Gilead Sciences Inc.’s COVID-19 drug remdesivir will cost much less than Wall Street analysts had predicted in a move that likely points to a more measured and responsible approach to the price of treatments and vaccines during the pandemic.
Gilead GILD Shares,
It gained 0.9% in trading on Monday following the price announcement made before the market opened. U.S. health officials separately said Monday morning that the government had reserved 500,000 remdesivir courses for Americans through September, for hospitals to purchase.
The cost of remdesivir for a 5-day treatment is $ 2,340 in all developed countries, a price similar to the cost-effectiveness estimates previously shared by a drug price watchdog organization. There is an exception, however; In the United States, the cost for a patient who has commercial health insurance, including a plan through their employer and purchased from health exchanges, is $ 3,120.
“Due to the way the US system is configured and the discounts that government health care programs expect, the price for private US insurance companies will be $ 520 per vial,” Gilead CEO Daniel O’Day said in a statement.
(The cost per vial for people covered by government health plans, including Medicare, Medicaid, and the Department of Veterans Affairs, is $ 390.)
Read: UK trial sparks interest in dexamethasone’s potential as a treatment for seriously ill COVID-19 patients
While nearly 80% of the approximately 2.1 Americans who tested positive for COVID-19 are 64 or younger, according to the Centers for Disease Control and Prevention, older Americans who are likely to be covered by Medicare tend to develop more severe forms of illness requiring hospitalization The Food and Drug Administration (FDA) emergency use authorization to receive remdesivir directs seriously ill patients to use mechanical ventilators or oxygen support.
Wall Street analysts see the price points as “reasonable” and “in line with expectations,” although Geoffrey Porges of SVB Leerink said he had previously expected a price in the US that was 75% higher than the Medicare price and 33% higher than commercial health insurance price. Still, he is also optimistic about the widespread use of remdesivir among COVID-19 patients with less serious illnesses. In the United States, physicians may prescribe “off-label” medications at their discretion.
“At this price, we expect the routine adoption of remdesivir for almost all moderate to severe COVID patients in the United States,” he wrote in a note to investors.
Gilead is also conducting clinical trials for an inhaled version of remdesivir and for use in children.
Analysts have been largely divided on whether remdesivir will be a financial blessing for Gilead. When O’Day told investors in May that the drug maker spent $ 50 million in manufacturing and clinical trial costs on remdesivr in the first quarter of 2020, that remdesivir development costs could exceed $ 1 billion. , and had donated more than 100,000 doses of the drug because “it’s the right thing,” at least three analysts downgraded the rating. Some, like Porges, had predicted a higher price.
“Many Wall Street analysts were urging and citing probable numbers of around $ 5,000 per course of treatment,” said Steven Pearson, president of the Institute for Clinical and Economic Review, which studies cost-effectiveness in medicine, in a statement. “The price announced today can be seen as a responsible decision by Gilead and a promising signal for other treatment pricing decisions for COVID-19 on the horizon.”
See also: Gilead expects to spend up to $ 1 billion on coronavirus medications this year, to donate 1.5 million vials
It is a sharp turnaround for Gilead, a company that became known in mainstream medical circles for its decision to price its cure for hepatitis C Sovaldi at $ 84,000 for a treatment in 2013. The price came under fire – the famous journalist Steven Brill asked, “Can any reporters please take us to the meeting where the Gilead executives decided to charge $ 1,000 per pill?” – and sparked an ongoing debate about how drugs are valued in the U.S.
“GILD also appears to have done a more careful job of articulating the rationale for pricing than in the past with” hepatitis C, RBC Capital Markets analyst Brian Abrahams told investors.
Based on this price, Abrahams predicts $ 2.3 billion in revenue in 2020.
That said, Rep. Lloyd Doggett (D-Texas) called the price “scandalous” for “a very modest drug.” Remdesivir was licensed for its ability to speed recovery and get people out of the hospital faster. It has not been shown to reduce death.
Gilead’s shares have risen 14.7% so far this year. Since the beginning of the year, the Health Care Select Spector SPDR Fund XLV,
is down 3.3% and the S&P 500 SPX,
down 6.8%.
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