May 7, 2020 - Health

The high stakes of pricing a coronavirus drug

Illustration of a price tag as an IV bag.
Illustration: Sarah Grillo/Axios

Now that the federal government is allowing the emergency use of remdesivir for coronavirus patients, and as the world awaits final clinical data on the drug's effectiveness, a giant question looms: What will the price be?

Why it matters: Gilead's pricing decision is important on its own, but it also will set the bar for how all coronavirus treatments that come after remdesivir will be priced.

Where it stands: Gilead CEO Daniel O'Day has punted all questions related to remdesivir's price thus far.

  • Gilead is giving away its existing remdesivir supply, which would cover about 140,000 patients, and won't land on a price until more data comes in.
  • The company is spending "up to $1 billion" on the drug, though it has also received sizable taxpayer investment for remdesivir — dating back to when the drug was tested for Ebola.

The intrigue: We have some ballpark pricing thresholds to consider based on a new report from the Institute for Clinical and Economic Review, an organization that analyzes drug prices.

  • $10 per treatment: This assumes a model where Gilead would only attempt to recover the basic costs of making remdesivir plus a small margin that generics typically earn. Even $10 per 10-day treatment, or $1 a day, is well above cost, according to researchers and consumer advocates.
  • $390 per treatment: So far, the science suggests remdesivir helps on the margins — it may get patients out of the hospital a few days quicker, but does not reduce the chance of death. A drug with that level of efficacy, if it's not being given away, should land at this price, ICER says.
  • $4,460 per treatment: This large jump in price assumes clinical trial data would show the drug saves lives. "That shows how important that mortality assumption is," ICER President Steve Pearson said.

The bottom line: Drug prices have taken a backseat to the pandemic, but remdesivir is about to make the issue very relevant again.

  • And Gilead is fully aware, saying in new investor filings Wednesday: "We are likely to face significant public attention and scrutiny about any future business models and pricing decisions with respect to remdesivir."
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