Hospitals will be able to buy predetermined amounts of the promising coronavirus treatment remdesivir through September for up to $3,200 per five-day treatment course, HHS said Monday.
Hospitals are currently getting the drug for free because of Gilead Sciences' initial donation of remdesivir, which officially runs out on Monday. HHS reached a deal to secure the lions' share of Gilead's scheduled production of remdesivir through September.
HHS secured more than 500,000 treatment courses for the next three months. After September, Gilead said that HHS will no longer manage allocation.
The amount of remdesivir any given hospital can purchase will be determined by federal and state governments based on hospitalization data. The drug will be shipped directly to hospitals, which is different from the current system that lets state health departments distribute the drug. The shipments will likely go out every two weeks, HHS said.
Preliminary data from a government-sponsored trial showed a median time to recovery of 11 days for those treated with remdesivir, compared with 15 days for patients who were not.
Gilead estimated that the earlier hospital discharges could save U.S. hospitals $12,000 per patient, but health policy experts have said it's too early to put a dollar amount on potential savings, and noted that hospital costs vary widely.
Dr. Peter Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center, tweeted that the hospital savings may be exaggerated if younger patients are kept in the hospital longer to complete a five-day course of treatment. Estimates of savings to hospitals also bake in the high prices they often charge, Bach said.
Patients generally won't directly pay for the drug. In Medicare, the cost will be incorporated into the DRG payments hospitals receive for treating COVID-19 patients. Congress temporarily increased hospitals' inpatient DRG payments for coronavirus patients by 20%, but the pay bump ends with the public health emergency. The current emergency designation ends July 25, but the HHS secretary has chosen to renew it for another 90 days.
Currently, the DRG that CMS has directed hospitals to use for COVID-19 patients reimburses around $16,000 including the pay bump, and for patients placed on a ventilator for more than four days, the reimbursement averages $48,000, according to a Kaiser Family Foundation brief.
A senior HHS official refused to comment on whether the agency has had any conversations with Gilead about the potential of a new technology add-on payment, or NTAP. If CMS provides a NTAP, hospitals get paid some of the cost of the product if a patient's care ends up costing more than the related DRG payment.
Under the normal pathway for NTAP approval, the payments wouldn't be available until October 2021.
Gilead set the price for commercial payers at $3,120 for a five-day course, which is 33% higher than the government price of $2,340. But Sean Dickson, director of health policy at non-partisan not-for-profit West Health Policy Center, said Medicare won't benefit from the lower government price.
"Medicare pays fixed price, and hospitals have to figure out effective care for that price," Dickson said.
A Gilead spokesperson clarified that the lower government price would be available to entities including the Department of Veterans Affairs, the Indian Health Service, the Department of Defense, the Coast Guard and the Federal Bureau of Prisons, but Medicare and Medicaid do not benefit because they do not directly purchase remdesivir.
The estimated $3,200 maximum price hospitals could pay is significantly higher than the price a prominent independent analyst estimated would be cost-effective given current evidence.
Several factors could substantially change the Institute for Clinical and Economic Review's calculations; if remdesivir is proven to have a mortality benefit, the cost-effectiveness benchmark increases significantly. However, if the inexpensive steroid dexamethasone is proven to reduce the risk of mortality and becomes the standard of care for patients with severe COVID-19 cases, ICER estimates remdesivir's cost-effectiveness benchmark could be reduced.
The consumer advocacy group Patients for Affordable Drugs criticized Gilead for pricing the drug higher than its current cost-effectiveness benchmark.
"Today's news proves that Gilead aims to profiteer off the COVID-19 pandemic. Gilead will realize profits far in excess of its cost to develop and produce a drug that has yet to demonstrate it will save lives," Patients for Affordable Drugs Executive Director Ben Wakana said in a statement.