Among the coconut plantations and beaches of South India, a factory the size of 35 football fields is preparing to churn out billions of generic pills for HIV patients and flood the U.S. market with the low-cost copycat medicines.
U.S. patents on key components for some important HIV therapies are poised to expire starting in December and Laurus Labs Ltd. -- the Hyderabad, India-based company which owns the facility -- is gearing up to cash in.
Laurus is one of the world’s biggest suppliers of ingredients used in anti-retrovirals, thanks to novel chemistry that delivers cheaper production costs than anyone else. Now, its chief executive officer, Satyanarayana Chava, wants to use the same strategy selling his own finished drugs in the U.S. and Europe. He predicts some generics that Laurus produces will eventually sell for 90 percent less than branded HIV drugs in the U.S., slashing expenditures for a disease that’s among the costliest for many insurers.
"The savings for U.S. payers will be so huge when these generic combination drugs are available in the U.S.," he said in an interview at the factory outside the Southern Indian city of Visakhapatnam. Payers will save "billions of dollars," he said.
The patent expiries are starting this month when Bristol-Myers Squibb Co.’s Sustiva loses protection. Gilead Sciences Inc.’s Viread follows next month. Both companies didn’t respond to requests for comment.
For generic manufacturers like Laurus, the U.S. market is alluring. With 1.1 million people infected with HIV in the U.S., and many of them living longer thanks to treatment, HIV drugs have become an $18.8 billion business for the pharmaceutical industry there, according to data provider IQVIA.
Part of that spending is due to the high cost of the medicines. For instance, a combination of Viread, Sustiva and a third drug sold in pill form under the brand name of Atripla has an average wholesale price of almost $37,000 per person annually, according to data from the U.S. Department of Health and Human Services.
But in the developing world the same combination can cost as little as $100 per person annually, after years of brutal competition between generic manufacturers drove prices down, according to Medecins Sans Frontieres. Though Laurus doesn’t yet make the actual pills those patients take, it’s become a dominant supplier of the key ingredients that make them work.
Of course, it might cost some jobs in the US, but if it can reduce the cost of health care, it would be worth it. Eventually patents run out (typically 20 years) so in the long run costs ought to come down, as long as there is real competition. But, it's not always the case as we saw with Pharma Bro. Because FDA approval is another hurdle.