Local newspapers recently reported that the first batch of sofosbuvir, the new drug for treating the hepatitis C virus (HCV), is expected to arrive in August, and the National Committee for the Control of Viral Hepatitis will start identifying the cases that will receive priority treatment.

Sofosbuvir, marketed under the name Sovaldi, is produced by the US-based multinational pharmaceutical company, Gilead Sciences Inc. It is an oral antiviral drug with high cure rates compared to the other antivirals, and is considered a breakthrough in the treatment of HCV.

At the end of 2013, Gilead revealed its plan to launch the new product in the USA at US$30,000 per month. All interested groups around the world received the price unhappily. It is unrealistic and unaffordable for everyone, even state budgets. It is worth noting that the cost of production of one sofosbuvir tablet does not exceed US$2, approximately LE15.

For the past few months, Gilead has been aggressively negotiating with the Egyptian Ministry of Health — represented by the National Committee for the Control of Viral Hepatitis — to approve sofosbuvir for HCV patients. Egypt is certainly a lucrative market for sofosbuvir, not only because of its size but also for its strategic significance.

Negotiations resulted in an agreement on the price of US$300 per bottle, which covers one month of treatment for a single patient only. Some Egyptian and international newspapers started publishing headline stories about Egypt getting the medication at a 99 percent discount of the global price.

The agreed price, US$300 per month, is equivalent to approximately LE2,000, which is the average monthly income of an Egyptian family. However, the Egyptian Ministry of Health considered this price a success.

The treatment course using sofosbuvir is 3-6 months, which will be determined by clinical trials conducted on the most prevalent HCV genotype in Egypt, genotype-4. This means that the treatment cost of sofosbuvir will range from US$900 to US$1,200 per patient.

Do we have enough funds for all the patients who need the treatment?

Rejecting the patent application

While everyone was busy following the negotiations with the ministry, the Egyptian Patent Office (EGYPO) has been examining Gilead’s application to protect the compound sofosbuvir with a patent. But a senior official at EGYPO has said that Egypt will not grant sofosbuvir a patent.

The reason lies in the weakness of the application submitted by the company. Technical examination of the compound has revealed that it is not novel chemically, and therefore does not fulfill the criteria of novelty and inventiveness, both of which are necessary for a pharmaceutical compound to be patented.

The official decision to reject the patent application has not been issued yet. Gilead was notified with the results of the examination, but the EGYPO office has not received any response from the company.

A patent is a form of intellectual property protection. It is a right granted by the state, giving a company the exclusive right to manufacture and market a compound for 20 years, according to the Egyptian Intellectual Property Law and the Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement).

Without a patent for sofosbuvir, Gilead cannot prevent any other pharmaceutical company from producing and marketing it in Egypt. Hence, Egyptian pharmaceutical companies should be able to manufacture it in Egypt by producing the active pharmaceutical ingredient (API) or by importing and packaging it.

So why don’t Egyptian pharmaceutical companies produce sofosbuvir at a cheaper price?

HCV in Egypt and Gilead’s restrictive policies

Gilead seemed in a rush to close the deal with Egypt, which was on the top of its list to register sofosbuvir. Egypt has the highest prevalence rate of HCV in the world, reaching 14.7 percent of the general population, with infection rates considerably higher in some geographical areas, such as the Nile Delta and Upper Egypt, where prevalence reaches 28 percent and 26 percent, respectively.

There are 8-10 million Egyptians carrying the antibodies of the virus, 5 -7 million of whom suffer from chronic HCV infection. The incidence rate is estimated to be 2-6 per thousand per year, which means that there are at least 170,000 new cases every year — a very high rate. Egypt is a guaranteed market for Gilead to launch its new product.

But despite the fact that Egypt is on top of Gilead’s list to register sofosbuvir, the company has eliminated Egypt from the countries that are authorized to manufacture sofosbuvir under a voluntary license (VL).

This is according to the Treatment Expansion Program the company presented at an international conference held in Bangkok last February, attended by civil society representatives from 22 countries. This means that Egypt cannot locally produce a generic copy of sofosbuvir according to the company’s announced policy. Gilead’s measures for choosing those countries were based on the lack of funds, private funding with regard to HCV treatment and the health care infrastructure.

The company will also make deals for the voluntary licensing of sofosbuvir in some lower middle-income countries that have high infection rates and limited treatment funds. These countries include India, Pakistan, Sudan, South Sudan, Tanzania, Zambia, Zimbabwe and others.

Gilead is currently making licensing deals with several Indian companies to produce sofosbuvir, which makes India the first country to obtain VL to produce sofosbuvir generically at prices much lower than Gilead’s. But due to the company’s current policy, India might not be able to export the active pharmaceutical ingredient to countries that are not on the VL list, including Egypt.

