Race for COVID-19 treatments reignites debate over role of public funding
GILEAD SCIENCES’ DECISION to reject orphan drug status for what could be a COVID-19 treatment might stop the company from monopolizing a drug that could save hundreds of thousands of lives. But a larger question remains. Will the antiviral remdesivir be affordable to taxpayers who helped pay for its development?
The company said it sought orphan drug designation to expedite the federal review process. Gilead officials said the U.S. Food and Drug Administration assured them they didn’t need it. “Gilead is confident that it can maintain an expedited timeline in seeking regulatory review of remdesivir, without the orphan drug designation,” the company stated.
But critics say the company was pressured by the public, patient advocates and lawmakers, who claimed Gilead was seeking orphan drug status for other benefits like having FDA fees waived, 50% in tax credits for clinical testing costs, and seven years of market exclusivity.
“It’s the same story that exists across the drug market,” said Peter Maybarduk, director of the Access to Medicines & Knowledge Economy Group at consumer advocacy organization Public Citizen. “Monopoly and price-gouging are the standard for all new treatments.”
Gilead has already faced such criticism. For years, Truvada was the only publicly funded, FDA-approved pre-exposure prophylactic for HIV. Since 2012, the cost of Truvada rose from an average list price of $1,391 a month to $2,100 a month last year. Gilead made billions from market exclusivity. Last November, HHS sued Gilead for willful infringement of the patent.
Gilead worked on research for the drug in collaboration with the Antiviral Drug Discovery and Development Center centered at the University of Alabama at Birmingham. The center received a five-year, $37.5 million grant from the National Institutes of Health to work on finding treatment for infectious diseases. The drug did not work for Ebola but shows promise in fighting a range of diseases caused by coronaviruses.
If remdesivir proves effective for COVID-19, it could be a financial boon for Gilead, which until a few years ago owned the most costly drug on the market—Harvoni, a treatment for hepatitis C with an average price tag of $10,000 for a six-month course of treatment. With more than 500,000 confirmed COVID-19 cases, market projections for a treatment could reach more than $2 billion.
Gilead spokesman Chris Ridley said if remdesivir is proven to be safe and effective to treat COVID-19, the company was “committed to making the medicine both accessible and affordable to governments and patients around the world.”
Some say that assurance just isn’t enough. “You just can’t assume that if you give investors a legal monopoly on a drug that they’re going to act nice,” said James Love, director of Knowledge Ecology International, a notfor-profit intellectual property rights advocate. “Governments are going to have to play a larger role if they don’t want to see access restricted.”
Legislative efforts have not gone far, which isn’t surprising considering drug lobbyists spent nearly $166 million last year, according to Open Secrets.
At one time, drug companies that got a public funding boost were required to set reasonable prices, but that changed in 1995 when the NIH rescinded its “reasonable pricing” policy.
There are still some levers that regulators can pull though. A Public Citizen report released in February found that the NIH has spent nearly $700 million since 2002 on research and development of vaccines and treatments for coronaviruses. The agency could reinstate its reasonable pricing provision without congressional authorization, or President Donald Trump could ramp up production of a COVID-19 treatment using the Defense Production Act.
Kenneth Kaitin, director of the Center for the Study of Drug Development at Tufts University School of Medicine, said those actions could discourage companies from taking the financial risks involved in developing new therapies. “From an emotional standpoint, you think that if the public is paying part of the cost of development then that should be reflected in the price, but that’s just not the way business works,” Kaitin said.
Sixteen drugmakers, including Johnson & Johnson, Pfizer and Sanofi are working on a vaccine or antiviral therapy for the virus. Given history, insurers would likely receive a discount for COVID-19 treatments, but that wouldn’t guarantee a lower price for many members on high-deductible health plans.