FILE PHOTO: Intravenous bags hang above young cancer patients at Rady’s Children Hospital as they participate in decorating golden capes to wear as superheroes as part of Childhood Cancer Month in San Diego, California
Gilead Sciences could be justified in charging up to $4,500 per coronavirus patient for its drug, a nonprofit pricing watchdog said in a recent report.
The California biotech is the maker of remdesivir, an experimental antiviral treatment that helped hospitalized COVID-19 patients recover 31% faster, shaving four days off hospital stays.
The company has yet to give a pricing strategy for remdesivir, beyond pledging to donate its current supply of the drug.
One Wall Street analyst calculated that Gilead could make $1 billion in 2020 by selling remdesivir at a $1,000 price tag, which he called “pretty reasonable.”
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While the big biotech Gilead Sciences has yet to outline its sales plan for the first effective coronavirus treatment, an influential drug pricing group has calculated the drug is worth up to $4,500 per patient.
The experimental antiviral called remdesivir was authorized for emergency use in the US on Friday, after a trial showed patients on the drug recovered 31% faster than those on a placebo. That translates to shaving four days off the typical hospital stay among these patients. It is the first drug to show a clinical benefit for COVID-19 patients in a high-quality randomized study.
The Institute for Clinical and Economic Review (ICER) is a Boston-based nonprofit that analyzes drug pricing. The pharma industry regularly clashes with ICER, criticizing its models for being too rigid. The group often finds drugs to be overpriced compared to their value in the healthcare system.
But in the case of remdesivir, ICER said Friday a price of up to $4,500 per treatment course is justified for remdesivir. The organization cautioned its findings are based on preliminary data that may change over time.
ICER’s analysis is focused on list prices for drug, which do not take into account rebates or discounts offered by drug companies.
“We are releasing these estimates now, despite the fact that the evidence is highly uncertain and evolving, because now is the time when the public and policymakers should be actively debating how to link pricing to an overall platform to develop treatments for COVID-19,” said Steven Pearson, ICER’s president, in a statement. “The consequential discussion about the tradeoffs and priorities involved with different pricing approaches cannot wait.”
But the California biotech has called it too early to set a long-term pricing strategy. So far, the company pledged to donate its current supply of remdesivir, which amounts to 140,000 treatment courses. The pricing question has become a top uncertainty among many investors and Wall Street analysts.
“The fact that ICER is typically conservative in all their analyses, and yet they can justify up to $4,500, seems pretty interesting,” Jefferies biotech analyst Michael Yee wrote in a Sunday note to investors.
Read more: Gilead plans to spend up to $1 billion to ramp up manufacturing of its coronavirus treatment, but execs dodged Wall Street’s questions about turning a profit
Using a placeholder of a $1,000 price, Yee estimated Gilead could make $1 billion on remdesivir by the end of 2020 if it sells 1 million treatment courses in the US and internationally. A $1,000 pricetag is “pretty reasonable” in the context of modern drug pricing, the analyst said.
Gilead has pledged it will donate its current supply of remdesivir, which amounts to about 140,000 treatment courses. CEO Daniel O’Day said Sunday the drug should start reaching patients within the next few days.
Remdesivir is given as a 10-day IV infusion and has only been tested in hospitalized COVID-19 patients. The company is also researching ways to administer the drug subcutaneously or through inhalation but has not provided any timetables on those efforts.
Read more: Coronavirus researchers are crafting drug cocktails with Gilead’s antiviral remdesivir, tapping the HIV playbook to fight the coronavirus
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