Gilead Sciences Inc. should be prepared to dramatically slash the price of its Covid-19 drug remdesivir if the drug fails to reduce deaths, an organization that analyzes the value of health-care treatments says.
Gilead has priced remdesivir at an estimated $3,120 for commercial health insurers. But so far the drug, which the Trump administration said Monday it was buying for U.S. hospitals, has not proved to significantly reduce deaths from Covid-19, although it does help people feel better faster, Steven Pearson, founder and president of the Institute for Clinical and Economic Review, said in an interview.
If the drug doesn’t prove to reduce deaths it would only be worth about $310, he said. “It’d be like a souped-up aspirin,” Pearson said. “You feel better a little bit quicker, but actually it doesn’t save lives.”
Health insurers have stressed the importance of paying for drugs based on their value in the same way they have been pushing for value-based payments for other medical services. Value-based payments attempt to pay medical providers based on the quality of treatment rather than on the volume of services provided. The health-care industry has been trying to move in that direction for years to get costs down and improve the quality of care.
Remdesivir is one of the first widely used drugs for Covid-19. It received emergency authorization from U.S. regulators in May after a big trial found it sped recovery by about four days in hospitalized patients.
A Call for Flexible Pricing
“The price should be flexible so that, going forward, if we learn that it doesn’t have a mortality benefit as we get more data the price should be dramatically reduced,” Pearson said.
ICER issued a statement Monday saying that Gilead’s pricing decision is “responsible” based on current evidence. But the price appears reasonably cost-effective only if a five-day course of treatment is used, rather than a 10-day course, and if the drug saves lives, the group said.
Gilead defended its price, which is $2,340 to governments of developed countries for a five-day course of treatment. It noted the “vast majority” of patients are expected to receive the five-day treatment course.
“In normal circumstances, we would price a medicine according to the value it provides,” Daniel O’Day, Gilead chairman and CEO, said in the statement. By the end of this year the company expects its investment on the development and manufacture of remdesivir to exceed $1 billion, he said.
Early study results show that remdesivir shortened recovery times by an average of four days, and earlier hospital discharges would result in hospital savings of about $12,000 per patient, O’Day said. “We have decided to price remdesivir well below this value.”
Meanwhile, the Campaign for Sustainable Rx Pricing, a group that advocates to lower drug prices through market-based methods, complained about Gilead’s price for the drug. CSRxP includes health insurers, medical providers, consumers, pharmacy benefit managers, pharmacists, and businesses.
“Gilead is demonstrating Big Pharma’s usual profits over people attitude by setting such a high price on this treatment developed with substantial taxpayer investment, especially while the true health and mortality benefits are still being studied,” CSRxP Executive Director Lauren Aronson said in a statement. “This Big Pharma giant continues to look for every avenue to boost profits off of the coronavirus crisis.”
The Blue Cross Blue Shield Association didn’t respond to a request for comment. America’s Health Insurance Plans, a health insurance trade group, referred Bloomberg Law to the CSRxP for comment.
‘Far Too High’
Peter Maybarduk, director of Public Citizen’s Access to Medicines Program, argued that the prices Gilead is charging private insurers, employers that cover employees’ health-care costs, and the government “are far too high.”
The drug should be in the public domain and priced at $10 for a course of treatment, Maybarduk said. That would cover the cost of manufacturing the drug and include a reasonable profit, Public Citizen, a consumer advocacy group, said in a release.
The federal government has contributed to the development of the drug, Maybarduk said. The government should take the position that it co-owns the patent for the drug and should exercise greater control over the price, he said.
No information was available on how many health insurers will charge enrollees out-of-pocket costs for remdesivir or how much those payments would be.
There will be no rebates or discounts on the drug, Pearson said. ICER estimated about 1 million people would use the drug in 2020. That would yield Gilead between $1.5 billion and $3 billion for selling the drug, he said.
“Given the circumstances in which this is occurring, in which Gilead has the power to price at will and government and insurers can’t walk away, they could have charged higher,” Pearson said. “It shows restraint.”
“That being said, they have the potential to make a lot of money on this, and some people will feel that, in the context of a pandemic, that their profit is going to be in a sense unconscionable, and that they should in a sense show more solidarity with the country and charge an even lower price,” Pearson said.
—With assistance from Robert Langreth (Bloomberg News)