A Blog by Jonathan Low

 

Oct 22, 2020

Covid Drug Remdesivir's Hefty Price Ignores US Gov't's Investment

Scientists and medical professionals are questioning why a drug developed with billions in US government investment is being priced at rates making it unaffordable for most American, even those with insurance. JL

Ekaterina Cleary reports in Stat:

The company put a $3,120 price tag per course of treatment for insured patients in the U.S., and priced it less for other governments in the developed world. Gilead’s investment into developing and manufacturing remdesivir was $1 billion. (But) between gathering knowledge behind remdesivir’s chemical structure and molecular target, the NIH invested as much as $6.5 billion between 2000 and 2019. A clinical trial showed  remdesivir shortened hospital stays only by an average of four days compared to a placebo and did not show a significant reduction in mortality rates.

Throughout the Democratic presidential primary, candidates cast a spotlight on the broken U.S. health care system and the high cost of prescription medicines. Bernie Sanders presented a sweeping plan that would allow the government to negotiate lower drug prices with pharmaceutical companies. Elizabeth Warren pledged to lower the price of several “critical public health drugs,” including insulin. An Andrew Yang campaign ad focused on high drug prices, suggesting taxpayers may be paying twice for medicines, an argument drawn from research I did with several colleagues.

But once Covid-19 emerged in the U.S., media attention understandably turned to follow the fast-spreading infection. Biotech and pharma companies diverted their resources to an all-hands-on-deck approach to find treatments and vaccines for Covid-19. The negative sentiment toward Big Pharma profiteering was gradually replaced by the hope that these companies could halt the virus without charging exorbitant prices for a cure.

Since then, progress to help those afflicted by Covid-19 has come in record time. Gilead repurposed remdesivir, its hepatitis C and Ebola drug, and was granted emergency use authorization for the treatment of Covid-19 on May 1, less than six months after the virus was discovered. The company pledged to donate nearly 1 million vials of remdesivir to hospitals. But with each patient requiring six to 11 doses, and the number of new cases and hospitalizations on the rise, concerns regarding ethical distribution were quickly ignited.


With remdesivir pricing in the spotlight, all eyes centered on Daniel O’Day, Gilead’s CEO, to announce the final price. On June 29, the company put a hefty $3,120 price tag per course of treatment for insured patients in the U.S., and priced it less for other governments in the developed world. Society groaned.

Patients around the country now face difficult decisions to pay for the treatment, groceries, rent, or other bills. It’s not an obvious choice, considering that a clinical trial sponsored by the National Institute of Allergy and Infectious Diseases showed that remdesivir shortened hospital stays only by an average of four days compared to a placebo and did not show a significant reduction in mortality rates.


In August, 34 attorneys general wrote a letter to the heads of the Food and Drug Administration, the Department of Health and Human Services, and the National Institutes of Health emphasizing that the scarcity of the medication and its high price warranted the government to make an unprecedented move: exercise march-in-rights. These rights, established by Congress under the Bayh-Dole Act, allow the federal government to retain patent rights for inventions developed with government funding, but have never been used. March-in-rights, the attorneys generals argue, would allow other distributors to help manufacture remdesivir, increasing the supply and lowering its cost. On Sept. 16, a letter from 11 state treasurers urged O’Day to “reprice the drug more affordably.”

O’Day has justified the price by estimating that Gilead’s expected investment into developing and manufacturing remdesivir was $1 billion. Although the actual R&D expenditure is not public record, we do know how much was spent by the government for science enabling the drug’s discovery. Research from the Center for Integration of Science and Industry, with which I am affiliated, determined that between gathering knowledge behind remdesivir’s chemical structure and molecular target, the NIH invested as much as $6.5 billion between 2000 and 2019. This is referred to as “basic research” that might never have resulted in a drug. Instead, the work was performed to learn about the inner workings of cells and organisms and how these systems function as a whole.

With that in mind, our center has priced out the NIH contribution towards research enabling not just remdesivir, but all 356 drugs the FDA approved between 2010 and 2019. In a recent working paper for the Institute of New Economic Thinking, we report that the discovery of every new drug approved in that time period was enabled by NIH funding, an investment totaling more than $230 billion since 2000. In a related paper, we show that because basic research is not focused on developing specific drugs, the body of knowledge contributing to cancer therapies spilled over into immunology, endocrinology, and other vital therapeutic areas.

These are huge dollar figures that companies are not accounting for when establishing a fair market price. Their discoveries simply would not be possible without the basic science laying the foundation.

For its part, the government is not stepping in to determine a reasonable price for taxpayer-supported prescriptions. While other industrialized nations pay a fraction of the prescription drug costs Americans do, many are priced out of innovative medicines even with insurance coverage.

Researchers have generated immense data to support that sustained NIH funding is crucial for the emergence of new drugs. It is now up to legislators to make it right by patients. After all, what good is pharmaceutical innovation if it is unaffordable? When it comes to removing barriers to treatment access, unprecedented times call for unprecedented measures, like exercising the authority to override patents, break monopolies, and prevent price gouging.

Even as the pandemic has seized our country’s attention, the issue of health care affordability has not disappeared. The scrutiny on structural reform must continue beyond the presidential campaign to ensure that change becomes a reality and not just a talking point. Once a Covid-19 vaccine and more treatments emerge, the government must be able to shield its citizens from being priced out of access.

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