Remdesivir Pricing

|The Volokh Conspiracy |

Let's assume that further studies establish that remdesivir turns out to have precisely the effects on COVID-19 patients indicated by the preliminary study reported several days ago. That is, assume that remedesivir is given only to patients whose illness is as severe as that of the patients in the initial study, and that with treatment, 8% of patients die instead of the 11.6% of patients who would have died without treatment. Also, assume that treated patients recover 31% faster than they otherwise would have. What then should a treatment of remdesivir cost?

An advocate of free markets, of course, would suggest that drugs ought to cost what people will pay for them. A truly free-market price for remdesivir would likely be quite high at least for now, because supplies are low and because there would likely be strong demand from people with much less severe cases, who might hope that remdesivir (like Tamiflu) works even better when taken early. But let's place this aside. For the most part, drug prices in the United States are not determined by how much individual consumers are willing to pay for the drugs. The drug market looks nothing like the market for houses, cars, or even over-the-counter medications.

Drug prices in the United States are determined in a market of sorts, in which Pharmacy Benefit Managers act as intermediaries between manufacturers and health insurers, but it's a very strange market. Health insurers, for example, feel that they have to make available some reasonable treatment for every condition, in part because insured patients can file for independent reviews of coverage denials on the ground that a drug was medically necessary. When our legal system effectively tells insurers that they have to offer certain drugs, it shouldn't be surprising that they will pay very high prices for those drugs. If a drug were priced well above what a cost-benefit analysis suggests is appropriate, state regulators would be less likely to sanction health insurers for refusing to offer the drug. So, there is some limit on what PBMs and ultimately insurers and uninsured consumers will pay, and the negotiations thus depend very loosely on cost-benefit concerns. Insurers agree to buy drugs not primarily because they think that offering a more attractive formulary will increase their insurance sales (though that is a consideration at the margin) but because they think they can't get away with not offering certain drugs. Russell Korobkin has done excellent work explaining limits on health insurer competition on how we might imagine health insurance markets in which health insurers actually competed on the quality of what they offered.

In the absence of a functional market, however, prices can be too low as well as too high. Pharmaceutical companies fear public outrage should they price drugs high. Outrage may make it easier, after all, for PBMs and insurers to refuse to buy the drug. And it can lead to unpleasantness like congressional investigations. Outrage is more likely to occur when pricing is more salient, and pricing will be more salient when a disease is more salient. Emergencies, meanwhile, generate outrage about price-gouging in many areas of the economy. One might think such concerns irrelevant in the pharmaceutical arena–a developer with the foresight to develop a drug that might be useful in a future pandemic and that otherwise will likely be valueless can hardly be thought to have obtained an unfair windfall–but because lives are at stake, concerns about price-gouging are especially strong.

And so we can predict that remdesivir will sell for what Gilead thinks it can get away with, whether this is more or less than the benefits that the drug produces for the patient. Part of what it can get away with, however, will depend on independent cost-benefit analyses, and an organization that produces influential, high-quality evaluations is the Institute for Clinical and Economic Review (ICER). ICER has produced a new report on pricing of remdesivir and other potential COVID-19 patients. It appropriately notes that clinical information may change but takes the same assumptions adopted above, allowing for the mortality benefits even though they do not yet meet the standard of statistical significance. It accordingly develops a model that determines an appropropriate price for remdesivir treatment: $4,460. Business Insider characterizes this price as surprisingly high and quotes a biotech analysis who sees a $1,000 price tag as "pretty reasonable." ICER also offers an additional model based on the principle of cost-recovery and produces a price of just $10 per treatment.

To me, even the higher amount seemed surprisingly low. COVID-19 is the world's most pressing medical problem. A great deal of discussion has focused on case fatality rates. Suppose that 1,000,000 seriously injured patients end up receiving remdesivir, saving 36,000 lives. In a world in which governments are spending trillions of dollars to mitigate COVID-19, can that really be worth only $4.6 billion?

What explains the low price? The key portion of the ICER analysis is here:

The three rows of the table correspond to different possible valuations of a quality-adjusted life year (QALY). The QALY values rise linearly, considering $50,000, $100,000, and $150,000 valuations. But the middle column, which assumes the mortality benefit and reports the net treatment value, does not. With $50,000/QALY, the benefit is only $4,460, but each additional $50,000/QALY produces another $24,210 in benefits. The report does not fully explain this, but I believe this is because the model is estimating social benefits, and there would be a cost of $19,750 to administering remdesivir. Presumably, if ICAR had considered a QALY valuation of $40,000, it would have recommended that remdesivir not be administered at all, even if it could be obtained free from the manufacturer.

