On 1 May 2020, the FDA issued emergency use authorization (EUA) for remdesivir to treat hospitalized patients with severe covid-19. The EUA was based on an analysis of preliminary data from the Adaptive covid-19 Treatment Trial (ACTT), a placebo-controlled randomized trial of 1063 patients, sponsored by the National Institute of Allergy and Infectious Diseases (NIAID) and results from an open-label dosing duration trial sponsored by Gilead.
The preliminary analysis and trial results have been published in the New England Journal of Medicine, however these initial findings should be interpreted with extreme caution. NIAID Director Anthony S. Fauci compared remdesivir to the first antiretroviral drug azidothymidine (AZT), which had modest benefits and whose clinical utility was debated for years as different studies offered conflicting information on its impact on survival in patients with HIV.
Supply and Demand
Since the effectiveness of remdesivir has not yet been fully established, it is not a given that remdesivir will work. Further information is required from ongoing trials, but use of remdesivir is gathering momentum ahead of the evidence. Until other therapies are approved, demand for remdesivir is likely to be high, particularly if the drug’s authorized indications are expanded to cover patients with milder disease. This raises important questions about access around the world, which will be influenced both by the price of remdesivir and Gilead’s ability to manufacture an adequate supply.
If remdesivir is officially approved by regulators, Gilead will be free to set the price of the drug in any country where it holds patents or other regulatory exclusivities, which enable the company to block competitive production by other manufacturers, as long as there are not comprehensive price control measures in place—as is the case in most low and middle income countries, and in the United States. Gilead has patents for the molecule and certain uses of the drug in the United States, and also holds important patents in other key jurisdictions such as the European Union, India, and China. Gilead has not announced a launch price for remdesivir, but its launch prices for other products, such as its hepatitis C medicine, sofosbuvir ($84,000), have been among the highest in the world.
Three Pricing Models
The Institute for Clinical and Economic Review (ICER), presented three pricing models for remdesivir in the US market: $10 for a 10-day treatment course if the drug is priced “at cost,” or, using a cost-effectiveness model with a willingness to pay threshold of $50,000, $390 if there is no mortality benefit, or $4,500 if there is a mortality benefit.
ICER’s estimated “at cost” price, it should be noted, does not explicitly incorporate R&D costs. As ICER noted, the drug was synthesized initially as part of Gilead’s hepatitis C drug program, which through the development of sofosbuvir and follow-on medicines, has already been well-rewarded, with over $50 billion in sales during the first five years after market entry. Additionally, there has been very substantial public investment in both clinical and pre-clinical studies on the safety and efficacy of remdesivir. These include tens of millions of dollars in research funding from the NIH and other government sources, and involvement so substantial that some patent law experts have concluded that the US government is possibly a legal co-inventor of the remdesivir compound itself and of some methods for its use. Significant funding also came from global sources, including the World Health Organization. In addition, prior to covid-19, the NIH spent $700 million on coronavirus research. Without these public investments, which occurred at the riskiest stages of development, and which are supporting the most important randomized trials, Gilead would not be in a position to market remdesivir today.
The price Gilead chooses for remdesivir may also shape the price of the next generation of medicines within the same treatment class, because introductory prices often create anchoring effects. The example of AZT is instructive: Burroughs-Wellcome priced the first drug for HIV at $8,000 (~$16,600, adjusted for CPI) a year and was then said to be “the most expensive prescription drug in history,” according to the NY Times. The decision by the company set off a firestorm of protests, including the earliest demonstrations by the activist group, the AIDS Coalition to Unleash Power (ACT UP). Subsequently introduced antiretroviral drugs, including many critical medications still widely used today, have only continued to be priced at ever higher levels.
Even if remdesivir demonstrates a survival benefit (currently unproven), a price at the higher range of ICER’s estimates may still be unjustified as it may impede access, and risks overcompensating the company, given its comparatively modest R&D expenditures. This reflects a principled approach to pricing that protects both incentives and access: companies should be rewarded for innovation, access should be as universal as possible, and the public should not pay twice for medicines.
Gilead should also be encouraged to license remdesivir to generic manufacturers to ensure consistent global supply and affordability for people living in poorer countries. Gilead has done this previously for their HCV drugs, predominantly in low income settings. Here, the company should include middle-income countries as well, given the seriousness of the pandemic and the evidence on R&D outlays.
If Gilead refuses to take these steps, or ensure an adequate supply, governments can also take action of their own. International law permits the overriding of patents, for example, to enable competitive supply of medicines, with a royalty paid to the patent holding company. Several countries, including Israel, Canada, and Germany took steps, after the covid-19 outbreak, to better enable such measures for pandemic therapies or vaccines.
Confirmation of the early results from NIAID’s trial of remdesivir would represent a modest, but important step forward for science and public health. The public sectors around the world invested heavily in remdesivir and if the drug is established to be effective, it should be made available at a reasonable, evidence-based price. We cannot allow history to repeat itself, from AZT to sofosbuvir, with people unable to access a critical medicine; the first in what may be a generation of antiviral drugs used to treat global pandemic infections.