Merck Sells Taxpayer-Financed Covid Pill at 40X Times What It Costs
Molnupiravir had funding from National Institutes of Health and the Department of Defense.
A five-day course of molnupiravir, the new medicine being hailed as a “huge advance” in the treatment of Covid-19, costs $17.74 to produce, according to a report issued by drug pricing experts at the Harvard.
Merck is charging the U.S. government $712 for the same amount of medicine, or 40 times the price.
The pill could bring staggering profits to both Merck and Ridgeback Biotherapeutics. A small Miami-based company, Ridgeback licensed the medicine from Emory University in 2020 and two months later sold the worldwide rights to the drug to Merck for an undisclosed sum. Although Ridgeback remains involved in the development of the drug, some have described the deal as “flipping.”
Like the vast majority of medicines on the market, molnupiravir — which was originally investigated as a possible treatment for Venezuelan equine encephalitis — was developed using government funds. The Defense Threat Reduction Agency, a division of the Department of Defense, provided more than $10 million of funding to Emory University. The National Institute of Allergy and Infectious Diseases, part of the National Institutes of Health, also provided Emory with more than $19 million in additional grants.
Yet only Merck and Ridgeback will reap the profits from the new antiviral, which according to Quartz could bring in as much as $7 billion by the end of this year. After the announcement of the encouraging clinical trial results on Friday, Merck’s stock price climbed, while stock prices of some vaccine makers sagged.
Despite its initial investment, the U.S. government seems to be facing a steep markup in prices. In June, the government signed a $1.2 billion contract with Merck to supply 1.7 million courses of the medication at the $712 price. The transaction is due to take place as soon as molnupiravir receives emergency use authorization from the Food and Drug Administration.