It thus matters a great deal in the model how one values a QALY. Timothy Taylor offers an accessible introduction to this question, noting in passing that ICER has generally used a value between $100,000 and $150,000. The paragraph below the table furnishes the critical detail: "In public health emergencies, cost-effectiveness analysis thresholds are often scaled downward, and we feel the pricing estimate related to the threshold of $50,000 per incremental quality-adjusted life year (and equal value of a life-year gained) is the most policy-relevant consideration." In other words, when large numbers of lives are at stake, we should pay less for health care, and so "we feel" that a price less than one-tenth the value we would get using the customary $100,000/QALY is appropriate.

The existence of a public health emergency should not mean that we should pay less for cures. If anything, one might think that one would pay more. After all, if we can reduce the case-fatality rate, then we might be able to open society up a little more than we otherwise would be able to. That benefit alone seems likely to be worth more than $4.6 billion. Perhaps there is a bit of a paradox: if we start to eliminate many (but far from all) COVID-19 infections, we might relax so much that we end up with even more deaths. Still, when assessing the benefits of a drug, we should probably place aside the question of whether policymakers will properly optimize the lockdown, and in any event, this played no role in the ICER analysis.

Perhaps the idea underlying ICER's view is that our pricing of medicines in a public health emergency ought not produce windfalls for producers. But strictly speaking, that should be irrelevant to a value-based assessment. Consideration of windfalls is relevant to the alternative assessment model, the one that produces a recommended price of $10. The core idea of that model is that the manufacturer should be allowed to recover R&D costs, as well as marginal costs and a small profit margin. But in this case, ICER concluded as follows:

In our base-case cost recovery calculation, we set the costs of research and development to zero. There are important reasons to assume that sunk research and development costs should not be used to help justify the price of new drugs. For remdesivir, this perspective is strengthened by the fact that it was previously developed as part of a suite of agents for potential use in chronic Hepatitis C. Given that the manufacturer successfully launched other drugs for Hepatitis C, it seems reasonable that any sunk costs for research and development have already been recouped in the successful market experience of the manufacturer's other treatments in that area. For that reason and others, we are not currently including any research and development costs separate from the development costs already captured in the cost of production. As the manufacturer spends new money going forward on clinical trials for the COVID-19 population, consideration will be given to including these costs as a possible component of a cost recovery price estimate.

The basic theory is that a company should be able to recover its R&D costs, but once it has successfully done so, it should not be able to recover any more, even if its research turns out to be useful for other diseases, indeed even if its research turns out to save the world from a pandemic. At best, it could obtain some additional recovery of its costs. The problem with logic of this sort is that it does not account for risk, and moreover risk is very difficult to account for. Those who advocate investment-based cost caps at least generally concede that these price caps must incorporate the risk of failure, so that one should receive double recovery if there was a fifty percent chance of failure. But it's very difficult retrospectively to assess, without hindsight bias, the risk of success. This is complicated further by the reality that there is a distribution of possible success levels and that this distribution is constantly changing. It's also not always obvious whether particular expenses are targeted at one disease or another. If pharmaceutical companies think that government officials will tend to underestimate risk and they expect to be able to recover only risk-adjusted costs, then they will not invest at all.

These considerations help explain the appeal of an approach that focuses on value rather than investment, even if government regulation prevents a true free market. If pharmaceutical companies expect that successful investments will be rewarded with an amount commensurate with the benefits produced by treatments, then the companies' internal cost-benefit analyses will already place an appropriate weight on considerations of risk. Meanwhile, companies will have incentives to take into account both obvious potential applications of drugs and the possibility of serendipitous applications. If we want pharmaceutical companies to develop drugs that might turn out to be extremely useful in the event of a pandemic, then a value metric helps accomplish this. We should not then subvert the value metric by smuggling in cost considerations, changing the rules for public health emergencies.

