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US pays $1B to nearly double supply of Merck’s COVID-19 pill

Merck is now in a race with Pfizer to capture the upside of COVID-19 pills, which could soon play an outsized role in the next phase of the pandemic and beyond.

The financial stakes are high. Pfizer’s coronavirus vaccine, for example, is on its way to the most lucrative drug launch in history. Regeneron’s COVID-19 antibody treatment REGEN-COV and Gilead’s infusible antiviral Veklury have each become multibillion-dollar sellers. Now COVID-19 pills should soon follow, offering a more convenient way to keep patients who’ve come down with symptoms out of the hospital.

Merck has a head start already, having won clearance in the U.K. to sell the drug under the trade name Lagevrio. Applications are under review in the U.S. and Europe, as well.

The company has promised to ensure access to low- and middle-income countries, too, via voluntary licensing agreements with other drug manufacturers. That promise appears to be playing out, with Beximco Pharma announcing Tuesday it had gained approval in its home country of Bangladesh for a generic version of molnupiravir that it will call Emorivir.

Merck projected up to $7 billion in sales by the end of 2022 as a result, a number that could increase if the pill is proven to prevent disease in people who have become exposed to infection. Shares recently climbed to about $90 apiece, their highest levels in years.

But those projections were made before Pfizer’s drug, known as Paxlovid, emerged as a viable — and potentially superior — alternative. Paxlovid reduced the risk of hospitalization and death from COVID-19 by 89% in clinical study, a result so compelling Pfizer stopped testing early and sped up plans to seek U.S. authorization.

That number topped the 50% reduction Merck reported with molnupiravir, though it can be misleading to compare drugs across trials. Still, Pfizer’s shares gained 10% — and Merck’s lost about the same — on the result, a massive one-day swing in value that is indicative of the financial potential of each medicine.

With Pfizer on its heels, Merck is moving fast to lock up more deals and is “currently in discussions with additional governments,” according to a statement. The company expects to make about 10 million courses by the end of the year and at least 20 million in 2022. Pfizer has said it can make up to 50 million doses in 2022, though a “considerable” part of that total would come in the second half of the year, according to a recent note from Evercore ISI analyst Umer Raffat.

Pfizer hasn’t yet contracted a deal with the U.S. government or disclosed a price. Merck’s drug has an implied price tag of about $700 per course, based on its supply deal.

An FDA advisory committee will meet to discuss Merck’s application on Nov. 30.