Photo: Justin Sullivan/Getty Images

Gilead will charge U.S. hospitals $3,120 for the shortest treatment course of its coronavirus drug remdesivir for typical patients with private insurance, according to an open letter from CEO Daniel O’Day.

Why it matters: It is the first antiviral drug shown to effectively treat coronavirus in a major clinical trial, and Gilead's pricing decision may set the bar for how future treatments will be priced.

  • Its benefits remain rather limited, as patients on the drug leave the hospital in 11 days versus 15 days.
  • It also did not lead to a statistically significant drop in deaths.

By the numbers: Gilead will charge two prices for the drug in the U.S. — one for patients with private insurance and a second, lower price for government health agencies like the Department of Veterans Affairs. The lower price will not be extended to government programs that do not directly purchase medicines, like Medicare

  • The government price will be $390 per dose, or $2,340 per patient for the shortest treatment course of five days and $4,290 for a longer treatment course of 10 days.
  • Nongovernment buyers will pay around $520 per dose — about a third more than the government price — for patients with private insurance, or approximately $3,120 for the shorter treatment and $5,720 for the longer treatment.
  • O’Day told the Wall Street Journal that 90% to 95% of patients currently receive the shorter, five-day treatment course.

The big picture: Gilead will only charge two separate prices in the U.S. It will charge the government price in other developed nations with public insurance programs.

  • "Part of the intent behind our decision was to remove the need for country by country negotiations on price. We discounted the price to a level that is affordable for developed countries with the lowest purchasing power," O'Day said.

Worth noting: Estimates from experts at the Institute for Clinical and Economic Review said last week that the cost of a course of remdesivir should not exceed $2,800.

Go deeper: Wall Street forecasts blockbuster sales for Gilead's coronavirus drug remdesivir

Editor's note: This story has been corrected to reflect that the lower price will be extended to government agencies, but not programs like Medicare that don’t directly purchase medicines.

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