ICER Provides First Update to Pricing Models for Remdesivir as a Treatment for COVID-19

— Updated cost-recovery benchmark price now framed as a range with maximum of $1,600 per 10-day regimen when incorporating assumptions regarding manufacturer’s 2020 development expenses, uptake of remdesivir, and consideration of early examples of real-world generic pricing —

— Highlighted “cost-effectiveness” benchmark price shifts modestly higher to a range from $4,580 to $5,080 based on new peer-reviewed data on remdesivir; however, a new scenario analysis assuming the likely incorporation of dexamethasone as standard of care produces a lower benchmark price range for remdesivir of $2,520 to $2,800 —

— Report contains additional scenario analyses to help policy makers debate what assumptions and pricing paradigms are most appropriate to achieve rapid development and distribution of treatments for a global pandemic —

BOSTON, June 24, 2020 – The Institute for Clinical and Economic Review (ICER) today released updated analyses to inform public debate of pricing for remdesivir (Gilead Sciences) and other future treatments of COVID-19.

Adhering to ICER’s adapted methodology for evaluating treatments for a pandemic, the ICER-COVID models comprise two alternative pricing paradigms for COVID-19 treatments: 1) “cost recovery” for the manufacturer, in which the price is adequate to return the costs of production of the drug and may also recoup drug-specific development costs; and 2) traditional cost-effectiveness analyses looking at the incremental health benefits and costs within the health system. ICER had previously published results from an initial iteration of the ICER-COVID models on May 1, and today’s updated models incorporate changes based on recent clinical data, updated cost estimates, public comments, and interactions with the manufacturer.

“Reaction to our initial ICER-COVID analyses confirms policymakers are eager to weigh and debate multiple approaches to pricing in a pandemic,” said Steven D. Pearson, MD, MSc, ICER’s President. “We hope that our ongoing updates to these models will continue to spur public discussion about determining the most equitable and productive way to improve public health and economic stability during times like these. As with all drug pricing decisions, policy makers should weigh potential other benefits of treatment and broader contextual considerations as important in framing the results of cost-recovery and cost-effectiveness analyses. Future updates to our report will continue to assess the evolving clinical landscape, including emerging peer-reviewed data on remdesivir, dexamethasone, and other emerging therapies.”

ICER-COVID Model 1: Cost Recovery

ICER’s updated cost-recovery benchmark price range for a full course of remdesivir is $10 to $600 if only considering the marginal cost of producing the treatment, and $1,010 to $1,600 if also considering the manufacturer’s forecasted 2020 clinical development expenses related to the treatment.

To understand the cost of producing the next course of remdesivir therapy, we continue to use as one part of our estimate an article by Hill et all in the Journal of Virus Eradication (2020) that suggests the raw materials needed to make remdesivir would cost approximately $10 for a 10-day course of treatment. In addition to this estimate, we are now incorporating an estimated $600 price based on the pricing announced by three early generic producers of remdesivir in Bangladesh and India.

The extent to which research and development costs should be considered as an empirical element in considerations of pricing for new treatments is disputed. In our updated analysis, we continue to provide a cost-recovery pricing estimate linked solely to the marginal cost of production, but we have now added a second approach that seeks to include projected spending by Gilead Sciences for research directly related to understanding the risks and benefits of remdesivir for patients with COVID-19. To estimate this investment, we reference public statements by Gilead that the company plans to spend $1 billion in clinical development on remdesivir in 2020. Based on additional statements from Gilead, we have assumed at this stage that approximately 1 million treatment courses will be available and sold within the first year, and that the $1 billion cost should be recovered over this number of treated patients. Using these assumptions, the cost-recovery pricing for remdesivir would need to include $1,000 for each course of treatment sold. As the manufacturer spends new money going forward on clinical trials for the COVID-19 population, consideration will be given to including these costs as a possible component of a cost-recovery price estimate.

