Putting A Price On COVID-19 Treatment Remdesivir

May 8, 2020
Originally published on May 10, 2020 8:56 am

Now that the Food and Drug Administration has authorized remdesivir for emergency use in seriously ill COVID-19 patients, the experimental drug is another step closer to full approval. That's when most drugs get price tags.

Gilead Sciences, which makes remdesivir, is donating its initial supply of 1.5 million doses, but the company has signaled it will need to start charging for the drug to make production sustainable. It's unclear when that decision might be made.

"Going forward, we will develop an approach that is guided by the principles of affordability and access," Gilead CEO Daniel O'Day told shareholders during the company's annual meeting Wednesday.

In a quarterly financial filing made the same day, Gilead said its investment in remdesivir this year "could be up to $1 billion or more," much of it for scaling up manufacturing capacity.

The company also acknowledged that it's in the spotlight. "[G]iven that COVID-19 has been designated as a pandemic and represents an urgent public health crisis, we are likely to face significant public attention and scrutiny about any future business models and pricing decisions with respect to remdesivir," Gilead said in the quarterly filing.

How will the company balance its business calculations with the drug's potential value to society?

"Gilead has not yet set a price for remdesivir," company spokeswoman Sonia Choi wrote in an email to NPR. "At this time, we are focused on ensuring access to remdesivir through our donation. Post-donation, we are committed to making remdesivir both accessible and affordable to governments and patients around the world."

Among potential treatments for COVID-19, remdesivir, an intravenous drug that was once studied for Ebola, is one of the furthest along.

"It's hard to imagine a situation in which there will be more public scrutiny," said Michael Carrier, a professor at Rutgers School of Law who specializes in antitrust and pharmaceuticals. "On the one hand, Gilead will try to recover its R&D in an atmosphere in which it is able to potentially make a lot of money. On the other hand, the pressure will be intense not to charge what's viewed as too high a price."

Breaking with its usual practices, the Institute for Clinical and Economic Review, or ICER, an influential nonprofit that analyzes drug pricing, issued an expedited report on remdesivir.

"Under normal circumstances, we would be unlikely to do a report when the evidence is this raw and immature," ICER President Steven Pearson said in an interview with NPR. "But it was quite clear that the world is moving at a much quicker pace."

If the price is based just on the cost of making the drug, then a 10-day course of remdesivir should cost about $10, according to the ICER report. (Gilead said results of a recently completed study suggest a five-day course of treatment may be just as effective.)

But if the drug is priced based on the drug's effectiveness, ICER estimates it should cost around $4,500 — assuming the drug is proven to have some benefit on mortality. If it doesn't and the drug only shortens hospital stays, that value-based price goes down to $390.

Results from a federally funded study described by Dr. Anthony Fauci, director of the National Institute for Allergy and Infectious Diseases, suggested that remdesivir could reduce recovery time by a median of four days — 11 days to recovery for patients treated with remdesivir compared with 15 days for those who got a placebo. A potential survival benefit is less clear.

Rutgers' Carrier said he expects Gilead to set the remdesivir price somewhere between the $10 and $4,500 that ICER estimated. The company has already shown that it can respond to public pressure when it asked the FDA to rescind the orphan drug status it won for remdesivir, he pointed out.

"When you see that $10 figure, that sets a benchmark for a figure that is eminently affordable," Carrier said. Ultimately, he said a price more than $1,000 per treatment course would be unpopular.

Gilead "will be watched very carefully," he said, because of its prior history of pricing. He referred to two other Gilead drugs that drew scrutiny over high price tags. The company charged $1,000 per pill for Sovaldi, a cure for hepatitis C. And its HIV drug Truvada can cost $22,000 per year.

But there is such a thing as pricing remdesivir too low, said Craig Garthwaite, who directs the health care program at Northwestern University's Kellogg School of Management.

"We don't think this is the only drug we need," he said, adding that remdesivir doesn't appear to be a "home run" against the coronavirus, based on existing data. "The thing that would worry me the most is that we're somehow telling people that if you take the risky bet to try, and you'll go after a coronavirus cure and you do it, you're not going to get paid."

Instead, he said he would like to see acceptance of a generous price for remdesivir to send the message to drug companies that the best thing they can do is "dedicate every waking moment to trying to develop that cure, and that if they do that, we will pay them the value they create," he said.

During a Gilead earnings call on April 30, analysts asked executives whether they could expect similar financial returns on remdesivir as they've seen with Gilead's other drugs.

"There is no rulebook out there, other than that we need to be very thoughtful about how we can make sure we provide access of our medicines to patients around the globe," Gilead CEO O'Day said. "And do that in a sustainable way for the company, for ... shareholders, and we acknowledge that."

