For company behind coronavirus drug, sharp questions over pricing, potentially cheaper option

After initial excitement about the discovery of a promising treatment for some coronavirus patients, executives with Gilead Sciences are now facing harsh criticism over the initial business decisions they’ve made in the midst of a pandemic.

In recent days, state leaders and a government watchdog group have leveled complaints against the company for the price point it set for its antiviral drug remdesivir, a promising treatment shown to diminish recovery time in hospitalized coronavirus patients, and for allegedly not more quickly pursing a potentially cheaper alternative. Gilead holds exclusive manufacturing rights for remdesivir.

“Gilead, on the one hand, has a product that helps people” said Dr. Erin Fox, the senior pharmacy director at the University of Utah. “But on the other hand, it does feel like they’re taking advantage of the situation.”

With some critics accusing the California-based pharmaceutical giant of placing too much focus on profits, Gilead is experiencing a challenge now facing a number of for-profit companies that are devising COVID-19 treatments and vaccines – how to market and sell their products during a global health crisis.

The company has pushed back on criticism of its drug marketing choices, citing the “unique situation” of conducting business during the pandemic, and saying it is guided by its "responsibility to patients." Early in the pandemic, it committed to donating 1.5 million doses of the drug worldwide.

Gilead also announced this week that it would investigate the less-expensive alternative to remdesivir after the company faced accusations of suppressing it for financial considerations.

In a letter to Gilead executives and federal health officials last week, government watchdog group Public Citizen encouraged the company to investigate whether another of its patented antivirals, called GS-441524, could serve as a viable and less expensive substitute to remdesivir, even though it may make the company less money.

The health research experts at Public Citizen, joined in signing the letter by two cancer medicine experts at University of Texas’s MD Anderson Cancer Center, argue that the cheaper drug “is very similar in chemical structure and activity to remdesivir” -- and may even “offer significant advantages over remdesivir.” The watchdog group posits that Gilead may be withholding it because its patent expires five years sooner than does remdesivir’s, the company would stand to profit more if remdesivir remained the only available treatment.

“It is unclear why Gilead and federal scientists have not been pursuing GS-441524 as aggressively as remdesivir,” the letter continues, “but we cannot help but note that there are significant financial incentives tied to Gilead’s current patent holdings.”

A Gilead spokesperson, however, told ABC News that the company had reason to promote remdesivir over the other drug: unlike remdesivir, early research suggested the other drug would be less effective and because of that, it had not been tested for humans.

The spokesperson said the company has since “initiated additional preclinical studies to further compare remdesivir and GS-441524” and will publish the results of those studies “as soon as they become available.”

The company has also faced renewed questions about the pricing it has set for remdesivir. Earlier this week, Gilead sought official approval for the drug from the U.S. Food and Drug Administration, but in May, regulators fast-tracked its use under an emergency use authorization to treat COVID-19 patients. By late June, Gilead set its price at $520 per dose for U.S. private insurance companies and $390 per dose for the U.S. government.

Most patients receive a five-day treatment, meaning the total charged for those with private insurers adds up to $3,120. For those enrolled in government health programs, that total is $2,340.

And while experts acknowledge it's difficult to determine the cost and value of a drug mid-pandemic, that price point is one that a bipartisan group of state attorneys general last week called “outrageous and unconscionable." On the day the letter was sent more than 53,000 people in the United States were hospitalized for the disease nationwide, according to the COVID Tracking Project.

“It is unfortunate that Gilead has chosen to place its profit margins over the interests of Americans suffering in this pandemic,” the group of 34 attorneys general wrote in a letter to officials from the Department of Health and Human Services. “Gilead should not profit from the pandemic and it should be pushed to do more to help more people.”

Led by California Democrat Xavier Becerra and Louisiana Republican Jeff Landry, the attorneys general encouraged the federal government to invoke a law that would allow third parties to develop remdesivir, effectively waiving Gilead’s patent.

Joe Torsella, Pennsylvania’s state treasurer, also went public with criticism of Gilead last week, calling its remdesivir pricing “both wrongheaded and immoral.” Torsella oversees Pennsylvania’s financial holdings and investments, which includes shares of Gilead.

