In a bid to maintain its dominance in the HIV market, Gilead Sciences (GILD) allegedly conspired with other drug makers whose medicines were part of a so-called combination cocktail in order to block generic competition, according to a lawsuit filed by AIDS activists and two unions.

The complaint describes an unusual scheme concerning these cocktails, which are actually fixed-dose combinations of different medicines and have been widely used for several years to combat the virus. Although Gilead has been a dominant player in the HIV marketplace, other companies manufacture HIV medicines that are useful components in a cocktail treatment.

In this instance, Gilead allegedly reached deals with Bristol-Myers Squibb (BMY) and the Janssen unit of Johnson & Johnson (JNJ) to use only its component, called tenofovir, in any cocktail the companies might later market — even after the tenofovir patent expired. And Gilead returned the favor by agreeing not to market a competing cocktail after the Bristol-Myers and Janssen patents expired, the suit stated.

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“While we allege a variety of conduct, at the heart of the case is a series of agreements in which Gilead agreed with other drug makers that they wouldn’t use generic versions of Gilead’s drugs in their drug cocktails even after the Gilead patents expired,” Mark Lemley, one of the attorneys who filed the lawsuit, wrote us. “We haven’t seen those types of agreements before in the pharmaceutical industry.”

As a result of this arrangement, the health care system was purportedly robbed of lower-cost options that could have been otherwise available, according to the lawsuit, which was filed in federal court in San Francisco on Tuesday. The lawsuit alleged that this “no-generic” scheme kept HIV drugs at the “sky-high” levels, even though generic versions of three principal components are available.

A Gilead spokeswoman wrote to say “we have entered into partnerships with other companies with the goal of bringing life-saving therapies to patients in need.  Any suggestion that we had improper motives is absolutely false.” A Bristol-Myers spokeswoman declined to comment. A J&J spokeswoman wrote that the lawsuit was just received and being reviewed. “We have no comment at this time,” she added.

The lawsuit pointed to a fixed-dose-combination drug such as Complera, which Gilead sells for $35,000 for a yearly course of treatment, and argued that a version of the drug using generic components together with a Janssen drug called rilpivirine would sell for no more than half that amount. The patent on the Janssen drug has not yet expired, by the way.

The lawsuit also charged that “no-generics” scheme covers more than 75% of all sales of nucleoside reverse transcriptase inhibitors, which are the “backbone” drugs in HIV cocktails, in the U.S.; more than 50% of all sales of so-called core agents, such as protease inhibitors and integrase inhibitors; and more than 75% of all sales of “booster” drugs that make some core agents more potent and longer-lasting.

“The anticompetitive actions alleged in this case are shocking and help explain why the prices we pay for our anti-viral pills just keep going up and up. This gross profiteering explains why less than half of people living with HIV in the U.S. are virally suppressed, one of the lowest rates among the world’s high-income countries,” said Brenda Goodrow, one of the activists who filed the suit, in a statement.

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And Peter Staley, a prominent member of ACT UP and a co-founder of Treatment Action Group who is the lead plaintiff, wrote us this: “How did a company that invented only two antivirals end up dominating the market? According to Gilead, 89% of treatment-naive patients take a Gilead product when they start treatment. How did that happen with only two invented drugs? Buried in Gilead’s filings (with the Securities and Exchange Commission), our lawyers found the answers. They systematically blocked a dozen possible combo-pills that would include cheaper generic components.”

The suit describes “concerning” practices, according to Michael Carrier, a Rutgers University Law School professor who specializes in intellectual property and anti-trust issues.

He explained that the tactics described in the lawsuit are a twist on so-called pay-to-delay deals in which a brand-name drug maker offers cash or something else of value to a generic company to forestall launch of its lower-cost version. In this instance, Gilead reached agreement with other brand-name companies, but it had the same effect as delaying generic competition, he said.

The lawsuit also argued Gilead engaged in what is called product hopping, which typically describes only modest reformulations that are made to a medicine but without offering any substantive therapeutic advantages. In this case, Gilead introduced an improved version of tenofovir with fewer side effects in a different combination tablet and began shifting patients to the newer drug that had a longer patent life.

The older version had troubling side effects and the lawsuit contended the company could have reduced the active ingredient in the older drug to mitigate troubling side effects. “Why have the original version that was unsafe if then to encourage the switch? And why delay? Some evidence they delayed the TAF version for more than a decade,” Carrier said.

“This describes the worst aspects of pay for delay settlements and product hopping all jumbled together,” he continued. “There has not been competition for HIV drugs and this complaint explains why… HIV is a very serious condition and the fact that patients have not been able to be treated is extremely concerning, especially when you consider the behavior alleged in this complaint. If Gilead had not engaged in this behavior, patients could be alive.”

This is only the latest battle AIDS activists have waged recently with Gilead.

Over the past few weeks, they have criticized the drug maker for donating its Truvada HIV prevention pill, arguing the move comes several years too late because the drug has been priced high enough to create a barrier to access. They also contend Gilead will get a generous tax break for a drug that now costs relatively little to make.

Activists have also pushed the National Institutes of Health to seek royalties from Gilead because Truvada was discovered, in part, by researchers who were supported with taxpayer grants. The company has denied the government had any hand in developing the drug, however, and also argued the patent held by Centers for Disease Control and Prevention is invalid.

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