Indian companies have already started manufacturing Remdesivir (under license from Gilead) and selling them at a price of ~$70.
I wonder how other countries are going to respond since the US seems to have bought up the entire global stockpile from Gilead (who are charging $390 - $520 to Americans).
This isn't just paying for the R&D on remdesivir itself. It's paying for all of the other antivirals which were developed and then failed clinical trials, and all the other antivirals that turned out to be largely useless because (like SARS, MERS, and Ebola) there was never a large-scale outbreak. If you require remdesivir to be sold at cost, then any company developing antivirals will reason out:
Scenario A: There's a huge pandemic and massive demand, but the drug can only be sold at cost, so we break even.
Scenario B: The drug fails clinical trials. We lose a bunch of money.
Scenario C: The drug works, but no pandemic ever happens. We lose a bunch of money.
.... and then no one will develop antivirals, because on average, you can only come out behind.
As to why the government can't do everything itself, I'll quote Paul Graham on venture investing, which (like drug development) is a highly technical, winner-take-all business where most projects fail:
"Why not just have the government, or some large almost-government organization like Fannie Mae, do the venture investing instead of private funds?
I'll tell you why that wouldn't work. Because then you're asking government or almost-government employees to do the one thing they are least able to do: take risks.
As anyone who has worked for the government knows, the important thing is not to make the right choices, but to make choices that can be justified later if they fail. If there is a safe option, that's the one a bureaucrat will choose. But that is exactly the wrong way to do venture investing. The nature of the business means that you want to make terribly risky choices, if the upside looks good enough."
Expensive projects for the public good with no mandate to turn a profit.
If you're part of a government agency whose entire purpose is to develop and research new drugs, you're not going to be unduly risk averse. You're going to be doing your job, trying new things, working on getting new, effective, efficient treatments and cures developed, tested, and released to the public.
Personally, I don't know to what extent I believe that pharmaceutical companies have actively suppressed research on cures for diseases, in favour of life-long treatments, but the incentives definitely support the theory. Publicly-run pharmaceutical research would also be much more likely to do a proper, thorough investigation of the kinds of treatments that can come out of well-known natural/easily-synthesized substances (as opposed to the existing pharmaceutical industry, which is incentivized to do research into things that require more specialized expertise & equipment, so the people who want the drugs must but them from them).
> In the U.S., the same government price of $390 per vial will apply. Because of the way the U.S. system is set up and the discounts that government healthcare programs expect, the price for U.S. private insurance companies, will be $520 per vial.
Sigh
How many years of normalizing and internalizing the utter insanity that is the US medical industrial complex does it take to be able to just say that with a straight face?
> How many years of normalizing and internalizing the utter insanity that is the US medical industrial complex does it take to be able to just say that with a straight face?
I hate to tell you, but it's not better in Europe just because the racket is obfuscated by several more layers.
I don't really understand the outrage. Surely, the price is only too high in the event that they can't sell their product? It's a business, not a charity.
Other companies will be looking hungrily at these earnings and invest in developing their own antivirals---which is exactly the desired outcome.
Sure, it would be great to have this drug available to everyone right here, right now, for cheap. But investing on those terms is not very attractive; hence the drug simply wouldn't exist.
American taxpayers contributed at least $70m to the development of this drug[0] and our reward is to be gouged by Gilead. It's the exact same shit they've pulled with Truvada[1] and it's grotesque.
This is actually pretty much the dumbest argument if you take just a moment to think about it.
Imagine some drug that costs $100 million to develop and that the most it can earn in the market is $70 million at a price of $1000. Okay, but then the government thinks it's really important to provide, so it's going to subsidize the development to the tune of $40 million. The drug company could then spend $60 million for development and earn $70 million. Over the typical drug development and sales lifetime, that's actually a quite mediocre return, but let's not worry about that.
But wait, the government paid 40% of the development cost. Why the fuck should that company be able to charge $1000, they should only be able to charge 60% of that, they should charge $600. Well, then they are fucked because they are right back at the same equation for whether it is profitable to work on that drug.
