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A fair value for Gilead SciencesThe newly licensed coronavirus treatment (GILD), remdesivir, would be $ 4,460 per patient, according to an independent review.
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The Institute for Clinical and Economic Review, also known as ICER, based this estimate on a measure of disease burden. However, Gilead has been very quiet about how much he could charge for remdesivir, an experimental treatment for Covid-19.
“However, they suggested last week that they ultimately believe that remdesivir will not dilute their overall profitability or return on capital, which is consistent with the company finally making a profit on its sale,” the analyst at SVB Leerink Geoffrey Porges in a statement. Note.
The biotech giant has pledged to donate the first 1.5 million vials of the coronavirus treatment. In addition, it will support compassionate use and expanded access programs, as well as make enough remdesivir for clinical studies.
Prices of a coronavirus treatment
In morning trading on the stock market today, Gilead’s stock rose 0.6%, near 80.40.
On Friday night, Gilead obtained the Emergency Use Authorization from the Food and Drug Administration for his drug in the treatment of the coronavirus. The authorization does not officially approve remdesivir. But it does allow doctors to administer it as an emergency medication for hospitalized patients.
Now, the question revolves around prices. ICER estimates that coronavirus treatment is cost effective at $ 4,460 per regimen. The emergency use authorization allows physicians to administer a regimen of remdesivir, which means five to 10 days of treatments, depending on the severity of the patient’s respiratory illness.
One of the factors that goes into the ICER estimate is what a year of perfect health is worth, which it says is $ 50,000. However, SVB Leerink’s Porges says the same measure of disease burden values a year of good health at $ 100,000. According to his calculations, coronavirus treatment would be worth $ 28,670 for a course at that $ 100,000 value, he said.
A starting point for negotiations
Gilead is investing quite a bit of money in developing remdesivir. Last week, Gilead declined to give a prospect for 2020. Biotechnology said its investment in coronavirus treatment “could be material.”
Porges finally hopes that Gilead will recoup its costs and benefit from remdesivir. That company is known for its treatments for hepatitis C and HIV. In fact, he was widely vetted for the high cost of his hepatitis C medications at the time they were released.
“If the purpose of biopharmaceutical companies is to develop drugs that confer individual and social benefits, and generate a positive return on shareholder capital by doing so, then why would Covid-19 be an exception?” Porges said.
He views ICER’s $ 4,460 payoff threshold as a “reasonable starting point” for Gilead’s negotiations on coronavirus treatment. Porges is rated on the Gilead Stock Market.
Gilead representatives did not immediately respond to a request for comment.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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