Gilead’s moral (and financial) COVID-19 conundrum

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Good afternoon, readers.

When remdesivir, biotech giant Gilead’s experimental antiviral drug, was given Food and Drug Administration (FDA) emergency authorization to treat certain COVID-19 patients, you might have thought that investors would rush into the breach.

But life—and the life sciences market—has a way of throwing curveballs at you. Since President Donald Trump announced remdesivir had received FDA authorization last Friday, Gilead’s stock has actually fallen more than 6.8%. The slide began promptly after the announcement.

As experienced biopharma investor Brad Loncar told me last week, there are plenty of factors fueling that slide. “Biotech investors know there’s no money in this,” he said, in part referring to “biotech ‘generalists’ who are throwing money at everything they see in the headlines.”

Those generalists are just looking to make a quick buck off of anything related to COVID, but they’re anxious that public scrutiny will rob treatments like remdesivir of profitability. (Loncar argues that it’s more important to look to the long-term science demonstrated in remdesivir’s development, and the implications it has for a company like Gilead in the future.)

But it can be difficult for companies to strike a proper balance in the midst of a pandemic, especially in the short term. Gilead CEO Daniel O’Day is well-attuned to that reality. He’s stated on multiple occasions that the biotech will be under immense pressure to price remdesivir fairly. The firm has also committed to giving away its existing batches for free and investing $1 billion in scaling up availability—a gigantic sum with no assurance of anything approaching a big return.

And therein lies the rub. Just how might Gilead price this treatment over the long term?

The Institute for Clinical and Economic Review (ICER), a pharmaceutical pricing watchdog that has long been a thorn in the industry’s side, has a few ideas.

ICER believes the treatment would be cost-effective at a price tag of $4,460 per patient—with some caveats. The current version of remdesivir is administered via IV in a hospital setting for seriously sick COVID-19 patients, and while it’s nothing approaching a cure, it has shown results in cutting down on hospital stays and clearing up expensive medical equipment such as ventilators for wider use.

ICER lays out a number of different scenarios for remdisivir pricing ranging from a non-profit approach that might be justified at $10 per treatment to the $4,460 number that would require more evidence showing remdesivir decreases mortality risk.

So what will Gilead do? The company won’t be announcing a price point until more data may change the calculus. It will be a tightrope act between corporate citizenship during a disaster and financial imperatives.

Read on for the day’s news, and see you again next week.

Sy Mukherjee
sayak.mukherjee@fortune.com
@the_sy_guy

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