That does not imply that the market always works perfectly. Sometimes, a drug company might benefit from a truly unpredictable exogenous shock. But this is especially relevant as to investments made after the pandemic, once unexpected demand suddenly materialized. Patent law can over-reward inventions that are not obvious but that are relatively cheap. Usually, this is not a problem because patent law induces earlier invention, but we can't be sure of this when demand suddenly arises. The possibility that a pandemic might occur within the lifetime of a patent is entirely predictable, and so it's hard to see why drug companies would not take that possibility into account. Any pharmaceutical company would have assigned a relatively low probability to the expectation of a pandemic as great as COVID-19, but that militates toward greater recovery, not less.

If one contends that companies will not change their R&D behavior because pandemics are improbable and capital markets are short-sighted, one might develop an argument that investments should be a factor in drug price recovery.  A very interesting recent article in the North Carolina Law Review by Miriam Marcowitz-Bitton et al., for example, argues that investment should help determine patent duration. But at the least, government should try to err enough on the high side when estimating risk that it does not end up undervaluing R&D contributions. The ICER estimates seem to me to be the opposite–quite stingy, erring intentionally on the low side out of fear that someone else might err on the high side. Those who wish to ensure robust incentives for R&D against pandemics and other critical social problems should argue for and defend considerably higher prices than the ones that ICER would think tolerable. If the government wants everyone to have access to the drugs, then it should negotiate a buy out at arms' length.


NEXT: Let People Go Outside

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. But not everyone will have access. You’re basically arguing for death panels for markets. You act like the company will not be compensated so you can condone death. Lord, this site has become so pathetic.

    1. Hey bud. “Death panels” is your argument? Got news for you, bud. Everything scarce is rationed one way or another. That’s what economics studies and what politics ignores. Money, time, connections, corruption, death panels, one way or another, everything is rationed. The more government intrudes, the more money is replaced by the other considerations, but especially corruption.

      1. Then I don’t expect you to use the phrase Death Panels when a D is expanding healthcare coverage.

        1. That makes even less sense. Why giraffe when you can jolly woke?

          1. Ah, there’s the willful ignorance I expect from this place.

      2. And it has to be invented before it can be rationed, and, downstream, death panels.

        Look at western shelves, crammed with food and new iPhones every year.

        Yup. I’m fine with that driving new pharmaceuticals. It is precisely because it’s so much more important than fluff like phones that this process must dominate. Anything else is murder.

        The products are produced at a phenomenal rate and amounts because of the freedom to pursue money.

        1. Our shelves aren’t so crammed right now — have a chat with the manager of your local grocery store.

        2. With some free-riding on NIH research, of course.

          At some point, sky-high profits are not required to generate innovation when merely high profits will do.

          Here, I will note, the profitability of the drug is already baked in.

          1. Hardly “free” riding. Care to guess the value of the ratio :

            (Taxes paid by drug companies and their employees)
            (NIH research costs attributable to drug company products)

            1. Free riding in that they are not bearing the costs, unless you think 100% of government spending comes from pharmaceutical companies.

              1. Why would you imagine I think that ? Especially as I went to all the trouble of writing :

                “(Taxes paid by drug companies and their employees)”

                1. Because those taxes go to a lot more than just funding basic biology research.

                  I don’t think total value from the government versus taxes paid in is a game you want to play. I’d get to fold in fire, police, utilities, public university training of post-docs, NIH training of researchers…

                  1. I don’t think total value from the government versus taxes paid in is a game you want to play

                    Yeah I kinda do.

                    I’d get to fold in fire, police, utilities, public university training of post-docs, NIH training of researchers…

                    All of which, added together, is an utterly trivial proportion of government spending.

                    There are net givers and net takers in the carousel of government taxes and spending. Businesses, their owners and their employees, are net givers. Solyndra et al – politically connected lossmakers – are the exceptions that prove the rule.

                    1. Proposition of government spending is not the right metric – it’s how they compare to what a given corporation’s tax remit is.

          2. Ugg. This is a tired trope which doesn’t really understand NIH research or how drug development works.

            It’s like saying that Apple and IBM are really responsible for drug development because they made the computers that all the research is done with, in terms of documentation, modelling, record keeping, and so on. So really, the drug companies are all free riding on IBM’s research.

            It’s a foolish and idiotic statement.

            1. Basic research is the foundation upon which the drug industry builds it’s research.

              It is not merely indirect infrastructure. It is a continual process that opens up the frontiers required for the innovative applied research.

