Gilead could live to regret its pricing decision

Yesterday, Gilead Sciences set a price for the Covid-19 treatment remdesivir that is “well below” its actual value, according to the company’s CEO, in order to ensure “broad and equitable access.” To activists, that’s a tacit admission that Gilead has been overcharging for years. To investors, it’s a concession that could undermine the company’s business. And to the industry at large, it’s a precedent that might change how drugs are priced.

SVB Leerink analyst Geoffery Porges warned that Gilead’s decision “will change all future expectations for the treatment of this disease and may also influence pricing in other diseases.” If drug companies change their definition of fair value for Covid-19, why not diabetes, cancer, or Alzheimer’s disease?

What’s worrisome to Porges is welcome news to James Krellenstein, co-founder of the HIV-prevention advocacy group PrEP4All. Gilead’s decision proves that drug companies can make ample profits without charging the maximum the market will bear, making remdesivir an opportunity to put pressure on the industry.

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