Remdesivir, the investigational antiviral drug heralded as a potential win against COVID-19, has been at the center of many controversies in recent weeks.
Barring the whistleblower accusations against the Trump administration for fumbling the national pandemic response policy , the politics surrounding this now commonly known drug illustrate challenges for patients, public healthcare leaders, and investors. Gilead Sciences (GILD -0.51%) is struggling with finding an acceptable price point that would commercialize remdesivir for market distribution.
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The complexities of drug pricing
Several analysts have placed multi-thousand-dollar price tags to the recommended 10-day treatment for COVID-19 patients, as determined thus far by several rounds of clinical trials. At the heart of the ongoing pricing debate is the effort to recoup billions in revenue and potential profit, focused at price points from $4,000 to well over $10,000.
For Gilead executives, mum is the word related to pricing. There's no real indication of Gilead's intent to recoup the costs tied to production, supply chain infrastructure, and actual clinical testing.
The Institute for Clinical and Economic Review estimated that cost effectiveness for remdesivir as a COVID-19 therapy could cost up to $4,460 per patient. The same institute's numbers also show that at $1,000 per patient -- a less quarter of the fair price ICER determined -- could theoretically generate $1 billion this year alone. The lowest possible price remdesivir could be sold at is $390, while the ICER projections show a cost of $9.32 to produce a 10-day course for one patient. These price points are based on the effectiveness of the treatment, including whether they reduce mortality rates or shorten hospital stays.
ICER estimates
While the ICER numbers are in no way mandated to be followed by drug makers, it should be noted that these numbers are quite conservative provided the context of the pandemic and the hundreds of millions being dumped into Moderna (MRNA 0.43%) and other biotech companies vying for a COVID-19 vaccine or therapy approval .
I wrote earlier this month that Gilead is still stuck with the 2013 controversy around Sovaldi, a life-saving drug for hepatitis C. The virus is spread through blood and through sharing needles and unsterile tattoo equipment. Most people show no signs of infection; however, hepatitis C can only be treated through antiviral medication, which involves formulations like Sovaldi. While clinical trials showed much promise for the drug as does remdesivir now, the drug pricing exceeds $1,000 per pill at an average of $84,000 for an entire 12-week course.
Accountability and transparent pricing?
Since there is concern over pricing for remdesivir, these concerns necessitate the consideration that the pricing for the actual drug should be relegated to a more transparent format. One argument from Congressional Democrats and healthcare reform advocacy groups is that the price for remdesivir should be monitored as an investment of public benefit due to the millions of dollars the U.S. government dumped into its development as an actionable COVID-19 therapy.
An eye-opening May 20 report produced by experts at The PrEP4All Collaboration and New York University School of Law provides a strong case that the U.S. government is possibly a "co-owner" of the U.S. patents related to remdesivir and its chemical compounds. While Gilead is technically the private entity responsible for the drug's commercialization, some estimates say $70.5 million was granted to the development of the drug and the intellectual property of the scientific contributions from government civilian and military scientists from the United States Army Medical Research Institute of Infectious Diseases and the Centers for Disease Control and Prevention.
Federal co-ownership
Frankly, this isn't a bad idea when it comes to the long-term optics of a sales regime that either makes remdesivir for COVID-19 an expensive means of treatment or an affordable one. It is safe to speculate that Gilead Sciences could have lousy press if the price for their treatment exceeds the ICER recommendations, or is priced to only generate profit at the expense of patients fighting the novel coronavirus disease.
If the U.S. government legally co-owns patents over remdesivir, it could have a right to manufacture, import, use, and sell the drug without payment or clearance from Gilead Sciences. Under such a structure, the U.S. government could essentially provide free licensure of the patent rights to generic medicines manufacturers, without Gilead's consent, that could steeply discount the price of remdesivir.
Whatever happens, happens. For now, hold on to any positions you may have in Gilead Sciences and watch the stock closely.