              The American research and technology enterprise requires both government and industry. It works well. But do not pretend companies are not investing based on ground fertilized by federal $$.

              1. “With some free-riding on NIH research, of course.” It’s a tired trope.

                The entire government-industrial complex of the United States relies on previous research and technology developed. IBM and Apple rely upon basic research on transistors. Google relies upon basic research from the original internet. The government relies upon the research, development, and applied products industry develops (not to mention the tax money).

                Nobody says “Google really belongs to the US government because the government developed the internet” or “Google is free riding on the government research”.

          3. This exposes the fundamental problem with discussing economics. We talk about fairness of price, bargaining power, and the squishy difference between “sky-high profits” and “merely high profits”. These terms don’t mean anything in economics. They don’t mean anything at all, really. Because the terms are relative. What is “sky-high” to you may be “merely high profits” to another.

            The problem that free markets solve is resolving these disputes in the most efficient way. Regardless of where you think sky-high profits stop and merely high profits begin, the difference has some effect on some marginal investor, somewhere. There is a level of promised profit that is inefficient. Not because there is some platonic ideal of “efficient” but because as profits approach “sky-high” competition drives it back down as more people flock to the investment to enjoy “sky-high” profits (that cease being “sky-high” because of this competition). Centrally planning what is (or is not) “sky-high” is not the most efficient allocation of resources. Efficient allocation of resources is important in fighting a pandemic.

            But let’s say we should centrally plan access to all for the drugs. Either we should just all pay for it through taxed R&D. Or we should all pay for it when the government buys the drug from a private company after outsourcing the R&D costs to that company. But, as the OP notes, if we get there we still have to negotiate the price, and the way we do it will affect future R&D investments by private companies, in ways that may be less socially useful. By less socially useful, I mean more people will die in the future than they would if we pay a different price in the present.

            1. When put like that, the issue is that the problem is not currently one of efficiency.

              Indeed, the markets left the building some time ago; this is a who gets the $$ question now.
              The OP argues that markets must be given their due to stimulate innovation. The finding it disputes (albeit not very convincingly) is that they have been given their due. Drawing a line from profits to innovations is not an easy job.

              I’m not arguing for central planning for access to all drugs – no one is that I see. But that doesn’t mean that this is a case where there is utility in letting Gilead double dip it’s profits for risk mitigation purposes. Unless one assumes profits are linearly connected to innovation. Which is silly.

              1. This isn’t a real market, but neither is the “finding” re: recoupment of R&D costs. The reason we want to slide the scale as close to markets as possible is because the right line-drawing is difficult (really, impossible) without markets. That doesn’t mean we can’t draw lines how we want, but I don’t see anything majorly objectionable in the OPs’ analysis. Since money is all liquid it doesn’t matter; the OP is just centrally planning the price higher than ICER would.

                Do you think the price (and profits) that OP suggested versus ICER more closely resemble the profits that the drug company would have in an actually free market? I think the answer is probably yes, that’s why I’m sympathetic to OP’s argument. What do you think?

                1. Line drawing for what, though? Markets optimize for efficiency of supply vs. demand. While I agree they’re a great spur for innovation, I don’t think they optimize for that.

                  I think you and I walk together on the idea that markets are a tool, not an end to themselves. I think markets have immense utility generally and in the drug development sector. But I don’t see the utility here.

                  This is a windfall for Gilead. I don’t think we need to pay attention to what the market would pay. I also don’t understand the risk mitigation valuation analysis the OP breezes by to explain away the double dipping issue. And I don’t buy the ‘profits up mean more research.’
                  Bottom line: Markets are a remarkable tool, but I don’t think this is a case where they have utility in either the short or long term.

                  1. However “optimize” is defined, markets are better at efficiently allocating resources in a way that spurs innovation, relative to some other measure. It is true that not free markets can produce more innovation than free markets. If the government enslaves a bunch of foreigners and puts them to work in slave labor developing innovation, that may result in more innovation than a free market, but not as efficiently. Efficiency is important only because we live in a world with finite resources. And of course promoting innovation through markets does not prevent the government from subsidizing innovation directly, either.

