- At the outbreak of the pandemic, Gilead Sciences donated its remdesivir supply to the government.
- Now, the company has outlined the charges it will start billing for in July.
- Gilead stock continues to rally in 2020.
Back in May, the FDA approved the emergency use of remdesivir, a drug created by Gilead Sciences (NASDAQ: GILD) to treat Ebola, for COVID-19 patients. Gilead donated its supply for the government to use.
Now, it’s time to pay the piper. In July, Gilead will begin charging for the drug.
How Remdesivir Works – and Doesn’t
Remember, the drug doesn’t actually cure COVID-19. Remdesivir works by interfering with the virus’ ability to replicate.
It’s been proven to help shorten recovery times by four days. That’s still 11 days, on average, instead of 15.
What’s more, the drug only has FDA approval for use right now as an emergency measure. It was never even approved for its original purpose of treating Ebola.
So what’s it cost to shorten a COVID-related illness by four days? It depends on who’s paying for it.
Gilead just outlined how much it expects to charge for treatments. From the numbers, it’s clear that price discrimination is in full force.
Gilead’s Numbers Show Discrimination at Work
A typical treatment for hospitals in the U.S. will run about $3,120. That’s 2.6 stimulus checks, for those that got them. That works out to $520 per dose. At least for patients who are commercially insured through a private plan, which includes workplace plans.
For the U.S. government via Medicare or similar programs, the cost is 25% lower at $390 per dose. That means a short treatment could run just $2,340, or up to $4,290 for a longer course. That’s a pretty steep bulk discount to the government!
Meanwhile, other prospective drugs for treating COVID-19 may have higher efficacy and a lower price. According to one large study, the steroid dexamethasone has proven effective at lowering the mortality rate, and a dose can be bought for less than $50.
And that’s to say nothing of antimalarial drug hydroxychloroquine, which can be bought for under $1 per dose. Hydroxychloroquine is controversial in the medical community, although its potential benefits were touted by President Trump – who admitted to taking the drug.
Expect Gilead Stock to Continue to Shine
Naturally, shares of Gilead are rallying today. Year-to-date, Gilead is up over 15%. The S&P 500 Index is still down nearly 7% from where it started the year.
Expect that outperformance to continue as the company starts taking advantage of panic-induced demand for its not-quite-approved Ebola drug.
Clearly, despite a pandemic, it’s business as usual for Gilead Sciences. The company receives revenue to work on drugs that can pass FDA muster. And shareholders will be happy to see more money coming in right now too.
Sure, Gilead bought some goodwill by donating their supplies to the government at the outbreak of the crisis. But you know what they say in the drug industry… the first one’s free.
Disclaimer: This article represents the author’s opinion and should not be considered investment or trading advice from CCN.com. Unless otherwise noted, the author has no position in any of the stocks mentioned.