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by Causes | 7.2.20

Gilead Sciences has announced pricing for remdesivir, the first medicine shown to have an impact on COVID-19. The four-digit price tag for a five-day course has raised some eyebrows.

What's the cost?

Pricing for five-day remdesivir courses will be tiered as follows:

Governments in the developed world - including the U.S. Indian Health Services (IHS) and Dept. of Veterans Affairs (VA) - will be charged $2,340.
U.S. insurers, Medicare, and Medicaid will pay $3,120 or 33% more than governments.
Countries in the developing world will receive remdesivir at greatly reduced prices through generic manufacturers to which Gilead has licensed production.

Is the price appropriate?

Independent price analysis

According to independent analyses by the Institute for Clinical and Economic Review (ICER), a nonprofit that sets benchmarks for which it believes are fair drug prices for the U.S., remdesivir could be cost-effective at up to $5,080 per treatment course.
ICER also acknowledges that recent studies showing that dexamethasone, a cheap and ubiquitous steroid, could save lives among ventilated COVID-19 patients could push the fair price for remdesivir down to as low as $2,520. That would mean governments would be getting a good deal, but private insurers, Medicare, and Medicaid would be overpaying.
ICER notes that if remdesivir doesn't actually work to save patients' lives, it might be worth as little as $310.
Peter Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center, says the current data about remdesivir may not support its price.

Recouping costs

According to ICER, Gilead may need to charge anywhere from $10 to $1,600 per patient to recoup the cost of producing remdesivir.

Gilead's perspective

In an interview with STAT, Gilead CEO Daniel O'Day — who wrote an open letter explaining the remdesivir pricing decision —argued that the proposed pricing for remdesivir is below market value:

\"We spent a lot of time and considerable care and discussion about how to approach the pricing of this medicine. 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.\"

In fact, O'Day believes that remdesivir's actual value is much higher than any of the proposed prices. He argues that by merely reducing the time that patients spend in the hospital, remdesivir would save $12,000 per patient.

Criticism by Congress and watchdogs

Some politicians have criticized Gilead's pricing. Rep. Lloyd Doggett (D-TX) says the price is \"outrageous\" for \"a very modest drug, which taxpayer funding saved from a scrapheap of failures\" (the pivotal trial for remdesivir was taxpayer-funded).

Peter Maybarduk, access to medicines director at Public Citizen, argues that remdesivir should be in the public domain given Gilead's reliance on public funding to develop it:

\"In a grotesque display of hubris and disregard for the public, Gilead has priced at several thousand dollars a drug that should be in the public domain. Gilead did not make remdesivir alone. Public funding was indispensable at each stage, and government scientists led the early drug discovery team. Allowing Gilead to set the terms during a pandemic represents a colossal failure of leadership by the Trump administration.”

Public Citizen contends that remdesivir should cost $1 a day, based on calculations that it could be manufactured at scale by generic drugmakers for this price.

Should the cost of remdesivir be capped?

As Vox writer Dylan Scott observes, the United States' lack of government negotiating on drug costs leads to elevated drug costs in the country. This includes the cost for remdesivir.

However, given the expected massive need for remdesivir, it's worth asking: should the federal government step in to cap the price the Gilead can charge for this drug?

—Lorelei Yang

(Image Credit: iStockphoto.com / digicomphoto)

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