In general, with a moment's thought, any intelligent person will realize that expecting discounts on products based on how much the development was subsidized by the government completely obviates the entire point of subsidies.
$70M is a fraction of what it has taken to get Remdesivir to the point where it is today. The argument that government is paying twice for drugs is usually deeply misleading, though in this case it did sponsor some trials. Usually government funds pay for understanding biology and pharma pays for figuring out how to drug those findings. It’s a symbiotic process, and depends on drug discovery being a lucrative business.
All this said, Pharma has abused its position and pricing power. Remdesivir is an ok but not amazing drug, and pricing it this high is bad policy. Part of what they are doing is protecting their flank. Pricing it too low would cause people to say, “see! You CAN price drugs low, let’s make you price other things lower.” This is immoral reasoning but it’s part of the logic.
Drug pricing is super complicated, it’s worth understanding more deeply. Remdesivir is a weird case, and should be viewed in a larger context. See this post as a great place to start with further links within:
They say the goal is to help as many people as possible, and that this principle has guided their development and pricing of the drug.
How do they reconcile this principle with the huge price difference between the USA and the rest of the world? Or between the developed world and the developing world?
I assume they are still making a profit selling doses at low costs to developing countries. If the goal is to help as many people like they say, why not extend that pricing to everyone?
It’s disappointing that taxpayers fund the development of these drugs and then get screwed by the same companies when it comes time to make a profit.
> I assume they are still making a profit selling doses at low costs to developing countries.
Why would you assume that, instead of assuming that the high prices in the developed world are subsidizing losses elsewhere? (Or, at least, that they are amortizing R&D costs with the prices in the developed world, and doing so allows them to make a profit selling more of it above the marginal cost of producing more.)
There must be a thousand ways to codify their stated objective 'to help as many people as possible', but I can't imagine why you'd think a completely flat pricing structure would be optimal for any of them.
Read it. They dont make the drug for developing nations. they let generics do that, presumably because it would be bad to try to prevent it (if possible at all). i think it mostly makes sense. but it does show they are afraid of negotiating with governments which is why usa is getting punished for being all private.
> with the huge price difference between the USA and the rest of the world
That doesn't really matter as the Trump administration has bought essentially the whole production capacity of Remdesivir for July, August and September.
Aside from the sensitive topic of pricing the new drug, I'd like to take this opportunity to remember the late Czech scientist Antonin Holy.
His lifelong research led to creation of many groundbreaking drugs against HIV, hepatitis and now Covid. This humble "invisible" guy's work literally saved millions of lives and is behind many of current Gilead drugs.
This Open Letter is bullshit (purely personal opinion obviously). I note they are transparent about the pricing in specific markets but that the CEO fails to be so transparent about the pricing for generics in other markets. I’m aware of the studies regarding its effectiveness but hate hand-wavy B.S. like this so here's some snippets taken from Gilead's own website.
"All descriptive printed matter, including advertising and promotional material, relating to the use of the remdesivir clearly and conspicuously shall state that:
:the remdesivir have not been approved [sic]
:the remdesivir have been authorized by FDA under an EUA [sic]"
page 6 https://www.gilead.com/-/media/files/pdfs/remdesivir/eua-fda...
I was in two minds about correcting the grammar but since they are all snips from the links decided to leave as is.
[Edit to clarify] My main point was that if they were pricing generics at a reasonable price they would have been trumpeting in the same press release as this. eg. if one is so reasonable that they openly discuss it then why not the pricing of generics.
> In normal circumstances, we would price a medicine according to the value it provides.
Which makes medicine so expensive that it provides no value to the many people who are in a bad position and cannot afford it. Pricing by the value something provides is only relevant for those who can afford that value in the first place (they assume you stay for the duration; you are lucky if you do not); for the rest it provides no value at all because they don't get into that position in the first place.
