Gilead may have an anti-coronavirus drug in remdesivir, but how do you market a pandemic treatment?

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The situation pushed the pharmaceutical company behind the investigational drug, Gilead Sciences ((BROWN), under the projectors. The company’s shares have risen almost 20% since the start of this year, and investors have started to question the potential returns from the remediation. At the same time, it has raised questions from legislators and activists about whether – and how much – a business should be able to benefit from a pandemic.

Gilead CEO Daniel O’Day said this week’s first quarter earnings call “that it is too premature” to say what the business model for remdesivir might be.

“Our goal will be to ensure that we find a sustainable model that allows us to provide remdesivir to patients around the world, which aims to provide access and affordability,” said O’Day. “We have just reviewed the clinical data, the demand scenarios, the regulatory approvals. “

Experts say it’s important for society to balance the affordability of the drug with earning at least enough money to recover the billion dollars it plans to spend on development costs. remdesivir this year. The price could also be important to entice Gilead and other pharmaceutical companies to continue to develop potentially crucial treatments.

“They need to have some kind of assurance that they will get their investments back,” said Tyler Van Buren, analyst at Piper Sandler.

There is currently no treatment or vaccine officially approved by the United States Food and Drug Administration for Covid-19, the virus that infected more than 1.2 million Americans and killed more than 73,500 in the United States. United.

A promising potential treatment Covid-19

Earlier this month, the FDA issued an emergency use authorization for the use of remdesivir to treat hospital patients with severe Covid-19, after a government study showed positive preliminary results for use of the drug. An Emergency Use Clearance is a regulatory bar lower than full FDA approval.

In late April, Dr. Anthony Fauci announced that the National Institute of Allergy and Infectious Diseases (NIAID) study had shown that remdesivir had “a clear and significant positive effect in decreasing the recovery time” of the coronavirus.

The study found that patients who took remdesivir recovered more quickly than those who did not. The drug improved the recovery time of coronavirus patients to 11 days instead of 15 and demonstrated numerical benefits for mortality – the number of patients who died from Covid-19 – although there were too few participants to prove at this stage that remdesivir reduces mortality with statistical significance.

Gilead also announced the results of its own phase 3 trial evaluating remdesivir given to hospital patients with severe coronavirus. This study showed the potential success of a five-day course of treatment, even though Gilead’s trial had not control group, limiting the conclusions that could be drawn.

How does the government decide who gets remdesivir? Doctors have no idea

Gilead has donated its current stock of 1.5 million doses of the drug to the United States government for distribution to Covid-19 patients. O’Day, CEO of Gilead, said on the earnings call that the company had increased production since January and hoped to have enough supply to treat more than a million patients by the end of the year. year.

The company says it has not yet made a decision on how much it will charge for the drug after the supply runs out.

“Given the continuing uncertainty in the pandemic’s trajectory and in the remdesivir clinical data, it is premature to define what is the right post-donation business model to create long-term sustainable supply for global needs,” said CFO Andrew Dickinson on the call, adding that the company plans to provide an update to its June quarter earnings call.

In theory, the drug could be a “blockbuster” for the company, even if it was at a moderate price, said Steven Seedhouse, analyst at Raymond James. If the company reaches its hoped-for treatment of one million Covid-19 patients by the end of the year and more by 2021, even at a price of several hundred dollars per treatment, Gilead could consider close to a billion dollars of revenue in a relatively short time. period of time.

But Seedhouse said he was skeptical that the company would charge for his work.

“I think it would be a public image of suicide for them to charge for this drug,” said Seedhouse, particularly because, to date, no studies have shown any statistical significance as remdesivir reduces mortality due to Covid-19 although the NIAID study still collects evidence on this. It is also unclear how long the demand for the drug will last, given the rush to develop a vaccine for coronaviruses.

Other analysts have taken a similar position.

“The company is to be commended for its efforts to respond so quickly to this public health emergency,” JPMorgan analyst Cory Kasimov said in a recent note. Cory Kasimov said in a recent note.

Profit in the midst of a pandemic

Some lawmakers and activists have called on Congress to step in to make remdesivir and other potential Covid-19 treatments and vaccines affordable.

“To overcome this pandemic, it is clear that we need better laws that regulate pharmaceutical companies to ensure that everyone – no matter where they come from or what they look like – can afford Covid-19Reme treatments” , Minnesota Attorney General Keith Ellison said in a statement. . “This is why I call on Congress to take swift action to suppress pandemic profitability. “

Drug rights group now lowers petition calling on Congress to include ramifications for “coronavirus relief package” demanding “fair and reasonable prices for all Covid-19s” drugs or vaccines developed with taxpayer funds. “Industry experts say such a Congressional intervention would be unusual.

Gilead has already been criticized for its high price tags on its hepatitis C and HIV drugs.

FDA issues emergency use authorization for remdesivir to treat hospitalized patients with severe Covid-19

But increasing the cost of remdesivir, if it works in treating Covid-19, could be profoundly damaging to Gilead’s image, according to Seedhouse. Preserving the company’s reputation, he said, could be more valuable than recovering the billion dollars it plans to spend this year on the development, research and manufacturing of remdesivir.

“It is a company that spends billions of dollars on research and development each year that does not go ahead,” said Seedhouse. “Or is it better to be the poster child of a responsible biopharmaceutical company doing the right thing? … The feeling and the perception of the company count as much as the EPS they print. “

Gilead chief financial officer Dickinson said the company wants to keep remdesivir “both accessible and affordable for governments and patients around the world.”

Potential pricing models

Experts say it is important to start the conversation about a fair price for remdesivir now, before the supplies given by Gilead run out and before any official approval.

The Institute for Economic and Clinical Review (ICER), an independent, not-for-profit research organization that analyzes and makes recommendations on fair drug pricing, released a report earlier this month on potential pricing models. for remdesivir.

The report details several potential pricing models for remdesivir, which the organization says will be updated as more data becomes available.

The first model, a “cost recovery” approach, takes into account the marginal cost of producing additional doses of remdesivir and the research and development costs incurred by the company. The initial analysis sets the company’s research and development costs at zero, as the drug was developed as a treatment for hepatitis C before the coronavirus.

This model sets the price of a 10-day course of remdesivir for a Covid-19 patient at $ 10.

The second uses an analysis based on the “quality-adjusted life years” acquired by the drug, a model often used for drug pricing that considers how much a drug can lengthen and improve a person’s quality of life .

This model suggests that remdesivir be offered from $ 390 per 10-day treatment cycle if it turns out that the drug has no beneficial effect on reducing mortality and from $ 4,460 per treatment cycle s ‘It turns out that the drug reduces mortality.

Even that highest price – nearly $ 4,500 per 10-day treatment – is fairly affordable compared to other similar types of emergency response drugs that reduce mortality, said Piper analyst Van Buren Sandler, calling it “one of the most reasonable price tags for you.” can see on a drug with mortality benefits. “

For the most part, this amount would also not be paid by patients, but by insurance companies or government insurance programs.

The ICER study is not intended to establish the exact price of remdesivir, a decision that will ultimately fall to Gilead, said ICER vice president of communications and outreach, David Whitrap.

“What we hope to do is start a conversation,” said Whitrap. “We think the time has come, before there is a price for this treatment, for the United States and the pharmaceutical industry to think about how we want to encourage and reward this type of therapy, or any sort of therapy for Covid-19, in a way that speeds up drug development and is also affordable and accessible to patients. ”

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