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Gilead Sets Two Separate Prices for its COVID-19 Drug in the United States, Charging More to Treat Most Americans

The pricing of remdesivir had been closely watched since it is one of the first drugs to receive FDA authorization to treat COVID-19, establishing a precedent for future treatments. Gilead’s two-tiered pricing structure has touched off questions about the drug’s value and the gaps in the U.S. drug pricing model.

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Gilead will charge hospitals that treat the vast majority of COVID-19 patients in the United States $3,120 for a five-day treatment of its COVID-19 drug remdesivir, establishing a price that is 33 percent higher than what the company says it will charge for the same treatment in other developed countries where government generally has the power to negotiate drug prices. 

The announcement on Monday touched off a debate about what should be considered a fair price for a treatment that has been shown in clinical trials to reduce hospital stays but not save lives, and underscored a long-standing problem in the way the United States pays for drugs.

Gilead’s pricing announcement had been closely monitored because remdesivir was one of the first COVID-19 treatment to receive U.S. Food and Drug Administration (FDA) emergency use authorization and anticipated to be approved by FDA, and therefore remdesivir’s price will likely set the tone for how much future COVID-19 treatments may cost. Drug prices have become even more of a divisive issue during the pandemic as tens of millions of Americans lose their jobs and struggle to afford their health care and medications.

According to the company, a five-day course of remdesivir will be priced at $3,120 for commercial payers as well as uninsured people in the United States, while the same course of treatment will cost $2,340 for government payers such as the Department of Defense and Department of Veterans Affairs, which is empowered to negotiate drug prices. Most notably, Gilead is charging hospitals the higher price of $3,120 to treat Medicare and Medicaid patients, stoking questions about why the two largest government payers failed to get access to the discounted government price. For a 10-day course of treatment, Gilead will charge hospitals $5,720 for each patient covered by a commercial plan, Medicare, or Medicaid.

Gilead has not explained the methodology it used to justify remdesivir’s price tag. 

An early, placebo-controlled, double-blinded study of remdesivir found a significant reduction in time to recovery, but did not find a statistically significant result in overall mortality. Prior to Gilead’s announcement, an independent and influential drug pricing group, Institute for Clinical and Economic Review (ICER), determined that a 10-day course of remdesivir that failed to demonstrate any mortality benefit should be priced no higher than $930. Gilead’s price for commercial payers is six times higher than that. 

Additionally, it remains unclear how many patients are likely to benefit from taking remdesivir, with questions still pending on whether the drug will have a narrow application, a broader application or be prescribed off-label. 

Early clinical data seems to suggest that remdesivir will have narrow clinical applications, with benefits demonstrated in a small patient population, meaning not all COVID patients would be able to use it or gain benefit from it. However, physicians may be inclined to prescribe remdesivir more widely even if there is little demonstrated clinical benefit because there are few other treatments available. 

A lot is still unknown about the ultimate market for the drug and how much money Gilead is likely to make. Analysts estimate that remdesivir’s pricing structure will result in $525 million in sales this year and $2.1 billion next year. Gilead is also in the process of developing an inhalable version, which will extend life and sales of the product.

Gilead has argued that it should be compensated for the efforts that went into developing remdesivir. The antiviral was born out of a longstanding antiviral research unit at Gilead that initially explored the drug as a treatment against Ebola but shelved the compound amid disappointing results. Gilead resurfaced remdesivir in recent months as a possible treatment against COVID-19, the infectious disease that has left 500,000 dead worldwide so far. Gilead has also benefitted from publicly financed research and development.

After results from clinical trials showed that remdesivir showed some effectiveness in improving recovery time for hospitalized COVID-19 patients, the FDA granted it emergency use authorization, meaning the FDA allowed an unapproved medical product to be used in a public health emergency when there are no adequate, approved, and available alternatives. It’s anticipated that the FDA will grant remdesivir full approval soon.

While it claims it will spend $1 billion developing redemsivir, the company has offered no details to explain the estimate. Some independent researchers have pegged the cost of producing the drug to less than $10 for a course of treatment, according to a study published in the Journal of Virus Eradication.

Gilead licensed remdesivir to other generic manufacturers to boost its production capacity, and those drugmakers will charge substantially less, Gilead said. Additionally, Bangladesh has begun manufacturing a generic form of remdesivir for sale in its country — the unauthorized generic is priced at $71 in U.S. dollars per vial, or about $426 for a 5‑day treatment of remdesivir, which is given intravenously.