The Trump team has a secret weapon as it tries to bargain down a pricey pill that prevents the spread of HIV: It owns a patent on the drug.
It’s a battle with billions at stake for Gilead Sciences Inc., which has cornered the HIV prevention market with Truvada. The pills can cost as much as $1,700 a bottle and earned the company $2.6 billion in U.S. sales in 2018, according to Bloomberg data.
Department of Health and Human Services Secretary Alex Azar told NPR this week the administration is negotiating with Gilead Sciences Inc. to drive down Truvada’s cost. HIV prevention, known as pre-exposure prophylaxis or PrEP, is central to President Donald Trump’s pledge to end the spread of the disease in the next decade. However, the pill’s exorbitant costs keep it out of the hands of those who need it most. About 40,000 new infections of HIV occur each year, according to CDC data.
The administration’s most potent tool in the talks could be the Centers for Disease Control and Prevention’s patent rights for the use of Truvada for HIV prevention. If enforced, the drug maker could owe the government royalties for infringing on that patent, advocates and legal scholars said.
“I think HHS does have real leverage here, and, if you look at Secretary Azar’s remarks, he framed it that way,” said Chris Morten, a staff attorney and research scholar at Yale Law School who wrote an analysis of the patent. His analysis was first reported by the Washington Post.
The HHS declined to comment on the negotiations or how it views the government’s patent on the drug, referring inquires to the National Institutes of Health. The NIH and the CDC both referred inquires back to the HHS. Gilead, which declined to comment, has disputed the validity of the government’s patents in the past.
Keeping Costs Reasonable
Truvada should be sold for the same price charged in other countries, said Michael Saag, a physician and HIV/AIDS researcher at the University of Alabama at Birmingham. A monthly supply for $30 would be reasonable because Gilead has more than recouped its research and development expenses, he said.
“They’re not going to be losing money by any stretch,” Saag said.
He hopes the current negotiations decrease the cost of the drug for all payers, not just those receiving it through government programs.
Azar’s April 8 comment was the first time the administration said it was negotiating with Gilead, but filings with the Securities and Exchange Commission indicate the line of communication has been open between the government and the company for years, Morten said.
Gilead was aware of one of the government’s patents in 2016, according to the company’s annual report that year. In a 2018 quarterly filing, the company acknowledged all three patents held by the government but said it didn’t believe they were valid.
Michael Risch, a professor and associate dean of faculty research and development at Villanova University’s Charles Widger School of Law, is a bit more skeptical about the government’s ability to bring about a price reduction.
“In theory, absolutely the government could do something with its patent,” but it only has a short period of time to act, Risch said.
Gilead’s patent on Truvada expires in 2021, giving the government limited time to leverage its patent and potentially file a lawsuit, if it comes to that.
“By the time you get to the end of the case, the value of forcing Gilead to reduce its price is going to be gone,” Risch said.