Intentionally Delayed Pharmaceutical Innovation Under Perverse Incentives: Gilead’s HIV Pipeline As A Case Study
June 16, 2021By Sean Dickson and Amy Killelea
As Congress continues its attention to pharmaceutical development and prices, the U.S. Senate Committee on Finance’s Subcommittee on Fiscal Responsibility and Economic Growth has called for a hearing entitled “Promoting Domestic Competition and International Competitiveness.” The Subcommittee has invited Gilead Sciences CEO, Daniel O’Day to testify about the current state of competition in the pharmaceutical industry and the impact of Gilead’s pricing decisions on access.
While the high list prices of Gilead’s products and the costs borne by the healthcare system because of these prices will and should factor into the Subcommittee’s inquiries, equally important is the history of the company’s drug development and market manipulation for critical HIV antiretrovirals (ARVs), potentially delaying access to safer medications in the name of profit. While the incentives under the U.S. patent system are supposed to encourage rapid introduction of innovative therapies, Gilead has instead delayed innovations to take advantage of other barriers to generic entry that prolong overall market monopolies.
Gilead’s development, pricing, and marketing of two ARVs in particular—tenofovir disoproxil fumurate (TDF) and tenofovir alafenamide (TAF)—offer a lens into how current incentives to innovate new pharmaceuticals may perversely delay patient access to clinically superior products while simultaneously increasing prescription drug costs. In this post, we describe the way Gilead manipulated these incentives and explain how Congress can reform current law to encourage innovation but not anti-competitive behavior.