
Open Letter from Gilead CEO: Remdesivir Pricing - drinker
https://stories.gilead.com/articles/an-open-letter-from-daniel-oday-june-29
======
flak48
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).

[1] [https://www.hindustantimes.com/india-news/india-s-hetero-
pri...](https://www.hindustantimes.com/india-news/india-s-hetero-prices-
generic-remdesivir-for-covid-19-treatment-at-rs5-400-per-vial/story-
kvqLE7vfjarEaj8Y1ad5lJ.html)

[2] [https://www.indiatvnews.com/business/news-covid19-drug-
cipre...](https://www.indiatvnews.com/business/news-covid19-drug-cipremi-
price-dosage-cipla-remdesivir-cipremi-price-covid-19-treatment-drug-covifor-
fabiflu-628798)

------
apsec112
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."

~~~
danaris
You know what government is _really_ good for?

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
> 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?

~~~
_pmf_
> 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.

~~~
quietbritishjim
Please back up such an unlikely sounding claim with several excellent sources.

Here in the UK, there is exactly one layer: the NHS. It negotiates prices
directly with drug suppliers, and as the sole buyer (monopsony) is able to get
a great deal. It also sets the prices paid by consumers (the prescription
price), which is a flat price charged for all drugs (yes really all of them)
and is currently £9.15 (about 11 USD) for a prescription (i.e. a full course
of multiple tablets of the drug). If you are given drugs in a hospital as part
of an inpatient treatment the charge is usually nil.

~~~
arpinum
Drugs are more streamlined, but most of the NHS looks a lot like the US
system. There are 8 major private electronic health systems, and many have not
signed interoperability pledges. 145 CCGs. Foundation Trusts, remember just 10
years ago GP Practices would become part. Quasi-private GP Practices. Mergers
going on every year (195 CCGs to 145 last year). Funding comes out of a myriad
of mystery buckets (winter funding).

~~~
quietbritishjim
The NHS employs about 1.4 million people (and I don't think that includes GP
practices). Of course an organisation that big is going to have quite a bit of
structure. I never intended to dispute that.

I was disputing that specifically _drug purchasing_ is a "racket" with "more
layers" the US system, which is what the parent comment claimed. None of the
organisations or organisational units that you mention have anything to do
with drug price negotiation, so I don't see what they have to do with the
conversation.

------
continuational
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.

~~~
flumpcakes
That sounds like an argument that only people with money should get medicine.

------
trowawee
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.

[0]: [https://www.citizen.org/article/the-real-story-of-
remdesivir...](https://www.citizen.org/article/the-real-story-of-remdesivir/)
[1]: [https://www.nytimes.com/2018/07/16/opinion/prep-hiv-aids-
dru...](https://www.nytimes.com/2018/07/16/opinion/prep-hiv-aids-drug.html)

~~~
kenhwang
It typically costs ~$2B to develop a new drug. Taxpayer contributions are
practically negligible.

~~~
TheOtherHobbes
How much did the Fed spend buying Gilead's bonds?

And how much more/less effective is Remdesivir compared to the generic
Dexamethasone anti-inflammatory?

~~~
kgwgk
They are not really comparabale as they are indicated at different points in
the disease progression.

------
udba
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.

~~~
cwyers
> 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.)

~~~
retSava
The message from the CEO which this is about, says they have the exact same
price across the globe, ie no subsidizing losses by that means, or there are
no losses.

The US price is in practice the same - they just had to account for the
always-expected discount which will push it down to the same as others.

------
josefrichter
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.

See [https://english.radio.cz/antonin-holy-one-countrys-most-
reno...](https://english.radio.cz/antonin-holy-one-countrys-most-renowned-
scientists-8591332)

------
Pick-A-Hill2019
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...](https://www.gilead.com/-/media/files/pdfs/remdesivir/eua-fda-
authorization-letter_01may2020.pdf)

and "Remdesivir is an investigational drug that has not been approved by the
FDA for any use."
[https://www.gilead.com/remdesivir](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
> 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.

[0] [https://www.hindustantimes.com/world-news/european-
regulator...](https://www.hindustantimes.com/world-news/european-regulator-
recommends-remdesivir-for-
covid-19-treatment/story-r0rQr687STv1xcTvDGd3UK.html)

------
hasperdi
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.

Source: [https://www.theguardian.com/us-news/2020/jun/30/us-buys-
up-w...](https://www.theguardian.com/us-news/2020/jun/30/us-buys-up-world-
stock-of-key-covid-19-drug)

~~~
godzillabrennus
Isn’t the welfare of its citizens basically the primary job for any
government?

Hopefully now that this is determined as effective the manufacturing can ramp
up and the whole world can get access.

~~~
flak48
Generic versions of Remdesivir are already available in India for $70 (under
license from Gilead). I hope other countries ramp up production too.

[https://www.hindustantimes.com/india-news/india-s-hetero-
pri...](https://www.hindustantimes.com/india-news/india-s-hetero-prices-
generic-remdesivir-for-covid-19-treatment-at-rs5-400-per-vial/story-
kvqLE7vfjarEaj8Y1ad5lJ.html)

------
SomeoneFromCA
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.

------
listenallyall
Seems expensive for a drug with "no significant benefits"

[https://www.barrons.com/news/antiviral-remdesivir-showed-
no-...](https://www.barrons.com/news/antiviral-remdesivir-showed-no-
significant-benefit-in-virus-patients-01588174805)

------
kennywinker
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.

~~~
auggierose
Maybe so that next time we need them, they don't just say, naahh, gonna do
something instead that actually pays?

~~~
TheOtherHobbes
That worked so well for opioid crisis victims.

~~~
auggierose
Care to convert that sentence into a coherent argument?

------
Tinyyy
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.

------
jjeaff
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.

~~~
cjhopman
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?

~~~
jjeaff
That's fine if you want to make a PR splash with a donation.

But don't do the same while you are gouging consumers. In other words, don't
piss on me and call it rain.

------
sub7
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.

~~~
jjeaff
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.

------
mesozoic
Good thing we bailed them out bought their bonds and now get to pay way too
much for a drug that don't work! Yay!

------
forgingahead
What's the price of equivalent doses of Hydroxychloroquine + Zinc?

~~~
rbinv
Very low, but obviously not comparable at all.

~~~
chrisco255
Do you have a randomized clinical trial comparing the two treatments?

~~~
strstr
I’m not certain it matters. The hydroxychloroquine paper was retracted: that’s
not a great sign for it’s effectiveness as a treatment.

~~~
jjeaff
The paper that was retracted was a paper that concluded that hydroxy
chloroquine usage caused higher fatality rates in covid patients.

