Thursday, May 07, 2020

Profits loom large in the drug world

Gilead Sciences Inc faces a new dilemma in deciding how much it should profit from the only treatment so far proven to help patients infected with the novel coronavirus.
The drug-maker earned notoriety less than a decade ago, when it introduced a treatment that essentially cured hepatitis C at a price of $1,000 per pill. Gilead is now in the spotlight again after data showed its antiviral drug remdesivir helped reduce hospital stays for COVID-19 patients, and the U.S. authorized wide emergency use of the therapy.  Wall Street analysts say remdesivir could generate $750 million or more in worldwide sales next year, and $1.1 billion in 2022, assuming the pandemic continues.

Gilead will need to avoid the appearance of taking advantage of a global health crisis to rake in profit, according to pharmaceutical industry consultants.  Gilead Chief Executive Daniel O’Day, in the post just over a year, is proceeding with caution. The company is donating enough remdesivir for at least 140,000 patients for distribution by the U.S. government to hospitals nationally.  At a meeting with Trump, O’Day pledged to make the therapy available to those in need. Gilead also aims to increase worldwide manufacturing to supply over a million coronavirus patients by year-end, rising to several million in 2021, if required. The company has not disclosed its pricing plans. 

“I think this will certainly help the industry’s reputation,” O’Day said on a recent conference call with investors. “I’m not suggesting that there won’t continue to be focus and pressure on drug pricing ... but it’s being done now in a way where we can have an appreciation for the innovation the industry brings.”

The Institute for Clinical and Economic Review (ICER), which assesses effectiveness of drugs to determine appropriate prices, suggested a maximum price of $4,500 per 10-day treatment course based on the preliminary evidence of how much patients benefited in a clinical trial. Consumer advocacy group Public Citizen said remdesivir should be priced at $1 per day of treatment, since “that is more than the cost of manufacturing at scale with a reasonable profit to Gilead.”

Gilead shares have risen about 20% since the beginning of the year, largely on hopes for remdesivir. That compares with a drop of 12% for the broad S&P500 Index. 

Lloyd Doggett, chairman of the House Ways and Means Health Subcommittee, sent Gilead a letter this week demanding the company detail its plans for remdesivir, including supply issues, disclosure of taxpayer investment in the drug’s development, and purchase and pricing arrangements. “American taxpayers have made a big investment in remdesivir, but now in return, those who need treatment may get only a big bill while Gilead gets a big payoff,” Doggett warned.

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