The issues around access to medicines at affordable prices has galvanized civil society, the pharmaceutical industry, the research community, and politicians this year in oft-contentious debate that shows no sign of abating. A day-long session hosted by the Global Health Centre of Geneva’s Graduate Institute, and cosponsored by the Swiss Institute of Intellectual Property and the Federal Office of Public Health, sought to unwrap some of the thorny questions around the access issue by examining in detail the story around one important recent breakthrough in treatment for Hepatitis C (HCV). The discovery of sofosbuvir transformed the course of HCV treatment forever by offering a breakthrough cure for what had been a chronic and often deadly disease, affecting affects some 71 million people worldwide in high- and low-income countries alike.

First approved for use in the United States in 2013, sofosbuvir was the first in a class of direct-acting anti-viral treatments that offered a 95%  cure rate for an insidious disease; it rapidly caught the interest of health systems worldwide. The race to expand access to a drug that was initially priced at over US$ 80,000 in the United States by Gilead Pharmaceuticals was hectic and often unpredictable.

Access to the patented drug known as Sovaldi® was expanded by Gilead to a wide range of countries through a series of voluntary licensing arrangements with manufacturers that reduced its price significantly. However, the drug remained unaffordable for many health systems and individuals.

Egypt’s courts rejected the patent on sofosbuvir – paving the way for massive local production of a WHO-recommended generic combination, sofosbuvir/daclatasvir, which reduced prices ten- and then 100-fold in domestic markets.  In 2017 Malaysia authorized importation of the Sofosbuvir/Daclatasvir generic, making use of TRIPS flexibilities in World Trade Organization rules regarding the rights of low- and middle-income countries to issue so-called “compulsory licenses” (called “government rights license in Malaysia) for importation or production by local pharma companies.

Moves in Egypt, South-East Asia and Latin America to produce and use generic drug versions have been strongly supported by civil society, including Drugs For Neglected Diseases Initiative (DNDi). DNDi has gone on to support development of yet another combination drug therapy of sofosbuvir/ravidasvir. Now in Phase II and III clinical trials, approval of yet another new HCV therapy should open the door to even greater expansion of treatment access.

Elsewhere, affluent countries such as Australia negotiated procurement of drugs for a lump sum with no cap on the number of people treated – the so-called ‘Netflix’ model. And even countries, such as Switzerland, faced twin challenges in ramping up awareness and education about a disease for which few people had previously sought treatment, which naturally led to higher drug costs as well.

The Geneva workshop convened experts and practitioners from industry, civil society and governments – including many who were on the frontlines of the Hepatitis C story – to take stock of the diverse approaches that have been used to improve access to the vital drug and see what lessons could be applied to the broader medicines access issue.

Said Suerie Moon, co-director of the Global Health Centre, and a co-host of the event, “Necessity is the mother of invention, we have seen all sorts of companies, PDPs, and others try all sorts of different approaches was because the need was very urgent.”

She noted that the key to success in the Hepatitis C story, as well, was innovation –  “not just in terms of developing new medical technologies, but in figuring out how to solve these problems”.

From this and other examples, she added, health policymakers might learn more about creative ways to “shift innovation models, tug and push and pull, to make them better serve the needs of society.”

At the same time, however, the Hepatitis C story is also somewhat unique.  The widespread prevalence of the disease not only in low income regions but also in high income countries such as Europe and Japan, means that the drug represented a profitable market for manufacturers of all kinds – unlike neglected diseases with a much smaller target groups of people mostly living in poor countries. HCV is also a disease where solutions can rely not only on drug treatment but also on greater public awareness and preventive behaviours, noted Vinh-Kim Nguyen, co-director of the Global Health Centre. “The medical community shares some of the responsibility for this epidemic because in the past it was driven by unsafe vaccination practices and needles used for intravenous purposes. So physicians have a special responsibility to respond.”

Disruptive in the ‘Best and Worst’ Sense

For industry, the HCV cure was disruptive “at its best and at its worst” observed Thomas Cueni, head of the International Federation of Pharmaceutical Manufacturers and Associations.

