On Monday, Gilead Science announced the cost of remdesivir, the first approved treatment for COVID-19. The drug doesn’t improve a patient’s chances of surviving — at best, it speeds up recovery and lowers the need for hospitalization from fifteen to eleven days, according to a study from the National Institute of Allergy and Infectious Diseases.
While not a miracle cure, Gilead’s pricing would lead you to believe it was. To receive the required six treatments of the drug, private insurance companies will be charged $3,120 — a healthy margin for a medication whose total course of treatment costs $10 to produce. Gilead’s argument is that the reduction in hospital care provides a cost savings that justifies the price.
That price is reserved for American patients with private health insurance, Medicaid, or Medicare, however. In other developed countries, their health care systems will pay 25 percent less for remdesivir. (The same discounted price is also being applied to US government agencies, specifically VA hospitals and the Department of Defense, that directly purchase prescription drugs.)
Why the discrepancy, despite the fact that American taxpayers have spent $70,000,000 to develop the drug in the form of grants from the National Institutes of Health? Simply, nearly every other developed country on the planet has some form of universal government insurance and regulates the price of prescription drugs in their system.
This isn’t Gilead’s first — or even its most outrageous — example of gouging Americans for a drug our tax dollars helped to develop. The company sells Hepatitis C cures Sovaldi and Harvoni. Initially, these drugs cost more than $1,000 per pill in the United States but were available for around 60 percent of that cost in Europe.
The price was so excessive that even when the price was reduced to $500 a pill in the United States, doctors from Sloan Kettering and the MIT Center for Biomedical Innovation suggested it would be an overall cost savings if the federal government simply bought Gilead, awarding their shareholders a 30 percent premium, while paying off the company’s $26 billion in debt. At the time, this would have cost taxpayers $156 billion but reduced the per-patient cost of the drug from $42,000 to $15,700, while eliminating the cost entirely for patients who receive Medicare or Medicaid, along with active military, federal and state government employees, and veterans.
When addressing the high cost of drugs in the United States, Democrats have proposed a patchwork of solutions. The most commonly talked about are allowing importation of lower-priced drugs from other countries and allowing Medicare to negotiate prices with prescription drug manufacturers. The truth is that these would be helpful and would save American consumers real money. But the core of the problem needs to be addressed.
What makes the United States uncompetitive with the rest of the world is the fact that our system, comprised of thousands of insurance plans, is simply inefficient and leads to consumers paying higher prices for prescription drugs.
This inefficiency isn’t just a number on an accountant’s Excel spreadsheet. These costs will ultimately be paid in human suffering. If a drug that doesn’t even cure the coronavirus costs insurance companies thousands of dollars, imagine what the cost of a drug that is actually effective will be. Insurance companies will not simply eat these higher prices. They will pass them on in the form of higher premiums, higher co-pays, and higher deductibles, increasing costs for American consumers and businesses. These higher costs ultimately mean less access to health care.
Opponents of Medicare for All love to remind us that nothing is free. That same principle should hold true for the 150 million Americans who have private health insurance. Our current health care system condemns them to pay an effective 33 percent tax on remdesivir. When a vaccine is developed, America’s private insurance consumers should again expect to pay this tax.
Over and over again during the 2020 Democratic primary debates, the moderators and moderate Democrats defended private health insurance, pretending they were advocates for the consumers trapped within it. The price of remdesivir is yet another example of how these politicians, along with the corporate and lobbying interests who support them, are content to treat people who rely on private health insurance as the suckers of the global health care system.
The only way to end this con job is to rid ourselves of the private insurance system whose inefficiency fundamentally is at the root of the problem.
Those who continue to argue against Medicare for All need to explain why they are defending a private insurance system that, by design, gouges its consumers.