                    I don’t know how we can speak in terms of “windfall[s]” without knowing “what the market would pay”. Windfall relative to what? The assertion strikes me as just an artful way to say “More money than I think they should make.” But the entire thing we’re discussing is what is the optimal price we can set for them that balances our interest in providing some good to the most people, while also encouraging future innovation in a way that is socially useful? Is it controversial to say that if profits go up, more people will be interested in chasing those profits in the future?

                    Are you rejecting entirely that giving Gilead a “windfall” (how you define it, I don’t yet know) will have no effect on capital flowing to drug innovation? If the state took the drugs from Gilead without giving them any compensation (setting aside a takings issue), do you think that, similarly, would have no effect on private innovation moving forward? If you reject the latter, we’re really only arguing about what the price point should be, and my north star remains best estimate of what the price would be in an actual free market. Do you disagree?

    2. “But not everyone will have access. You’re basically arguing for death panels for markets.”

      It’s the exact opposite. He’s arguing for pricing drugs based on value to encourage development of drugs in the future that save lives. The access problem is addressed in the last sentence. See the part where it says: “If the government wants everyone to have access to the drugs, then it should negotiate a buy out at arms’ length.” The only way to guarantee access for all is to have the government buy and distribute.

      1. That makes an assumption not only that markets are neccessary to drive the innovation we see in drug development (a postulate I agree with) but that more profits drive more innovation. That logic clearly fails at some point, the only question is where.

        And you can’t ask the market – they don’t valuate profits, that’s a derived number after they’ve done their work.

        1. “necessary” is too strong. Of course “drive the innovation” can happen even if there is no free market. The government can do the innovation. (The US does heaps of research through public universities, funded by the government. It’s kind of sort of a free market but not entirely.) My assumption is only that innovation funded by free market investment result in more and cheaper innovation than you would get if funded and directed by central planning. I do not think this is controversial but if there is some economic literature to the contrary, I’m all ears.

          “And you can’t ask the market – they don’t valuate profits, that’s a derived number after they’ve done their work.”

          I do not understand this. The markets I’m involved in do valuate profits, beforehand. People put money behind things based on estimated profits beforehand. They can be wrong about those investments, but it doesn’t mean profits are just some random thing that befall investors on the back end. Capital will flow to those places that deliver the greatest return on investment, which is more than just a function of promising the highest number possible. Industries with proven, consistent returns will receive more capital than others, even if they offer less by way of potential returns.

          1. Yeah, I do a bunch of grants stuff. A market it is not, but existing within a capitalist system it’s a pretty great spur for innovation.

            Anyhow, to first order markets are about efficiency in the face of demand and supply signals. Profits are the outcome of said efficiency. If you ask the markets how much profit is optimal, they will tell you infinity.
            Companies will never tell you their profits are too high due to some market failure or degeneracy. That’s why a regulated market is the REAL genius engine of innovation and efficiency.

            1. “If you ask the markets how much profit is optimal, they will tell you infinity.”

              I’m not arguing against all regulation. I’m only arguing that if we’re going to tell them what the profits they have to enjoy are, we should try and do our best to estimate it based on what we think the market would pay them. Value estimation strikes me as a better attempt to do that over investment-based estimation. I still can’t tell your objection to that, other than investment-based will lead to a “windfall”. But that concept doesn’t make any sense in the free market we are trying mimic. To the OP’s point, if I invest $100 with the expectation that if I hit I will make $200, knowing that there is some risk of partial or total loss, being paid $100 when I hit doesn’t make me whole. Because if my hitting condition is capped at $100, I wouldn’t have invested the $100 in the first place. (I would have invested less, or not at all.)

  2. You should also pay up if you want to put people in danger for your own convenience, slaver.

  3. The survival rate may or may not be statistically significant.

    The study found patients spent 4 fewer days in the hospital. I don’t know the billing rate for a 1 day hospital stay, but if Gilead were to ask for half the benefit of that savings, the drug would be quite expensive and still a good deal for everyone involved.

  4. The America I grew up in, one that respected liberty & property, no longer exists, so if the government purports to need this intellectual property for the public good, in an “emergency”, I don’t see why they can’t just take it. Seize it.

    Remember that the cost is in licensing the patent, not in mixing the chemicals, and assuming they can get the precursor chemicals, it’s no big deal to make a drug once you know the formula and manufacturing methods.

