Did Gilead just shoot itself (and the entire pharma industry) in the foot?
Gilead announced Monday it will charge “the vast majority of patients” roughly $2,300 for its Covid-19 treatment, remdesivir. That’s not an insignificant amount, but it was enough to quell much of the ire from folks who expected "price gouging" or "profiteering." In fact, only a few advocacy groups and liberal members of Congress spoke out about Gilead’s monumental decision Monday.
To those following the debate over drug pricing in Washington, the silence was striking: For months, lawmakers and advocacy groups have taken every chance to bash drug makers over their high prices, and yet lawmakers seemed largely uninterested in Gilead’s big news.
That might seem like success — after all, Gilead avoided the public relations disaster that seemed guaranteed if the company had priced the drug higher. But as my colleague Damian Garde writes in a new story for STAT, Gilead’s decision may still haunt the pharma industry for years to come.
As Damian writes: “With Covid-19, the drug industry is promising to make do with less. Once the pandemic is over, activists might demand the exception become a rule.” Damian notes that Wall Street analysts, too, are increasingly worried that Gilead’s decision will force future drug makers to abandon their usual strategy of pricing as much as the market will bear.
For more on the long term impacts of Gilead’s decision, check out Damian’s story here.
To those following the debate over drug pricing in Washington, the silence was striking: For months, lawmakers and advocacy groups have taken every chance to bash drug makers over their high prices, and yet lawmakers seemed largely uninterested in Gilead’s big news.
That might seem like success — after all, Gilead avoided the public relations disaster that seemed guaranteed if the company had priced the drug higher. But as my colleague Damian Garde writes in a new story for STAT, Gilead’s decision may still haunt the pharma industry for years to come.
As Damian writes: “With Covid-19, the drug industry is promising to make do with less. Once the pandemic is over, activists might demand the exception become a rule.” Damian notes that Wall Street analysts, too, are increasingly worried that Gilead’s decision will force future drug makers to abandon their usual strategy of pricing as much as the market will bear.
For more on the long term impacts of Gilead’s decision, check out Damian’s story here.
Could remdesivir be the next CAR-T?
While Gilead might not be charging as much for remdesivir as some analysts expected, already, there are concerns that the drug’s price tag may leave hospitals struggling financially. That could have serious implications for Medicare patients.
Hospitals aren’t reimbursed directly for drugs administered to Medicare patients at the bedside. Instead, in most cases, they’re reimbursed based on an average price that the government sets for treating a patient’s specific diagnosis. Right now Medicare is reimbursing between $6,000 and $40,000 per patient, depending on the severity of their illness, for example. But adding a multi-thousand-dollar drug to hospitals’ balance sheets without increasing their reimbursement could incentivize hospitals not to offer the drug, some experts worry.
“We want to signal to pharmaceutical companies that if they come up with effective drugs for the treatment of Covid-19, that we will pay for those drugs and administer them to patients — but I think there’s a concern that reimbursement won’t reflect that,” said Rachel Sachs, an associate professor of law at Washington University in Saint Louis.
It wouldn’t be the first time reimbursement issues meant patients didn’t get access to promising new drug: Hospitals have been reluctant to offer high-tech CAR-T treatments for conditions like cancer because low Medicare reimbursement rates would have forced them to lose money when administering these drugs.
It’s still too early to tell how much of a financial squeeze remdesivir will put on hospitals, or to guess what the government might do about it. The Trump administration declined to answer reporters’ questions Monday on whether it was considering an extra payment boost for remdesivir. In a separate media briefing Monday, White House press secretary Kayleigh McEnany told reporters hospitals could save money treating Covid-19 patients by administering remdesivir because it would shorten hospital stays.
Gilead did not respond to STAT’s questions on whether it would request a payment bump for the drug.
Hospitals aren’t reimbursed directly for drugs administered to Medicare patients at the bedside. Instead, in most cases, they’re reimbursed based on an average price that the government sets for treating a patient’s specific diagnosis. Right now Medicare is reimbursing between $6,000 and $40,000 per patient, depending on the severity of their illness, for example. But adding a multi-thousand-dollar drug to hospitals’ balance sheets without increasing their reimbursement could incentivize hospitals not to offer the drug, some experts worry.