“We’re going through a time when the country is hurting and people are either rising to the occasion or taking advantage of it,” Joe Torsella told ABC News. “I want to urge Gilead to put themselves in the camp of the ‘rising to the occasion’ group and rethink this pricing.”

Torsella said he has been in touch with Gilead about reducing the cost, but would not go into detail about those discussions.

Critics of Gilead say their concern stems in part from what they say is the relatively low cost of manufacturing the drug. The state attorneys general claim one vial of the drug – a daily dose – costs between $1 and $12 to manufacture. One peer-reviewed study published in the Journal of Virus Eradication earlier this year suggested that one dose could be produced for only 93 cents.

Gilead pushed back on that figure, telling ABC News that “fair-minded audiences will understand that the cost to manufacture a complicated investigational drug like remdesivir, which relies on raw materials sourced from around the world, involves multiple chemical reactions and requires sterile manufacturing facilities, is not 93 cents.” The company did not say how much it understands the drug to cost to manufacture.

The company has also disputed the argument that by accepting $70 million in estimated taxpayer money to develop the drug through federal grants and clinical trials and charging patients thousands of dollars for treatment, Americans are effectively paying twice for the drug.

Gilead has reported in its quarterly financial filing that it has invested more than $1 billion in the drug, with much of the money used to increase manufacturing capacity. The company also pushed back on the $70 million figure, claiming it reflects government grants for “research across many disease areas.” Gilead said it calculated $18.9 million in government grants for work relating to coronavirus.

Fox, the University of Utah pharmacist, said “it is not uncommon” for a drug product to receive government funding for research and development, and characterized the example of remdesivir as “an unfortunate continuation of this double-dipping.”

Beyond the medicine’s potential health benefits, Gilead highlight’s its value in saving hospital costs, while acknowledging that “there is no playbook for how to price a new medicine in a pandemic.”

“Earlier hospital discharge would result in hospital savings of approximately $12,000 per patient,” said Daniel O’Day, the company’s CEO, in a June statement announcing the drug’s price. “Even just considering these immediate savings to the healthcare system alone, we can see the potential value that remdesivir provides.”

Experts in the field agree that determining a fair price for drugs is always complicated. In the case of remdesivir, the complexity is exacerbated by multiple factors. While the stakes are especially high during a global pandemic, the process of gaining emergency authorization is much more streamlined than during normal times. And it is able to go to market even though there remains a relatively small body of research showing remdesivir to be effective.

“We still don’t have the full clinical picture to know what is the full value of the drug,” said Dr. Michael Ganio, a senior director at the American Society of Health-System Pharmacists. “So as far as whether it’s too expensive or priced appropriately, it’s really difficult to say.”

Some have defended Gilead’s pricing decisions. An analysis by the Institute for Clinical and Economic Review in June determined that “Gilead made a responsible pricing decision based on the evidence we have today.”

Other experts said they felt strongly that Gilead should prioritize wide distribution over profits during the crisis, even though they are a for-profit enterprise.

“That their actions benefit public health to the extent that they do is a side effect of their pure pursuit of profits,” said Dr. Peter Bach, a health policy expert at New York City’s Memorial Sloan Kettering.

Torsella, the Pennsylvania state treasurer, called on Gilead to take a more humanitarian perspective to the crisis. He conceded that the company cannot ignore its role as a money-making entity, but pleaded with executives to take the extraordinary weight of the pandemic – and its effect on every American – into account.

“I understand there are business imperatives,” Torsella said. “But this is a time when everybody is and should be making some sacrifices. And I’d like to see that reflected here.”

A Gilead spokesperson said the company is doing its best to navigate a difficult period in a way that helps those in need, and supports the company’s work financially.

“Throughout the pandemic, our responsibility to patients has guided all of our actions, and this holds true for our approach to remdesivir pricing,” the spokesperson said. “The unique situation of this pandemic requires a unique solution to ensure remdesivir is accessible to patients around the world, while also balancing the need to recoup our investment to date and continue to invest in this medicine and research that will prepare us for emerging pandemic threats.”

What to know about coronavirus:

• How it started and how to protect yourself: Coronavirus explained
• What to do if you have symptoms: Coronavirus symptoms
• Tracking the spread in the U.S. and worldwide: Coronavirus map