Insurers Humana and Centene are separately suing four large pharmaceutical companies, alleging they engaged in illegal practices to protect the market exclusivity of their widely prescribed medications for HIV, a disease affecting millions of Americans, resulting in high prices for drugs despite the existence of generic alternatives.
On Monday, Humana filed suits in a Northern California district court against Gilead Sciences, Bristol Myers Squibb, Johnson & Johnson's pharma arm Janssen and Teva Pharmaceuticals, which manufactures generics. Centene followed on Tuesday, filing near-identical litigation in the same court.
The insurers claims the companies conspired to impede and delay competition for their HIV drugs, allowing Gilead to retain a monopoly for years past when generics should have been introduced in the market.
That allegedly resulted in Humana, Centene and other insurers paying more for HIV drugs than they otherwise would have, with the payer saying it has sustained and continues to sustain damages due to the overcharges.
More than 1.1 million people in the U.S. currently live with HIV, and nearly 40,000 new patients are diagnosed with the disease each year. If untreated, HIV can lead to AIDS and death. Despite the advent of numerous drugs to manage the virus over the past few decades, just a handful of players dominate the market for antiretroviral drugs, with Gilead the most prominent.
Gilead sells several of the best-selling HIV drugs on the market, along with others used in HIV drug combinations. Currently, more than 80% of U.S. patients starting HIV treatment take one or more of Gilead's products daily, according to the suit.
A number of Gilead's medications can be made cheaply, some for as little as $10, according to the suit. Yet the California-based drugmaker has charged insurers thousands of dollars for a 30-day supply, Humana said, resulting in enormous profits. In 2020, Gilead's sales of HIV products reached almost $17 billion.
In the suit, Humana alleges Gilead has been able to keep hold of its HIV dominance through a "comprehensive, illegal scheme to blockage competition."
That includes making deals with other competing drugmakers stretching as far back as 2004, including to create branded combination drugs with bans on using generic components to create competing drugs — even after the patents on the combination drugs expired — and delaying market entry for competing generic medications for years.
One example cited in the suit is Gilead's practices around its drug Viread.
Tenofovir, one of the principal compounds used in Gilead's drug regimens, was discovered decades ago and subsequently lost patent protection. In 2001, Gilead began marketing a drug with alterations to tenofovir, called tenofovir disoproxil, that metabolizes in the body as tenofovir. That drug is marketed as Viread.
Given the degree of the changes, Viread's patents could be vulnerable to generic competition. To head this off, Humana claims Gilead entered into a series of agreements with Bristol Myers and Janssen to combine their drugs, insulating them and their component parts from competition.
For one, Gilead and Bristol Myers agreed to combine their respective drugs Truvada (a single pill already combining Viread and another HIV drug, Emtriva) and Sustiva into an third drug, called Atripla, in order to prevent imminent challenges to Truvada's patents, the lawsuit said. The resulting combination was protected by Bristol Myers Squibb's patents.
The companies then aggressively promoted Atripla, inducing patients and physicians to switch their prescriptions. That allowed the two to continue charging "supracompetitive prices" for Atripla even after standalone generic versions of its components launched, the lawsuit says.
The companies also combined Gilead's Truvada with Janssen's Edurant; Gilead's Tybost and Janssen's Prezista; and Gilead's Tybost with Bristol Myers' Reyataz. All the combinations included a no-generics restraint clause barring both parties from creating generics based on the other's standalone drug, according to the suit.
Gilead also took anticompetitive steps to extend its HIV franchise on its own, Humana alleges.
"All of these anticompetitive agreements and actions combined to insulate Gilead’s product portfolio from the drastic price erosion that would have occurred with effective competition, and resulted in billions of dollars in annual excess profits that accrued (and continue to accrue) to Gilead and its co-conspirators," Humana accuses in the suit.
The Kentucky-based insurer is also targeting Teva, one of the largest generics manufacturer in the world, for so-called "pay-for-delay" deals inked with Gilead, a practice that the Biden administration has proposed banning. The controversial agreements can keep generic competitors off the market after the expiration of patents for a certain drug.
In 2009, Teva challenged Gilead's patents to tenofovir disoproxil, the backbone to Viread, Truvada and Atripla. Gilead sued Teva in response. Four years later, the day before the trial, the two announced a settlement that delayed the introduction of a Viread generic by four and a half years, until mid-December 2017, a little over a month before Gilead's patents were set to expire.
In exchange, Gilead gave Teva six weeks of exclusivity as the only seller of a Viread generic — a deal worth more than $100 million to Teva, the lawsuit alleges.
Then, in 2014, Gilead and Teva announced another settlement delaying the introduction of generic Truvada and Atripla by more than six and a half years, until the end of September 2020. In return, Teva got six months of exclusivity as the only seller of generic Truvada and Atripla. That deal was worth more than $1 billion to Teva.
In response to Humana's litigation, a Gilead representative told Healthcare Dive the suit "distorts and misstates" the drugmakers' history, collaborations and settlement agreements.
"Gilead believes this lawsuit and its antitrust allegations are without merit. The allegations against Gilead are misguided and do not accurately reflect antitrust laws or Gilead's history of innovative collaboration and competition in HIV medicines," the spokesperson said in a statement.
Generics are usually at least 20% less expensive than their branded counterparts when there's a single generic competitor on the market, according to estimates from the Food and Drug Administration. This discount typically increases to 50% to 80% when multiple generics are available.
Generics are therefore an important tool in lowering drug costs over time. According to CMS, national spending on prescription drugs hiked another 6% in 2019, faster than the 4% growth the year prior. But despite industry efforts to produce more generics, drugmakers have been criticized for practices like creating webs of patents in order to extend monopolies on drugs.
Humana's suit isn't the first from an insurer accusing pharmaceutical giants of anticompetitive practices to delay generic competition.
In September, Humana and Centene filed separate suits against Merck & Co., alleging the drugmaker conspired to delay generic versions of its blockbuster cholesterol drug Zetia from coming to market — including pay-for-delay schemes — resulting in hundreds of millions of dollars in overpayments from insurers.
California in 2019 became the first state to prohibit pay-for-delay deals, which the Federal Trade Commission has estimated cost consumers some $3.5 billion a year. A U.S. Supreme Court ruling in 2013 found the arrangements can sometimes violate antitrust laws.
Humana and Teva did not respond to multiple requests for comment.