The panic over the Covid-19 virus is diminishing and America is beginning to reopen again for business and social interaction. But the risk remains that you may still get infected if you’re exposed to someone contaminated with the virus and you fail to take the necessary precautions.
Most people who do contract the virus will have minimal symptoms and recover uneventfully. But a small but significant few will get seriously ill and some will die, mostly those with significant co-morbidities such as heart disease, diabetes, and respiratory illnesses.
Only two developments can change that scenario: an effective drug to treat the virus, or even better, an effective vaccine to prevent viral infection in the first place. Absent these two developments, the virus will continue to run its course, wreaking havoc on our lives and our economy.
Multiple pharmaceutical companies are working hard now to develop an effective vaccine and there are hopeful signs of one by early next year. But the big news this past week is the FDA approval of remdesivir as an effective treatment for those with serious Covid-19 infection. This is great news and should be a huge encouragement to all Americans, as well as people around the world.
Remdesivir was developed by Gilead Sciences and the company has already donated 1.5 million doses, free of charge, for treatment of the seriously ill. But it should be understood that this is no overnight achievement. Remdesivir has actually been in development for over ten years.
John F. Cogan and George P. Schultz, senior fellows at the Stanford Hoover Institution, tell us in The Wall Street Journal this drug treatment breakthrough is a product of the American market and legal system. In this system, privately owned biotech and pharmaceutical companies, financed by investor capital, seek to invent, develop and distribute new medications. Patent protection provides drug companies with additional incentives over and above those normally provided by the market to undertake the necessary risks. The incentives come from governmental protection of intellectual property and the associated ability temporarily to charge prices above the marginal cost of production. Even so, drug companies and their investors reap rewards from their successes, and suffer losses when their efforts fail.
Developing new drugs is a risky and expensive business. About 70% of drugs never make it to market because they prove ineffective or too toxic. Drugs typically gain approval only after many years of development. Charging more than the cost of production, at a price customers are willing to pay, allows developers to recoup these costs.
Over ten years ago, remdesivir was determined to be effective as an antiviral drug. Research of the drug as a treatment for childhood respiratory diseases has been done since 2010. Ultimately, it failed in that purpose, but it was tested in other viral illnesses including Ebola virus and two other corona viruses, SARS and MERS. However, with the passage of those illnesses, there were insufficient patient numbers for human trials of the drug.
Now, remdesivir is back in the news and the most exciting new treatment of Covid-19 yet. But its approval for this new application comes after over ten years of research and development. That’s ten years of expensive R & D, only possible in the American system that permits companies like Gilead to temporarily set prices above the cost of production in normal times, thus enabling the development and donation of this potent treatment now.
Politicians from both political parties have railed against the pharmaceutical companies for over-pricing their drugs. Progressives, like Senator Bernie Sanders, have called for drug price-controls as part of a government-controlled healthcare system. President Trump has also made proposals that would tag the price of drugs in this country to the prices paid in European countries. While these proposals are politically popular, such changes in the current system would seriously hamper our ability to develop new drug treatments at times of national and world-wide crisis such as this Covid-19 pandemic.
It’s a good thing we don’t have government-controlled healthcare, yet.