As I read online, the entire treatment in India is well under $100[0]. I am all for getting the R&D money back, but charging medicine based on value (who determines that value anyway; that's highly subjective) it may provide is a recipe for disaster. Especially in this case; they stand to sell 10s of millions of these vials (even though they don't really seem to 'provide value' as clearly as advertised as others have mentioned here), so the R&D/investment story is... not very good.
What this letter did not address is the fact that the US is hoarding almost all of Gilead's Remdesivir in the upcoming few months. Leaving the rest of the world with almost nothing.
It's fine. The formulation will get out there, and the world's chemists will figure out how to make it, and then the Indian generics factories will pump it out en masse.
The hard part with drugs is usually finding out if they work. This one is hard to make, but they'll figure it out.
And then each country gets to make the choice for itself of how much it loves IP law and how much it loves human life.
> In the developing world, where healthcare resources, infrastructure and economics are so different, we have entered into agreements with generic manufacturers to deliver treatment at a substantially lower cost.
I assume this means that:
1. Remdesvir is not that hard to manufacture.
2. Gilead will license the drug to 3rd party factories, so no need to manufacture them in the US.
I wonder if this will indirectly lead people to start thinking about whether socialized medical systems stifle innovation and make the systems reliant on innovative "capitalist" economies.
not sure if totally accurate but if it is then it serves the rest of the world right for playing nice with the US while the US screws them over anytime it is convenient
They did not know what to do with this drug, because it turned to be flop almost for every virus they tried. They would have scrapped it, if not for covid. Now they are telling us they need to recover R&D price. Very funny.
If it is an effective treatment, tell me why we should pay $2,340 per patient, and not just invalidate their patent on the grounds of public good? The US gov partially paid for its development in the first place.
At $2340 a patient, the drug is an expensive treatment plan but not overpriced imo.
If the claimed reduction in time to recovery is true, then around $600 a day of reduced recovery time is probably worth the hospitalization and long term health costs.
Besides having to recoup the costs of development of Remdesivir, as well as the costs to trial various drugs that never make it to market, Remdesivir is currently in short supply and probably costs a significant amount to produce.
It seems unreasonable to expect a good in such short supply to be sold for cheap. The overall cost of $2k isn’t prohibitively expensive such that many lives would be lost over this anyways.
When you need a whole letter to explain the new price, you know it's going to be loaded with crap and the price will be excessive. This one doesn't disappoint.
That's bullshit. Companies have "whole letter"s for pretty much everything they do. Gilead had a "whole letter" when they said they'd provide 1.5 million doses for free. Was that also loaded with crap and the "$0" price excessive?
I do in $20 or less what costs $800 there. Americans pay probably $200 of that $800 and think "oh insurance covered it" when really they just payed 10x the price.
The US is so full of morons they must love being ripped off or something.
Few pay that much. It's the insurance companies who for some reason can't negotiate better. But also, note that you get it for $20 because americans are subsidizing you.
flak48|5 years ago
I wonder how other countries are going to respond since the US seems to have bought up the entire global stockpile from Gilead (who are charging $390 - $520 to Americans).
[1] https://www.hindustantimes.com/india-news/india-s-hetero-pri...
[2] https://www.indiatvnews.com/business/news-covid19-drug-cipre...
apsec112|5 years ago
Scenario A: There's a huge pandemic and massive demand, but the drug can only be sold at cost, so we break even.
Scenario B: The drug fails clinical trials. We lose a bunch of money.
Scenario C: The drug works, but no pandemic ever happens. We lose a bunch of money.
.... and then no one will develop antivirals, because on average, you can only come out behind.
As to why the government can't do everything itself, I'll quote Paul Graham on venture investing, which (like drug development) is a highly technical, winner-take-all business where most projects fail:
"Why not just have the government, or some large almost-government organization like Fannie Mae, do the venture investing instead of private funds?
I'll tell you why that wouldn't work. Because then you're asking government or almost-government employees to do the one thing they are least able to do: take risks.
