* London congress showcases dramatic treatment advances
* WHO guidelines back Gilead, J&J pills but flag up cost
* UN agency wants "concerted effort" to reduce prices
* Hepatitis C pricing a hot issue for biotech investors
By Ben Hirschler
LONDON, April 9 (Reuters) - The World Health Organisation wants a "concerted effort" to drive down the cost of new hepatitis C drugs that offer a cure for the liver-destroying virus but are unaffordable for most infected people worldwide.
The forthright comments from the UN agency on Wednesday add to pressure on drugmakers such as Gilead Sciences - which is already facing protests in the United States over its $1,000-a-day pill - to do more to improve access.
In its first-ever treatment guidelines for the disease, issued at a meeting of international liver experts in London, the WHO strongly recommended new drugs from Gilead and Johnson & Johnson - with a big caveat on their cost.
Treating the approximately 150 million people in the world living with chronic hepatitis C infection is the new front-line in the battle over access to medicines.
As with AIDS 15 years ago, modern drugs are transforming the ability to fight hepatitis C because pills such as Gilead's Sovaldi are far more effective and better-tolerated than older injection regimens, with cure rates well above 90 percent in many cases.
"These drugs are fantastic - they are a real breakthrough," Markus Peck-Radosavljevic, a professor of medicine in Vienna and secretary-general of the European Association for the Study of the Liver, told Reuters. "But the prices are too high."
Pharmaceutical companies say they need to charge high prices on new successful drugs to cover the huge cost of development, including of those that fail to make it to the market.
A record number of promising results from late-stage clinical trials on a range of new oral medicines will be showcased at the International Liver Congress this week.
Hepatitis C virus, or HCV, is spread through blood, often via contaminated needles. It causes cirrhosis and liver cancer. The vast majority of cases are in poorer countries where the complexity, cost and side effects of current treatments have made treatment impractical.
The arrival of simple pills, taken for as little as a couple of months, could revolutionise therapy, if the price is right.
By giving governments a plan setting out how to test for, treat and prevent HCV, the WHO is laying foundations for tackling the disease, while spurring demand and sending a strong message on price.
"I hope these guidelines will help to promote a reduction in price and thereby an increase in access," said Stefan Wiktor, who leads the WHO hepatitis programme.
Drawing a clear parallel with the experience of HIV/AIDS, the WHO believes a "multi-pronged" approach is needed. This could include tiered price discounts by branded drugmakers, voluntary licensing and also compulsory licensing.
Voluntary licensing involves a patent owner agreeing to license its drug to generic manufacturers, while a compulsory licence is issued by a government without any such agreement - something the pharmaceuticals industry is keen to avoid.
After dragging their feet for years over access to AIDS drugs in Africa, pharmaceuticals makers are trying to take the initiative this time. Market leader Gilead recently agreed a 99 percent price discount for Egypt and plans to grant voluntary licences to several Indian generics firms.
J&J has also promised to work on access and others entering the area - such as AbbVie, Bristol-Myers Squibb and Merck & Co - are expected to follow suit.
But campaigners want more. The Medecins Sans Frontieres group believes a 12-week course of treatment and diagnosis should cost no more than $500. That compares with the $84,000 and $66,000 charged by Gilead and J&J respectively for their drugs in the United States.
There is also a big concern about middle-income countries such as China, India and Russia, which are home to most cases of HCV worldwide but where drug companies are more reluctant to accept rock-bottom prices than in the poorest nations.
Charles Gore, president of the patient-led World Hepatitis Alliance, welcomed the WHO guidelines but said international funding along the lines of the Global Fund to Fight AIDS, Tuberculosis and Malaria was now needed.
When it comes to profits, drug companies are expecting to make most of their money in the United States, where medicines traditionally fetch a premium.
But the scale of the expected demand for new hepatitis C drugs - which industry analysts believe will translate into annual sales of $9.1 billion for Sovaldi alone by 2017, according to Thomson Reuters data - means the industry is under fire.
U.S. lawmakers asked Gilead last month to explain the $84,000 price tag on Sovaldi, hitting shares in the firm and raising fears across the biotech sector.
"Until we develop a better model, we are still in the situation where investors in pharma want to recompensed on the winners for all the losers - and there have been a lot of losers in hepatitis C over the years," said Gore.
(Reporting by Ben Hirschler; editing by David Stamp)