January 29, 2016
By Alex Keown, BioSpace.com Breaking News Staff
FOSTER CITY, Calif. — Gilead Sciences, Inc. , which is facing scrutiny for the price of its blockbuster hepatitis C treatments and a lawsuit over patents for its AIDS treatments, is under new leadership, the company announced this morning.
John Milligan will take over the position of chief executive officer beginning March 10. Milligan, who has worked at Gilead since 1990 and currently serves as president and chief operating officer, will succeed current CEO John Martin, who will assume the role of executive chairman of the company. Martin joined Gilead in 1990 and was appointed CEO in 1996 and Chairman of the Board in 2008.
Gilead’s shares are down more than 3 percent this morning. Stock hit a morning low of $82.55 per share, down from its opening price of $84.28 per share.
Under Martin’s leadership, Gilead grew from a company with a market valuation of about $1 billion to today, when the company is poised to report earnings of more than $32 billion in 2015—more than three times what the company generated in 2012. That explosive growth in revenue is largely due to Harvoni and Sovaldi, its blockbuster hepatitis C treatments, which generate billions of dollars in revenue annually.
However, with that growth has also come some criticism, particularly for the pricing of those treatments. Harvoni and Sovaldi have treatment costs of $84,000 and $94,500 respectively for a 12-week regimen. Despite the price, Gilead’s hepatitis C treatments have proven to be highly effective since they were launched. Sovaldi has had a 90 percent efficacy in curing, not treating, but curing, the liver disease when used with other treatments—surpassing older treatments. It was because of that high rate of efficacy that Gilead was able to command such a high price for Sovaldi.
But, that high price has made Gilead a target of political and legal maneuverings. A U.S. Senate report said the high cost of the drugs has also been damaging to Medicaid programs. According to the investigation, Medicaid programs spent $1.3 billion before rebates for the hepatitis C drugs to treat fewer than 2.4 percent of enrollees diagnosed with the liver disease. More than 700,000 hepatitis C patients on state Medicaid programs are still waiting to receive their medications.
On Wednesday, Massachusetts Attorney General Maura Healey threatened Gilead with a lawsuit over the pricing of the two hep C treatments. In a letter submitted to Gilead by Healey and obtained by the Boston Globe, Healey said the pricing of the drugs “may constitute an unfair trade practice in violation of Massachusetts law.” The letter said the attorney general’s office was looking at the possibility of bringing an unfair commercial conduct complaint against Gilead, the Globe reported.
The high cost of Gilead’s drugs has led some prescription services, such as Express Scripts Holding Company to drop coverage of Sovaldi because of the costs. Likewise, the Southeastern Pennsylvania Transportation Authority filed a lawsuit against drugmaker Gilead charging the company is abusing its rights as a patent holder “by charging discriminatory prices that apparently have no other rational basis other than to inflate the company’s bottom line.” In addition, the U.S. Senate report said the high cost of the drugs has also been damaging to Medicaid programs. According to the investigation, Medicaid programs spent $1.3 billion before rebates for the hepatitis C drugs to treat fewer than 2.4 percent of enrollees diagnosed with the liver disease. More than 700,000 hepatitis C patients on state Medicaid programs are still waiting to receive their medications.
Earlier this week, the AIDS Healthcare Foundation filed a lawsuit challenging the patents on Tenofovir, a component in Genvoya, Gilead’s four-in-one fixed-dose combination to treat HIV/AIDS patients as well as Gilead’s combination drug, Stribild. In its lawsuit, the foundation alleges that Gilead “manipulated the patent system and engaged in anticompetitive practices to prevent economical access” to TAF, a prodrug of the Tenofovir compound. Michael Weinstein, president of the AIDS Healthcare Foundation, said two years ago Gilead unsuccessfully petitioned the FDA for a patent extension from three to five years on Stribild. He said the drug had an annual cost of $28,500 per year per patient, making it the most expensive fixed-dose first-line combination HIV/AIDS therapy on the market.