As anyone who has worked for the government knows, the important thing is not to make the right choices, but to make choices that can be justified later if they fail. If there is a safe option, that's the one a bureaucrat will choose. But that is exactly the wrong way to do venture investing. The nature of the business means that you want to make terribly risky choices, if the upside looks good enough."
danaris|5 years ago
Expensive projects for the public good with no mandate to turn a profit.
If you're part of a government agency whose entire purpose is to develop and research new drugs, you're not going to be unduly risk averse. You're going to be doing your job, trying new things, working on getting new, effective, efficient treatments and cures developed, tested, and released to the public.
Personally, I don't know to what extent I believe that pharmaceutical companies have actively suppressed research on cures for diseases, in favour of life-long treatments, but the incentives definitely support the theory. Publicly-run pharmaceutical research would also be much more likely to do a proper, thorough investigation of the kinds of treatments that can come out of well-known natural/easily-synthesized substances (as opposed to the existing pharmaceutical industry, which is incentivized to do research into things that require more specialized expertise & equipment, so the people who want the drugs must but them from them).
ohazi|5 years ago
Sigh
How many years of normalizing and internalizing the utter insanity that is the US medical industrial complex does it take to be able to just say that with a straight face?
_pmf_|5 years ago
I hate to tell you, but it's not better in Europe just because the racket is obfuscated by several more layers.
continuational|5 years ago
Other companies will be looking hungrily at these earnings and invest in developing their own antivirals---which is exactly the desired outcome.
Sure, it would be great to have this drug available to everyone right here, right now, for cheap. But investing on those terms is not very attractive; hence the drug simply wouldn't exist.
flumpcakes|5 years ago
trowawee|5 years ago
[0]: https://www.citizen.org/article/the-real-story-of-remdesivir... [1]: https://www.nytimes.com/2018/07/16/opinion/prep-hiv-aids-dru...
cjhopman|5 years ago
Imagine some drug that costs $100 million to develop and that the most it can earn in the market is $70 million at a price of $1000. Okay, but then the government thinks it's really important to provide, so it's going to subsidize the development to the tune of $40 million. The drug company could then spend $60 million for development and earn $70 million. Over the typical drug development and sales lifetime, that's actually a quite mediocre return, but let's not worry about that.
But wait, the government paid 40% of the development cost. Why the fuck should that company be able to charge $1000, they should only be able to charge 60% of that, they should charge $600. Well, then they are fucked because they are right back at the same equation for whether it is profitable to work on that drug.
In general, with a moment's thought, any intelligent person will realize that expecting discounts on products based on how much the development was subsidized by the government completely obviates the entire point of subsidies.
entee|5 years ago
All this said, Pharma has abused its position and pricing power. Remdesivir is an ok but not amazing drug, and pricing it this high is bad policy. Part of what they are doing is protecting their flank. Pricing it too low would cause people to say, “see! You CAN price drugs low, let’s make you price other things lower.” This is immoral reasoning but it’s part of the logic.
Drug pricing is super complicated, it’s worth understanding more deeply. Remdesivir is a weird case, and should be viewed in a larger context. See this post as a great place to start with further links within:
https://blogs.sciencemag.org/pipeline/archives/2019/12/11/ar...
(Conflict declaration: I founded a biotech)
kenhwang|5 years ago
udba|5 years ago
How do they reconcile this principle with the huge price difference between the USA and the rest of the world? Or between the developed world and the developing world?
I assume they are still making a profit selling doses at low costs to developing countries. If the goal is to help as many people like they say, why not extend that pricing to everyone?