On May 1, the FDA authorized remdesivir for emergency use, meaning it will be easier to administer to hospitalized patients with severe disease during the pandemic, but the drug is not yet officially approved. The federal government is coordinating distribution of the treatment.

O'Day acknowledged on the recent earnings call that the company "could" charge for remdesivir under an emergency use authorization, but he stressed that Gilead is donating its current supply, which should last through "early summer."

To date, the National Institutes of Health said it has obligated $23 million toward its COVID-19 remdesivir trial. And the U.S. Army Medical Research Institute of Infectious Diseases did some of the early in vitro and animal studies with the medicine prior to the pandemic.

"Taxpayers are often the angel investors in pharmaceutical research and development, yet this is not reflected in the prices they pay," Reps. Lloyd Doggett, D-Texas, and Rosa DeLauro, D-Conn., wrote in an April 30 letter to Health and Human Services Secretary Alex Azar.

Concerned about remdesivir's price, they asked for a full breakdown of taxpayer funds that have gone toward the development of the medicine. "An unaffordable drug is completely ineffective," they wrote in the letter. "The substantial taxpayer investments in COVID-19 pharmaceutical research must be recognized."

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The world is eagerly waiting to see whether an experimental drug works as a treatment for COVID-19. And if it does work, the questions will be, how much will it cost, and who will get it? NPR pharmaceuticals correspondent Sydney Lupkin is here to talk to us about that. Good morning.


GARCIA-NAVARRO: So, Sydney, you've been reporting on this drug. Can you remind us what it is and what we know about it?

LUPKIN: Sure. So the drug is called Remdesivir. It's made by a company called Gilead Sciences. And it's something that you would get intravenously in the hospital. It's just one of the experimental drugs being tested as a potential treatment. And it's the furthest one along in that process. The latest study results coming out of the NIH show that the drug reduced coronavirus patients' recovery time by about four days. But whether the drug helps patients survive coronavirus is not clear at this point.

Another thing - it's not FDA-approved yet. But because there's a pandemic, it's been granted something called emergency use authorization, allowing it to be given to certain patients.

GARCIA-NAVARRO: So who are those patients?

LUPKIN: People who are really sick that require oxygen. There's a good chance they're on a ventilator or in an ICU. It's not for everyone, at least not right now.

GARCIA-NAVARRO: With that said, is there enough to go around? It's a new drug. And the company just got this permission.

LUPKIN: There is a limited supply. The company is donating the first 1.5 million doses. That's expected to last until at least early summer as far as we know. But it has to ramp up manufacturing to meet future need. That's one of the reasons the company says it has to figure out what to charge for Remdesivir. It costs money to ramp up manufacturing. And they need to be able to pay for them.

GARCIA-NAVARRO: So what are they going to charge? I mean, new drugs can be very expensive these days.

LUPKIN: The company has not said what it plans to charge for Remdesivir or when it will announce that price. Here's CEO Daniel O'Day at Gilead's annual meeting this week.


DANIEL O'DAY: Going forward, we will develop an approach that is guided by the principles of affordability and access.

GARCIA-NAVARRO: So he really didn't say.

LUPKIN: No. But he did acknowledge that Gilead is in a unique position and has to price the drug in a way that is sustainable for the company and its shareholders.

GARCIA-NAVARRO: OK. So what are people saying the companies should be charging?

LUPKIN: That's a complicated question. There's already a ton of pressure on Gilead to set a low price for Remdesivir. Members of Congress are saying, look. Taxpayers have already invested a significant amount of money in Remdesivir. And they deserve a fair price. One influential drug price research group says that the drug only costs Gilead about $10 to make a full 10-day course of this drug. But this group estimates that what the drug is worth to the patient, to society is way higher - really, a few thousand dollars. And there's some debate about whether that's too high or too low. Ultimately, the number Gilead comes up with is really important beyond just this drug. Craig Garthwaite, a health economist at Northwestern University, says a generous price can incentivize companies to work on the next coronavirus drug or vaccine. But a low price can do the opposite.

CRAIG GARTHWAITE: The thing that would worry me the most is that we're somehow telling people that if you take the risky bet to try and, you know, go after a coronavirus cure and you do it, you're not going to get paid.

LUPKIN: He thinks a generous price would send a message to drug companies to work as hard as they can on new therapies and vaccines because they'll be compensated for them.

GARCIA-NAVARRO: All right. That was NPR pharmaceuticals correspondent Sydney Lupkin. Thank you so much.

LUPKIN: You bet. Transcript provided by NPR, Copyright NPR.