By Sean Dickson and Amy Killelea
As Congress continues its attention to pharmaceutical development and prices, the U.S. Senate Committee on Finance’s Subcommittee on Fiscal Responsibility and Economic Growth has called for a hearing entitled “Promoting Domestic Competition and International Competitiveness.” The Subcommittee has invited Gilead Sciences CEO, Daniel O’Day to testify about the current state of competition in the pharmaceutical industry and the impact of Gilead’s pricing decisions on access.
While the high list prices of Gilead’s products and the costs borne by the healthcare system because of these prices will and should factor into the Subcommittee’s inquiries, equally important is the history of the company’s drug development and market manipulation for critical HIV antiretrovirals (ARVs), potentially delaying access to safer medications in the name of profit. While the incentives under the U.S. patent system are supposed to encourage rapid introduction of innovative therapies, Gilead has instead delayed innovations to take advantage of other barriers to generic entry that prolong overall market monopolies.
Gilead’s development, pricing, and marketing of two ARVs in particular—tenofovir disoproxil fumurate (TDF) and tenofovir alafenamide (TAF)—offer a lens into how current incentives to innovate new pharmaceuticals may perversely delay patient access to clinically superior products while simultaneously increasing prescription drug costs. In this post, we describe the way Gilead manipulated these incentives and explain how Congress can reform current law to encourage innovation but not anti-competitive behavior.
The History Of Gilead ARV Development: TDF Vs. TAF
TDF and TAF are both nucleotide reverse transcriptase inhibitors (NRTIs), a class of antiretroviral (ARV) therapies that work to disrupt the ability of the virus to make copies of itself by blocking the “reverse transcriptase” enzyme at the heart of the virus replication process. NRTIs are the backbone of the ARV market. Gilead’s development and marketing of these two products went in two very different directions.
In 2001, Gilead received approval from the Food and Drug Administration (FDA) for TDF sold under the brand name, Viread, and in the several years following Viread’s approval launched a number of ARVs containing TDF, including Truvada (TDF/FTC) in 2004 and Atripla (TDF/FTC/EFV) in 2006. TDF has an excellent safety and efficacy profile, but the product’s FDA label lists two noteworthy side effects: decreases in bone mineral density and new onset or worsening of renal impairment. What is notable is that at around the exact same time that Gilead launched its TDF products, Viread and Truvada, it was also conducting research on yet another tenofovir derivative: TAF.
Gilead conducted multiple studies in the early 2000s, with conclusions suggesting there were benefits to TAF over TDF in some cases. An early study in 2001 that looked at how TAF operated in plasma and blood cells of dogs found that the ability of TAF to target certain areas at low dosages “should be an important indicator of greater clinical efficacy of TAF.” At the 2002 convening of the premier HIV research conference, the Conference on Retroviruses and Opportunistic Infections (CROI), Gilead’s head of development said TAF could be taken in lower doses than TDF, resulting in better antiviral activity and fewer side effects—and he announced that Gilead was intending to start clinical trials soon. A clinical trial indeed began in March of 2002 and ended in February of 2003, specifically comparing the safety, tolerance, and efficacy of TAF relative to TDF.
In its Q4 2003 report, Gilead told investors that it would be continuing clinical development of TAF “based on favorable Phase I/II results,” demonstrating that Gilead had evaluated the data from the 2002-2003 comparative trial. Yet Gilead failed to publish the results of the clinical trial, announcing in October of 2004 that “Gilead does not believe that [TAF] has a profile that differentiates it to an extent that supports its continued development.”
After announcing the cessation of TAF research, Gilead’s TDF products took off, becoming the key component of multiple single-tablet regimens that provide once-daily pill options for people living with HIV. TDF-based products, including Gilead’s blockbuster drug Truvada, were wildly successful for Gilead. By 2008, Truvada alone had generated $2.1 billion for the company. During this time, Gilead discreetly kept up work on TAF. One study published in 2005 concluded that “the high concentrations of tenofovir observed in lymphatic tissues after oral administration of [TAF] are expected to result in increased clinical potency relative to TDF.” Gilead also filed a series of patents on TAF and related molecules, even though the program was supposedly mothballed.
In 2010, after a multi-year hiatus, Gilead quietly restarted its research into TAF, calling it “an interesting new molecule.” In 2012, Gilead announced a new Phase 2 clinical trial of TAF, highlighting that TAF “could enable the development of a new range of single-tablet regimens for HIV that optimize clinical efficacy, safety and tolerability for patients.” In 2014, Gilead finally published the results of the trial that ended in 2003 and which it had referenced in prior shareholder reports, stating that TAF “showed more potent anti-HIV-1 activity and higher intracellular tenofovir levels compared with [TDF], while maintaining lower plasma tenofovir exposure.” The common finding of all of these studies, including those in the early 2000s, was that TAF could be used at lower dosages than its TDF counterpart with identical clinical efficacy, offering at least the potential for less drug toxicity on bone and renal functioning.
