It's Good News, Bad News for Gilead's HIV Pill

Last Updated Aug 12, 2008 12:37 PM EDT

The good news: The FDA approved Viread, Gilead's dwindling HIV treatment, as a therapy for hepatitis B. The drug's sales had gone down to $613 million from a peak of $783 million as newer combination drugs -- including Gilead's own Atripla, which includes Viread -- eroded the market for standalone Viread.

The bad news: A California appeals court reinstated a shareholder lawsuit against Gilead in which the company is accused of promoting Viread for off-label purposes. Gilead's win of the new indication now looks damaging for its defense of the suit, because the off-label allegations revolved in part around promoting Viread for treatment of hep B (pictured), according to the San Francisco Chronicle.

This isn't the first time Gilead has been accused of mis-marketing this drug. The FDA sent the company a warning letter in 2002.

The off-label sales allegedly constituted a majority of the drug's revenues at the time, and once the FDA told Gilead to stick to the rules, Gilead's stock plunged -- triggering the suit by aggrieved shareholders. The fact that Gilead was seeking approval for the previously off-label condition puts the company in the bizarre position of having to argue that it did not believe Viread should be used for hep B, even though it wanted the FDA to approve Viread for hep B -- and from now will be legally promoting Viread for hep B.

And the extra revenues Gilead will earn from being able to revivify the Viread franchise could be offset by any award for the plaintiffs in the California suit. Gilead has thus far had nothing to say about the ruling.