Big Pharma Company Reaping Profit Margin Higher Than 90 Percent on Remdesivir After Setting Price More Than 13 Times Cost of Production
Washington, D.C. – The Campaign for Sustainable Rx Pricing (CSRxP) issued a statement Friday reacting to reports that Big Pharma giant Gilead is reaping profit margins north of 90 percent on remdesivir as a treatment for COVID-19. The development of remdesivir was heavily subsidized by taxpayer dollars.
“Gilead is price-gouging the American public on a COVID-19 treatment that taxpayers paid to develop,” said CSRxP executive director Lauren Aronson. “Gilead is reaping astounding profit margins, higher than 90 percent, off of remdesivir as a treatment for COVID-19, while the true health and mortality benefits of the drug are still being weighed.”
“Remdesivir was developed with American taxpayer investment as a potential treatment for Ebola,” Aronson continued. “This is the latest evidence that policymakers must act to hold Big Pharma accountable and ensure COVID-19 treatments and vaccines are priced affordably after the investment of billions of dollars of taxpayer money into their development.”
On Wednesday, Gilead announced remdesivir had brought in a staggering $873 million in revenues so far this year for the company and that “it was the company’s second-best-selling drug in the third quarter,” The New York Times reports.
Earlier this year, Gilead set the price of remdesivir at $3,120 for a course of treatment for private insurers and $2,340 for government entities, despite the fact that one course of treatment only costs Gilead $234 to makeand that taxpayers already contributed at least $80 million in grants to pay for remdesivir’s development. That’s around a 90-93 percent profit margin.
Gilead’s blockbuster sales and sky-high price for remdesivir have come under fire by various outside experts. The New York Times reports:
But the F.D.A.’s decision to grant the drug full approval — which means the company can now begin broadly marketing it to doctors and patients — has puzzled several outside experts, who say that it may not deserve the agency’s stamp of approval because it is, at best, a mediocre treatment for Covid-19, the disease caused by the coronavirus. And they have questioned whether Gilead deserves to pocket potential billions from the drug when the federal government has played a significant role in its development.“This is a troubling approval,” said Dr. Peter B. Bach, the director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center. “This is an extremely weak set of trials to support an approval for an antiviral.”
… Gilead has gotten mixed reviews from outside experts over the price it has set, at $3,120 for a course of treatment for private insurers and $2,340 for government entities. One outside group that evaluates drug prices, the Institute for Clinical and Economic Review, said Gilead had made a “responsible pricing decision” that was in line with its own determination that $2,800 would be a fair price. However, that praise came with a significant caveat — the price would be fair only if remdesivir ultimately showed that it significantly lowered death rates, a benefit that has not been proven. Others say the company’s profits are unfair, given how much support it has gotten from the government. Public Citizen, a consumer group, has estimated that the federal government has invested $70 million in remdesivir, and it sponsored the major trial that led to F.D.A. approval — and the only major study that compared it with a placebo. “Remdesivir should be in the public domain,” said Peter Maybarduk, director of the global access to medicines program at Public Citizen. “Gilead will have remade its modest investment many times over.”
Gilead Has Faced Criticism Before Over Shady Practices Aimed At Boosting Profits From Remdesivr:
Earlier this year, eleven state treasurers threatened legal and legislative action if Gilead does not lower the cost of remdesivir. “Gilead is prioritizing unreasonable profits over recovery and disregards the $70 million American taxpayers paid to study the drug as an Ebola treatment, the treasurers say in a Sept. 16 letter to Gilead CEO Daniel O’Day,” Inside Health Policy reports.
Previously, Gilead tried to take advantage of the pandemic by rushing to obtain orphan drug designation privileges for remdesivir before cases of COVID-19 surpassed 200,000 in the United States. Orphan drug designations are meant to encourage the development of treatments and cures for rare diseases – which COVID-19 is not. Remdesivir’s orphan drug designation would have allowed Gilead to rake in profits off research partially funded by American taxpayers. Fortunately, Gilead caved to mounting criticisms over their attempt to boost profits by undermining competition during a time of crisis and rescinded orphan designation for remdesivir.
Now, more than ever, our policymakers must hold Big Pharma accountable and lower prices for American patients.
Read more on market-based solutions to hold Big Pharma accountable HERE.