“We want to signal to pharmaceutical companies that if they come up with effective drugs for the treatment of Covid-19, that we will pay for those drugs and administer them to patients — but I think there’s a concern that reimbursement won’t reflect that,” said Rachel Sachs, an associate professor of law at Washington University in Saint Louis.
It wouldn’t be the first time reimbursement issues meant patients didn’t get access to promising new drug: Hospitals have been reluctant to offer high-tech CAR-T treatments for conditions like cancer because low Medicare reimbursement rates would have forced them to lose money when administering these drugs.
It’s still too early to tell how much of a financial squeeze remdesivir will put on hospitals, or to guess what the government might do about it. The Trump administration declined to answer reporters’ questions Monday on whether it was considering an extra payment boost for remdesivir. In a separate media briefing Monday, White House press secretary Kayleigh McEnany told reporters hospitals could save money treating Covid-19 patients by administering remdesivir because it would shorten hospital stays.
Gilead did not respond to STAT’s questions on whether it would request a payment bump for the drug.
HHS is sticking to its chaotic system for distributing remdesivir
HHS announced Monday that it reached an agreement with Gilead to secure more than 500,000 doses of remdesivir and that it will allocate the new doses the same way it distributed previously donated doses of the medicine: The government will review data submitted by hospitals to determine how much to ship to each state and then state health officials determine which hospital in each state will get the drug. The drug distributor, AmerisourceBergen, will then send the drug where it's needed.
To say that system had some initial hiccups would be an understatement. Hospitals were clamouring back in May to track down initial shipments of remdesivir, which were sent around seemingly at random. But a senior HHS official told reporters Monday that HHS felt the agency still needed to be involved in distribution of the drug, “so every patient … would have an equal chance.” After all, absent an HHS intervention, major hospitals with existing relations with Gilead would likely have an easier time buying the drug than a rural hospital with a tiny staff and no D.C.-clout.
Despite the chaotic rollout just over a month ago, Heather Pierce, senior director and regulatory counsel at Association of American Medical Colleges, called the news “a relief.”
“It’s preferable to be using this system than to have the model switch to a purely commercial model where not only is there a charge for the drug but the allocation of the drug is dependent on individual hospitals' relationships with Gilead,” Pierce said. “Having each hospital or each state having to negotiate separately for a limited supply of the drug would be problematic.”
To say that system had some initial hiccups would be an understatement. Hospitals were clamouring back in May to track down initial shipments of remdesivir, which were sent around seemingly at random. But a senior HHS official told reporters Monday that HHS felt the agency still needed to be involved in distribution of the drug, “so every patient … would have an equal chance.” After all, absent an HHS intervention, major hospitals with existing relations with Gilead would likely have an easier time buying the drug than a rural hospital with a tiny staff and no D.C.-clout.
Despite the chaotic rollout just over a month ago, Heather Pierce, senior director and regulatory counsel at Association of American Medical Colleges, called the news “a relief.”
“It’s preferable to be using this system than to have the model switch to a purely commercial model where not only is there a charge for the drug but the allocation of the drug is dependent on individual hospitals' relationships with Gilead,” Pierce said. “Having each hospital or each state having to negotiate separately for a limited supply of the drug would be problematic.”
Drug prices hikes in the time of Covid-19
July 1st is rapidly approaching. For most Americans, that means Independence Day BBQs are right around the corner. For D.C. residents it means the incessant nightly fireworks are almost over. And for drug pricing nerds, it means drug price hikes! After all, drug makers often announce their mid-year price hikes on this day.
In anticipation of this year's increases, the Campaign for Sustainable Rx Pricing is out with a new poll finding that 83 percent of surveyed voters believed drug makers should suspend price hikes during the Covid-19 pandemic. The poll also has some striking findings, including that there’s still widespread support for drug pricing reform, despite drug makers’ efforts on Covid-19. In fact, 82% of those surveyed said policy makers “must ensure patients can access Covid-19 medications and prevent pharmaceutical companies from setting unreasonable prices.”
Those survey participants might be dismayed to see the results of a new report from a separate advocacy group, Patients for Affordable Drugs. A new report released Monday found that drug prices are going up at about the same pace during the coronavirus pandemic as they have in the past. The report found that 245 drugs increased in price between the first Covid diagnosis in the U.S. and June 20th.
