US government pays Merck $712 for 5-day molnupiravir course that only costs $17.74 to manufacture

According to a report by drug pricing experts at the Harvard School of Public Health (HSPH) and King’s College Hospital in London, a five-day course of molnupiravir only costs $17.74 to produce.

So why is Merck charging the U.S. government $712, or over 40 times the production price of the drug?

Is molnupiravir key to treating coronavirus?

Molnupiravir is making waves because the new drug is allegedly a “huge advance” in the treatment of the Wuhan coronavirus (COVID-19) and it was developed with funding from the National Institutes of Health (NIH) and the Department of Defense (DoD).

On Oct. 8, it was announced that molnupiravir reduced the risk of hospitalization among clinical trial volunteers with moderate or mild illness by 50 percent, suggesting that it may be key to ending the coronavirus pandemic.

Monoclonal antibodies are an antiviral treatment that is administered intravenously. But as a pill, molnupiravir is more accessible. Health experts hope that the drug can help reduce the coronavirus death rate.

According to the statement from Merck and Ridgeback Biotherapeutics, the two companies that jointly launched molnupiravir, there were no deaths reported among the 385 patients who received the drug in the first 29 days of the trial.

Unfortunately, eight of the people who received a placebo died.

It comes as no surprise that molnupiravir could rake in the profits for both Merck and Ridgeback Biotherapeutics. Ridgeback is a small company based in Miami and it licensed the medicine from Emory University in 2020. Two months later, Ridgeback sold the worldwide rights of the molnupiravir drug to Merck for a confidential amount.

Molnupiravir, originally considered as a possible treatment for Venezuelan equine encephalitis, was developed using government funds.

According to research from the nonprofit Knowledge Ecology International, a division of the DoD called the Defense Threat Reduction Agency shelled out over $10 million of funding in 2013 and 2015 to Emory. The National Institute of Allergy and Infectious Diseases (NIAID), part of the NIH, has also provided Emory over $19 million in additional grants. (Related: Doctor says US “wasting money” on coronavirus drug from Merck.)

Merck cashing in on molnupiravir

Only Merck and Ridgeback will enjoy profits from the new antiviral, which is slated to bring in as much as $7 billion by the end of 2021.

Merck says it has agreements with other governments. While the details on those agreements remain unknown, it is believed that the drug will be priced differently per country depending on their income levels. Additionally, Merck has plans to license the drug to some Indian manufacturers to produce a generic version for low-income markets.

Following the announcement of the promising molnupiravir clinical trial results, Merck’s stock price climbed as stock prices of some vaccine makers went down. Even with its initial investment, the U.S. government may be facing a steep increase in drug prices.

Back in June, the government signed a $1.2 billion contract with Merck for 1.7 million courses of the medication for $712. The transaction will take place after molnupiravir receives emergency use authorization from the Food and Drug Administration (FDA).

Luis Gil Abinader, senior researcher at Knowledge Ecology International, says that since federal agencies spent at least $29 million on the drug’s development, the U.S. government should make sure that the medicine is affordable.

Merck claims to be “committed to providing timely access to molnupiravir globally”

Merck has promised to make molnupiravir accessible around the world, with licensing agreements with five Indian companies that manufacture generic drugs already underway.

The company may implement a tiered pricing approach to help other countries finance their health response to the coronavirus pandemic without worrying too much about the price. Reports say that Indian companies will offer the drug at less than $12 for a five-day course.

Pricing molnupiravir at $19.99 would allow Merck a 10 percent profit margin. Melissa Barber, a doctoral candidate at HSPH and co-author of the report on molnupiravir, says molnupiravir would be accessible to people who need it most because pricing is not as extreme compared to other drugs.

Dzintars Gotham, a physician at King’s College Hospital and a co-author of the report on molnupiravir, notes that the $17.74 cost of producing a five-day course of the antiviral pills is an estimate. However, the algorithm used by Big Pharma often results in overestimates.

The prices that private companies charge for drugs often increase instead of decrease. Abinader has explained that the pricing differential should be grounds to demand a better price under the Bayh-Dole Act.

Passed in 1980, Bayh-Dole regulates the transfer of federally funded inventions into commercial property and allows the government to step in and suspend the use of patents that were developed with government funding if there is proof that the products are high-priced.

Gotham concludes that molnupiravir highlights the good and the bad of the U.S. pharmaceutical system. While the U.S. government funded some scientists to develop antivirals to fight coronavirus, those scientists “just gave them away to private industry with apparently no strings attached.”

Potential side effects of molnupiravir

Merck did not report any serious side effects among participants in the clinical trial, aside from minor symptoms like headaches.

Antiviral pills help block the virus from replicating. Molnupiravir tricks the coronavirus into using the drug to try to replicate the virus’s genetic material. But once that process is underway, the drug inserts errors into the genetic code of the virus.

Daria Hazuda, vice president of infectious disease and vaccine research at Merck, explains that creating enough errors or creating errors in parts of the virus that are important makes it impossible for the virus to replicate.

It’s too early to tell if molnupiravir is a safer alternative to coronavirus vaccines. Go to BigPharmanews.com for more updates on molnupiravir and other coronavirus treatments.

Sources include:

TheIntercept.com

QZ.com

NYTimes.com