Gilead Sciences: The $84,000 Hepatitis C Cure and the $1,000 Name

Got something to say to this podcast? Send a voicemail, and you might hear yourself on the next episode!

In 1987 Michael Riordan, a 29-year-old venture capitalist with a Johns Hopkins medical degree and a Harvard MBA, caught dengue fever overseas and came home determined to fight viruses. With $2 million from his firm he started a company called Oligogen, then paid a California nonprofit $1,000 for the name Gilead, from the play Balm in Gilead. Early antisense DNA research brought the company near bankruptcy several times, though it drew board members including Donald Rumsfeld, George Shultz and Harold Varmus. In the early 1990s it licensed nucleotide analogs from chemist Antonín Holý and virologist Erik De Clercq, compounds that jam viral replication. Gilead discovered the compound behind Tamiflu but, with about 350 employees, had to license it to Roche. Buying NeXstar Pharmaceuticals in 1999 gave it a European sales force, and HIV drugs followed: Viread in 2001, the one-pill Atripla in 2006, and Truvada approved for prevention in 2012.

In 2011 Gilead paid $10.4 billion for Pharmasset to get sofosbuvir, approved in 2013 as Sovaldi, which cures hepatitis C in up to 99 percent of cases. It cost $1,000 a pill, $84,000 for a 12-week course. An 18-month Senate Finance Committee investigation concluded the price was set to maximize revenue. Oregon identified 10,000 Medicaid patients who qualified but limited treatment to 500 of the sickest a year, while licensed generics in India sold for as little as $4.29 a pill. Truvada reached $2,000 a month in the U.S. by 2018 though early prevention research was done and patented by the CDC. Net income fell from over $18 billion in 2015 to about $5.3 billion in 2019 as cured patients left the market, and COVID-19 antiviral remdesivir, sold as Veklury, brought in over $4.5 billion in 2021.

• Lawsuits allege Gilead held back its safer TAF formula until 2015 to keep earning on the older TDF drug, linked to kidney and bone side effects.
• A 2016 report estimated the "double Irish" tax structure let Gilead avoid about $10 billion in U.S. taxes.
• Gilead received orphan drug status for remdesivir in March 2020, then asked the FDA to rescind it after public backlash.
• It bought CAR T cell therapy maker Kite Pharma for $11.9 billion in 2017 and Immunomedics for $21 billion in 2020.
• Warren Buffett turned down Riordan's pitch in the company's early years.