Ten years ago, the biopharmaceutical company Gilead Sciences, invented Remdesivir as a hoped-for treatment of Hepatitis C. At the time, they decided to not continue development. Later, with government funding, the drug was re-purposed as an anti-viral, and Gilead spent about a billion dollars to develop and manufacture the drug as an anti-viral. So far, so good.
Now comes the COVID-19 pandemic. A clinical trial was conducted and the new experimental drug Remdesivir did fairly well. The study showed that the drug sped up hospital recoveries by four days. Note that the drug had no statistical impact on COVID-19 survival.
OK, we’ve got a treatment for the novel coronavirus. It’s not a silver bullet, but it is something we want in the hospital’s tool box. In the above photo, Remdesivir is dispensed in 100 mg vials. Each COVID-19 patient will require six vials.
So, what’s the price?
The Institute for Clinical and Economic Review stated that Gilead could recover all their costs through 2020 by charging $160 per vial (six vials = $960).
Gilead Sciences, in an open letter June 29th by their CEO, Daniel O’Day, announced a price of $390 per vial ($2340 for the required six doses). For US private insurance, the price goes up to $520 per vial ($3120 for the required six doses).
How Daniel O’Day arrived at his price is astounding. One would think that, in an emergency, you recover your costs ($160) and tack on a fair profit (say 15% tops or $24). That would make a fair price for a single vial to be $184.
To me, this would be honest capitalism. You recover your development, manufacture, and distribution costs and tack on a fair profit. Yet O’Day is getting double the fair price for those uninsured and nearly triple for those with private insurance. How does he justify his gouging?
In his open letter, O’Day stated that “we would price a medicine according to the value it provides.” Well, that’s a hole you can drive a truck through.
He points out that the earlier discharge “would result in hospital savings of approximately $12,000 per patient.” Then he pats himself on the back and says “We have decided to price Remdesivir well below this value.” The Trump Administration has ordered 500,000 treatment courses at the stated price.
Suspicious? I am.