Gilead puts a price tag on Covid-19 relief now

While a world awash in a pandemic awaits a coronavirus vaccine, Gilead Sciences is bringing a treatment to market. Remdesivir is an experimental drug that may help Covid-19 patients recover more quickly — but it doesn’t immunise them. Its price tag is $600 for a series of six treatments for patients who live in developing countries where Gilead, to its credit, allows a generic version to be sold. If patients live in a developed country and the government insures them or provides their healthcare, it costs $2,340. If they have private insurance and live in the US, it costs $3,120. (And that’s if six treatments work; some patients are expected to need 12 treatments, so those prices could double.)
That sounds like a lot of money to me. But it doesn’t sound like a lot to Gilead’s chief executive officer, Daniel O’Day.
O’Day noted in a letter posted on his company’s website that remdesivir is priced “well below” the “value” it provides. He defined that “value” as the amount Gilead has determined providers and patients save (about $12,000) by shortening treatment times in hospitals. “There is no playbook for how to price a new medicine in a pandemic,” O’Day wrote. “In normal circumstances, we would price a medicine according to the value it provides.”
Using already exorbitant hospitalisation costs as a benchmark for value is a neat trick, but Geoffrey Porges, a prominent biotechnology and pharmaceuticals analyst, is on the same page as O’Day.
“It’s unprecedented to price the drug below the medical costs that it’s saving,” Porges told NPR, saying he thought remdesivir could save as much as a whopping $40,000 per patient. Wait, there’s more. “That ignores the enormous societal value that everybody else gets from making a patient less infectious, for
getting a patient back into the community, for getting them back to work sooner,” he added. “All of those societal benefits aren’t even considered in this price.”
Just for speculation’s sake, what would all those societal benefits add up to? Another $40,000 per patient? $100,000? $1 million? Pick your number because any figure, in
the context of squishy and hard-to-quantify externalities, will be squishy and hard to quantify.
Porges has also invoked history when weighing in on remdesivir’s price tag. “If you are going to war, or preparing for war in a capitalist country, you have to let business make money out of the process or business won’t work,” he wrote in a note to investors in early June, quoting a famous diary entry of former Secretary of War Henry Stimson during World War II.
There’s no question that the world is at war with Covid-19, and there’s nothing wrong with a business making money, of course. Profits are a fundamental incentive. But they frequently aren’t the only incentive. And the interesting and troubling arguments raised by remdesivir’s price have plagued the pharmaceutical and biotechnology businesses for quite some time.

—Bloomberg