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Gilead Sciences, the company that makes the Covid-19 drug, announced in an open letter on Monday morning that it has decided to set a price of $390 per vial for the US government, which would include Veterans Affairs and Department of Defense hospitals, and other governments of developed countries. But the discounted price will not include Medicare or Medicaid.
A typical five-day treatment course would include six vials, which would equate to $2,340 per patient, Daniel O’Day, Gilead Sciences chairman and CEO, said in the letter.
The US government will continue to manage US allocations of remdesivir to hospitals through September, the company said.
The letter added that the price for US private insurance companies will be $520 per vial, which would total $3,120 per patient for a five-day treatment course of six vials.
“The government price is applicable to the Big Four federal agencies (Veterans’ Affairs, Indian Health Services, Department of Defense and the Coast Guard), as well as other government direct purchasers like the Federal Bureau of Prisons, once on the Federal Supply Schedule,” a Gilead spokesperson told CNN.
“Medicare and Medicaid are not direct purchasers of drugs administered in an inpatient setting. Hospitals purchase inpatient drugs at commercial pricing and are then reimbursed by the Centers for Medicare & Medicaid Services at set rates.”
Remdesivir, which is currently administered through infusions, is the only drug that has an emergency use authorization from the US Food and Drug Administration to treat coronavirus infections. Until now, remdesivir treatments had been donated to the US government and allocated by the US Department of Health and Human Services and states. However, the US government’s last scheduled shipments of that donation are going out today.
‘We believe all patients will have access’
“As with all our actions on remdesivir, we approached this with the aim of helping as many patients as possible, as quickly as possible and in the most responsible way. This has been our compass point throughout, from collaborating to find rapid answers on safety and efficacy, to scaling up manufacturing and donating our supply of remdesivir through the end of June,” O’Day wrote in the letter.
“In each case, we recognized the need to do things differently to reflect the exceptional circumstances of the pandemic,” O’Day wrote. “Now, as we transition beyond the donation period and set a price for remdesivir, the same principle applies.”
“At the level we have priced remdesivir and with government programs in place, along with additional Gilead assistance as needed, we believe all patients will have access,” O’Day wrote. “Gilead has entered into an agreement with the U.S. Department of Health and Human Services (HHS) whereby HHS and states will continue to manage allocation to hospitals until the end of September. After this period, once supplies are less constrained, HHS will no longer manage allocation.”
HHS Secretary Alex Azar announced that agreement during an appearance on “Good Morning America” on Monday.
“President Trump has secured half a million courses of treatment of remdesivir through September,” Azar told ABC’s George Stephanopoulos.
“This is the drug that if you’re hospitalized can reduce the length of your stay by a third and we’re working with our states to make sure it gets to the hospitals most in need,” Azar said. “We’re experiencing, in many of the counties in the southern parts of the United States, very serious outbreaks.”
The allocation process
HHS noted in a press release on Monday that hospitals will receive remdesivir shipments and pay no more than Gilead’s wholesale acquisition price, which amounts to approximately $3,200 per treatment course.
“Generally, patients do not pay directly for hospital-administered drugs like remdesivir; rather, for Medicare and most private insurers, the drug’s cost is incorporated into payments made by the insurer, such as Medicare paying for the drug through a diagnostic-related group,” the press release said. “These supplies will be allocated in the same way that Gilead’s donation of approximately 120,000 treatment courses of remdesivir were allocated.”
In other words, HHS allocates the product to state and territorial health departments based on the needs of hospitals with Covid-19 patients, and then health departments allocate the drug to hospitals.
“The delivery of the purchased remdesivir will be streamlined, going directly to the hospital, per the state’s allocation decision, rather than going first to the state health departments for subsequent delivery to hospitals,” according to the HHS press release. Shipments will likely occur every two weeks.
CORRECTION: This piece is corrected and updated to show that medicaid does not get the discounted price, but the VA and Department of Defense hospitals do.