Gilead Sciences Inc. detailed its pricing plans for Covid-19 drug remdesivir, saying it will charge U.S. hospitals $3,120 for a typical patient.
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 and Medicaid that don’t directly purchase medicines, a Gilead spokesman said.
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 course.
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 duration.
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, Mr. O’Day said. In addition to the VA, the Indian Health Service, the Defense Department, the Coast Guard and other direct purchasing agencies will also receive the lower price, the Gilead 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 remdesivir.
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 days.
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 Infectious Diseases.
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. regulations.
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 clinical trials.
“Gilead made a responsible pricing decision based on the evidence we have today,” ICER President Steven D. Pearson said 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 other medicines.
One issue that has already factored into debate over what remdesivir should cost is the U.S. government’s role in funding its development.
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,” Rep. Lloyd Doggett (D., Texas) said 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.
—Catherine Lucey contributed to this article.
Write to Joseph Walker at firstname.lastname@example.org
Corrections & Amplifications
Gilead Sciences Inc. will charge a lower price of $390 a dose of remdesivir to some U.S. government agencies that directly purchase pharmaceuticals, such as the Department of Veterans Affairs. An earlier version of this article incorrectly said the lower price would be extended to government health programs such as Medicare.