This morning, Gilead Sciences announced that it would begin charging a US price of $3,120 for a 5-day course of remdesivir as a treatment for COVID-19. The company will discount its price to $2,340 for certain federal government programs such as the Department of Veterans’ Affairs and the Department of Defense. (The discount will not apply for Medicaid or Medicare, because CMS does not directly purchase drugs that are administered in an in-patient hospital setting; instead, hospitals will purchase remdesivir at the commercial price, and CMS will reimburse the hospital at set rates under bundled payment agreements.)

ICER’s President Steven D. Pearson, MD, MSc, provided the following reaction:

“Gilead made a responsible pricing decision based on the evidence we have today. The price is largely in line with ICER’s independent assessment suggesting that a price of approximately $2,800 would be reasonable in proportion to the added benefits for patients and the cost offsets in the health system now that dexamethasone is rapidly becoming standard of care. But Gilead’s price appears reasonably cost-effective only under two key assumptions — that a 5-day rather than a 10-day course of treatment is used; and that patients gain a mortality benefit in addition to a shorter time to improvement. This mortality benefit is not an unreasonable assumption at the current time but has yet to be shown in data with statistical certainty. This caveat, and the need for further research to determine the true longer-term risks and benefits of remdesivir, should not be overlooked.

There are several other key contextual factors to remember when judging Gilead’s price announcement today. First, Gilead has the power to price remdesivir at will in the US, and no governmental or private insurer could even entertain the idea of walking away from the negotiating table. Second, many Wall Street analysts were urging and citing probable figures around $5,000 per treatment course. Given these factors, today’s announced price can be viewed as a responsible decision from Gilead and a promising sign for pricing decisions of other treatments for COVID-19 on the horizon. However, some will view that in the midst of an ongoing pandemic, the price represents an unfair premium over the cost of developing the drug, particularly given the federal investment in research on remdesivir. Our analyses also estimated that a remdesivir price necessary to recoup Gilead’s coronavirus-specific development in the first year would be approximately $1,600. At today’s announced price, Gilead therefore has the opportunity to make a substantial profit on remdesivir, and some will call the amount of profit into question, whereas others will feel that a healthy profit will send needed signals to the life science industry that further investment in what may be a risky development process for additional treatments for COVID-19 is a reasonable business decision. 

We believe that three conclusions can be drawn from today’s announcement and these contextual factors. First, in a US health system that too often sees launch prices for new drugs scaled far beyond reasonable cost-effectiveness levels, Gilead’s pricing announcement demonstrates restraint and a promising precedent for future drug pricing during a pandemic. Second, the responsible pricing decision today for remdesivir must be reassessed, and the price allowed to move — up or down — based on our future learning about the drug’s effectiveness. If further data do not show a clear mortality benefit for remdesivir, then the price of the drug should be dramatically reduced. And third, the US should continue to explore alternatives to a drug pricing system that leaves the decision about the price for drugs that may mean the difference between life and death for millions of people in the hands of a single company, without competition, and whose only constraint on pricing is their own moral conscience enforced by public pressure.”

On June 24, ICER updated its economic models for remdesivir:

  • ICER’s cost-recovery benchmark price is framed as a range with maximum of $1,600 per 10-day regimen when incorporating assumptions regarding manufacturer’s 2020 development expenses, uptake of remdesivir, and consideration of early examples of real-world generic pricing.
  • ICER’s cost-effectiveness benchmark price is a range of $4,580 to $5,080, based on new peer-reviewed data on remdesivir. However, a scenario analysis assuming the likely incorporation of dexamethasone as standard of care produces a lower benchmark price range for remdesivir of $2,520 to $2,800.