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A Gilead-Remdesivir Fix: The Ten Percent Solution


The Washington Post had an excellent piece documenting how the government put up most of the money for developing remdesivir, a drug that now offers the hope of being the first effective treatment for the coronavirus. As the piece explains, in spite of the substantial contribution of public funds, Gilead Sciences holds a patent monopoly on remdesivir, which will allow it to charge whatever it wants without facing competition from other manufacturers.

There is a simple and obvious solution to this problem. The government should simply take possession of the patent, putting it in the public domain so that anyone can manufacture the drug and also conduct further research, subject to the requirement that any subsequent developments are also in the public domain. (This would be analogous to the rules for free software.)

To ensure that Gilead is fairly compensated, we can pay the company an amount that is 10 percent above any research costs it incurred that exceeded the government payments for development. Gilead would just have to submit its records, with the payment coming after they are fully audited. (There would be a return applied to past payments, of say 5 percent real, so that a payment made in 2015 would get a 25 percent real return [ignoring compounding], in addition to the ten percent markup.)

See, it’s simple, fun, and easy. We get the drug. Gilead gets a respectable profit, and remdesivir is cheap. Is everybody happy?

The post A Gilead-Remdesivir Fix: The Ten Percent Solution appeared first on Center for Economic and Policy Research.

Dean Baker 2020-05-27 15:14:29

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The post A Gilead-Remdesivir Fix: The Ten Percent Solution appeared first on Market World.



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