Coronavirus revives debate over drug pricing

The COVID-19 pandemic has put a spotlight on pharmaceutical companies' drug pricing decisions. Gilead Sciences has promised to give away its first production run of the antiviral therapy remdesivir and allow poor countries to make generics. Johnson & Johnson said it would sell its vaccine, now in trials, on a not-for-profit basis.

The COVID-19 pandemic has put a spotlight on pharmaceutical companies' drug pricing decisions. Gilead Sciences has promised to give away its first production run of the antiviral therapy remdesivir and allow poor countries to make generics. Johnson & Johnson said it would sell its vaccine, now in trials, on a not-for-profit basis. Moderna’s chief executive said "we don't want to maximize profit" on its vaccine. Industry analysts say such efforts do not constitute a sustainable business model: In the long run the companies have to charge prices commensurate with the cost of developing drugs, including those that fail. The question is whether the pandemic proves to the public and politicians the merits of the current pricing system, which lets drug companies charge whatever the market will bear. Empirical studies show that revenue expectations help drive drug innovation. Because the United States pays so much more than other countries for the same drugs, it accounts for 70% of biopharmaceutical profits among developed economies, according to the White House Council of Economic Advisers. The U.S. also accounts for 44% of medical research and development and 60% of high-value life-sciences patents, according to a 2015 study. "The real question is whether everything that comes out is worth the price we end up paying for it," said Patricia Danzon, a professor of health-care management at the University of Pennsylvania’s Wharton School who has studied drug pricing.