Before visiting the chemistry lab at Gilead Sciences in Foster City, California, I don the mandatory blue smock and safety goggles that obscure half my face. When I enter, I notice that someone has diagrammed molecules on the lab’s glass cabinets with dry-erase markers. Countertop machines whir loudly as they boil down chemical compounds to their most potent forms. I also see that one of the research scientists isn’t wearing his lab coat. “You busted him—that’s awesome,” one of his colleagues laughs.
When you’re bringing lifesaving drugs to market almost as fast as you can develop them, you’re going to forget your jacket now and then. Over the past few years, Gilead has ushered through four effective new treatments for HIV alone. In late 2013, the company released a drug called Sovaldi, a breakthrough treatment for hepatitis C, which affects at least 130 million people globally, ravages the liver, and claims up to 500,000 lives annually. Sovaldi is the first antidote to the hepatitis C virus, boasting a 90% cure rate. During the first three quarters of 2014, the drug generated sales of more than $8.5 billion and helped Gilead more than triple its net profit from the previous year to nearly $3 billion. Sovaldi is now the fastest-selling new drug of all time, according to several estimates. It’s on track to unseat AbbVie’s drug Humira—which has been on the market for more than 10 years—as the highest-earning drug of 2014. And last fall, less than a year after Sovaldi’s release, Gilead put out an even more powerful sequel, Harvoni. “These drugs are completely changing the prognosis for hepatitis C patients, and that has been long overdue,” says Rena Fox, an internist and professor of clinical medicine at the University of California, San Francisco. “It’s revolutionizing a whole segment of care.”
Meanwhile, Gilead has three more HIV medications in the works and several more to treat liver disease. When this many lives are in the balance, they know it’s important to innovate quickly.
Gilead, which employs 7,000 people on six continents, was founded in 1987 by Michael Riordan, a medical doctor who had contracted dengue fever while working at a clinic in the Philippines and who experienced firsthand the persistence of viruses, which replicate quickly and commandeer healthy cells. (Dengue fever must run its course; he recovered.) Riordan set out to develop transformative antiviral medications. He hired John C. Martin as chief scientist; he’s now Gilead’s CEO. The company’s first blockbuster was Viread, based on a molecule it acquired from a European lab in 1991 that became one of the most widely used components of other HIV medications. In 2003, Gilead acquired a struggling company called Triangle Pharmaceuticals, which produced a drug that could be combined with Viread to make Truvada, which was approved by the FDA in 2004. Immediately after that, Gilead entered a joint venture to combine Truvada with a drug from competitor Bristol-Myers Squibb to create Atripla—the first once-a-day single tablet to treat HIV. “Our scientific expertise is about figuring out what’s best in the world and trying to bring that into Gilead,” says John Milligan, the company’s president and COO.
The company applied this same strategy against hepatitis C. In 2011, at a medical conference, a small New Jersey–based biotech firm called Pharmasset showed that hepatitis C patients who used its treatment—then called sofosbuvir—for 12 weeks would see cure rates of nearly 100%. Less than two weeks later, Gilead acquired the company for $11 billion. “We’d never seen anything like that before,” Milligan says.
Acquiring Pharmasset was a gamble: Gilead’s stock price tanked after the announcement, and sofosbuvir had not yet completed clinical trials. But it was also a huge opportunity. The aging baby boomer population will bring a large pool of new infections, and nearly a third of people infected with HIV are co-infected with the hepatitis C virus. These people, who are living longer thanks to antiretroviral drugs, are more prone to the long-term risks of hepatitis C, including cirrhosis and liver cancer. Existing treatments only offered cure rates between 45% and 80% and required patients to take them for up to 48 weeks. They also involved injections of interferon, a highly toxic drug with side effects—nausea, stomach pain, personality disorder—that were often as bad as the disease. Not only could sofosbuvir improve patient outcomes and halve the duration of treatment, but early studies had shown success in patients who were not responsive to interferon injections. Gilead had to get the new drug, now called Sovaldi, to market quickly, before competitors like Merck and Vertex, which had also released treatments that year, could catch up. “We compressed the clinical time frame way down,” Milligan says. “And it’s risky. If you’re wrong, the money goes away. You’re never going to get that back.”
