As EU Approval Moves Closer Are Governments Prepared For PrEP?

| About: Gilead Sciences, (GILD)
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On Friday the EU's Committee for Medicinal Products for Human Use (CHMP) announced its positive opinion on Gilead’s (NASDAQ:GILD) HIV pre-exposure prophylaxis product Truvada PrEP. With the committee firmly on side, approval of the regimen could come in 2017, an event that would be welcomed by HIV campaigners.

But with many European governments trying to control healthcare costs, the biggest issue facing Truvada PrEP might not be approval but rather reimbursement.

The big divide

Truvada was originally approved in Europe in 2005 for use in combination with other antiretroviral products for the treatment of HIV-1 infection. Research into prophylactic use began in 2010, and studies have reported reduced risk of infection of up to 92%.

In the US, where Truvada PrEP has been available since 2012, the drug is usually covered through either Medicaid or insurance programs, with the regimen costing in the region of $16,000 a year, according to EvaluatePharma's US sales data.

If typical discounts of up to 50% between US and European pricing are applied this could mean that Truvada PrEP could be sold in the EU for around $8,000 a year.

The global picture

Outside the US prophylactic use of the drug is only approved in a handful of countries including Australia, Canada and South Africa. However, it is available in France under a Temporary Recommendation for Use agreement.

Uptake in these regions has been variable, and where use is widespread it has been down to government initiatives, such as that in Australia, where the drug is being slowly rolled out as part of scientific implementation studies, allowing the Australian government to fund treatment.

If the experience of other countries can be taken as a proxy for future European penetration then without government support or reimbursement sales of the drug could be sluggish.

UK not OK

PrEP has already hit a big stumbling block in the UK, one of the biggest European markets. In March, the UK government announced that despite strong evidence of the efficacy of Truvada PrEP there were legal reasons why it could not provide funding to roll the drug out via the NHS.

Funding for PrEP has now been left to local authorities, many of which are cutting budgets in response to government-imposed spending cuts. This means that in reality little funding will be provided.

This has left those wanting PrEP in the UK to buy the drug out of pocket. The drug reportedly costs £400 ($525) for 30 pills – approximately $6,300 a year.

But some have argued that governments should not fund drugs that could be seen as leading to risky lifestyle choices rather than funneling public funds towards healthcare campaigns around safer sex and condom use.

If Gilead is to boost EU sales of Truvada, which loses patent exclusivity in five years, it will have to make the case for the health economic benefits of PrEP use, including avoiding treating patients with HIV and reducing infection rates.

The big question will be whether, given the size of the opportunity, Gilead has the inclination and money to commit to the necessary studies to make its point.