Profitable Pill

Preventative treatment now accounts for about half of the pill’s U.S. sales, Kevin Young, Gilead’s chief operating officer, said in July. The 13-year-old medication’s sales reached $3.57 billion in 2016, accounting for almost 12 percent of revenue for the Foster City, California-based company.

“It certainly represents a growth opportunity in the U.S. — until generics hit,” said Asthika Goonewardene, a biotechnology analyst with Bloomberg Intelligence in New York. “Beyond the societal benefit, this is an old drug, and even with the likely discounts and rebates to ensure coverage, the margin is good and a volume play is very lucrative to Gilead’s earnings.”

Gilead doesn’t expect competition from generic versions of Truvada in the U.S. until 2021, Chief Executive Officer John Milligan said last month. Patent protection means that the medicine costs about $17,258 per person a year in the U.S., Andrew Hill, a senior visiting research fellow in the pharmacology department at Liverpool University, and colleagues told the International AIDS Conference in Paris in July. That compares with an annual cost of about $67 per person for a generic version in India.

Truvada’s patent expired on Aug. 1 in Australia, but a panel advising the government there deferred making a recommendation to subsidize either the Gilead brand-name product or Mylan’s generic version for PrEP, pending further information on its cost-effectiveness.

While “PrEP appeared to be effective in reducing the transmission of HIV,” Truvada wasn’t cost-effective at the price Gilead requested, the Pharmaceutical Benefits Advisory Committee said in a statement Friday. The company’s submission estimated annual expenditure of more than A$200 million ($158 million) in five of six years, the panel said, adding that it considered that “the opportunity cost was unacceptably high.”

Cheaper Generics

Without any government subsidy, PrEP costs about A$1,000 a month in Australia for users who aren’t participating in a study. Generics can be bought online in the U.K. from about 50 pounds ($64) a month.

“Once it comes off patent, you are going to wind up a getting a much larger use of it,” said Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases in a telephone interview. “It will be more accessible from an economic standpoint.”

While that will help drive down the prevalence of HIV, it may also have some less desirable effects.