It can take up to 15 years to bring a drug to market. Gilead did it in two. First, sofosbuvir was well into development when Gilead bought it. Second, the FDA is often willing to expedite approval of drugs in areas not typically prone to innovation. (“The common denominator is high unmet need,” says Saurabh Aggarwal, principal and cofounder of Novel Health Strategies, a firm that advises companies on bringing drugs to market. “Gilead has a high focus on that, which helps it get early approval.”) Third, Gilead’s top executives—all accomplished chemists—were quick to recognize the drug’s potential and submitted Sovaldi for “priority review” (the FDA commits to take action within six months instead of 10). The FDA then requested that it be submitted as a “breakthrough therapy” (which involves FDA collaboration) and advised Gilead to do away with 48-week clinical trials, since the previous data had already shown improvement upon the standard of care.
Meanwhile, Gilead was developing other applications for sofosbuvir, including Harvoni—which combines sofosbuvir with another drug in the company’s portfolio—to create a once-daily pill that proved to be even more effective than Sovaldi. Patients had cure rates of up to 99%, and many only needed to take the drug for eight weeks as opposed to 12. In October 2014, not even a year after Sovaldi hit the market, the FDA approved Harvoni, which did away with interferon completely. “It’s rare that you’re working on a replacement before you even have your drug approved,” Milligan says. “That’s how fast development was going.” It’s exactly what the company had done to transform HIV treatment—synthesizing a multi-pill “cocktail” into one superior pill that was more effective, improved patient compliance, and decreased side effects.
Former military technician and Lockheed Martin avionics specialist Gavin West, 59, spent a year on interferon and other drugs in 2006. “It was the most excruciating, miserable experience of my life,” he says. Fatigue and cognitive impairment from hepatitis C had forced him to leave his job. The drug cocktail actually made him worse, and two months after he finished the regimen, the virus came back. “They told me, ‘Hang in there,’ ” West says. “I was just waiting to die.”
He remembers getting the call from his physician’s office about Harvoni. “I went in and there was one pill,” West says. He took it and waited for the nausea, headache, and muscle pain. Nothing. He felt better, and when he went to refill the bottle, the clinician told him he was done. “I felt like crying,” he says. A little over a year later, he remains free of the disease.
Gilead’s hepatitis C drugs are revolutionary. They’re also very expensive. A 12-week course of Sovaldi costs $84,000. (That’s $1,000 per pill.) A 12-week course of Harvoni generally costs $94,500. Gilead predicts that future versions could require shorter lengths of treatment, which will thereby bring down costs. And by taking these drugs, patients are less likely to be hospitalized or undergo costly liver transplants. Plus, Gilead charges the same or less than its rivals do for their less effective treatments.
Still, Gilead has experienced backlash. Insurance companies and benefit managers, such as Express Scripts, have accused Gilead of trying to bankrupt the health care system, while other groups, such as the Philadelphia transit system, have gone so far as to sue the company for the amounts they’ve had to pay for employees’ therapies. “They don’t have to be as expensive as they are,” says UCSF’s Fox, acknowledging that Sovaldi is priced the same (and even lower) than similar and specialty medications for other diseases. “When these drugs come out, almost everyone is eligible right away. There’s a pipeline of people waiting,” she says, which results in billions that insurance companies and Medicare must pay at once.
Economists would say that high return is what creates a competitive, and therefore, more innovative market, because pharmaceutical companies are incentivized to invest in tackling the most challenging diseases. “We’re getting into a situation where drugs are geared to more and more [specific] conditions, they’re hard to make, and they’re going to be priced high because of that,” says Craig Garthwaite, an economist and strategy professor at the Kellogg School of Management. Besides, he says, “we’ve been complaining for a long time about how all pharmaceutical companies are doing is creating me-too drugs,” he says, referring to scores of treatments for more mundane conditions like heartburn. “No one can argue that this is not real innovation. They’re doing everything that we’ve asked them to.”
