GILEAD SCIENCES IS FACTORING potential savings to hospitals into its pricing decision for a promising COVID-19 treatment, but hospitals and health policy experts say it’s too early to assess the drug’s impact. Gilead is running its own cost-savings analysis of remdesivir for hospitals, according to an SVB Leerink investor note. So far hospitals have received the drug for free; Gilead plans to donate enough doses by early June to treat more than 120,500 hospitalized COVID-19 patients.
Little data is available on remdesivir’s clinical effectiveness, not to mention its comparative- or cost-effectiveness. Christopher Fortier, chief pharmacy officer at Massachusetts General Hospital in Boston, said remdesivir has only been in use for roughly six weeks since the Food and Drug Administration granted emergency use authorization on May 1, and the hospital is focused more on studying its clinical outcomes than its cost savings.
Fortier is skeptical of analyses that point to cost savings for certain parameters this early. “There are so many compounding factors that could cause someone to be moved back to another floor, or moved to home care. With these diseases it’s difficult, almost impossible, to come up with a hard dollar figure,” he said.
Preliminary data from a government-sponsored trial showed a median time to recovery of 11 days for those treated with remdesivir, compared with 15 days for patients who were not. However, it’s unclear exactly what that means for hospital costs.
Two metrics that could produce cost savings are the length of hospital stays and intensive-care unit admissions. “There’s no guarantee that it will always shorten a hospital stay, which is where most of the savings will be,” said Dr. Walid Gellad, an associate professor of medicine and health policy at the University of Pittsburgh who researches prescribing and prescription drug use.
Savings calculations could be indered because hospital costs vary greatly across geographic areas. Gellad said the issue with using hospital savings to justify drug prices is that hospital costs are high to begin with. “The pharma industry is always the first to point out that hospital prices are too high,” Gellad said. “The drug can save a lot of money because hospitals are expensive.”
A Gilead spokesperson said the company has not yet set a price for remdesivir and is ensuring access through its donation. “Post-donation, the company will work closely with governments and healthcare systems to provide access for providers to prescribe remdesivir for appropriate patients.” .
Whether hospitals will ultimately save money will be determined by several variables that aren’t clear yet, but a significant factor will be how the drug factors into DRG payments for COVID-19.
Congress chose to inflate DRG payments for COVID-19 patients by 20% during the public health emergency, but payments will decrease after the emergency ends. Public health emergencies have to be renewed every 90 days; the most recent extension was on April 26.
DRG payments are based on historical costs from claims data. Avalere senior consultant Abby Moorman said there could potentially be a gap when claims data for COVID-19 patients are available and factored into DRG payments, but the cost of remdesivir won’t be because hospitals got the drug for free for a while. New technology add-on payments, or NTAPs, were introduced to help bridge that sort of gap.
If CMS provides an NTAP, hospitals get paid some of the cost of the product if a patient’s care ends up costing more than the related DRG payment. A product has to meet criteria on newness of the technology, a cost threshold, and clinical improvement to be approved for an NTAP. Under the normal pathway for NTAP approval, payments wouldn’t be available until October 2021.
Hospitals could be eligible for a maximum add-on payment of 65% of the drug’s cost. It may be possible for CMS to expedite the process to grant remdesivir an NTAP, Moorman said, though it hasn’t been done before. CMS did not respond to a request for comment.