Pricing Of COVID-19 Drug Remdesivir Showcases Pharma Industry Controversies

There is no guarantee that the pharmaceutical company Gilead will make the coronavirus drug remdesivir affordable. Liam Glen writes on how the pandemic has intensified problems with drug pricing.

Gilead Sciences, Inc. CEO Daniel O’Day delivers remarks during a meeting to announce that an FDA emergency use authorization has been granted for Gilead’s remdesivir drug to treat COVID-19 patients.

The FDA has approved the drug remdesivir as a COVID-19 treatment. While it is no cure, clinical trials suggest that it allows for quicker recovery times.

This offers hope for a disease which doctors have little idea how to effectively treat. And the company that produces remdesivir, Gilead, has offered 1.5 million free doses. But there are fears that once more is needed, the price will rise dramatically.

This problem has been long in the making, but the COVID-19 pandemic has made it more pressing than ever. Each policy response has its own benefits and drawbacks, but it is simply intolerable for any potentially life-saving medication to be unaffordable.

Possible Prices of Coronavirus Treatments

The Institute for Clinical and Economic Review estimates that Gilead could charge as little as $10 for a 10-day remdesivir treatment while still recouping the costs of production, but from a cost-effectiveness approach it would be justified in charging $4,500, assuming that studies prove that remdesivir does have life-saving effects. But according to Politico, investors are pushing the company to charge up to $10,000.

Similarly, if any company successfully develops a COVID-19 vaccine, there is uncertainty over whether it will be affordable, or whether the producer will seek to maximize profits.

This should not be a surprise in the United States, which has far higher drug prices than the rest of the world. This is usually attributed to a mixture of a deregulated pricing system which allows companies to charge whatever they see fit and strict patent laws that prevent competition.

When people need treatment to survive, this means that the cost can become prohibitively high. Former Turing Pharmaceuticals CEO Martin Shkreli faced intense criticism when he attempted to raise the price of the life-saving Daraprim from $13.50 to $750 per tablet. But the process is often slower and more insidious, such as the steadily rising price of insulin.

The Potential Solutions

President Donald J. Trump, joined by Vice President Mike Pence and United States International Development Finance Corporation CEO Adam Boehler, meets with Gilead Sciences, Inc. CEO Daniel O’Day to announce that an FDA emergency use authorization has been granted for Gilead’s remdesivir drug to treat COVID-19 patients Friday, May 1, 2020, in the Oval Office of the White House. (Official White House Photo by Joyce N. Boghosian) Patents are only valid so long as the state agrees to prosecute anyone who breaks them. The government could easily decide that anyone who is safely able to produce the drug may do so, or it may make it itself. This is the solution that organizations like Doctors Without Borders advocate to prevent coronavirus drugs, tests, and vaccines from becoming inaccessible.

In the United States, the Bayh-Dole Act would theoretically allow the federal government to override the patent of any COVID-19 treatment or vaccine created with the help of federal funds.

But opponents warn that this would prevent pharmaceutical companies from making a profit and could therefore discourage them from engaging in research in the first place. However, moves like this might still be used as leverage. In 2001, Bayer sold the antibiotic Cirpo, used to treat anthrax, to the federal government at a discount price after the Bush administration threatened to buy a generic version.

Meanwhile, the libertarian Cato Institute is advocating a method to override the patent issue altogether by offering prizes instead. Any company that researches an effective COVID-19 vaccine would get a cash reward in the place of monopoly over its production. This would incentivize innovation while still ensuring widespread availability.

Along these lines, it would also be possible to direct more funding into public sector pharmaceutical research so that we would be less dependent on profit-motivated private corporations. With renewed interest in public health issues, an expansion of government funding would surely be popular.

There is no one, simple answer to keeping drug prices low – either in response to the current crisis, or in the long term – but any approach should start with the baseline assumption that unaffordable treatments are unacceptable.

 


 

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