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Perspectives on Remdesivir’s $3,120 Price Tag

August 6, 2020

Gilead Sciences, Inc. revealed that for promising COVID-19 treatment remdesivir, it will charge $2,340 for a typical five-day, six-vial treatment course for people covered by U.S. government health programs and $3,120 for those covered by private insurance, AIS Health reported.

In an open letter, Gilead CEO Daniel O’Day argued that Gilead priced remdesivir “well below” its estimated value, considering it can save the U.S. health care system approximately $12,000 per patient by reducing the length of COVID-19 patients’ hospital stays.

But not everyone is convinced by that argument.

Gilead Sciences, Inc. revealed that for promising COVID-19 treatment remdesivir, it will charge $2,340 for a typical five-day, six-vial treatment course for people covered by U.S. government health programs and $3,120 for those covered by private insurance, AIS Health reported.

In an open letter, Gilead CEO Daniel O’Day argued that Gilead priced remdesivir “well below” its estimated value, considering it can save the U.S. health care system approximately $12,000 per patient by reducing the length of COVID-19 patients’ hospital stays.

But not everyone is convinced by that argument.

“So they’re saying by shortening hospital stays, the system is going to save all these monies, but I always ask the question, ‘Why is it that the drug company should get to pocket all or some substantial portion of that savings?'” says Jack Hoadley, Ph.D., a research professor emeritus at Georgetown University’s Health Policy Institute. “That’s a savings we should accumulate for consumers, for payers [and] everybody else.”

Hoadley is not alone in those views. The advocacy group Patients for Affordable Drugs, in a June 29 statement, wrote that “Gilead’s price for remdesivir shows once again that we can’t trust Big Pharma to act responsibly — even in the face of a global pandemic.”

The U.S. government helped fund the development of remdesivir, and dexamethasone — a generic steroid — is priced at less than $1 per day even though it ‘showed promise for combating severe COVID-19 cases and reducing potential mortality rates,” the organization said.

The Institute for Clinical and Economic Review (ICER) also brought up dexamethasone in its statement. The U.S. price range of $2,340 to $3,120 is “is largely in line with ICER’s independent assessment suggesting that a price of approximately $2,800 would be reasonable in proportion to the added benefits for patients and the cost offsets in the health system now that dexamethasone is rapidly becoming standard of care,” wrote ICER President Steven D. Pearson, M.D.

Leerink analyst Geoffrey Porges, in a June 29 note to investors, pointed out that the U.S. commercial price set for remdesivir was below his firm’s expectations. Still, “we believe the disclosed [remdesivir] pricing is reasonable, and should provide significant value to the Gilead shareholders and still deflect much of the criticism the company might face in this emergency,” Porges wrote.

Radar On Market Access: Experts Are Skeptical of Trump Administration’s Drug Pricing Executive Orders

August 4, 2020

In executive orders released July 24, the Trump administration renewed its push toward a signature campaign issue: lowering drug prices. The three executive orders call for regulations allowing drugs to be imported from other countries, requiring Federally Qualified Health Centers to make insulin and epinephrine available to low-income members of the public at the discounted prices set by the 340B Drug Pricing Program, and removing safe harbor protections under the Anti-Kickback Statue for prescription drug rebates in Medicare Part D, AIS Health reported.

“I think that what you have here is a collection of policies that are intended to make noise, but will have little to no practical effect on drug prices before the election,” Avalere founder Dan Mendelson says.

In executive orders released July 24, the Trump administration renewed its push toward a signature campaign issue: lowering drug prices. The three executive orders call for regulations allowing drugs to be imported from other countries, requiring Federally Qualified Health Centers to make insulin and epinephrine available to low-income members of the public at the discounted prices set by the 340B Drug Pricing Program, and removing safe harbor protections under the Anti-Kickback Statue for prescription drug rebates in Medicare Part D, AIS Health reported.

