Dive Brief:

• By January 2019, Gilead Sciences intends to sell authorized generics of its blockbuster hepatitis C drugs Harvoni and Epclusa through a new subsidiary.
• The subsidiary, Asegua Therapeutics, will offer the generics at an annual list price of $24,000 for the most common course of therapy. According to Gilead, the copycat medicines could save Medicare Part D patients up to $2,500 in out-of-pocket costs per course of therapy.
• Though still a multi-billion dollar business, Gilead's hepatitis C portfolio has seen revenue fall sharply in recent years due to a shrinking pool of untreated patients as well as increased competition. Sales of Harvoni, for instance, fell 52% between 2016 and 2017.

Dive Insight:

The primary U.S. patents for Sovaldi (sofosbuvir), Harvoni (sofosbuvir/ledipasvir) and Epclusa (sofosbuvir/velpatasvir) don't run out for at least another decade. But Gilead seems ready to acknowledge the writing on the wall with the hepatitis C market, and is turning to authorized generics as a means of shoring up its share.

Especially noteworthy in Monday's announcement was the decision to create a copycat version of Epclusa, which gained Food and Drug Administration approval only two years ago.

Though newer than Sovaldi and Harvoni, Epclusa hasn't been able to escape the pressures facing the larger hepatitis C treatment landscape. During the second quarter, sales of the drug were down 57% from the $1.17 billion seen in the same period a year prior.

"Launching these authorized generics is the best solution available to us today to quickly introduce a lower-priced alternative to our [hepatitis C virus] medications without significant disruption to the healthcare system and our business," Gilead CEO John Milligan said in a Sept. 24 statement.

The quick rise and fall of Gilead's drugs also underscores just how unprepared the drug pricing system is for therapies that end up curing chronic diseases.

It's a system that has received increased criticism from patients and government officials. Against that backlash, pharmaceutical manufacturers and payers have tossed around blame for the sky-high price tags on many drugs, as well as the barriers preventing patients from accessing them.

Gilead, for instance, repeated in its statement a frequently used argument across biopharma: that the discounts drug companies offer on their products aren't getting passed down to the patients because of the " complexity and structure of the U.S. healthcare system ..."

"Further, existing contracts, together with laws associated with government pricing policies, make it challenging to quickly lower a product's list price once it is on the market," Gilead added.

The West Coast biotech touted that its forthcoming authorized generics will provide savings on and access to hepatitis C medicines for state-managed Medicaid plans that don't already benefit from negotiated rebates. It also claimed a continued interest in finding new long-term financing models.

Whether that hunt pays off, Monday's decision appears to have garnered at least one other supporter.

"Today's action by Gilead Sciences is a step in the right direction, and we are encouraged that a drug maker is finally taking meaningful action to bring prices down for cash-paying customers," said Express Scripts, one of the nation's largest pharmacy benefit managers, in a Sept. 24 statement.