“Seven out of ten 10 Hep C patients developed liver disease and then we suddenly had a cure – that’s the kind of positive disruption patients and society waits for.  But on the worst side, countries were not ready, it caused huge rifts in national budgets.  And personally I believe that Gilead didn’t get enough credit,” he contended.

Anticipating the surge of demand that would come from lower income countries, the company was aggressive in ensuring that they had “access programmes ready, the tech transfer programmes, the voluntary licensing deals, really trying to make sure that they could replicate what they had done in the HIV/AIDS field.”

“But the shock was really in the developed countries and I think we learned from that in a number of areas,” he said. “I think that Gilead learned the hard way that trying to do the right thing in developing countries doesn’t absolve you…But on the other hand, the industry in many, many countries is now sitting down with Ministries of Health for talks about horizon scanning, talks about how can we prevent the next shock and how can we better plan in terms of budget impact?”

“That is something that we haven’t quite coped with yet, but I think it would be interesting to talk about does this call for new models to finance this kind of disruptive innovation.”

Is It the Innovation Model or the Finance Model that Needs Fixing?

Cueni contended that the current model for drug innovation “works extremely well – although it has of course has some challenges.”  The deeper challenge, he said is that “Innovation needs to be affordable and sustainable in terms of budget.”

“Hep C is an example of the innovation model, in terms of bringing up transformative innovation, working very well. Rather than try to reinvent the wheel, we need to admit that this competitive innovation model works very well, and let’s focus on the research need where the model doesn’t work very well,” he said, noting that neglected research agendas for antibiotics, malaria and other neglected diseases are now being tackled by public private partnerships, such as Drugs for Neglected Diseases Initiative, Medicines for Malaria Venture and others.

“We need to be careful that one side does not fit all. There were concerns that Hep C would break the bank, but because of competitive price pressures, the prices fell greatly.”

“Switzerland spends about 2% of its healthcare budget on cancer drugs, and that is double that of 20 years ago. But 2% doesn’t break the bank… and 50% of cancers are also preventable so I regret that we haven’t got a cancer prevention plan,” he added, referring to rising concerns about the high prices of medicines for cancer and rare diseases.

“Companies are increasingly sensitive about access to medicines in high and low- income countries. And there is increased willingness among industry to talk about differential pricing [for  high, middle and low-income countries.]. We need to do more from our side…. but also governments, likewise need to do their part.”

“Innovation systems as it stands (except neglected tropical disease and antibiotics) are delivering a stream of innovative medicines which results in us occasionally struggling to afford them, but overall, the system in terms of innovation works extremely well.”

“We do need new antibiotics to fight AMR [antimicrobial resistance]. Thanks to push incentives – such as GARDP [Global Antibiotic Research & Development Partnership] in Geneva and CARB-X … we have a number of potentially truly novel antibiotics, but there is no one who picks them up through clinical development and brings them to markets,” Cueni added, noting that for that final stage of the process, industry skills are desperately needed.

At the other side of the price spectrum, Cueni also noted that the access issues to low-cost drugs, many of which are no longer under patent, have to be addressed along with the issues posed by high-priced drugs.

He observed that rich countries are increasingly outsourcing their drug procurement and thus have become very reliant on just a few suppliers in Asia or elsewhere for many critical drugs. That, in turn, is contributing to bottlenecks and serious shortages in critical supplies, as domestic manufacturers can no longer depend upon reliable, long-term purchase arrangements from national hospitals and health systems.

That point was echoed by, Felix Addor, Deputy Director General, Swiss Federal Institute of Intellectual Property, who noted that, “Even a country like Switzerland has faced severe shortages for vaccines and antibiotics. In fact, in 2017, 81 essential medicines were not available, the majority of which are off-patent.”

In many low- and middle-income countries, meanwhile, inexpensive drugs for hypertension and other chronic diseases are often unavailable – decades after their patents expired – reflecting the multi-faceted dimensions of the access issue, noted WHO’s Assistant Director-General Mariangelo Simão.

Finding The Balance; Access Issue By Issue

Nora Kronig Romero, ambassador for Public Health, in the Swiss Federal Office of Public Health, echoed Cueni’s view that it is not the innovation system, per se, that is broken.