“I think that what you have here is a collection of policies that are intended to make noise, but will have little to no practical effect on drug prices before the election,” Avalere founder Dan Mendelson says.

Marc Samuels, CEO of ADVI, says that the proposals seem half-baked, and will likely draw strong opposition. “These executive orders are consistent with the previous [drug pricing] blueprint adopted by the Administration and debated in part in Congress. But having the authority to make quick changes doesn’t mean doing so is a good idea, especially so close to an election,” he says.

The idea of importing drugs from other developed countries, and relying on their drug safety inspection regimes, has popped up in the past. Mendelson, who ran the health division of the Office of Management and Budget between 1998 and 2000, says that although the Clinton administration considered the idea seriously, it found that it wasn’t feasible.

“We looked at it and rejected the policy because we were concerned that it wouldn’t work, and that in fact it would not only compromise the pharmaceutical supply chain but also likely be rejected by the very countries we would want to import the drugs from,” Mendelson explains.

The rebate order addresses a persistent challenge for the administration. And Citi analyst Ralph Giacobbe is skeptical that the proposal will actually manifest substantial changes in the way PBMs do business.

“While this will resurrect some debate on the PBM business model, we see the likelihood as either low or limited in scope,” Giacobbe wrote in a note. “Additionally, [with] the language of HHS having to confirm that this action does not increase federal spending, Medicare beneficiary premiums or out-of-pocket cost may make it a moot point since premiums will definitively rise, in our opinion.”

A fourth executive order would tie drug prices to their list prices in countries with Most Favored Nation status. That order has not yet been released, but could be in the coming weeks.

Radar On Market Access: Manufacturers, Payers Wait on Federal COVID-19 Vaccine Distribution Plan

July 28, 2020

As the many COVID-19 vaccines under development barrel toward clinical trials for safety and efficacy, questions remain about how they will be distributed when they become available, AIS Health reported.

In a hearing held by a subcommittee of the House Energy & Commerce committee, pharmaceutical executives said they would rely on guidance from the Trump administration and the Centers for Disease Control and Prevention (CDC) to distribute vaccine doses.

As the many COVID-19 vaccines under development barrel toward clinical trials for safety and efficacy, questions remain about how they will be distributed when they become available, AIS Health reported.

In a hearing held by a subcommittee of the House Energy & Commerce committee, pharmaceutical executives said they would rely on guidance from the Trump administration and the Centers for Disease Control and Prevention (CDC) to distribute vaccine doses.

Those guidelines will be important to insurers, as vaccine doses aren’t likely to be available to everyone immediately, according to Mike Schneider, a principal at Avalere Health. Though some firms have already begun manufacturing doses of their vaccine in parallel to testing, the immediate availability of hundreds of millions of doses at the time of FDA approval would be unprecedented.

Schneider notes that multiple vaccines may be available at the same time, and one may offer greater protection from COVID-19 than others. Protocols will need to be developed to determine which patients will be first in line for the most effective vaccine. Schneider says that plans need to start thinking about their internal guidelines now.

He adds that PBMs, which often have the most robust data about a patient’s drug regimen and immunization status, will be essential to tracking who has been vaccinated and screened.

Schneider says that plans are unlikely to favor one vaccine over another in their formularies. For example, Prime Therapeutics, a PBM owned by Blue Cross and Blue Shield affiliates, says it is committed to obtaining a supply of COVID-19 vaccine as soon as possible, seemingly regardless of who manufactures it.

A July 20 analysis prepared by health care investment bank SVB Leerink LLC takes a different view of the shape of the initial vaccine market than Schneider’s prediction of scarcity, arguing that the sheer volume of development efforts makes more than one breakout product likely.

In any case, Schneider predicts that the initial rollout will be unusual when compared with other vaccine distribution.

“This won’t just be going to your pharmacy and your pharmacist gives you a vaccine, like the flu vaccine,” Schneider says. He suspects that rollout will involve specialized facilities that combine rapid screening with inoculations at the same site.

