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Let the Hep C Drug War Begin

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Following Johnson & Johnson's (NYSE: JNJ  ) approval of Olysio two weeks ago, Gilead Sciences (NASDAQ: GILD  ) gained FDA approval for its hepatitis C drug Sovaldi, previously known by its generic name sofosbuvir.

Let the competition begin.

Unfortunately, it'll likely be short-lived.

Sovaldi is approved to treat four different strains of hepatitis virus referred to as genotype 1-4. Olysio is only approved for genotype 1, so Gilead will have genotype 2-4 all to itself. Johnson & Johnson went after genotype 1 because it's the most prevalent in the U.S.

Both drugs have to be taken with pegylated interferon and ribavirin, the former of which has to be injected and causes flu-like side effects. That's a big deal, especially since the drugs have to be taken for 12 weeks, although it's an improvement on the nearly year-long treatments that were required before oral medications including Vertex Pharmaceuticals' (NASDAQ: VRTX  ) Incivek and Merck's (NYSE: MRK  ) Victrelis were introduced.

Comparing the clinical trials in the drug labels, Sovaldi has a distinct advantage over Olysio, which isn't recommended for patients with specific genetic change in genotype 1a viruses. And even if you look at patients without the mutation, Olysio only cures 84% of patients compared to 92% for genotype 1a patients taking Sovaldi. Olysio does have a slight advantage for genotype 1b patients with 85% cure rate compared to 82% for Sovaldi. Both drugs appear to be better than Vertex Pharmaceuticals' and Merck's first-generation drugs, which are already starting to be phased out.

Not that it matters much
All oral cocktails that don't require pegylated interferon are on their way. They've produced cure rates as good or better than Gilead's and Johnson & Johnson's combinations. In a phase 3 trial, AbbVie's (NYSE: ABBV  ) five-drug combo for instance produced a cure rate of 95% in genotype 1a patients and higher in genotype 1b. Gilead hasn't released phase 3 data for its all-oral combination that'll include Sovaldi, but the phase 2 data looked promising.

Patients whose disease hasn't progressed very far -- hepatitis C acts on the liver over many years -- are likely to wait for the all-oral regimens rather than take Gilead's or Johnson & Johnson's drugs with pegylated interferon.

Or they could just take both (but they won't)
Data from a phase 2 trial combining Olysio and Sovaldi produced solid results with greater than 90% of patients experiencing viral suppression. While the data is very promising, few patients will end up getting the two new medications together since it hasn't been approved by the FDA. Doctors could prescribe the combination off label, but considering the high cost of the two drugs, it's not clear that insurers would pay for it.

And, as was mentioned previously, there's no rush for most patients to get treated. For most patients, doctors will just wait for an FDA-approved all-oral regimen from Gilead or AbbVie rather than risk a combination that hasn't been tested in a larger phase 3 trial.

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