    1. The government can seize the drug (patents, formulas, etc.). But it would have to pay fair market value for it.

      1. A year ago, I would have agreed with you.

        But a year ago, the government shutting down a business would have involved a fair market payment as well. It’s not “temporary” because there are a lot of businesses that will never reopen.

        Notwithstanding that. let’s say that the government only seizes the drug on a “temporary” basis, during the “emergency”, how is this different from all of the other “temporary” things it has done during the “emergency”?

        And then there is the Defense Production Act — if the government can require GM to make medical equipment and specify what price GM can charge for them, along with requiring the medical equipment company to license it’s patents and such to GM — why can’t it do the same thing here?

        Property is property, and if the takings clause is now moot, then the taking clause is now moot. I don’t approve of this, but if this is the new reality in which we live, then it is the new reality in which we are forced to live.

      2. There was an interesting piece on NPR yesterday where paying for doses not in the tens or hundreds but thousands of dollars would be phenomenally cheap compared to what they’ve spent already.

        This year we’re spending wayyyyyyy more per capita than the height of WWII.

      3. The government can seize the drug (patents, formulas, etc.). But it would have to pay fair market value for it.

        What’s the problem with this ? It’s an emergency, the government makes a taking, and eventually the compensation is either agreed or settled by the courts. Seems less frenetic than having to work out the price right now in the middle f the emergency.

        Also seems more like a proper use of energency government takings than seizing property for private shopping center developments.

        I note in passing that the government is boosting the price in the emergency with its insurance company coverage rules so it might want to waive those.

        1. And while we’re on the subject of taking property, note that the property to be taken is a government created monopoly right – intellectual property. Not like land and buildings and machines etc, where the property exists independent of government and the government merely chooses to codify in law how you work out who owns it.

          Without venturing onto the thin ice of whether and how much the government’s creation of intellectual property rights is a good or bad thing, it seems to me that the government’s justification for taking (with compensation) its own created property is stronger than it is for taking other people’s independently existing property.

    2. And yet the pharmaceutical industry continues to do quite well.

      Almost as though your melodrama is nonsense.

      As the OP tacitly admitted when it took into account political factors in pricing, it’s hard to find a better case for market failure than a potential cure for a pandemic. Nigh-infinite demand signals will do that.

  5. If my company makes Drug X for, say, herpes (or migraines, whatever), and it costs me $1.00 per dose (including all the prior research and testing), plus another $1.00 (for the various other drugs my company worked on but did not get to market for one reason or another). And I’m now selling X for $5/dose, so my company is doing quite well with this drug.

    X does well re Covid-19. It also saves about 4 days in the hospital, which saves tens of thousands of dollars per patient. And let’s assume that the market re Covid-19 is equal to my market for migraine patients.
    a. Can I now charge $100 per dose for each C-19 patient, while still charging $5 for each migraine patient?
    b. Can I now charge $100 per dose, regardless of the usage?
    c. Can I now charge about $50/dose to everyone–averaging out the values to each set of patients?
    d. Can I only charge around $6/dose, to get my fair return re migraines that I’ve been getting, plus an extra dollar or so, to compensate my company for the millions it took to test X for applicability to Covid-19?
    e. $10,000 per Covid patient, which will be a rough approximation of receiving half or one-third or one-quarter of what my drug will be saving the government/insurance company?
    f. Some other calculation?

    I don’t have an answer here. (Some of the above seem much less likely than others.) But I can see at least some merit in each argument.

    1. A few points.

      1. The argument you’re making is about a drug that is already on the market, and is closer to a chloroquine argument. Remdesivir is not actually on the market, or approved for anything (prior to the current issue).

      2. If, in your case, you’re arguing from a drug already on the market (IE, chloroquine) with an already approved price ($5 a dose in your example), the proper pricing for a new broad indication is $5 a dose (there might be a minor mark up for additional manufacturing, but it might be like $5.50, so minor).
      2a. The reason for this, is you can’t change wildly different prices for the same product. If you try, people will say they’re getting it for one thing, and use it for the other.

      3. If by contrast, you’re developing a new drug that is not on the market (Remdesivir), generally the answer will be, “what the market will pay” in combination with maximizing sales volume. That true of any new product, whether it be iphones, drugs, cars, or houses. An iphone doesn’t need to be $1000.
      3a. That revenue is generally plowed back into new drug development, for things like…Remdesivir, with a small percentage used for profit distribution (as any public company does.)

