Humana and Centene are separately suing a handful of drugmakers, alleging they engaged in illegal practices to protect the market exclusivity of their widely prescribed medication for HIV, a disease affecting millions of Americans, resulting in exorbitant prices for drugs despite the existence of generic alternatives.
Humana on Monday filed suits in a Northern California district court against Gilead Sciences; Bristol Myers Squibb; Johnson & Johnson's pharma arm, Jannsen; and Teva Pharmaceuticals, which manufactures generics. Centene followed suit on Tuesday, filing near-identical litigation in the same court.
In their suits, the payers allege 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 resulted in Humana, Centene and other payers shelling out more for HIV drugs than they otherwise would have, with the payers alleging they had sustained and continue 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 — notably, Gilead.
Gilead manufactures three of the four best-selling HIV drugs on the market, along with other drugs used in HIV combination antiretroviral therapy, or "cART." Currently, more than 80% of U.S. patients starting HIV treatment take one or more of Gilead's products daily, according to the suits.
A number of Gilead's medications cost under $10 to produce. Yet for almost 20 years, the California-based drugmaker has charged insurers thousands of dollars for a 30-day supply, according to the payers, resulting in enormous profits: In 2020, Gilead's sales of HIV products reached almost $17 billion.
In its 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 cART drugmakers stretching as far back as 2004, including to create branded combination drugs with express 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 suits is Gilead's practices around its drug Viread.
Tenofovir, one of the principal compounds used in cART regiments, was discovered more than three decades ago and subsequently lost patent protection. In 2001, Gilead began marketing a drug with slight alternations to tenofovir, called tenofovir disoproxil, that metabolizes in the body as tenofovir. That drug is marketed as Viread.
Considering the slight alterations, Viread's patents were vulnerable to competition from generic alternatives.
To head this off, Gilead allegedly entered into a series of agreements with Bristol Myers and Jannsen to combine their drugs, insulating them and their component parts from generic 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 lawsuits allege. 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 standlone generic versions of its components launched, Humana's lawsuit says.
As with Atripla, the companies 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 — taking advantage of whichever drug had longer patents to protect market exclusivity — included a no-generics restraint clause barring both parties from creating generics based on the other's standalone drug.
Gilead also took anticompetitive steps to extend its monopoly cART franchise on its own, Humana and Centene allege.
Those include intentionally delaying the introduction of safer cART drugs it had developed to ensure additional sales of its drugs already on the market while they were protected from competition; switching doctors and patients away from drugs vulnerable to competition, leaving them with no generic alternatives; purposefully degrading the efficacy of certain drugs vulnerable to competition to nudge patients to switch to its monopoly products; and using false and misleading marketing tactics.
"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 its suit.
The Kentucky- and St. Louis-based payers are also fingering Teva, which is 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 well past 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 to eliminate its patent challenges. 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 lawsuits allege.
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 absence of the drugmakers' actions and the unlawful settlements, generic versions of cART regiment drugs would have launched years earlier, and resulting competition would have driven prices down, Humana said.
In response to Humana's initial 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.
As such, generics are a major tool in lowering runaway drug costs. 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, protecting profits.
In the suit, Humana said it's covered a large share of the cost of the illegally protected cART drugs, paying "billions of dollars" to third-party pharmacies for HIV medications dispensed to its members in the U.S. The payer said it's also spent "millions" on the medications dispensed through its own mail-order pharmacy and retail pharmacy locations.
It's not the first lawsuit from Humana or Centene accusing pharmaceutical giants of anticompetitive practices to delay generic competition.
In September, Humana and Centene filed separate suits against Merck, 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.
The same legal firms are representing Humana and Centene in their suits, with Berry Silberberg Stokes heading the suits against Teva and Crowell & Moring heading the suits against Gilead, Janssen and Bristol Myers.
Editor's note: This story has been updated to include a statement from Gilead and details of Centene's suit.