Australia markets closed

How much the first effective Covid-19 treatment will cost

An ampule of Ebola drug Remdesivir is pictured during a news conference at the University Hospital Eppendorf (UKE) in Hamburg, Germany, April 8, 2020, as the spread of coronavirus disease (COVID-19) continues. Ulrich Perrey/Pool via REUTERS/Getty

The global coronavirus pandemic will abate but won't entirely go away until a cure is found – but with US biopharmaceutical company Gilead Sciences developing remdesivir, the first medicine shown to be effective against Covid-19, the world is one step closer.

But for some, it might still be out of reach – because the medicine comes with an eye-watering price tag. That is, if customers were to pay out-of-pocket.

In an open letter, Gilead Sciences chairman and CEO Daniel O’Day laid out the prices for remdesivir, and how the company decided on the prices.

For governments of developed countries, remdesivir will cost US$390 (AU$568) per vial.

But current treatment patterns indicate that most patients will need to be on a five-day treatment course that will use six vials of remdesivir, which will come to US$2,340 per patient, or about AU$3,406.

Developing nations will pay less as Gilead is entering into “agreements with generic manufacturers to deliver treatment at a substantially lower cost”.

‘Unchartered territory’

Generally, medicines are priced “according to the value it provides”. Early study results showed that remdesivir shortened hospital stays by four days, which in the US would save hospitals of about $12,000 per patient. This sum does not factor in the “direct benefit” to patients who have a shorter stay in hospital.

According to O’Day, remdesivir is priced “well below this value”.

“There is no playbook for how to price a new medicine in a pandemic,” he said.

“At the current price of $390 per vial, remdesivir is positioned to achieve the aim of providing immediate net savings for healthcare systems.”

More research will have to be done into remdesivir; Gilead estimates its investment in remdesivir will exceed US $1 billion and for work to continue through to 2021 and beyond.

The California-based biopharmaceutical giant considered its “full scope of our responsibilities” in pricing remdesivir, O’Day added.

“We started with our immediate responsibility to ensure price is in no way a hindrance to ensuring rapid and broad treatment. We also balanced that with our longer-term responsibilities: to continue with our ongoing work on remdesivir, to maintain our long-term research in antivirals and to invest in scientific innovation that might help generations to come.

“As with many other aspects of this pandemic, we are in uncharted territory in pricing remdesivir,” he said.

“Ultimately, we were guided by the need to do things differently. As the world continues to reel from the human, social and economic impact of this pandemic, we believe that pricing remdesivir well below value is the right and responsible thing to do.”

Remdesivir is still being studied in clinical trials across the world. It hasn’t been approved by the US Food and Drug Administration yet, but it has been granted authorisation for emergency use for patients with severe cases of Covid-19.

However, this authorisation is temporary and may be revoked.

What is remdesivir?

Remdesivir was originally developed to treat Ebola.

In Australia, remdesivir does not have regulatory approval for use per se, but “wherever possible … should be administered in the context of a randomised trial with appropriate ethical approval,” according to the National Covid-19 Clinical Evidence Taskforce.

“Use of remdesivir for adults with moderate, severe or critical COVID-19 outside of a trial setting may be considered.”

However, it’s generally not recommended for pregnant patients, children, or adolescents.

Royal Melbourne Hospital and Doherty Institute infectious diseases physician associate professor Steven Tong said the drug is not being used in Australia in clinical trials, but is used for compassionate use and only given to patients in intensive care.

“My understanding is they’re going to prioritise areas of the world where there’s a lot of COVID at the moment, and that what will be provided to Australia will be fairly limited – potentially only five hospitals – which obviously doesn’t cover much of our population,” he told newsGP.

Sign up for your exclusive access to the fortnightly webinars.

Follow Yahoo Finance Australia on FacebookTwitterInstagram and LinkedIn.