      1. A.L. — or they go from $100 to $608 (wholesale), which is what Mylan did with the Epi Pen. See

        Another interesting question is if Remdesivir is given an expedited route to marketing, saving the company considerable expense, should that be reflected in the price? Should it be required to be?

        1. Mylan and a select few other companies have horribly abused the system, and shouldn’t be considered of representative of the entire industry.

  6. The cost of a course of hydroxychloroquine + azithromycin is about $20

    2020-04-20: IHU Méditerranée Infection, Marseille, France: Early treatment of 1,061 COVID-19 patients with hydroxychloroquine and azithromycin (PDF)

    BACKGROUND: Hydroxychloroquine (HCQ) and azithromycin (AZ) are promising drugs against COVID-19.

    METHODS: We conducted an uncontrolled non-comparative observational study in a cohort of 1,061 infected patients treated with HCQ+AZ combination for at least three days.

    RESULTS: Good clinical outcome and virological cure were obtained in 973 patients within 10 days (91.7%). Prolonged viral carriage was observed in 47 patients (4.4%) and was associated to a higher viral load at diagnosis (p < 10-2) but viral culture was negative at day 10. All but one were PCR-cleared at day 15.

    A poor clinical outcome was observed for 46 patients (4.3%) and 8 died (0.75%) (74-95 years old).

    Mortality was lower than in patients treated with other regimens in all Marseille public hospitals (p< 10-2). Five patients are still hospitalized (98.7% of patients cured so far). Poor clinical outcome was associated to older age (OR 1.11), initial higher severity (OR 10.05) and low HCQ serum concentration. Poor clinical and virological outcomes were associated to the use of selective beta-blocking agents and angiotensin II receptor blockers (P<0.05). No cardiac toxicity was observed.

    CONCLUSION: Early HCQ+AZ combination is a safe and efficient treatment for COVID19.

    1. Dude, you are way behind the times. Not even Trump is pushing that study anymore.

      Maybe those drugs will end up being effective, but there’s no actual scientific support for the fact at this time.

      1. Did you actually read the study? It’s the largest study, of over a thousand people.

        I know you are a hand waving lawyer, but try to read stuff outside your area once in a while. It’s not that hard.

        1. I read the commentaries on the study’s methodology. Like you should, if you’re interested in science.

        2. I’m not a lawyer these days.

          Science policy is my field. Technical evaluations are a thing I do pretty often.

  7. “Whenever someone comes to my chambers and wants to talk about the price of eggs, I tell them to go talk to Brandeis.”

    -Oliver Wendell Holmes
    (paraphrased, likely)

    Mr. D.

  8. “The problem with logic of this sort is that it does not account for risk, and moreover risk is very difficult to account for.”

    Could you unpack this? If they recoup R&D costs it does account for risk. The thing that ordinarily accounts for risk is profits. But the discussion about risk is in relation to recouping R&D costs.

    1. The risk is looking forward, and it’s from an investment perspective. Let’s give you an example.

      Let’s pretend you’re a multimillionaire. You’ve got $10 million dollars to invest. You decide to buy 1% of 10 different small biotech companies, at a million dollars apiece, each with a single product.

      Those companies use that money ($100 million apiece) to develop drugs. One company succeeds. The other 9 go bankrupt.

      What type of revenue should the company that succeeded obtain from their drug? Should it be enough to recoup R+D costs plus a substantial profit ($100 million)? That would be $200 Million. Or should it be a extremely large profit? That would be a billion dollar drug.

      How do either of those profits affect you as the multimillionaire, and your decisions to invest in the next cycle of biotechs?

  9. It appears that remdesivir will prove to be effective in the fight against COVID-19. Now I would like to see how it effects those who are not in a life threatening conditions though. But when it is approved it will also be available to other nations. Many times in these other nations the same prescription can be bought for much less than it can in the US. This is true even in Canada which will have just as good medicines as the US. Now here is how I think that it should be priced. The average price in the modern western economies such as Canada, Australasia and Europe and a few other places around the world the price here in the US should be in line with it cost in these others nations. Nations with a much lower standard of income the price should be a little lower based on what the average income is. There is no reason for the people of the US pay such higher price for the drugs than these other nations who has a similar income. These nations should have to pay for the cost of research and development as well as the US have to pay for it.

Please to post comments

Comments are closed.