Milligan says that Gilead warned insurers and pharmacy benefit managers about the volume of patients that would be eligible for Sovaldi. The company also offers tiered pricing for its hepatitis C medicines in developing countries (Sovaldi costs just $300 per bottle in Egypt, where more than 10% of the population is infected with the disease) and provides a patient assistance program for those without insurance, or whose insurers have denied coverage. Christine Breit, a 56-year-old real estate property manager in San Francisco, had severe fatigue, nausea, and cognitive impairment while taking interferon. She heard about Sovaldi at a seminar, but she says Blue Cross Blue Shield refused for two months to cover the drug, which prompted her to call Gilead, which directed her to the program. “I would get these bills for $32,000,” she recalls, “and it would say, ‘Pay this amount: $0.’ ” Breit says that before she started Sovaldi, her doctors considered putting her on a liver transplant list. As of November, she was two months post-treatment, with no detectable trace of the virus in her body.
Pricing isn’t the only reason Gilead has faced opposition. Its HIV drug Truvada—shown in studies to be up to 100% effective in preventing the transmission of HIV when taken regularly as PrEP (preexposure prophylaxis)—has come under fire by activists arguing that the drug encourages unsafe sex. Gilead’s loudest opponent is Michael Weinstein, president of the AIDS Healthcare Foundation, who has called Truvada a “party drug.” Last year, the AHF ran an ad campaign asking the CDC, which recently endorsed the drug, in big bold letters, “What if you’re wrong about PrEP?”
“What we know in the community is that there are already [people] who are putting themselves at risk,” says Ernest Hopkins, director of federal affairs at the not-for-profit San Francisco AIDS Foundation. He points to a recent trial showing that PrEP users engaged in less-risky behavior while on the medication. In a bold declaration last summer, Governor Andrew Cuomo announced a three-pronged plan to eradicate HIV/AIDS in New York—once considered the focal point of the epidemic—that included encouraging people at high risk for infection to use PrEP. Cuomo also announced that Gilead had negotiated supplemental discounts with the state’s Medicaid program to increase access to HIV medication.
For all of the controversy over pricing, Sovaldi and Harvoni are having an energizing effect on the market: In December, Express Scripts announced that it would no longer cover Gilead’s medicines for most patients due to an exclusive deal with AbbVie to distribute a new four-pill hepatitis C treatment called Viekira Pak. (It retails for $83,319, but Express Scripts negotiated a “significant discount.”) Gilead fired back the next month by announcing that CVS, one of the nation’s largest pharmacy benefit managers, would exclusively sell Sovaldi and Harvoni. Several days later, the insurance provider Anthem announced a similar deal.
When there’s innovation in medicine, however controversial, the benefits can be a matter of life and death. “If you don’t like an iPad, you don’t have to buy it,” says Norbert Bischofberger, Gilead’s chief scientist and head of R&D. (He helped invent the influenza drug Tamiflu, which Gilead owns.) “But health and survival, that is a right.” The company has just filed for approval of TAF, an HIV drug it says is safer on the bones and kidneys. Its new drug Zydelig can halt the progression of certain blood cancers. And—always innovating upon its own work—the company is currently ushering through clinical trials a drug called 5816, a sequel to Harvoni that aims to work the same across all genotypes, and is targeted toward patients in developing countries.
“We are motivated by what we do,” says Bischofberger. “There’s nothing more precious than health.”
“I was inspired by fear. At first, it was fear of HIV—I was exposed after an intimate relationship with someone who failed to disclose their status. That was scary. And then I heard about a possible study that involved taking daily medication and some counseling, and, well, that was concerning too. What was this medicine? Were there side effects? And, quite frankly, I worried that African-American males can be treated as guinea pigs in medical studies. But the more I thought about it, the more I realized that I had been putting myself at risk for a long time, and there were habits I needed to break. So I signed up and began taking what turned out to be Truvada PrEP. In counseling, they asked me things like how many people I’ve slept with who are potentially HIV positive, and how many partners I didn’t use a condom with—and I realized that I didn’t know. That’s alarming. Now I just have a regular prescription for Truvada; insurance pays for it. And I hope this drug inspires other people to get tested, and to ask themselves hard questions. HIV is a disease that does not discriminate, and the African-American community in particular needs to make some corrections. But we cannot correct what we do not confront.” —As told to Nikita Richardson
[Illustration: Nicolas Berger]