ICER-COVID Model 2: Traditional Cost-Effectiveness

In ICER’s updated base case analysis, our highlighted cost-effectiveness benchmark price range for remdesivir is $4,580 to $5,080 per treatment course. This benchmark assumes a mortality benefit for remdesivir, that treatment is within a predominantly “severe” population as represented in the ACTT-1 trial, and that the standard of care does not include treatment with dexamethasone. An important new scenario analysis evaluates remdesivir if used within a population also receiving dexamethasone as standard of care; under those conditions, the same cost-effectiveness price benchmark for remdesivir falls to a range of $2,520 to $2,800, due to the estimated contribution of dexamethasone in reducing the underlying risk of mortality.

The new scenario analysis was based on striking – but preliminary and non-peer reviewed – data suggesting that dexamethasone, an inexpensive and widely available steroid medication, reduces mortality in hospitalized patients with COVID-19. Clinical experts advised us that dexamethasone will rapidly become standard of care, but we have chosen not to make it the ICER base case at this juncture pending further details and peer review of the data. In another scenario analysis, we consider the cost-effectiveness of remdesivir based solely on its demonstrated benefit of shortening time to improvement, but without a mortality benefit – an outcome that did not reach statistical significance in the Adaptive COVID-19 Treatment Trial (ACTT-1); without an assumption of mortality benefit, the cost-effectiveness benchmark price falls to $310.

ICER continues to calculate pricing levels to meet various cost-effectiveness thresholds while highlighting the policy relevance of pricing in a pandemic at $50,000 per quality-adjusted life year (QALY) and per Equal Value of a Life Year Gained (evLYG). The report provides cost-effectiveness benchmark prices at higher cost-effectiveness thresholds, but we continue to believe that the $50,000 per QALY/evLYG threshold is more likely to be policy-relevant for consideration of a treatment being evaluated for use in a public health emergency.

Since publishing our initial ICER-COVID models, we have incorporated several key adjustments into our cost-effectiveness model, including:

  • Newly available peer-reviewed data from the Adaptive COVID-19 Treatment Trial (ACTT-1) was used, including an adjusted hazard ratio for mortality and an adjusted rate ratio for time to recovery.
  • Average age at death was estimated based on US epidemiological evidence that was adjusted to the ACTT-1 population.
  • Annual health-related costs for those who recovered were updated to be consistent with evidence.
  • Added scenario analyses assuming use of dexamethasone as part of standard care, incorporating emerging evidence on the impact of dexamethasone on mortality.

To inform understanding of our model and guide public comments, a full list of assumptions and updated inputs are included within an appendix of the updated report.

Broader Societal Benefits of an Economic Recovery

ICER is aware that a very effective treatment for COVID-19 may alter how society contemplates the risk/reward tradeoffs of relaxing social distancing measures, which in turn could spur an economic recovery. The ICER-COVID models do not include these potential effects because ICER assumes that policymakers would view it inappropriate to set a price for a treatment for COVID-19 to capture the potential broader economic benefits associated with future economic recovery. However, as with all drug pricing decisions, policy makers should weigh potential other benefits of treatment and broader contextual considerations as important in framing the results of cost-recovery and cost-effectiveness analyses.

Additional Information and Public Input

Adhering to ICER’s adapted methodology for assessing treatments for a pandemic, this ongoing initiative is a collaboration between ICER and Drs. Melanie Whittington and Jon Campbell, academic researchers from ICER’s Health Economics Council. Additional assumptions, citations, and scenario analyses can be found within the detailed summary of the ICER-COVID models. Following the May 1 publication of our initial ICER-COVID models, we received public comments, which we considered when producing this update. Further, an independent member of ICER’s Health Economics Council reviewed the ICER-COVID CEA model code. We will continue to re-assess each model regularly based on feedback and emerging data, and we will publish frequent updates. Click here for a complete timeline of the history of this assessment.

All feedback and suggestions can be emailed to ICER at publiccomments@icer-review.org.

About ICER

The Institute for Clinical and Economic Review (ICER) is an independent non-profit research institute that produces reports analyzing the evidence on the effectiveness and value of drugs and other medical services. ICER’s reports include evidence-based calculations of prices for new drugs that accurately reflect the degree of improvement expected in long-term patient outcomes, while also highlighting price levels that might contribute to unaffordable short-term cost growth for the overall health care system. For more information about ICER, please visit ICER’s website.