How India's Patent Office destroyed Gilead's Big Pharma global game plan

© Manish Swarup/AP Photo

In 2006, members of the Indian Network for People Living with HIV/AIDS demonstrated in New Dehli against a patent applied for by Gilead Sciences.

Gilead Sciences charges a lot for the hepatitis treatment Sovaldi, which sells for as much as $84,000 to U.S. patients. The innovative medication has become one of the world's best-selling drugs despite its price tag, fueling huge growth at Gilead. The company had revenue of $24.2 billion in 2014, according to analysts' estimates, more than double its sales in 2013. Earnings for last year are projected to reached $12.8 billion, more than four times higher.

But the high price of Sovaldi threatens to make the drug too expensive for many patients with hepatitis C in developing countries such as India, where protesters last year lobbed accusations of gouging and carried signs renaming the company "Killead." In September the U.S. pharmaceutical company announced a licensing deal with seven Indian drugmakers to produce generic versions of Sovaldi that could be sold in 91 countries. That, according to Gilead, would help take care of the problem. "Our view is that the competition and the capabilities of these partners will bring down the price," Gregg Alton, executive vice president, told reporters in New Delhi at the time of the announcement.

Unfortunately for Gilead, this week government officials stepped in the way: India's patent office on Tuesday sided with critics who had challenged the company's patent. By rejecting the claim, the Controller General of Patents, Designs and Trademarks has opened the door for more Indian pharmaceutical companies to produce sofosbuvir, the generic version of Sovaldi. And unlike the seven companies that agreed to the deal with Gilead in September, the newcomers won't have any restrictions on where they can sell their generics.

"Getting sofosbuvir out of the stronghold of Gilead's monopoly will be crucial to expanding treatment for people with hepatitis C globally," Dr. Manica Balasegaram, executive director of the Action Campaign of Doctors Without Borders/Médecins Sans Frontières, one of the groups behind the Indian patent office challenge, said in a statement.

The news is a victory for MSF partner Tahir Amin, the New York-based lawyer in charge of intellectual property at the Initiative for Medicines, Access & Knowledge. Amin is an English-trained solicitor who once worked as a corporate lawyer for Levi Strauss and now oversees a small team of attorneys challenging big pharma patents in India and other countries. While Gilead had pointed out to the Indian patent office that 17 countries, including China, Indonesia, and Israel, had already granted patents for similar claims, India makes challenges easier thanks to its policy of requiring would-be patent holders to demonstrate that their compounds are new and not obvious - and also better than existing compounds.

"India believes that the patent standards are so low that companies can get patents for inventions very easily," Amin said in an interview. The patent office's examiner ruled Gilead's patent claim "lacks novelty and inventive step," as Bloomberg News noted, and also doesn't demonstrate it's significantly more effective than already known compounds. Amin explains that the controller general's decision holds that "there are a number of earlier compound structures that are very close to what Gilead is trying to get a patent for."

But Sovaldi is a breakthrough drug. Shouldn't that be worth something? "It's important to recognize that what the patent office deals with is whether something is new in science," Amin said. "The decision says there are a number of earlier compound structures that are very close to what Gilead is trying to get a patent for. It's a scientific decision and has nothing to do with the utility of the drug." Gilead didn't offer comment on Wednesday.

The company can appeal, a process that could take years. For now, Amin is hopeful the patent office decision will allow 49 million people - or 74 percent of the total number of hepatitis C patients globally - access to the drug in countries that had been off-limits to generics under the September agreement between Gilead and the seven Indian drugmakers. "Gilead's licensing deal is what we call managed competition," he says. "What this case can achieve is open competition, a real free market."

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