Few remember the time when the pharmaceutical industry was the world’s most admired. The leader was Merck, which was deemed by Fortune magazine to be the “World’s Most Admired Company” for seven straight years starting in 1987. As recently as 1997, three pharmaceutical companies were in the top ten of Fortune’s list including Merck (#3), Johnson & Johnson (#4) and Pfizer (#8).
But these heady days evaporated for the industry in the 21st century as evidenced by the following headlines. (p.96)
“Side-effects may include lawsuits.” – NY Times, October 2, 2010 “Big Pharma’s Shame: emerging markets bribery.” – MSNBC.MSN.com, February 28, 2012 “Drugmakers have paid $8 billion in fraud fines in the last decade.” – USA Today, March 7, 2012
The fines, the illegal detailing of drugs, the revelations about millions of dollars of payments being made to physicians who prescribe drugs, the lack of transparency with respect to the publishing of clinical trial results, all took a tremendous toll. As a result, the pharmaceutical industry’s reputation fell below that of almost every other industry. For an industry that prided itself in doing good by helping patients around the globe, this was devastating.
The pharmaceutical industry has worked hard to turn things around. Companies now have strict rules with respect to how sales reps are allowed to interact with physicians and healthcare providers. Any payment of more than $10 that is made to a healthcare provider, be it for meals, promotional events, speaking engagements, etc., must be made public on the company’s website, thus enabling anyone to see if her physician is receiving payments from a drug company and for what purpose. All clinical trials being conducted by a company must be listed on ClinicalTrials.gov for all the world to see. Furthermore, within 12 months of the completion of the trial, the results must also be posted on this website. In fact, the transparency that the industry has shown in reporting the results of these trials stands in stark contrast to the behaviors of academic and federal clinical trial sponsors who have been derelict in their reporting obligations.
It should also be noted that during the last decade, the industry has had historic productivity in producing new drugs. A bounty of new medicines are now available to patients to treat cancer, heart disease, hepatitis C, inflammatory diseases, rare diseases etc. Yet, despite all of this, a Gallup poll last September showed that the pharmaceutical industry’s reputation remained at the bottom of 25 prominent U.S. industries. While it made improvements on many fronts, the industry remains plagued by controversies around drug prices and access to medicines. Ironically, despite the public’s perception, wholesale drug prices, as well as net prices, have been falling for most drugs.
Enter Covid-19. Within days of the emergence of SARS-CoV-2, the pharmaceutical industry mobilized to attack this virus. Gilead, acting quickly, was able to reposition a failed Ebola drug into a treatment for Covid-19. Named remdesivir, this antiviral was given an Emergency Use Approval by the FDA in record time. Many other companies including Moderna, Pfizer, Merck, AstraZeneca, and GSK have worked feverishly on getting a vaccine for this coronavirus and some vaccines have already entered human studies. Companies are also looking for other therapeutic agents that can be used to treat the virus and the health complications that it causes. These actions are unprecedented.
These efforts have certainly been noticed by the public. A recent Harris Poll found that 40% of Americans have a more positive viewof the pharmaceutical industry than they did before the pandemic. People are impressed – and thankful – with the efforts that the industry is making with respect to vaccines, therapeutic agents and diagnostic tests. The pharmaceutical industry’s value and strengths are being appreciated for the first time in a long while.
Unfortunately, this can all go south pretty quickly. Lurking in the background of the race to treat and cure Covid-19 is the issue of drug pricing. With Gilead’s remdesivir the first drug out of the gate, all will be watching to see how high – or low – the pricing bar will be set. Speculation has been all over the place. Most interesting has been the analysis done by the Institute for Clinical and Economic Review (ICER), the self-proclaimed nation’s watchdog on drug pricing. ICER believes that, assuming remdesivir can successfully treat Covid-19 and get people back to work at least four days earlier, a cost of $4,500 per patient is justified. That’s a stunning price, especially coming from the usually conservative non-profit ICER.
Would Gilead set such a price? To date, Gilead’s behaviors have been exemplary. Thus far, it has provided 1.5 million doses of remdesivir at no cost to patients and has invested about $1 billion for development and manufacturing. Yet, Gilead has downplayed the potential commercial prospects for its antiviral implying that remdesivir won’t be an example of price gouging. Still, Gilead should be allowed to more than break even for such an important drug. Furthermore, without a significant ROI, Gilead and others might be reluctant to get involved when the next pandemic occurs.
Whatever price Gilead sets for remdesivir will be the subject of intense scrutiny and debate. Investors will demand a high price to maximize their returns. The public will want it to be priced less than its daily cup of coffee. That’s a range of about $2.50 to $5,000 per patient. But affordability and access will drive the public’s view. Furthermore, the entire industry’s image will be impacted by Gilead’s decision. A price that’s deemed reasonable by patients and payers will be applauded and will reflect well on the industry. A very high price will evoke responses of “same old pharma” and invite more calls from politicians to enact price controls for drugs or, even worse, demands for exercising march-in rights to take over remdesivir and other Covid-19 vaccines or drugs.
Gilead’s decision will set the tone for the Covid-19 vaccines and drugs that will follow. It will also impact the reputation of the whole industry. It’s not an easy decision. Let’s hope they get it right.