending, based on invoice prices to pharmacies, rose 12 percent last year, according to IMS Health, which sells data to the industry.
Gilead is one of the world's dominant drug companies today largely because of its success in making tenofovir a cornerstone of HIV treatment. A year of treatment with Gilead's HIV medicines costs about $30,000, most of it paid by insurers or the government.
The drug is now a component in five of the top six HIV drug regimens recommended by a national panel to fight the virus. The World Health Organization considers it among the globe's essential medicines.
Wall Street analysts had expected the company's HIV medicine sales to begin falling in 2018 when the patent on the original drug expires. But that forecast changed with the arrival of Genvoya -- a combination of TAF and three other medicines.
The compounds in Genvoya are protected by multiple patents, the last of which now expires in 2032 -- more than 40 years after tenofovir was invented.
James Krellenstein of ACT UP, an activist group for AIDS patients, believes that the company delayed the development of a less-toxic version of tenofovir to extend its profits. "I think it's amazingly unethical behavior," he said.
Earlier this year, the Los Angeles-based AIDS Healthcare Foundation, which operates clinics and pharmacies for AIDS patients, sued Gilead, contending that it delayed the less toxic form of tenofovir to manipulate the patent system and keep prices artificially high.
The foundation, which buys tenofovir-based medicines for many of its 600,000 patients worldwide, called Gilead's moves "a calculated, anti-competitive maneuver" aimed at keeping lower-cost generics off the market. It is asking the court to toss out the patents on the new drug so that other companies can sell it for less.
Gilead denies the lawsuit's claims. In stark language contained in a recent court filing, the company's lawyers said the firm "had no duty to develop, test, seek approval of, or launch its new product on any particular timetable."
Business on 06/03/2016