Since remdesivir became the first medicine shown to have an impact on Covid-19, doctors, politicians, and Wall Street investors have engaged in a tense guessing game: What would its maker, Gilead Sciences, charge for the drug?
Now there is an answer.
For all governments in the developed world, including the U.S. government’s Indian Health Services and the Department of Veterans Affairs, Gilead will charge $2,340 for a five-day course. U.S. insurers, in addition to Medicare and Medicaid, will pay 33% more, or $3,120. Countries in the developing world will get the drug at greatly reduced prices through generic manufacturers to which Gilead has licensed production.
“We spent a lot of time and considerable care and discussion about how to approach the pricing of this medicine,” Gilead CEO Daniel O’Day told STAT. “At this price it’s significantly below the value it brings to patients and to society. There is no doubt of that in my mind.” He also wrote an open letter explaining the company’s decision.
Remdesivir’s effectiveness against Covid-19 was established in a 1,063-patient study conducted by the National Institute of Allergy and Infectious Diseases. In results released in late April and later published in the New England Journal of Medicine, the drug reduced the median time it took a patient to recover from 15 days to 11 days with a 10 day course of treatment. The mortality rate in the remdesivir group was 7.1%, compared to 11.9% among those who received placebo, but the difference was not statistically significant. In another study in less sick patients, remdesivir led patients to improve more than placebo when it was given for five days, but not when it was given for 10.
Following the NIAID trial, in May, the Food and Drug Administration said it would allow emergency use of remdesivir to treat patients with Covid-19.
There will be room for outsiders to argue the price is too high — and too low. The Institute for Clinical and Economic Review (ICER), a nonprofit which sets benchmarks for what it thinks are fair prices in the U.S., said that remdesivir would be cost-effective at as much as $5,080 per treatment course. But it also said that, given recent studies showing that dexamethasone, a cheap and ubiquitous steroid, could save lives among ventilated patients, a fair price might be as low as $2,520. That would mean that governments would be getting a good deal, but perhaps not private insurers in the U.S.
In another analysis as part of the same document, ICER said that if remdesivir does not save patients’ lives, the drug might be worth as little as $310. The group also said that, to recoup the manufacturers cost, the drug might need to cost anywhere from $10 to $1,600 per patient.
O’Day said Gilead believes that remdesivir’s value is much higher than any of those numbers, arguing that just by reducing the time patients spend in the hospital the drug would save $12,000 per patient.
“There’s no playbook for how to price a medicine in a pandemic,” O’Day said. “In normal circumstances, we’d have priced this medicine in accordance with value. But we’re not in normal circumstances. This is an extraordinary global situation.”
Peter Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center, said he worries that the drug could actually lengthen some hospitalizations, because patients may not be discharged until they get a full course. And he said the data about the medicine may not support the price.
“This is entirely predictable,” said Bach. “They take the highest number anybody has floated, they cut down a bit from there, and they say now they’re the good guys.
“This is a drug that was shelved. This is a drug where the pivotal trial was funded by the U.S. government. And they did not go and run a trial that would have been definitive. But they’re happy to capitalize on it.”
The price, O’Day said, was determined by finding one that would be affordable to the developed country with the lowest purchasing power, and then setting a single price for all countries.
Why is the price for private insurers in the U.S. higher? Because, O’Day said, that is how the U.S. system works. “There are always two prices in the United States for a medicine,” he said.
The Department of Health and Human Services said that it has bought 500,000 courses of remdesivir for American hospitals, which are expected to last through September. This represents all the doses Gilead expects to produce in July, and 90% of those expected to be produced in August and September. After September, a more traditional commercial distribution system for the drug will be put in place.
Gilead expects that insurers and government programs, not patients, will shoulder most of the cost of the drug in the U.S. The company said government programs, including the Coronavirus Aid, Relief, and Economic Security Act, which supports uninsured patients, should support the drug’s affordability and that Gilead will provide additional assistance.
One group that may not be happy with Gilead’s decision: investors. In a series of notes to investors, SVB Leerink analyst Geoffrey Porges recommended buying Gilead shares and said that he believed annual sales of remdesivir could reach $6.7 billion next year. Porges assumed prices of $5,000 per course in the U.S., $4,000 per course in Europe, and $2,000 per course in other markets.
“I’ve never seen a disconnect between doing what’s right for patients and doing what’s right for investors,” O’Day said. “I believe that this is the right decision for patients and it’s the right decision for Gilead and it’s the right decision for investors.” But he said that, in his discussions with investors, many understood what he said is Gilead’s responsibility.
“Many investors I spoke to encouraged us to make sure we put patients first,” O’Day said. “And so that’s what we’ve done here.”
The company will be continuing to invest in new studies of remdesivir, which must be given intravenously. It is also working on a version that could be inhaled into the lungs, which will be priced separately. Gilead said it expects to spend $1 billion developing remdesivir by the end of this year.
Correction: Due to incorrect information provided by Gilead to STAT, an earlier version of this story misstated that Medicaid would be eligible for remdesivir’s government price.