Perspectives on Trump Admin’s COVID-19 Testing Payment Guidance

July 23, 2020

As more employers turn to COVID-19 testing to see if employees are safe to return to the workplace, the Trump administration has clarified that insurers must cover only physician-ordered “medically necessary” diagnostic and antibody tests, AIS Health reported.

The guidance, released jointly on June 23 by HHS, the Dept. of Labor and the Dept. of the Treasury, also says self-funded employer plans must pay for COVID-19 testing that’s medically appropriate.

As more employers turn to COVID-19 testing to see if employees are safe to return to the workplace, the Trump administration has clarified that insurers must cover only physician-ordered “medically necessary” diagnostic and antibody tests, AIS Health reported.

The guidance, released jointly on June 23 by HHS, the Dept. of Labor and the Dept. of the Treasury, also says self-funded employer plans must pay for COVID-19 testing that’s medically appropriate.

“Testing conducted to screen for general workplace health and safety (such as employee ‘return to work’ programs), for public health surveillance for SARS-CoV-2, or for any other purpose not primarily intended for individualized diagnosis or treatment of COVID-19 or another health condition is beyond the scope” of the requirements embedded in the legislation approved by Congress earlier this year that requires insurers to pay for COVID-19 testing, the FAQ document said.

“I think now that [the insurers] have had this clarification, they’re going to use that as part of their determination of coverage,” Ashraf Shehata, KPMG national sector leader for health care and life sciences, tells AIS Health.

Richard Hughes IV, managing director at Avalere Health, says that it’s possible to argue that Congress intended insurers to cover all tests for their members, regardless of whether a physician ordered them, whether the person was symptomatic, or whether the test was needed to return to work.

However, Hughes says it’s also possible to argue that Congress gave CMS the authority to implement these testing requirements with some restrictions. “There could be tremendous variability across payers’ approaches to coverage policy and how they process claims,” he says.

In fact, many insurers already have moved to limit testing coverage in some ways, although their policies are fluid and have been updated frequently, says Danielle Showalter, principal at Avalere.

Individuals whose plans will not cover a test can turn to what Shehata calls the “retail model,” which is direct-to-consumer COVID-19 testing sites that don’t require a health care provider’s permission. Costs vary for this type of testing, which generally wouldn’t be covered by insurance unless the person is symptomatic.

Radar On Market Access: Trump Admin’s COVID-19 Testing Payment Guidance Stirs Debate

July 21, 2020

Weeks after the Trump administration released guidance saying private health insurers don’t have to pay for COVID-19 testing conducted for the purposes of workplace safety or public health surveillance, questions and controversy are still simmering about the implications of that edict, AIS Health reported.

“With COVID-19 cases skyrocketing and our testing capacity nowhere near where it needs to be, it is unacceptable that this Administration’s priority seems to be giving insurance companies loopholes instead of getting people the free testing they need,” wrote Frank Pallone Jr. (D-N.Y.), Bobby Scott (D-Va.), Richard Neal (D-Mass.), Patty Murray (D-Wash.) and Ron Wyden (D-Ore.) in a recent letter to HHS, the Dept. of Labor and the Treasury Dept.

Weeks after the Trump administration released guidance saying private health insurers don’t have to pay for COVID-19 testing conducted for the purposes of workplace safety or public health surveillance, questions and controversy are still simmering about the implications of that edict, AIS Health reported.

“With COVID-19 cases skyrocketing and our testing capacity nowhere near where it needs to be, it is unacceptable that this Administration’s priority seems to be giving insurance companies loopholes instead of getting people the free testing they need,” wrote Frank Pallone Jr. (D-N.Y.), Bobby Scott (D-Va.), Richard Neal (D-Mass.), Patty Murray (D-Wash.) and Ron Wyden (D-Ore.) in a recent letter to HHS, the Dept. of Labor and the Treasury Dept.