“It’s good to leave the things that work, working, without having to change or draw lessons from it.”

Access needs to be examined issue by issue, she said, in order to make incremental, but effective, adjustments that achieve “balance”.

“When we look at access to medicines, it has 3 pillars  – price, access to people, and sustainable financing – we have to discuss when we have imbalance between these 3 pillars – either the price is too high, or the access to people is not a given. How do we most effectively and sustainably use the limited resources we have?

“There are also huge challenges with shortages.  How are we going to act if we don’t get the right vaccine at the right time?  And countries need to work together. The importance of international cooperation must be emphasized. Switzerland is a small country. When we talk about differential pricing, Switzerland doesn’t want to pay the same price as Egypt, but still how do we ever achieve the numbers that we want [in terms of purchase power]?”

James Class, Innovation Policy Lead at Gilead Sciences, added, “There is a need to balance today’s cures with tomorrow’s cures.  Having an innovation ecosystem will essentially spur market competition.  A drug like sofosbuvir has resulted in permanent cost-savings for governments. There is value in it since it not only improves patients’ lives, but also results in long term savings for health systems. As many as 100 countries have voluntary licenses on [the patented version of Gilead’s] sofosbuvir. In 2018, more than 485,000 patients were treated, more than 250,000 in India alone.

“Instead of trying to look at the fundamental architecture, let’s get into the system and find out where are the skewed incentives, and take them out and fix them. That, I think, it going to do a lot more for society.”

25% of HCV infections In Countries Not Covered by Voluntary Licenses

Still, despite the massive issuance by industry of voluntary licenses for production of the patented HCV drug formulation, some 25% of people infected with Hepatitis C treatments live in middle income countries that were not covered by such arrangements, noted Bernard Pécoul, Executive Director, Drugs for Neglected Diseases initiative.

This has led to DNDi’s intervention to support clinical trials of yet another generic drug formulation of sofosbuvir/ravidasvir, developed with Egyptian manufacturer Pharco, in collaboration with Pharmaniaga in Malaysia and Chemo in Latin America.  The sofosbuvir /ravidasvir combination has shown a 97% cure rate, comparable to the patented drug formulations, and DNDi hopes to register it in 2020.

Due to the success of such global, publicly-supported R&D partnerships, complemented by an acceleration of local production in countries such as Egypt, the price of generic HCV cures has dropped by nearly 100% in Egypt, said Sherine Helmy, CEO, Pharco Pharmaceuticals. The new DNDi supported combination will hopefully come on the market in Malaysia at about $US 300 for a 12 week treatment.

“Differential pricing is not a solution,” said Pécoul. “The pricing is defined by the company. Rather, reaching affordable prices also depends on the IP status of the drug, as well as government leadership in local R&D and manufacturing.”

Pécoul said that he sees “open source innovation,” involving broad-based collaborations with industry and researchers such as those fostered by DNDi, as the wave of the future – “We are trying to promote as much as possible open source innovation, and we have some space to move and trying to work with companies, the future will be in this direction if we want to stimulate innovation at the early phase of discovery, there is this trend today and it is an important one.”

Are Innovation Rewards Funding More Innovation – or Business Acquisitions?

However, Victor Roy a research fellow at the UCL Institute for Innovation and Public Purpose contended that the Hep C story also illustrates more fundamental failings in the current system of innovation incentives.  The system as it is designed today, he noted, makes use of public funding to generate new products, but then prioritizes corporate acquisitions and rewards to shareholders above expanded access to products or even investments in the next round of drug discoveries.

“There is a misconception that the public sector funds only basic science,” he said. “But public investment essentially accelerated the momentum for the discovery of the (Hepatitis C) drug.”

Public institutions act like venture capitalists “playing midwife” to biotech labs that are working on promising drug candidates – only to be acquired later by big pharmaceutical companies for huge sum of money.

This “acquisition model of drug development” has driven up costs with large companies scouting out small biotech firms with promising innovations, which they believe can be marketed profitably to health systems.  He cited examples of Gilead purchase of Pharmasset, the original innovators of an all-oral HCV regimen for $11 billion, among others.

