AIDS Drug Antitrust Case on Shaky Ground

SAN FRANCISCO (CN) — A federal judge dismissed with leave to amend an AIDS nonprofit's antitrust suit accusing pharmaceutical giant Gilead Sciences and its cronies of blocking a cheap HIV drug from reaching patients.

U.S. District Judge William Alsup gave AIDS Healthcare Foundation an opportunity to amend its monopolization, conspiracy and state law claims, but fully dismissed claims of patent invalidity and a Sherman Act claim that Gilead illegally tied sales of its drug to defendant Janssen Sciences Ireland and Japan Tobacco's drugs.

The foundation's general counsel Arti Bhimani said in an email that the organization would appeal the decision.

AIDS Healthcare Foundation claims Gilead, Japan Tobacco and Janssen Sciences manipulated the Food and Drug Administration's patent system to keep a prodrug of the HIV drug tenofovir, called TAF, off the market as a standalone, generic drug so they could continue profiting off their TAF patents and patents for another prodrug called TDF.

A prodrug is a medicine that is converted into its active form inside the body.

"Pharmaceutical companies should not be permitted to game the patent system to prolong profits at the expense of patient welfare," Bhimani said.

In 2015, Gilead sought FDA approval for three new combination drugs, which were identical to its existing drugs except that they substituted TAF for TDF, after it found that TDF causes bone and kidney toxicity. It then licensed TAF to Japan Tobacco and Janssen for use in combination drugs.

The FDA approved the new combination drugs, Genvoya, Descovy and Odefsey, in 2015 and 2016, and granted Gilead a five-year exclusivity period over TAF products — effectively blocking FDA approval of new generic TAF drugs until 2020.

AIDS Healthcare Foundation says Gilead violated unfair competition laws by waiting until 2011 to conduct clinical trials on TAF despite discovering TAF's safety benefits in 2004, purposely delaying FDA approval and the granting of exclusivity until just before its TDF patents expired. This delayed potential legal challenges to Gilead's TAF patents and forced patients to endure TDF's toxic side effects for longer than they had to, the foundation says.

But Alsup said in his decision that the foundation had failed to explain how that delay amounted to unfair competition.

"Gilead's patents gave it a monopoly over both TDF and TAF. It had no obligation to introduce the improved product at an earlier date," he said.

The foundation had also sought an order declaring five of Gilead's patents on its TAF combination drugs invalid.

In denying that claim, Alsup pointed to the Federal Circuit's finding that generic drug makers must wait to sue for patent invalidity until they can seek FDA approval because "there is significant uncertainty about the nature of any hypothetical product" that might be manufactured far into the future.

Gilead's exclusivity prevents generic drug makers from applying for FDA approval until 2019.

"In our opinion, AIDS Healthcare Foundation's complaint lacked merit and we believe our position has been validated," Gilead public affairs associate director Ryan McKeel said in an email.

Despite his finding, Alsup suggested the courts could reconsider the invalidity claims, but that the foundation would need to overcome significant roadblocks.

"If we were writing on a clean slate, this order would hold that AIDS Healthcare, at least as a purchaser seeking to encourage manufacturers to prepare to make TAF-containing products as soon as Gilead's NCE exclusivity expires, could pursue its invalidity theories in district court as the first step in solving a multilayered problem," Alsup said.

"But the slate isn't clean." The Federal Circuit's interpretation prevents challenges of patents in district court at least until a generic drug manufacturer has neared completion of a product," he said.

The foundation claims that the defendants stifled consumer demand for standalone TAF by tying Gilead's TAF sales to sales of Japan Tobacco's and Janssen's combination drugs. But Alsup countered that market demand for standalone TAF is irrelevant because the FDA prohibits its sale.

"Far from possessing appreciable economic power in the market for standalone TAF, Gilead lacks any power to sell standalone TAF until the FDA approves Gilead's NDA for that drug," he said.

However, Alsup did cite Gilead's timeline in applying for FDA approval of TAF in his discussion of consumer demand for the drug.

"True, Gilead elected not to seek approval of TAF until several months after it released the first combination drug containing TAF, but it had no duty to pursue FDA approval of the standalone version," he said.

The foundation had also accused Gilead of monopolizing the TAF market by combining TAF with other ingredients to protect its "weak" TAF patents from legal challenges.

In an email on Friday, Gilead's McKeel said that "ongoing collaboration with the medical and advocacy communities has always played a key role in helping inform our development programs and decisions."

Gilead is represented by Gary Frischling of Irell & Manella in Los Angeles. Japan Tobacco is represented by Charles Coleman of Holland & Knight in San Francisco. Janssen is represented by William Cavanaugh of Patterson Belknap in New York.

AIDS Healthcare Foundation is represented by staff attorney Liza Brereton in Los Angeles and by Dorian Berger, also in Los Angeles.

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