A federal judge has ruled that pharmaceutical giant Gilead Sciences did not illegally manipulate the U.S. patent system by waiting years to introduce a less-toxic version of one of the world's most-prescribed HIV medicines.
The Los Angeles-based AIDS Healthcare Foundation had sued Gilead in January, arguing that the Foster City company had intentionally delayed research on the safer form of the medicine in order to keep out competition and preserve its high prices.
Judge William Alsup in the U.S. District Court in Northern California dismissed the case last week, ruling that Gilead's patents were valid. The company, he said, "had no obligation to introduce the improved product at an earlier date."
The foundation said it planned to appeal.
"We intend to appeal this all the way to the Supreme Court, if necessary," said Michael Weinstein, the foundation's president.
Gilead said it was pleased with the court's decision.
"In our opinion, AHF's complaint lacked merit and we believe our position has been validated," the company said in an emailed statement.
In the lawsuit, the foundation had asked the court to invalidate the patents protecting the new modified formulation of a drug called tenofovir. Gilead introduced that new version -- which it has found in studies to be less toxic to the kidneys and bones -- in a combination pill called Genvoya in November.
The foundation had argued in the lawsuit that millions of patients could have benefited years earlier from the less harmful drug if the company had not delayed its development.
The older drug's label has long warned that it can damage a patient's kidneys and bones. In a large study in 2012, doctors at UC San Francisco analyzed a database of more than 10,000 HIV patients at the Department of Veterans Affairs, finding the risk of chronic kidney disease rose 33% each year a patient took the medicine.
Wall Street analysts say that Gilead is poised to extend its dominance of the world's HIV medicine market for a decade or longer by introducing the new drug now and convincing doctors to switch patients to it by 2018, when the older drug's patent expires.
When a patent expires, other companies can sell generic forms of the medicine, which quickly causes its price to fall.
Gilead's scientists had been finding in animal and early patient studies that the modified version of the drug worked to fight HIV at just a fraction of a dose, creating the possibility of fewer side effects. In 2004, though, top executives suddenly announced that they were abandoning the research.
In Oct. 2004, John Martin, then Gilead's chief executive, said an "internal business review" had concluded that the modified tenofovir was unlikely to be "highly differentiated" from the older drug that the company was selling with growing success.
Six years later, however, Gilead restarted the research on the experimental drug with one top executive describing it to investors as "an interesting new molecule" that could replace tenofovir.
Besides Genvoya, Gilead is now selling the new version of the drug in combination with other HIV medicines in pills called Odefsey and Descovy.
The company's sales force is encouraging doctors to switch patients to the new drugs by detailing the results of Gilead-paid head-to-head studies that show patients taking the older drug have signs of more bone and kidney damage.
This month, Phil Nadeau and Marc Frahm at Cowen & Co. wrote that Gilead had hiked prices of two of its combination pills containing the older drug 7%. Those hikes were on top of a similar price hike Jan. 1 for the same two drugs, they said.
With the combined price hike of about 14% -- many times the annual rate of inflation -- the older drugs now cost more than the new medicines.
The Cowen analysts wrote that Gilead appeared to have increased the prices on the older medicines "to help accelerate the switch" to the new pills before 2018, when the original formulations' patents begin to expire.
Gilead said the increases did not affect the price freeze the company has in place for government programs that pay for low-income patients' HIV drugs. The company added that it also offers financial assistance programs, including co-pay coupons, "to ensure patients have access to HIV medicines."
"What we would also emphasize is that Gilead continues to reinvest in research and development programs for new investigational therapies that will hopefully benefit a greater number of patients," the company said.