“It is a myth to some extent, that that a single firm develops a drug. It is more like a relay race with a number of financial intermediaries acting with a pricing horizon over the future,” said Roy.

And once a drug has been successfully launched, not only the costs of the R&D as such, but of the company acquisitions, are reflected in the price tag.  And finally, the monies earned from a blockbuster drug sales are often channeled into more expensive corporate acquisitions, or distribution to shareholders, before they are re-invested into the internal R&D innovation structure – “and that is how we arrive at high price points,” said Roy.

“So there need to be alternative pathways to drug development which look at “how do we make ‘access’ an ex-ante design feature of evolving innovation models?” he asked.

“My wish on innovation is to have political momentum to test alternative pathways to the shareholder model, particularly on antimicrobial resistance…we need more public investment, private sector would be there, to test to how we do drug development in a more affordable way.”

One of those pathways should be “delinkage” of innovation incentives from patent monopolies with publicly supported funds that can also reward new discoveries, said Fifa Rahman, a Malaysian NGO delegate to the board of UNITAID. From the NGO perspective, she said, “The innovation system is not working – The price that was offered to Malaysia was US$ 36,000 for a a cure and average Malaysian household income is US$ 1,300 a month. That’s an unfair price. Gilead made US$ 19.2 billion in the second year of marketing [Solvadi]; it recouped its R&D costs in 4.5 days. And yet today many people still don’t have access to HCV drugs.”

“We see these same problems with drugs such as delamanid (to treat drug resistant TB) not coming to the final stage because it is not profitable to bring this to the world. So what are we going to do?  Are we going to turn to the DNDis of the world every time poor people need a drug? We need to think about delinkage – about a prize fund.”

Transparency of Prices in the Equation – How Hep C changed Everything

While many of the problems in the current system have been attributed to the lack of transparency of costs in the R&D pipeline as well as a lack of transparency around pricing, Kronig noted that the transparency debate is multi-dimensional, involving R&D costs, clinical trials, prices and patents – “completely different areas, completely different ways in tackling the issues, completely different international frameworks.”

“So let’s design the policies where you have the regulatory space, to find the right balance of quality of care, access to patients and health financing.”

Still, the high cost of Hepatitis C drugs undeniably changed the nature of the discussion said, Mariângela Simão, WHO Assistant Director-General, and head of its medicines access activities.

“It was disruptive globally because it came at such a high price,” she said, noting that at the time the breakthroughs occurred, she was a Brazilian representative on medicines access issues serving on a number of international boards. Before the Hepatitis C breakthrough, low and middle-income countries were already concerned about drug prices, “afterwards, you had rich countries concerned as well.”

Ultimately, the HCV story was one of the factors that led to approval of the milestone transparency resolution in the World Health Assembly last May, said Simão. And the impacts are continuing with the recent vote in the French Parliament to require public disclosure of public funds used for R&D in new drug registrations.

In terms of expanding access to costly treatments, she predicted that dilemmas similar to those experienced with Hepatitis C cure, will loom in coming years as more costly biotherapeutics, as well as cell and gene therapies come on the market to treat cancer, rare diseases and genetic diseases.  And at the request of South Africa and other countries, the issue of access to high priced medicines, including drugs for orphan diseases, will be on the agenda of the WHO Executive Board in 2021, after being deferred this year.

Added Pécoul, the government’s role is to exert a balancing influence on industry price demands, and the recent French Parliamentary resolution on price transparency is a reflection of growing political will to do that.

“If we don’t know the cost of the investments, if we don’t know the part of public investment versus private investment, all of these elements have to be taken into consideration for defining the price of a final product. The issue of transparency is fundamental…it’s time to stop, to have some rebalance, some indicator of monitoring, and I think the French government is moving in this direction.”

International cooperation is another avenue, emphasizes Kronig. “I am sure that there is on the part of government, quite a bit of potential in working between countries, exchanging best practices and ensuring how we can cooperate.”

However, price is not the sole determinant of access, she adds. For instance, in the case of Hepatitis C, there remain challenges of preventing disease through better hygiene and investments in patient safety, on the one hand, as well as overcoming disease stigmatization to reach marginalized groups, on the other.

