In an open letter on Monday, Gilead Sciences Inc. announced that a standard five-day, six-vial treatment of remdesivir would be priced at US$3,120 for an American patient with private insurance. Each vial is set to cost US$520.

On May 1, remdesivir was given authorization by the United States Food and Drug Administration (FDA) to treat COVID-19 after a large clinical trial conducted by the National Institutes of Health (NIH) found that the drug shortened a patient’s recovery time by an average of four days. However, the drug was not found to reduce fatality rates.

For patients on government-sponsored health insurance programs such as Medicaid, and for other developed countries, the treatment price has been set at US$2,340 per patient, with each vial costing US$390.

This cost will be borne by insurance companies, with each patient’s out of pocket expenditure being determined by individual insurance plans and income levels.

The company wrote in the letter that the intention behind setting a lower price for other developed countries was “To ensure broad and equitable access at a time of urgent global need."

“Part of the intent behind our decision was to remove the need for country by country negotiations on price. We discounted the price to a level that is affordable for developed countries with the lowest purchasing power. This price will be offered to all governments in developed countries around the world where remdesivir is approved or authorized for use.”

In developing countries, Gilead has entered into agreements with local manufacturers to provide treatment at a much lower cost.

“In the developing world, where healthcare resources, infrastructure and economics are so different, we have entered into agreements with generic manufacturers to deliver treatment at a substantially lower cost. These alternative solutions are designed to ensure that allcountries in the world can provide access to treatment."

Shortly after Gilead’s announcement the US Department of Health and Human Services (HHS) announced in a news release that the Trump administration had entered into an agreement with the company to provide patients with 500,000 treatment courses, almost the entirety of Gilead’s supply until September of this year.

HHS Secretary Alex Azar stated, “President Trump has struck an amazing deal to ensure Americans have access to the first authorized therapeutic for COVID-19. To the extent possible, we want to ensure that any American patient who needs remdesivir can get it.”

According to the HHS news release, Gilead will ship the drug to wholesaler AmerisourceBergen, which will allocate remdesivir to American hospitals based on the hospital’s COVID-19 burden and according to the directions provided by HHS and state health departments.

Gilead also added that after September “once the supplies are less constrained, HHS will no longer manage allocation,” meaning the drug can then be sent to other nations as well.

Boston University health care economist Rena Coti told The New York Times, “This is a U.S.-first policy. Access is guaranteed to the U.S., but worldwide demand could potentially outstrip supplies.”

The company stated in the letter that it has set remdesivir’s price much lower than its value. It also added that shortening a patient’s recovery time by four days, as demonstrated by the study, could result in hospital savings of amounting to approximately US$12,000 per patient.

“Even just considering these immediate savings to the health care system alone, we can see the potential value that remdesivir provides. This is before we factor in the direct benefit to those patients who may have a shorter stay in the hospital.”

“As the world continues to reel from the human, social and economic impact of this pandemic, we believe that pricing remdesivir well below value is the right and responsible thing to do.”

Gilead also stated that it would invest US$1 billion by the end of the year to research, develop and manufacture the drug to meet global demand. The pricing was also driven by the need to recover those costs.

However, remdesivir’s pricing has been criticized by many as being too high.

A June 24 independent analysis by the Institute for Clinical and Economic Review (ICER), found that Gilead could recover all its 2020 costs by pricing each vial at between US$100 and US$160.

On Monday, the ICER said in a statement, “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.”

Peter Maybarduk, access to medicines director for the nonprofit group Public Citizen revealed that the drug was developed with the help of US$70 million of taxpayer money and the contribution of government scientists.

“In a grotesque display of hubris and disregard for the public, Gilead has priced at several thousand dollars a drug that should be in the public domain.”

“Gilead did not make remdesivir alone. Public funding was indispensable at each stage, and government scientists led the early drug discovery team. Allowing Gilead to set the terms during a pandemic represents a colossal failure of leadership by the Trump administration.”

In mid-June, The Lancet published a study that showed that inexpensive drug dexamethasone, could reduce fatality risk for patients on ventilators by a third and reduce the risk of fatality for patients on oxygen by a fifth.

Upon conducting a cost-effectiveness analysis, ICER stated that this news should reduce the price of remdesivir to between US$2,520 and US$2,580.

Despite pricing concerns, HHS will most likely send the first shipment of the total 500,000 treatment courses over a period of two weeks. It will monitor the distribution of hospitalized patients across the country to determine where the shipment should be sent.

How the drug will be distributed in the US after the agreement between HHS and Gilead ends in September remains unclear. Furthermore, the federal government doesn’t plan to stockpile the drug to ensure supply.

Remdesivir is administered intravenously. However, Gilead is testing inhaled formulations on patient groups so that the drug can be administered to patients before they are hospitalized as well as during earlier stages of the disease.

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