James Gelfand, senior vice president of health policy at the ERISA Industry Committee (ERIC), tells AIS Health that he’s fielded concerns that since insurers aren’t paying for back-to-work testing, workers might have to. But in reality, many of the large, self-insured businesses that ERIC represents “are starting to reopen and relaunch back up to full capacity, but most of them are not using a robust testing regime to do so.” The reason, he says, is that diagnostic tests “are essentially taking a snapshot of a moment in time with sometimes a 10-day lag time,” so they’re not very helpful to employees who need to know right away if they’re safe to go back to work.

Steve Wojcik, vice president of public policy at the Business Group on Health, says he sees the logic behind not forcing health insurers to pay for back-to-work testing.

“If there is a medical reason…to get tested, and a doctor is recommending it, then the health plan would cover it, but if testing is part of return to work, some employers may be incorporating testing [costs] into their return-to-work plans,” he points out.

According to Christen Linke Young, a fellow at the USC-Brookings Schaeffer Initiative for Health Policy, a separate problem is the fact that private insurers are required to pay for out-of-network COVID-19 testing at whatever cash price that a lab or provider lists on a public website. Because those prices aren’t necessarily constrained by prevailing market rates, that can “put a lot of upward pressure on insurance reimbursement for tests,” she says.

Radar On Market Access: Remdesivir’s $3,120 Price Tag Stirs Debate

July 14, 2020

Gilead Sciences, Inc. recently revealed that for promising COVID-19 treatment remdesivir, it will charge $2,340 for a typical five-day, six-vial treatment course for people covered by U.S. government health programs and $3,120 for those covered by private insurance, AIS Health reported.

In an open letter, Gilead CEO Daniel O’Day argued that Gilead priced remdesivir “well below” its estimated value, considering it can save the U.S. health care system approximately $12,000 per patient by reducing the length of COVID-19 patients’ hospital stays.

Gilead Sciences, Inc. recently revealed that for promising COVID-19 treatment remdesivir, it will charge $2,340 for a typical five-day, six-vial treatment course for people covered by U.S. government health programs and $3,120 for those covered by private insurance, AIS Health reported.

In an open letter, Gilead CEO Daniel O’Day argued that Gilead priced remdesivir “well below” its estimated value, considering it can save the U.S. health care system approximately $12,000 per patient by reducing the length of COVID-19 patients’ hospital stays.

But not everyone is convinced by that argument.

“So they’re saying by shortening hospital stays, the system is going to save all these monies, but I always ask the question, ‘Why is it that the drug company should get to pocket all or some substantial portion of that savings?'” says Jack Hoadley, Ph.D., a research professor emeritus at Georgetown University’s Health Policy Institute. “That’s a savings we should accumulate for consumers, for payers [and] everybody else.”

Hoadley is not alone in those views. The advocacy group Patients for Affordable Drugs, in a June 29 statement, wrote that “Gilead’s price for remdesivir shows once again that we can’t trust Big Pharma to act responsibly — even in the face of a global pandemic.”

The U.S. government helped fund the development of remdesivir, and dexamethasone — a generic steroid — is priced at less than $1 per day even though it ‘showed promise for combating severe COVID-19 cases and reducing potential mortality rates,” the organization said.

The Institute for Clinical and Economic Review (ICER) also brought up dexamethasone in its statement. The U.S. price range of $2,340 to $3,120 is “is largely in line with ICER’s independent assessment suggesting that a price of approximately $2,800 would be reasonable in proportion to the added benefits for patients and the cost offsets in the health system now that dexamethasone is rapidly becoming standard of care,” wrote ICER President Steven D. Pearson, M.D.

Leerink analyst Geoffrey Porges, in a June 29 note to investors, pointed out that the U.S. commercial price set for remdesivir was below his firm’s expectations. Still, “we believe the disclosed [remdesivir] pricing is reasonable, and should provide significant value to the Gilead shareholders and still deflect much of the criticism the company might face in this emergency,” Porges wrote.