By Joseph Walker
Gilead Sciences Inc. detailed its pricing plans for Covid-19
drug remdesivir, saying it will charge U.S. hospitals $3,120 for a
The drugmaker on Monday disclosed its pricing plans as it
prepares to begin charging for the drug in July. The U.S. has been
distributing remdesivir donated by Gilead since the drug was
authorized for emergency use in May.
Under the company's plans, Gilead will charge a higher price for
most patients in the U.S., and a lower price for the rest of the
developed world where governments directly negotiate drug prices.
The lower price will be extended to some U.S. government agencies,
such as the Department of Veterans Affairs, but not programs such
as Medicare that don't directly purchase medicines, a Gilead
The government price will be $390 a dose, or $2,340 a patient
for the shortest treatment course and $4,290 for a longer treatment
Gilead said in the U.S. it will charge nongovernment buyers such
as hospitals about $520 a dose, or one-third more than the
government price, for patients who are commercially insured. That
works out to $3,120 for a patient getting the shorter, more common
course of treatment, and $5,720 for the longer treatment
The U.S. is the only developed country where Gilead will charge
two prices, Gilead Chief Executive Daniel O'Day said in an
interview. In other nations, governments negotiate drug prices
directly with drugmakers. "The logic is that we wanted a single
government price around the developed world," Mr. O'Day said.
The higher price for U.S. commercially insured patients is
because government health programs such as the VA typically receive
statutorily defined discounts off the prices companies receive in
the private market. In addition to the VA, the Indian Health
Service, the Department of Defense and the Coast Guard will also
receive the lower price, the spokesman said.
"This medicine is priced far below the value it brings to
health-care systems and that's true for private payers and
government payers," Mr. O'Day said.
On average, the drug should help reduce hospital costs by
$12,000 a patient, he said. Gilead estimated the savings based on
data showing that each day of hospitalization costs $3,000 and that
patients taking remdesivir are discharged four days sooner than
those receiving standard treatment, Mr. O'Day said.
The Trump administration has been critical of other rich
countries paying less for prescription drugs than the U.S., and has
threatened to implement regulations that would tie U.S. government
reimbursement to prices paid abroad.
White House spokeswoman Kayleigh McEnany said Monday that
patients were unlikely to shoulder the full cost of the drug,
citing the way hospitals are reimbursed for drugs administered
during inpatient visits. She also said that the drug would reduce
hospital stays, saving hospitals money.
"The patient will not see that cost," she said.
Remdesivir sales could reach $2.3 billion this year, of which
about $1.3 billion would be profit, according to estimates by Brian
Abrahams, an RBC Capital Markets analyst.
Gilead shares fell slightly on Monday, amid some analysts'
expectations that Gilead would charge more. Gilead shares are up
15% so far this year, driven largely by high expectations for
Covid-19 patients get two doses of remdesivir by infusion on the
first day, and one dose daily afterward. The shortest treatment
course is five days, while a longer treatment course takes 10
Currently, 90% to 95% of patients receive five-day treatment
courses, Mr. O'Day said.
Remdesivir is the first antiviral drug shown to be effective at
treating Covid-19 in a major clinical trial, reducing patients'
recovery times by four days compared with the placebo group in a
large study funded by the National Institute of Allergy and
So far, few other drugs have proven in human testing to help
coronavirus patients. One drug that recently produced positive
results in a clinical trial was the steroid dexamethasone.
The drug, which treats Covid-19 by a different mechanism than
remdesivir, has been on the U.S. market for decades to treat other
diseases. It hasn't been authorized in the U.S. to treat Covid-19,
but doctors are allowed to prescribe it "off-label" under U.S.
Given its unique status, remdesivir's pricing has been widely
anticipated -- and hotly debated -- among doctors, health insurers
and investors. It could serve as the starting point for other drugs
that eventually prove to safely treat coronavirus patients.
The Institute for Clinical and Economic Review, a nonprofit
group that analyzes pharmaceutical prices, said last week that a
cost-effective price for remdesivir would be $2,520 to $2,800 a
patient if dexamethasone becomes a standard medication for
Covid-19. The estimate also assumes that remdesivir reduces the
risk of death from Covid-19, though that hasn't been proven in
"Gilead made a responsible pricing decision based on the
evidence we have today," said ICER President Steven D. Pearson in a
written statement on Monday. But "if further data do not show a
clear mortality benefit for remdesivir, then the price of the drug
should be dramatically reduced."
The U.S. Food and Drug Administration on May 1 authorized
emergency use of remdesivir through the course of the pandemic.
Gilead plans to seek a full, permanent approval.
In July, Gilead will start charging for the drug, but federal
and state officials will continue deciding which hospitals receive
it. In September, Gilead expects to have enough supply to meet
demand and will distribute the drug in the same way it distributes
One issue that has already factored into debate over what
remdesivir should cost is the U.S. government's role in funding its
The NIAID funded the study that showed it sped the recovery of
hospitalized Covid-19 patients, and expects to spend at least $30
million on the study through the end of the fiscal year, an NIAID
spokesman said in February.
Some Democrats criticized remdesivir's price. "An outrageous
price for a very modest drug, which taxpayer funding saved from a
scrapheap of failures," said Rep. Lloyd Doggett (D., Texas) in a
written statement. "Taxpayers will be charged billions more for the
same medications that they have already paid significantly for
drugmakers to develop."
Gilead has also invested in researching remdesivir. The company
previously developed the drug to treat Ebola patients, but it
didn't work as well as other drugs. Gilead and other researchers
explored remdesivir's Covid-19 use after the virus emerged.
Gilead has said it spent about $50 million on
research-and-development related to the drug in the first quarter,
or about 4.5% of its total R&D spending. Through the end of
2020, Gilead expects to spend more than $1 billion on developing
and manufacturing remdesivir, Mr. O'Day said.
Some generic drugmakers have said they plan to charge less than
$1,000 per treatment course in India and Bangladesh, where Gilead
has licensed rights to sell the drug. ICER estimates that the raw
materials needed to make remdesivir cost about $10 a patient for a
10-day treatment course, citing a recent academic paper.
Write to Joseph Walker at email@example.com
(END) Dow Jones Newswires
June 29, 2020 15:59 ET (19:59 GMT)
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