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.
About the Author Reprints
Pandemic profiteering, as $70 million in federal funds went into its development: https://www.commondreams.org/news/2020/06/29/absolute-robbery-gilead-announces-3120-price-tag-covid-19-drug-developed-70-million
Pricing according to “value” in maintaining human life is nonsense. If value were the measure, water would cost more per ounce than gold. No, the proper measure is determined by offer and acceptance in a free market. A free market doesn’t exist in pharmaceuticals on account of gummint-granted monopoly, principally through patents. That could be changed.
And thanks to a Republican bill attached to Medicare Part D, Medicare is forbidden to bargain prices with pharmaceutical corporations.
Billions taken from the pockets of taxpayers, but lucrative jobs for the GOPers who steered the bill. (You could look it up! On Wikipedia.)
I think we might benefit from microeconomics courses.
When it comes to many pharmaceuticals, patients often have no choice. It’s “take the drug” or likely die. I hope I live to see the day when a medicine is manufactured and the company prices it just enough to cover costs, as a gesture to do what is right when people are dying. Not everything in this life should have a price tag, but you’d never know it.
Has anyone in the medical community checked with Jim Acosta and CNN, to be sure that they approve of this drug being used by physicians to treat COVID 19?
Physalin should work even better than dexamethasone, and unlike dexamethasone, a fluoridated steroid, Physalin B is a natural plant sterol.
Who are these people at ICER that think real NOVEL drugs cost this little to make at such large volume? It is infuriating they are tasken for serious, when their analysis fails any real scrutiny. For example they base what the drug costs to make on an academic article with no real merits. This drug in particular isn’t straightforward to make especially not at such massive scale. Just promulgating pseudoscience to what “drugs” costs vs seeking actual quotes and talking to CMOs. They also leave out all the legal/regulatory & quality services that go into a product.
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7213074/
ICER should consider reflecting on the costs hospitals charge and make a real difference to society.
These pharmaceutical people should be put in jail. “Spent considerable time” – so what?
Since, let’s even say January. Barely 6 months – no practice runs, no “trials” – just ‘poof’ and it’s on the market. And exactly how much time did the CEOs spend on the lab floor? Bet I can tell you- next to NONE. Yet they’re pricing their Covid med at $2,340 for a 5-day course (I’d bet that’s 5 whole pills) and records indicate that the majority of people require at least twice that time to begin showing marked improvement. Who knows what mutant effects will be seen down the road? New meds commercials are scary enuff – I’d rather suffer the ailment in most cases than be subjected to all the adverse side effects!! You can rest assured THOSE folks aren’t getting $468 per pill. C’mon, Donald – now’s your chance to show the world YOU think this medicine price gouging – no, scratch that – this medicine price ROBBERY – just cannot be tolerated, that if these people want to play hardball, YOU happen to have 8 esteemed Judges that I’m sure would be willing to sit for an hour or two and come up with 4 or 5 Federal charges for these cretins to answer for!
This is IV, not pills. And that also means it will be mostly used in hospitalized patients. What we need is a med that reduces the number of people who have to go into the hospital, something a primary care doctor could administer and the patient take at home.
I totally agree. Donald should step up. Being a senior citizen with a bare bone retirement fund how are people in my age group supposed to handle these costs . I definitely do not want them handed down to my children.
The Remdesivir study showed the difference in COVID-19 mortality rates for the Remdesivir arm and that of placebo was not statistically significant. NIH was conducting the study. What did they do? They fished for a justification to impose Remdesivir on the society. Look for a slight success and it was difference duration to recovery – and there wasn’t anything worth writing about. The left leaning media was used to promote the lie Remdesivir was a game changer. The same way they were used to discredit hydroxychloroquine and even lie that it was likely harmful to patients. There is an evil agenda and it is costing the world a lot of lives.
A drug that is pretty much already obsolete. Not having showed improving in survival, and with cheap anti inflammatory steroids looking promising in actually reducing mortality.
On the other hand, the huge surge in infections in the US could require a drug shortening hospitalization to not overwhelm ICUs. A drug for dumb-society proofing an epidemic
Does it help the long haulers, estimated at 10% of the infected?
In my opinion, the actual reason for the government persuing this drug is simply so it can look like they are “doing something”, instead of admitting that we currently have no effective knowledge or weapons to use against the virus.
The first casualty of war is *always* the Truth.
Just what I was thinking too. Not a home run or even close.