On September 24, 2018, Gilead Sciences announced its intent to launch authorised generic versions of its blockbuster hepatitis C drugs Harvoni (ledipasvir/sofosbuvir) and Epclusa (sofosbuvir/velpatasvir) through a subsidiary—an unexpected development since its US patents on Harvoni and Epclusa do not expire until 2030 and 2032, respectively.
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GlobalData views this strategic move as a shrewd acknowledgement by Gilead that it must embrace a more volume-based approach in order to regain its position as the leading player in the rapidly evolving hepatitis C space.
Although both Harvoni and Epclusa have been extremely successful, with peak US annual sales of $10B and $2.4B, respectively, pushback from payers on the cost per patient and increased competition, particularly from AbbVie’s Mavyret (glecaprevir/pibrentasvir), have dampened Gilead’s revenue stream, necessitating a shift in strategy.
Gilead has said that these authorised generic products would sell for a list price of $24,000 per treatment course, without needing to consider existing contracts and deals with public and private insurers and pharmacy benefits managers. The price cut is so drastic that the generic will be less expensive than even the Veterans Health Association (VA) heavily discounted price for Epclusa of $24,300.
The actual difference in price being paid by health insurers for Gilead’s branded HCV products is likely not to be as significant because of the discounts and rebates that have been negotiated with payers. However, the prices of the authorised generics are still likely to represent significant savings and will result in greater overall prescriptions of Gilead’s HCV product line.
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By GlobalDataThe biggest winners in the launch of authorised generic versions of Harvoni and Epclusa will be patients on Medicare Part D, who currently do not have easy access to Gilead’s products given the much lower list price of Mavyret.
Gilead has acknowledged that it has lost its position as the undisputed market leader in hepatitis C, mainly because of competition as sales of AbbVie’s pan-genotypic Mavyret continue to beat expectations. The force with which AbbVie has taken hold of the HCV market, due to an aggressive pricing strategy combined with Mavyret’s impressive clinical attributes, has forced Gilead into adopting a more radical approach.
By launching authorised generics ahead of patent expiration, Gilead has risked earning less revenue per patient with the hope of achieving greater patient access to its products. If Gilead’s aggressive approach pays off and increased access provides a revenue boost, in the short term it could slow and possibly even reverse the rapid growth of AbbVie’s Mavyret, thereby allowing Gilead to reap longer-term sales in the hepatitis C market as it continues to decline from its 2015 pinnacle.
Image credit: BruceBlaus.
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