Pandemic pricing: existing drugs and price gouging

19 May 2020 (Last Updated December 15th, 2020 12:18)

Amid strained supplies and surging demand for effective Covid-19 therapies, consumer protection agencies are watching out for exploitative price gouging among retailers, and medical access campaigners are rallying against inflated prices for existing drugs that could be repurposed against the virus.

Pandemic pricing: existing drugs and price gouging
For existing medicines and technologies being trialled against Covid-19, prices are being scrutinised across the supply chain to prevent exploitative price-gouging during a period of surging demand. Photographer: Mikael Sjoberg/Bloomberg

As the novel coronavirus continues to push healthcare resources to the brink across the world – total cases are estimated at nearly three million and total deaths at over 200,000 at the time of writing – it has become clear that this this a crisis beyond any single organisation’s capacity to solve. With the breadth of research required to develop new vaccines and therapies that are safe and effective against Covid-19, new, sometimes surprising partnerships are springing up in every quarter of the pharma industry and beyond.

“We will only halt Covid-19 through solidarity,” said World Health Organization (WHO) director general Dr Tedros Ghebreyesus in a statement on 24 April. “Countries, health partners, manufacturers, and the private sector must act together and ensure that the fruits of science and research can benefit everybody.”

But, as is often the case when there is a wide range of clinical research funded by a blend of public and private investment, there is a great deal of caution around pricing, profit and patents. For existing medicines and technologies being trialled against Covid-19, prices are being scrutinised across the supply chain to prevent exploitative price-gouging during a period of surging demand. For the novel, Covid-specific antiviral treatments and vaccine candidates that are now under investigation, there are fierce debates surrounding private companies’ ability to patent and monopolise important drugs, potentially pricing them out of the reach of low-income countries.

“With a pandemic raging, now is not the time to test the highest prices the market will bear,” said Médecins Sans Frontières’ (MSF) Access Campaign diagnostics advisor Stijn Deborggraeve in late March.

Existing medicines vs Covid-19: supply chain fears

While clinical development projects continue to spin up for new Covid-19 treatments and vaccines, the short-term focus from a pharmaceutical perspective has been on assessing the safety and efficacy of existing drugs that may be repurposed against the coronavirus. These include HIV protease inhibitor combo lopinavir/ritonavir, anti-inflammatory corticosteroid dexamethasone and antimalarial drug hydroxychloroquine – the latter of which has been heavily promoted by US President Donald Trump, despite very shaky evidence on its efficacy. The UK’s RECOVERY trial is assessing all three of these, as well as several others, in what’s being touted as the world’s largest randomised clinical trial of potential Covid-19 treatments.

As demand for these potentially repurposable drugs ramps up, there are concerns around the possibility for price hikes through the supply chain. In April, STAT reported that US-based active pharmaceutical ingredient (API) distributor Spectrum Chemical had seen price increases of up to 350% for the API hydroxychloroquine sulphate.

Even for basic over-the-counter remedies there appears to have been a ‘pandemic premium’ added in some cases. Paracetamol/acetaminophen, which has emerged as the preferred means of home treatment for fever associated with Covid-19, price-gouging has been reported in the retail market, with a Pharmaceutical Journal investigation in March finding instances of hugely inflated prices at online pharmacies, with one example being 500 times the usual retail price. Consumers have also reported unexplained price hikes at some community pharmacies.

Regulators take notice of Covid-19 price gouging

These examples are primarily driven by price-gouging behaviour on the retail side of the supply chain to take advantage of limited supplies, especially in light of India’s new export ban on certain APIs and medicines, including paracetamol. This places the onus on regulators and consumer protection agencies to clamp down on rogue vendors. In the UK, the Competition and Markets Authority (CMA) has threatened price regulation if retailers take advantage of the pandemic in pricing products, while in Brazil, the Administrative Council for Economic Defense (CADE) has made an investigation into similar behaviour its “number-one priority”, as reported by MLex.

Thus far, however, reports of price hikes of existing medicines have been sporadic rather than endemic, and repurposed drugs have the potential to be the most cost-effective therapeutic response to Covid-19 in the short-term. This was reiterated by the findings of a study into the production costs of existing drugs being studied against Covid-19, which was published in the Journal of Virus Eradication in April.

The study found that across the most promising drugs being studied against Covid-19, production costs ranged from $0.30 to $31 per treatment course, concluding that “should repurposed drugs demonstrate efficacy against Covid-19, they could be manufactured profitably at very low costs, for much less than current list prices”. Gilead Sciences, whose Ebola treatment remdesivir was one of the drugs analysed, told Reuters that the study does not properly reflect large-scale production costs but did not present any alternative figures.

“This pricing study shows clearly that potential medicines to treat Covid-19 are not at all expensive to produce and could be priced such that anyone who needs treatment should be able to access it,” said MSF Access Campaign pharmacist Jessica Burry. “Several of the treatments being trialled for Covid-19 are currently priced much higher than these estimates show they should be. Rationing drugs because of high prices and limited supply will only serve to prolong the pandemic. What good is a lifesaving drug if you can’t afford it?”