Many of the price hikes they noted were for medicines doctors are using to treat Covid-19 patients, in part because of supply chain disruptions and in part, according to P4AD, because of “opportunistic hikes.” For example, sedatives like morphine, fentanyl, and ketamine, used to sedate patients on ventilators, have faced national shortages after a pandemic-induced 67% increase in demand. Drug companies have increased the price on all three drugs since the first COVID-19 case appeared in the U.S.
Other categories that endured price hikes include cardiovascular drugs, HIV drugs, autoimmune drugs, and mental health drugs, which, as of April, have seen a 21% increase in demand.
In anticipation of this year's increases, the Campaign for Sustainable Rx Pricing is out with a new poll finding that 83 percent of surveyed voters believed drug makers should suspend price hikes during the Covid-19 pandemic. The poll also has some striking findings, including that there’s still widespread support for drug pricing reform, despite drug makers’ efforts on Covid-19. In fact, 82% of those surveyed said policy makers “must ensure patients can access Covid-19 medications and prevent pharmaceutical companies from setting unreasonable prices.”
Those survey participants might be dismayed to see the results of a new report from a separate advocacy group, Patients for Affordable Drugs. A new report released Monday found that drug prices are going up at about the same pace during the coronavirus pandemic as they have in the past. The report found that 245 drugs increased in price between the first Covid diagnosis in the U.S. and June 20th.
Many of the price hikes they noted were for medicines doctors are using to treat Covid-19 patients, in part because of supply chain disruptions and in part, according to P4AD, because of “opportunistic hikes.” For example, sedatives like morphine, fentanyl, and ketamine, used to sedate patients on ventilators, have faced national shortages after a pandemic-induced 67% increase in demand. Drug companies have increased the price on all three drugs since the first COVID-19 case appeared in the U.S.
Other categories that endured price hikes include cardiovascular drugs, HIV drugs, autoimmune drugs, and mental health drugs, which, as of April, have seen a 21% increase in demand.
Some serious deja vu on Capitol Hill
Drug pricing took center stage on Capitol Hill Monday, and so did some serious drama.
First, came an explosive new op-ed from Senate Finance Committee Chairman Chuck Grassley (R-Iowa) accusing his Democratic counterpart, Sen. Ron Wyden (D-Ore.), of walking away from a bipartisan drug pricing deal the two penned last year. As someone who watched Grassley and Wyden pat each other on the back and even take photos as they celebrated the bill passing out of committee last July, Grassley’s accusations were striking, and underscored that the seemingly bipartisan momentum to rein in high drug prices has all but vanished on Capitol Hill.
There was drama on the House side, too:Democrats held a vote Monday on a package of reforms to the Affordable Care Act, which also included the House’s previously-passed drug pricing bill, HR 3. As debate unfolded on the House floor, Republicans repeatedly slammed Democrats for pushing legislation they say will kill innovation during a global pandemic.
In a last ditch effort to kill H.R. 3, and to unleash some serious sass, Rep. Greg Walden, the top Republican on the House Energy & Commerce Committee, introduced a last-minute procedural motion that would prevent H.R. 3 from going into effect unless the federal government certified it wouldn’t prevent the development of any Covid-19 treatments. The motion failed 187-223, although Republicans succeeded in getting nine Democrats to vote for the motion.
First, came an explosive new op-ed from Senate Finance Committee Chairman Chuck Grassley (R-Iowa) accusing his Democratic counterpart, Sen. Ron Wyden (D-Ore.), of walking away from a bipartisan drug pricing deal the two penned last year. As someone who watched Grassley and Wyden pat each other on the back and even take photos as they celebrated the bill passing out of committee last July, Grassley’s accusations were striking, and underscored that the seemingly bipartisan momentum to rein in high drug prices has all but vanished on Capitol Hill.
There was drama on the House side, too:Democrats held a vote Monday on a package of reforms to the Affordable Care Act, which also included the House’s previously-passed drug pricing bill, HR 3. As debate unfolded on the House floor, Republicans repeatedly slammed Democrats for pushing legislation they say will kill innovation during a global pandemic.
In a last ditch effort to kill H.R. 3, and to unleash some serious sass, Rep. Greg Walden, the top Republican on the House Energy & Commerce Committee, introduced a last-minute procedural motion that would prevent H.R. 3 from going into effect unless the federal government certified it wouldn’t prevent the development of any Covid-19 treatments. The motion failed 187-223, although Republicans succeeded in getting nine Democrats to vote for the motion.
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