Buyers clamor for Merck's COVID-19 antiviral molnupiravir, but pricing is already controversial

Merck
Countries are lining up to secure Merck and Ridgeback's molnupiravir amid reports that they are overcharging for the drug. A recent report in The Indepedent says that Merck is charging the U.S. 40 times what it costs to make. (Merck & Co.)

Less than a week after Merck and Ridgeback released extraordinary data on the effectiveness of experimental COVID-19 drug molnupiravir, the rush is on to lock up supplies.

On Wednesday, Singapore, Australia and South Korea unveiled deals with Merck to secure the drug. The company is said to be in talks with several other countries including Germany, Malaysia and Thailand.

The brisk business comes amid complaints that Merck is overcharging for the treatment. In the company’s supply agreement with the United States, Merck charged 40 times what it costs to produce the drug, The Independent reports.

The report cites an analysis by Harvard School of Public Health and King’s College Hospital in London, which found that it takes about $17.74 to produce a five-day course of molnupiravir. Earlier this year, Merck agreed to supply 1.7 million courses to the U.S. government at $700 each.

The company didn't respond immediately to a request for comment.

The drug, which was originally developed to treat the flu, has been shown to reduce the chance of hospitalization from COVID-19 by 50%. Since federal funding fueled its early development, the cost has come under fire while a larger debate swirls in the country about drug pricing.  

Researchers at Emory University discovered the drug and licensed it to Ridgeback last year, according to the university. Ridgeback tried to obtain more government funds, the company's co-founder Wendy Holman recently told CNBC. When that effort failed, Ridgeback turned to Merck. In May 2020, Merck unveiled a deal to pick up exclusive global rights.    

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The value of molnupiravir is that it can be taken in pill form. Other COVID therapeutics needs to be delivered through an IV.

Meanwhile, countries are swarming to Merck to secure doses of the treatment which has yet to be sanctioned by the FDA.

Australia said it has purchased 300,000 courses. In South Korea, Prime Minister Kim Boo-kyum said the country has signed a deal for 20,000 courses and was looking to buy other antiviral drugs.

RELATED: Merck and Ridgeback's molnupiravir will be 'complementary, but not a competitor' to COVID-19 vaccines: analyst

And amid a coronavirus outbreak, Singapore also has struck a deal with Merck. Despite vaccinating more than 80% of its population, the country reported a record 3,486 new cases on Tuesday, said Reuters.

Merck has said it plans a tiered pricing approach based on country income criteria. To support production of molnupiravir in massive amounts and more cost-effectively, Merck has made agreements with several Indian manufacturers including Aurobindo, Cipla, Dr. Reddy’s, Emcure, Hetero, Sun Pharma and Torrent.