It is quite strange to exclude Egypt from the VL list despite meeting all the criteria. It has the highest prevalence rate of HCV in the world, and has the manufacturing ability to generically produce sofosbuvir at a reasonable price that will cover the size of its market, instead of buying it at the expensive market price.

Cost of treatment and Egyptian government spending

Looking at the price offered to us, US$300 monthly, and considering what the Egyptian government spends on health care in general, and specifically on HCV treatment, it will cost the Egyptian government five times its total expenditure on health in 2011 should all HCV patients receive treatment.

It is also worth mentioning that until 2011, the National Control Strategy had managed to provide treatment for only 1.67 percent of the chronic HCV patients, and that the budget for the National Treatment Program covers only 40 percent of the total amount of the program’s actual spending.

Wahid Doss, head of the National Committee for the Control of Viral Hepatitis, told the Egyptian Initiative for Personal Rights (EIPR) that other entities will contribute to the treatment cost besides the HCV treatment program, such as the Health Insurance Organization and syndicates. There is also the possibility of patient co-payment.

The socio-economic nature of HCV in Egypt should not be ignored. It becomes clear when looking at the geographical distribution of the virus, and also its distribution in relation to wealth. In addition, there is the high private out-of-pocket expenditure on health care and treatment in Egypt, which amounts to 68 percent of the total treatment costs.

That being said, the high price remains the main obstacle to accessing treatment in Egypt.

It is not clear until now how the government — represented by the Ministry of Health and the National HCV Treatment Program — will be able to come up with the funds to buy sofosbuvir.

The details of the deal with Gilead were not disclosed, but members of the Ministry of Health who had attended a conference on hepatitis in Geneva last March revealed that the market price for the public — outside the HCV treatment program — will be set at five times the price of the Ministry of Health, which means US$4,500 for a 12-week treatment course.

According to Gilead, for the treatment of genotype-4, which is most prevalent in Egypt, sofosbuvir is administered in combination with interferon and ribavirin. But Doss told the EIPR that the company is trying to push for a six-month treatment regimen using sofosbuvir only. And this, beyond doubt, would guarantee an even more sizeable market for the company.

This six-month treatment will not be applied until the clinical trials on genotype-4 are finalized, and according to Gilead, the results of these trials are not final and have not been published yet.

It is also unclear whether the price offered for sofosbuvir includes the cost of the interferon and the ribavirin, in case a combination treatment is used. This is an extremely important point that might change all the calculations.

The Ministry of Health’s policy has always been based on negotiating medicine prices to reach a relatively low price for the ministry’s use in the public sector, in exchange for allowing higher prices in the market and the private sector.

Given the high private expenditure on treatment in Egypt — the amount patients pay out of their own pockets to purchase treatment without any insurance coverage — a large sector of HCV patients will remain untreated, because the market price exceeds their budget.

The importance of local manufacturing in Egypt

Several Egyptian pharmaceutical companies have recently expressed their wish to produce sofosbuvir locally, and some have even started communicating with the manufacturers of the APIs in other countries.

Local production does not only provide the patients and government with affordable medicines, but also creates competition, which forces the medicine's originator company to lower its prices in the Egyptian market.

There was a precedent in the case of HCV treatment when the Egyptian company Minapharm started producing a biosimilar version of pegylated interferon, forcing Roche to lower the price of its product.

The problem lies in the Ministry of Health’s lack of support for the pharmaceutical industry’s efforts, as some representatives of national companies have expressed. This was made clear when such an important issue did not come up on the agenda during negotiations with Gilead.

The decision makers in the Ministry of Health — represented by the Committee and the Central Administration for Pharmaceutical Affairs — were supposed to discuss the restrictive policy regarding local manufacturing applied by Gilead, and this unfair condition should have received more attention from the state.

According to the TRIPS Agreement signed by Egypt and the Intellectual Property Law, Egyptian companies can manufacture any compound that is not patented within the Egyptian territory, which should be the current case of sofosbuvir.

Also, according to the same texts, the Egyptian state can terminate the patent of any protected medicine it deems important to supply for Egyptian patients at lower prices — this practice is referred to as compulsory licensing. This is one of the options Egypt can resort to in case a medicine price is unaffordable, or in the case of an epidemic outbreak that threatens national security.

If we consider HCV to be a matter of national security, then the state needs to stand up against the abuse of international companies, whether in pricing its products or in hindering local manufacturing.

A longer version of this article was published in the South-North Development Monitor (SUNS), under the title "No sofosbuvir patent in Egypt, but Gilead deal still expensive", issue #7782, April 10, 2014.

This Article was published on Mada Masr on the 23rd of May 2014