How the race to develop treatments and a vaccine will create a historic windfall for the industry — and everyone else will pay the price.
By Matt Taibbi and cross-posted from Rolling Stone.
On June 29th, 2020, while America remained transfixed by anti-police protests, the chairman and CEO of the pharmaceutical company Gilead issued a much-anticipated announcement. In a breezy open letter, Daniel O’Day explained how much his company planned on charging for a course of remdesivir, one of many possible treatments for Covid-19. “In the weeks since we learned of remdesivir’s potential against Covid-19, one topic has attracted more speculation than any other: what price we might set for the medicine,” O’Day wrote, before plunging into a masterpiece of corporate doublespeak.
The CEO noted a study by the National Institute of Allergy and Infectious Diseases, a division of the National Institutes of Health, showing that Covid-19 patients taking remdesivir recovered after 11 days, compared with 15 days for placebo takers. In the U.S., he wrote, “earlier hospital discharge would result in hospital savings of approximately $12,000 per patient.”
The hilarious implication seemed to be that by shortening hospital stays by four days on average, remdesivir was worth $48,000 a dose. That O’Day might come to such a conclusion was not outlandish. Gilead became infamous a few years ago for charging $84,000 per course of treatment for Sovaldi, a “groundbreaking” hepatitis-C drug. The company’s policies for pricing have more than once prompted congressional hearings, as in the case of Truvada, a drug to combat HIV transmission that was developed in part with the aid of government grants and that earned Gilead more than $30 billion in revenue. Would they try something similar at a time of unprecedented medical terror with one of the few available Covid-19 treatments?
No, as it turned out. Although “we can see the value that remdesivir provides” — i.e., we could have charged $48,000 per dose — Day wrote, “we have decided to price remdesivir well below this value.” He went on to say that to “ensure broad and equitable access at a time of urgent global need,” Gilead had generously decided to place the price for remdesivir at a measly $3,120 per patient.
Investors were bummed. Gilead even undercut the prediction of the Institute for Clinical and Economic Review (ICER), a watchdog that calculated a fair price for remdesivir at $4,500 per course of treatment. When Gilead announced a price below that level, it caused a tremor on Wall Street, as its share price fell. The company had already offended the Gods of Capitalism by donating hundreds of thousands of existing doses of remdesivir to the government. What self-respecting American corporation voluntarily undermines its own market?
Not Gilead, as it turns out, and really, not any pharmaceutical company. What Americans need to understand about the race to find vaccines and treatments for Covid-19 is that in the U.S., even when companies appear to downshift from maximum greed levels — and it’s not at all clear they’ve done this with coronavirus treatments — the production of pharmaceutical drugs is still a nearly riskless, subsidy-laden scam…