Test 1 materials review:
Revenue, Profits, Average Cost, Marginal Cost
Monopoly, Monopsony, Bilateral-Monopoly, Bertrand
Test 2 materials:
Hep C discovery and disease overview
- Hepatitis C was recognized in the 1970s, initially called Non-a, Non-b Hepatitis
- Officially discovered and identified in 1989
- Primarily spreads through blood-blood contact
- Drug users
- Blood Transfusions
- Dirty medical equipment
- Infects the liver and triggers an immune response which damages the liver over time
- Hard to treat
Traditional treatments for Hep C
Intron A (interferon alfa-2b) interferon alfacon-1 + Ribavirin Ribavirin + Intron A (interferon alfa-2b) known as Rebetron peginterferon alfa-2b (Pegintron) peginterferon alfa-2a (Pegasys) Copegasus is Genentech’s version of Ribavirin boceprevir telaprevir
Companies
- Schering-Plough
- Merck
- Genentech
Problems:
- Takes long time
- Requires injections
- Limited Effectiveness
Costs: Early Interfereon Treatments cost between 15-30k and had 40-50% effectiveness rates
DAA therapies using boceprevir and telaprevir increased cost and effectiveness to 50-70k and 60-75% respectively
Why Sovaldi?
- Higher cure rates (90%)
- Shorter cure period
- No injections of alpha interferon
- Works for most varieties of hep C
- Considered a cure rather then a treatment
History of Pharmasset
- Founded 1998
- Focus on HIV and Hep medications
- Developed sofosbuvir in 2007
- Bought by Giliad in 11/2011 for 11 billion dollars
- Giliad commercialized the product bringing it to market in 2013
Pharmasset and Gilead
- Was aquired in 2011 for 11bn dollars
- Pharamsset had the first all-oral treatment regime, but it was not approved at the time. High risk, high reward.
- Cost Giliad 1/3 of their value, large investment. 9% stock fall after announcement
- Biggest purchase in Gilead history
- Pharmasset fit nicely into Giliad’s existing portfolio
Gilead hopes to combine two or three hepatitis C drugs into a single pill, a strategy that has been very successful with its drug Atripla for AIDS.
Cost to bring Sovaldi to market
Consists of
- Pharmasset Aquisition
- Stage 3 clinical trials (200-300 million $)
- Manufacturing and Distribution (100-200 million)
- Advertising Campaigns and Distribution (50-100 million)
Harvoni vs Sovaldi
- Both Developed by Giliad
- Harvoni was a development on Sovaldi
- Harvoni (2014)
- Cost $94,500 a year
- 95% cure rates
- Can cure in 8 weeks
- All-in-one cure
- Sovaldi (2013)
- Cost $84,000
- Cure rates ~90%
- Had significant side effects due to being bundled with Interferon or Ribavirin
- Required injections in addition to pills often
| Feature | Sovaldi (Sofosbuvir) | Harvoni (Sofosbuvir + Ledipasvir) |
|---|---|---|
| Approval Year | 2013 | 2014 |
| Components | Sofosbuvir | Sofosbuvir + Ledipasvir |
| Mechanism | NS5B polymerase inhibitor | NS5B polymerase + NS5A inhibitors |
| Genotypes Treated | 1, 2, 3, 4 | 1, 4, 5, 6 (mainly 1) |
| Treatment Duration | 12-24 weeks | 8-12 weeks (up to 24 in complex cases) |
| Common Side Effects | Fatigue, headache (with ribavirin/IFN, more severe) | Fatigue, headache (mild) |
| Cost for 12 Weeks | ~$84,000 | ~$94,500 |
| Usage Advantage | High cure rates with other drugs | Single-pill, interferon-free, high efficacy |
Adoption rates
- Warehousing
- Only sickest patients get disease
- Some people did not stick to regimine
- 1 in 12
Gilead Revenue
- Revenue was 20 billion in 2015 for Harvoni, with Sovaldi slightly behind
- Fell rapidly after competitors entered market and patient pool dried up
Initial projections for Hep C patients
“An estimated three million to four million Americans — and as many as 170 million people worldwide — have chronic infections of hepatitis C. Many of those infected in the United States are baby boomers who injected drugs using contaminated needles decades ago and might not even know they have the disease. The infection can cause liver cirrhosis and liver cancer, but often not for decades”
As of 2011
Cost problems for US healthcare system
Monopoly period and Competitors
Competitors
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Olysio
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Viekira Pak
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Technivie
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Daklinza