Following publication of its long-lost TAF research from over a decade earlier, the first TAF-inclusive single-tablet regimen for the treatment of HIV was approved by the FDA in 2015 and sold under the brand name Genvoya (TAF/elvitegravir/cobicistat/FTC). Descovy (TAF/FTC), a similar drug to Truvada except that it swaps in TAF for TDF, was approved by the FDA for HIV treatment in 2016. Gilead had pulled off a timing, marketing, and scientific dance, building a TAF-based market of products to replace older TDF-based regimens ahead of patent expiration. (See exhibit 1) The next play for Gilead was to ensure providers and consumers were willing to switch regimens.
Exhibit 1: Key dates in Gilead’s commercialization of TDF and development of TAF
TDF (tenofivir disoproxil fumarate)
TAF (tenofivir alafenamide)
|In 2001, Gilead’s Viread (TDF) was approved by the FDA
|In 2001 and 2002, Gilead researchers publish work on a modified version of TDF, TAF, which shows efficacy at lower dosages than TDF
|From 2002-2003, Gilead conducts a clinical trial comparing TDF and TAF head-to-head, evaluating relative efficacy, safety, and tolerability
|A Q4 2003 shareholder report announces continued clinical development of TAF “based on favorable Phase I/II results”
|In 2004, Truvada (TDF/FTC) was approved by the FDA for HIV treatment
|In 2004, Gilead announced via a press release it was stopping its research on TAF, including delaying publication of clinical trial data
|In 2006, Atripla (TDF/FTC/EFV) was approved by the FDA, marking an exclusive collaboration between Gilead and BMS
|From 2004 to 2005, Gilead applies for multiple patents for TAF
|In 2012, Complera (TDF/FTC/rilpivirine) was approved by the FDA and in 2014, Stribild (TDF/elvitegravir/cobicistat/ emtricitabine) was approved by the FDA
|In 2010, Gilead announced it was adding a “an interesting new molecule,” TAF, to research plans
|In 2012, Truvada was approved for PrEP by the FDA
|In 2014, Gilead published data collected from the 2002-2003 trial showing TAF may be a safer alternative to TDF
|In 2014, Gilead and Teva Pharmaceuticals entered into a settlement agreement that allowed Teva to launch a generic version of Truvada (TDF/FTC) starting September 30, 2020
|In 2015, Genvoya (TAF/elvitegravir/cobicistat/FTC) became the first TAF product approved by the FDA
|On September 30, 2020, Teva began its six-month exclusivity period for generic TDF/FTC
|In 2016, Descovy (TAF/FTC) and Odefsey (TAF/FTC/rilpivirine) were approved by the FDA
|In April 2021, multiple generic manufacturers began marketing generic TDF/FTC
|In 2019, Descovy was approved for PrEP by the FDA
Source: Authors’ analysis.
Why Did Gilead Delay Launch Of TAF?
Gilead’s patent on Viread (TDF) was originally set to expire in 2018 and the patent for Truvada (TDF/FTC) was originally set to expire in 2021. Gilead’s TDF-based products enjoyed unparalleled market success in their first decade of approval. However, as the patent end dates grew closer, Gilead began to move away from TDF and back toward TAF.
Given Gilead’s immaculately well-timed resurrection of TAF years after its initial research, it is hard to imagine that the 2004 stop work order on TAF research was driven by anything other than patent and market share gamesmanship and a practice known as “product hopping.” Because TDF and TAF are different molecules, it can be harder to switch patients from TAF product to a generic TDF product once they have been established on the new regimen.
Current law not only permits, but encourages, this sort of product hopping. Because Gilead was publishing data on TAF in the early 2000s, it had to file patents then to protect its invention; these patents could expire around the same time as TDF’s patents or be more easily challenged by generic manufacturers. Instead, Gilead is relying heavily on exclusivities generated by the Food, Drug, and Cosmetic Act (FDCA) to protect TAF. These FDCA exclusivities create a perverse incentive to delay introduction of pharmacologic improvements until right before the patents on the original drug expire, delaying patient access to better therapies.
Gilead’s patents on TAF were similar to TDF and may not have provided significant protection from generic competition. (Gilead claims some TAF patents persist until 2032, but these might be easily challenged.) However, the FDCA protects TAF even if the patents are vulnerable: Gilead received five years of new chemical entity exclusivity for the new TAF molecule, even though the patents will expire during that period; moreover, it has bumped this exclusivity to seven years for some products under orphan drug exclusivity. Additional studies that expand TAF’s prescribing indications can generate new original investigation exclusivities on some formulations, which add another three years of protection and which cannot be challenged by generic drug makers.
