Federal health authorities and Gilead Sciences have agreed on prioritized delivery to Americans — and pricing that was not negotiable.
Remdesivir, the very first drug known to be successful against coronavirus, will be marketed under an unprecedented arrangement with the federal government setting non-negotiable costs and prioritizing American patients, health officials reported Monday.

Credit: Gilead Sciences

According to Ernst Berndt, a former health economist at Massachusetts Institute of Technology Sloan School of Management, the arrangement will act as a blueprint for the delivery of new drugs and vaccines as the pandemic swells.

According to the Department of Health and Human Services and Gilead Sciences, the manufacturer of the medication, Remdesivir will be sold for $520 per vial, or $3,120 per treatment course, to private insurance hospitals.

The price will be set at $390 per vial, or $2,340 per course of treatment, for patients on government-sponsored insurance and for those with national health care systems around the world.

The medication will only be available through September in the United States, ensuring American patients will receive almost half of Gilead’s sales, over 500,000 treatment courses.

The medicine was distributed to hospitals nationally based on need by H.H.S. and state health departments. They will no longer have a part to play in deciding where the medication is sent after September.

“This is a U.S.-first policy,” said Rena Conti, a health care economist at Boston University. “Access is guaranteed to the U.S., but worldwide demand could potentially outstrip supplies.”

Rena Conti, PhD (Photo by Rick Reinhard)

“I am unaware of any other policy except perhaps in bioterrorism drugs where there might be country-specific supplies,” she added.

Remdesivir is actually the only therapy that has been shown to speed up recovery time in seriously ill patients with coronavirus. A major clinical trial, funded by the National Health Institutes, showed that, on average, the drug modestly shortened recovery time by four days but did not minimize fatalities.

The actual cost of the medication has also been unknown. “There is no playbook for how to price a new medicine in a pandemic,” said Daniel O’Day, Gilead’s chief executive, in a statement.

Gilead has donated remdesivir to hospitals since the emergency authorization of the drug for the treatment of patients with Covid-19, the disease caused by the coronavirus. The last shipments of donated drugs have been distributed on Monday.

The new pricing is not exorbitant, some experts have said. Many promising drugs are already on the market for other uses now in late-stage research, Dr. Conti noted, which cost more than remdesivir several times over.

The Institute for Clinical and Economic Analysis, a non-profit organization measuring equal product prices, reported that Gilead would have to charge $1,600 per regimen to cover its costs. Yet as much as $5.080 per course of care will also be a cost-effective price for insurers, provided that patients could leave the hospital sooner.

In a statement on Monday, the Institute for Clinical and Economic Review warned, “Gilead has the power to price remdesivir at will in the U.S., and no governmental or private insurer could even entertain the idea of walking away from the negotiating table.”

But because many Wall Street analysts were expecting the medication to cost around $5,000 for a treatment course, the lower price “can be seen as Gilead’s responsible decision,” the institute added.

A Gilead Sciences facility in Oceanside, Calif. The company said supplies of remdesivir would be sufficient this fall. Credit…Mike Blake/Reuters

The consumer advocacy organization, Public Citizen, described the new price as offensive, noting that remdesivir had been developed with more than $70 million in public money.

But Jalpa Doshi, of the University of Pennsylvania, noted that one benefit of remdesivir might be intangible. “This treatment and others as well as vaccines may help reduce fear of the virus, an important factor in accounting for its value,” she said.

This would be their distribution almost as rare as the selling of remdesivir.

The aim is to give the drug to AmerisourceBergen, one of the pharmacy wholesalers that fulfill requests from private health care providers such as hospitals, for Gilead. As outlined by state health departments and the Department of Health and Human Services, AmerisourceBergen will offer remdesivir to hospitals according to need until the end of September.

After September, “once supplies are less constrained, H.H.S. will no longer manage allocation,” Gilead said. It is not clear at this stage how patient need would be factored into distribution decisions.

An earlier attempt had been a disaster. Gilead used AmerisourceBergen to distribute the drug after remdesivir obtained an emergency authorisation in May. Needy hospitals did not receive any, while hospitals with few patients with coronavirus got unsked supplies. H.H.S. and the departments of state health stepped in then to organize the delivery.

The latest strategy “leaves the hook on Gilead,” said Dr Berndt. When this fall there is more demand than supply, Gilead should not be blamed for decisions over who gets the drug and who doesn’t.

Rubber stoppers are fitted onto vials of remdesivir at a plant in the United States. Gilead Sciences and the federal government on Monday announced a plan for pricing and distributing the drug.Credit…Gilead Sciences, via Associated Press

An official from the Department of Health and Human Services said on Monday that remdesivir would not be stockpiled for fall, and Gilead said there would be an ample supply for all American patients who need it.

Yet no-one really knows what will happen after September, Dr. Conti said: “We will see how access gets rolled out and assured.”

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