Gilead prices Remdesivir at $3120 - a lower price than I expected
Today's Managing Health Care Costs Number is $3120
Gilead announced its price for Remdesivir, the antiviral that is modestly effective at decreasing the number of days of hospitalization in those with severe COVID-19. It will charge $3120 for a five-day course of the medication in the US, and $2340 for a 5 day course for government payers in the US and other developed countries. It will license the drug to generic manufacturers to allow far cheaper prices in developing countries.
Remdesivir is better than no treatment for those severely ill with COVID-19, but it does not confer a statistically significant survival advantage. It does help people get out of the hospital earlier though - and Gilead says the value of these decreased hospital days is $12,000. ICER, the Institute for Clinical and Economic Review, has looked at Remdesivir a number of ways:
Marginal cost: Ingredient cost and manufacturing cost is between $10 and $600
Cost recovery: Considering the $1b clinical development claimed by Gilead, the justifiable cost could be $1000 per course
Traditional cost effectiveness: Value of Remdesivir was $4500-$5000 assuming that it offers some survival advantage, although that declines to just $2500-$2800 now that dexamethasone, a cheap generic drug, has also been shown to decrease hospital length of stay, along with decreasing mortality. ICER states that the cost-effectiveness benchmark price declines to $310 per course if Remdesivir has no survival advantage.
This afternoon, a commentary in StatNews points out that the pharmaceutical industry could be furious at Gilead for not charging a higher price. Activists are already asking why Gilead should be allowed to charge whatever the market would pay for its HIV and Hepatitis C drugs.
Gilead broke serious boundaries when it initially charged $1000 a pill ($84,000 for a course of treatment) for its Hepatitis C therapy (Sovaldi). So I fully expected the initial price for Remdesivir to be higher. I would predict that the price for inhaled Remdesivir, if it comes to market, will be far higher.
Pharmaceutical companies rarely leave "money on the table," and it will be hard for hospitals not to use Remdesivir for their sickest patients. On the other hand, the study showing effectiveness of dexamethasone at <$10 a dose made it harder for Gilead to charge a premium price for Remdesivir, which appears to be a bit less beneficial. And the backlash for Sovaldi pricing was severe, although the profits from that effort allowed Gilead to invest in additional HIV medications which it priced high as well.
Drug companies want to be able to charge a "value based" price for their successful drugs. But the reality is that the value delivered by some drugs, though probably not this one, is simply more than we as a society can afford to pay. Gilead might have helped the entire industry dodge a bullet by not choosing the most eye-popping price for Remdesivir.