Gilead is the key to fixing the drug industry’s reputation. Here’s why that’s a tenuous proposition.

Late last week, Gilead Sciences scored an emergency use authorization from the Food and Drug Administration for its Covid-19 treatment, remdesivir. The move allows the government to distribute the drug to hospitalized patients with dangerously low oxygen levels. With the hurdle of FDA review cleared, Gilead will now face its biggest challenge yet: Pricing the drug in a way that doesn’t reignite the furor over high prices that has plagued the drug industry in Washington for the last four years.

Lobbyists are on high alert that actions by Gilead could either gain the industry good will in Washington, or further sour their already spotty reputation. As one lobbyist told me: Gilead’s pricing “could either provide us with a further reprieve or hasten our demise.”

Gilead has a history of courting controversy with its pricing, from an $84,000 hepatitis C treatment to HIV prevention medications that run $20,000 per year. STAT’s Damian Garde and I dug into why Gilead is likely to face an uphill battle pricing remdesivir in a new story here.

Since reporting this story, the evidence of Gilead’s uphill battle has only grown. Here’s what has caught my eye — and suggests there’s a fight to come:

Congressional progressives wrote to HHS Secretary Alex Azar Friday asking for details on how much government investment went into remdesivir’s development. Progressives have long argued that the government has the right to force companies to price their treatments affordably if they were created using federal research funding. They’ll likely use any information they get from HHS to slam Gilead for making money off of taxpayer’s dollars. STAT’s Ed Silverman has more here.
The Lower Drug Costs Now coalition, which is largely made up of unions and other liberal groups, will hold a press call later today with the Attorney General of Minnesota demanding that Gilead make remdesivir “affordable and accessible.” A spokesperson tells STAT the group will be calling for congressional action to make sure the public can afford Covid-19 treatments.

Predicting the price of remdesivir

There are plenty of projections floating around about how much Gilead might charge for the drug. But a Friday analysis from ICER, a group that reviews cost-effectiveness, is worth pointing out.

They argued that Gilead has reason to charge up to $4,500 dollars for a course of remedesivir. That’s in line with predictions from Evercore ISI analyst Umer Raffat, who has estimated the drug would carry a sticker price of around $4,000. Other analysts have predicted the drug might be priced closer to $750.

Such a high estimate is striking from ICER, which has been maligned by drug industry defenders as frequently undervaluing new treatments. It might also give Gilead some justification to charge a high enough price to keep the markets happy.

Pleasing drug pricing activists, however, may be another story. Already, some have seized on a separate ICER analysis — this one focused on so-called “cost-recovery” — that estimates that Gilead could price remdesivir at $10 for a 10-day course of treatment and still recover its production costs. That finding has catalyzed groups like Public Citizen to push for a shockingly low price.

“Remdesivir should be $1 per day. That is more than the cost of manufacturing at scale with a reasonable profit to Gilead,” Public Citizen’s Peter Maybarduk told STAT in a statement.

One more thing about Gilead

Did you catch Gilead’s eye-popping lobbying spending this quarter? The company shelled out $2.45 million on lobbying in the first four months of 2020, according to federal disclosures first reported by NPR. That surpasses the company’s all-time quarterly lobbying record by nearly $600,000. Most of that money went to influencing coronavirus relief and drug pricing legislation.

That lobbying bill puts Gilead on par with some of PhRMA’s most prolific Washington spenders, like Merck, which spent $2.1 million last quarter, and Genentech, which spent $2.7. They’ve got some growing to do before they catch up to Pfizer though. The industry giant, which typically spends the most of any PhRMA company, spent $4 million last quarter.

More coronavirus coverage from STAT

Curious how remdesivir works? Alex Hogan explains in a new video.

Another remdesivir-related challenge: The drug is very difficult to make, but Gilead needs to ramp up production.

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Is a big day for CAR-T on the horizon?

Drug makers and other stakeholders are anxiously awaiting the release of a CMS regulation that they hope will finally offer a sustainable way to reimburse providers for delivering pricey CAR-T treatments to cancer patients. Because reimbursement policies haven’t kept pace with the technology, the American Action Forum has estimated that hospitals are losing roughly $50,000 per patient when they administer the treatments.

To fix that problem, legislators, disease advocacy groups and the drug industry have all been pushing CMS to create a new diagnosis-related group, or DRG, specifically for treating patients with CAR-T. That would mean hospitals get a specific payment rate for CAR-T treatments, rather than reimbursing at the rate of a bone marrow transplant, which is what currently happens.

While certain industry groups have been calling for a new DRG since 2017, stakeholders told STAT they expect it will likely come as part of this year’s inpatient prospective payment system rule from CMS. They’re confident it’ll happen soon, given that a special payment program to help hospitals recoup some of their CAR-T costs expires in September. AAF projects hospitals would lose $73,000 per patient if CMS does nothing.

The IPPS rule, which will be released in draft form, is expected any day now and would likely be finalized in August.

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