It’s disappointing that taxpayers fund the development of these drugs and then get screwed by the same companies when it comes time to make a profit.
cwyers|5 years ago
Why would you assume that, instead of assuming that the high prices in the developed world are subsidizing losses elsewhere? (Or, at least, that they are amortizing R&D costs with the prices in the developed world, and doing so allows them to make a profit selling more of it above the marginal cost of producing more.)
alimw|5 years ago
timwaagh|5 years ago
Tinyyy|5 years ago
hans_castorp|5 years ago
That doesn't really matter as the Trump administration has bought essentially the whole production capacity of Remdesivir for July, August and September.
https://www.theguardian.com/us-news/2020/jun/30/us-buys-up-w...
josefrichter|5 years ago
His lifelong research led to creation of many groundbreaking drugs against HIV, hepatitis and now Covid. This humble "invisible" guy's work literally saved millions of lives and is behind many of current Gilead drugs.
See https://english.radio.cz/antonin-holy-one-countrys-most-reno...
Pick-A-Hill2019|5 years ago
"All descriptive printed matter, including advertising and promotional material, relating to the use of the remdesivir clearly and conspicuously shall state that: :the remdesivir have not been approved [sic] :the remdesivir have been authorized by FDA under an EUA [sic]" page 6 https://www.gilead.com/-/media/files/pdfs/remdesivir/eua-fda...
and "Remdesivir is an investigational drug that has not been approved by the FDA for any use." https://www.gilead.com/remdesivir
I was in two minds about correcting the grammar but since they are all snips from the links decided to leave as is.
[Edit to clarify] My main point was that if they were pricing generics at a reasonable price they would have been trumpeting in the same press release as this. eg. if one is so reasonable that they openly discuss it then why not the pricing of generics.
tluyben2|5 years ago
Which makes medicine so expensive that it provides no value to the many people who are in a bad position and cannot afford it. Pricing by the value something provides is only relevant for those who can afford that value in the first place (they assume you stay for the duration; you are lucky if you do not); for the rest it provides no value at all because they don't get into that position in the first place.
As I read online, the entire treatment in India is well under $100[0]. I am all for getting the R&D money back, but charging medicine based on value (who determines that value anyway; that's highly subjective) it may provide is a recipe for disaster. Especially in this case; they stand to sell 10s of millions of these vials (even though they don't really seem to 'provide value' as clearly as advertised as others have mentioned here), so the R&D/investment story is... not very good.
[0] https://www.hindustantimes.com/world-news/european-regulator...
hasperdi|5 years ago
Source: https://www.theguardian.com/us-news/2020/jun/30/us-buys-up-w...
godzillabrennus|5 years ago
Hopefully now that this is determined as effective the manufacturing can ramp up and the whole world can get access.
renewiltord|5 years ago
The hard part with drugs is usually finding out if they work. This one is hard to make, but they'll figure it out.
And then each country gets to make the choice for itself of how much it loves IP law and how much it loves human life.
sydd|5 years ago
> In the developing world, where healthcare resources, infrastructure and economics are so different, we have entered into agreements with generic manufacturers to deliver treatment at a substantially lower cost.
I assume this means that:
1. Remdesvir is not that hard to manufacture.
2. Gilead will license the drug to 3rd party factories, so no need to manufacture them in the US.
stefan_|5 years ago
lend000|5 years ago
supergirl|5 years ago
SomeoneFromCA|5 years ago
unknown|5 years ago
[deleted]
listenallyall|5 years ago
https://www.barrons.com/news/antiviral-remdesivir-showed-no-...
kennywinker|5 years ago
auggierose|5 years ago
unknown|5 years ago
[deleted]
Tinyyy|5 years ago
Besides having to recoup the costs of development of Remdesivir, as well as the costs to trial various drugs that never make it to market, Remdesivir is currently in short supply and probably costs a significant amount to produce. It seems unreasonable to expect a good in such short supply to be sold for cheap. The overall cost of $2k isn’t prohibitively expensive such that many lives would be lost over this anyways.
jjeaff|5 years ago
cjhopman|5 years ago
sub7|5 years ago
The US is so full of morons they must love being ripped off or something.
jjeaff|5 years ago
mesozoic|5 years ago
forgingahead|5 years ago
rbinv|5 years ago
cjhopman|5 years ago