Gilead’s Push From TDF To TAF Products
As TAF-based products came to market, Gilead immediately employed a full court marketing press for providers and consumers to switch from TDF-based regimens. Gilead repeatedly touted claims that TAF-based regimens were safer than TDF-based regimens because TAF required a much lower dose than TDF, lessening the potential for bone and renal toxicity. In its 2016 press release announcing Descovy’s FDA approval, Gilead publicly claimed that TAF “demonstrated improvement in surrogate laboratory markers of renal and bone safety as compared to TDF in clinical trials.” Given the studies it conducted in the early 2000s, Gilead’s claim about TAF’s relative safety compared to TDF was anything but new in 2016.
Gilead’s marketing worked. Medicare Part D spending data indicate that in 2015, before their TAF-based counterparts were approved, 58,366 Medicare beneficiaries were using Truvada and 14,272 were using Stribild, both TDF-based treatments. Yet in 2017, after the introduction of TAF, beneficiaries receiving Truvada had dropped to 36,596 and beneficiaries receiving Stribild had dropped to 7,411. In 2017, 31,533 beneficiaries were using Descovy, the TAF-inclusive version of Truvada, while 28,632 beneficiaries were using Genvoya, the revised version of Stribild. Looking at total units (which better account for mid-year product transitions than beneficiary counts), Gilead had converted 49 percent of Truvada/Descovy utilization to the new product, and 82 percent of the Stribild/Genvoya utilization to the new product, in Medicare Part D.
Beyond just Medicare, Gilead saw significant switching for HIV Pre-Exposure Prophylaxis (PrEP) treatment with Truvada or Descovy. In the first nine months following Descovy’s October 2019 receipt of a PrEP prescribing indication, 30 percent of all prescriptions for PrEP were for Descovy. This means that thousands of individuals were started on or switched to products with a list price of thousands of dollars per month just as the generic TDF/FTC market was coming online. (For comparison, by June 2021, the acquisition cost for most of the generic TDF/FTC options on the market was only $1 per month.)
To be fair, Gilead was not the only entity helping to create an artificially timed market for Descovy for PrEP. In 2018, on the cusp of generic TDF/FTC competition, the federal Department of Health and Human Services launched its Ready Set PrEP initiative, using donations of branded product from Gilead to provide PrEP to uninsured individuals. Even after the entry of generic TDF/FTC for PrEP, this federal program continues to only provide access to Gilead’s brand-name products for PrEP.
Gilead’s aggressive push to market TAF’s benefits over TDF is brazen given its deliberate strategy to delay TAF availability for over a decade, despite early evidence suggesting it would be better tolerated for some patients than TDF. While the benefits of TAF-based regimens over TDF-based regimens are overblown given the price tag, Gilead’s own statements and research reflect that the company wholeheartedly believed TAF to be safter than TDF—yet it delayed development and launch of TAF to maximize profits for its entire TDF/TAF product line, limiting patient access to a potentially safer product.
A Path Forward
The Senate Subcommittee will undoubtedly delve into Gilead’s history of high list prices for breakthrough products and whether those prices are justifiable. But equally important is Gilead’s strategy to preserve market share and company profits over timely access to drugs, drugs the company itself deemed safer for patients.
The patent system already rewards new developments by creating an immediate incentive to release the technology, protecting it from competition for 20 years. Yet Gilead chose to deviate from the standard incentive for new pharmaceutical innovation by not commercializing TAF during the core patent-protected years. Instead, Gilead leveraged FDCA exclusivities that extend its monopoly beyond 20 years to switch patients from TDF to TAF, eking out additional years of profits while preventing patients from accessing a therapy that may have fewer side effects.
The fact that, for over a decade, Gilead shelved its own research suggesting that TAF may have greater patient safety than TDF indicts the regulatory system that allowed this to happen. Gilead is not alone in having abused these incentives: AstraZeneca took a similar approach in switching patients from Prilosec to Nexium at the end of Prilosec’s patent protection, and Forest Laboratories did the same with Celexa and Lexapro. These product hops, while costly in terms of dollars, are unlikely to have had the potential clinical ramifications of Gilead’s intentional delay of TAF.
It is incumbent upon Congress to remove incentives that encourage manufacturers to delay effective medications for profit by gaming the patent and drug exclusivity system. Specifically, Congress should require clinical trial results to be published within a certain window after trial completion. This would provide more information to clinicians and patients and creating a mechanism to hold manufacturers accountable.
More broadly, Congress should reduce incentives for product improvements to be introduced at the end of the patent lifecycle and create new incentives that encourage therapeutic improvements to be marketed as soon as they are known, with a requirement that the manufacturer demonstrate substantive clinical benefit to receive any additional exclusivity. This would hasten patient access to better formulations while maintaining rewards for true therapeutic advancement. Gilead’s intentional delay of a clinical improvement cannot become the standard for drug development, and Congress must revise the system that allowed it.