“In terms of balance, it’s how do you get the right balance between the different pillars. How do we make sure we have innovation, we have access to the patients, and we have sustainable financing for the health system, is the balance we want to get. Finding the balance is the challenge, but we shouldn’t put one interest in front of the other. “

IP Is Neutral – Its How You Use It That Counts    

As for the role of IP in the system, Pécoul stressed that, “My concern with IP is more abuse of IP, I think there is a lot of abuse of IP. That is why it is so important that the government retains some control, some balance and some flexibility, imagine the TRIPS, to avoid this abuse of IP. When I think about abuse of IP, it is when there is a slight modification of a product that will bring another 12 years of IP protection.”

“[In DNDi] We are trying to promote as much as possible open source innovation, and we have some space to move and we are trying to work with companies, and I think the future will be in this direction if we want to stimulate innovation, particularly at the early phase of discovery.  There is this trend that is there today, and it is an important one.

Said Class, “It is critical to preserve the intellectual property system. Intellectual property is providing certainty for a certain time… Instead of trying to look at the fundamental architecture, get into the system and look at the skewed incentives and do something about those.”

But as the system exists today, add Roy, “The incentive is about more chronic treatments, it’s not about having breakthroughs. The science may be there, but I am not sure the finance is there. I am not sure Wall Street was so happy about the Hep C cure.”

Concluded Addor, “Ultimately IP is a neutral tool, that can be tremendously important to the advancement of science. The issue is more about how policymakers use it.”

“IP has really made a lot of innovations happen, because you have to reveal your innovation in the patent application, it also provides everybody with a cooking recipe to do then later on a repetition with the protected innovation, that they can imitate.”

“And the bad side is that it gives a market monopoly, exclusivity on the market for some time, and in that way is anti-competitive.  But I do hope that IP continues to play an important role. Because I think we tend to forget that you have to make your innovation public.”

“And I hope we are not going in the direction of where you have undisclosed information, where we are forced to reinvent the wheel because I did not find the cooking recipe for the wheel that is already on the market.  So having said this, I hope that IP is going to continue to flourish, having said that it doesn’t mean that we shouldn’t use our creativity to not just keep the system working as it is, but maybe enlarging the cake, and looking at creative, complementary alternatives,  working as well, maybe less well or  even better.

“Nobody can simply work alone, we live in a globalized world, so we have to act together.  Only if we recognize that we are mutually dependent then we can come together with solutions… I’m a mountaineer, I did climb and still do climb a lot and I once met a woman who was the first woman to climb mount Everest. I asked her what made you summit mount Everest, she said, ‘it’s these little steps – they add up.’”

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Brief Summaries of the Country Experiences Introducing Hepatitis C drugs are excerpted below:

Australia’s universal access strategy: the “Netflix model” – Gregory Dore, Professor, Kirby Institute, University of New South Wales, Sydney

The Australian government negotiated a five-year (2016-2021) contract for purchase of the patented Hepatitis C drug formulation, with no cap on the number of people treated. There is an AUD 200-250 million cap on total annual expenditure for Hepatitis C treatment.

While the full details of the Australian arrangement remain secret, the lump sum arrangement of USD 766 million was disclosed along with details of numbers of people treated.  Previously published studies estimate that treatment costs were reduced to one-tenth of the $US 72,000 treatment cost in the United States, at the time the contract was signed.

The lump-sum remuneration arrangement, dubbed the “Netflix model” was viewed as a way to expand the reach of treatment by making it more affordable to the public health system, and in the process reach marginalized populations who otherwise might not have received care, Dore said.

“Civil society was very strong in their message – “access to medicines for all or none”, said Dore, noting that a broad range of stakeholders were involved as Australia worked to make HCV drugs available, including civil society, clinicians, patients and the industry.

During the negotiations, the government was of the view that the final deal should ensure that more patients would be treated at a lower price. For the industry the choice was about generating revenues of AUD $ 3 billion over five years or AUD $ 1 billion over five years. Making a couple of hundred million dollars per year, as a result of this negotiation is not a small consideration.

From the perspective of the government it was important to get clarity on the impact on the annual health budget. For that, getting epidemiological data that informed policy making was key. There was a need to build programs to address harm reduction such as in high risk groups including in prisons, among those living with HIV, among others. The target population is diverse and the solutions needed to be diverse as well, said Dore.

Dore noted that “There was push back from the specialists, who were against the involvement of non-specialist primary care physicians, in administering the new treatment, but “it is important to develop models of care that reach people. One cannot expect high detection by assuming that patients will show up in tertiary health facilities.”

Egypt Ramps Up of Local Production – Heba Wanis, Researcher, Third World Network

The story of Egypt’s fight against Hepatitis C, includes a strong government and a political will to making drugs accessible. Egypt’s domestic approach included combining the efforts of the government and private sector to secure access to HCV treatment.

The Plan of Action for the Prevention, Care and Treatment of Viral Hepatitis was developed and launched in October 2014 in addition to a national treatment programme. Negotiations resulted in providing new HCV treatment at USD 300 per box per month in 2014.

In addition, high standards of patentability and rigorous internal examination, also resulted in the rejection of a patent for sofosbuvir. Egyptian Patent Office rejected the application on grounds of lack of novelty and inventiveness.

As a consequence, the effect on generic competition in Egypt has resulted in the registration of 40 generics, Gilead’s Sovaldi is priced at USD 839, generics cost USD 51 – 150 per box. The absence of patent protection led to domestic production of low-cost generic DAAs, supported by fast-track registration.

More than 2 million have been successfully treated on the back of comprehensive national testing and treatment, using nationwide treatment facilities.

The Journey of Government Use Licenses on Hepatitis C: The Experience of Malaysia – Noor Hisham Abdullah, Director General of Health, Ministry of Health, Malaysia

“The ‘Netflix model’ is too expensive for a country like Malaysia. One size does not fit all. It is important to continue to innovate to meet public health goals,” says Abdullah.

Malaysia’s government made use of World Trade Organization’s TRIPS Article 31 as well as the Malaysian Patents Act 1983 that authorizes it to issue a compulsory licensing in order to provide access to essential medicines for public, non-commercial purposes. It did so after several negotiations between May 2016-2017 with patent holders of registered treatments had failed to reach an agreement.

When the compulsory license was issued, intense pressures were applied to the Malaysian government by the Pharmaceutical Researchers and Manufacturers of America (PhRMA), and other US pharma groups, calling for Malaysia to be placed on the US Trade Representative’s Priority Foreign Countries watch list in its “Special 301 Report”.

Even so, says Abdullah, “If we had not exercised a compulsory license, we would not have subsequently received voluntary licenses to access the drugs. There is a need to balance the pressures that a government faces, with the need for treatment by patients.”

Switzerland – Adjusting to Disruption in a High-Income Country – Philip Bruggmann, Chair, Swiss Hepatitis C Association, University of Zurich

“Switzerland was unprepared for the arrival of the golden pill,” said Bruggman.

“Ertswhile standard medication against Hepatitis C – Interferon – was self-limiting due to lots of side effects and contraindications. When HCV direct-acting antivirals entered the market, it was very safe, very potent and very easy to apply. Suddenly, the potential HCV population that could profit from a treatment increased massively. It was expected that there would be a sharp rise in treatment uptake and a consequent explosion in health expenditure as a result of the high prices of drugs.”

The laws governing the pricing procedure are designed for conventional drug development steps in Switzerland. Health authorities were unprepared both on price negotiation and having the epidemiological or clinical knowledge.

Using a dedicated patient organization, initiating roundtables of medical experts, using health officials and having clear media communication and deploying awareness campaigns have helped.

A “Buyers Club” offering access to treatment for those affected by the limitations and putting pressure on pharmaceutical industry to lower prices have also worked.  Theoretically all patients have unrestricted access to medication since the direct-acting antivirals are covered by the compulsory health insurance. “But this does not mean that all get treated,” said Bruggman. “There are still gaps in detection and linkage to care that are relevant barriers in the access to medicines.

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Priti Patnaik contributed to reporting and writing of this story, including summaries of the country case study experiences.

Image Credits: Suriyan Tanasri/DNDi, Graduate Institute of Geneva, Global Health Centre.