Trump Sets Up Pharma Billionaires for Coronavirus Payday

Regeneron’s federally funded Covid-19 treatment, which was used to treat Donald Trump, will likely be unavailable to most patients.

Regeneron CEO Dr. Leonard Schleifer attends a meeting with President Donald Trump, members of the Coronavirus Task Force, and pharmaceutical executives in the Cabinet Room of the White House, Monday, March 2, 2020, in Washington. (AP Photo/Andrew Harnik)
Regeneron CEO Leonard Schleifer attends a meeting with President Donald Trump, members of the coronavirus task force, and pharmaceutical executives in the White House in Washington, D.C., on March 2, 2020. Photo: Andrew Harnik/AP

The development of the antibody cocktail used to treat President Donald Trump for Covid-19 — which he heralded as a cure for the disease — was funded largely by the U.S. government, yet the Trump administration has apparently failed to set any guarantees that the treatment would be affordable. The biopharmaceutical company Regeneron, led by the two highest paid executives in the industry, received hundreds of millions in public funds during the research and development of the antibody therapy, and now stands to make a killing from its potentially lifesaving treatment.

Leonard Schleifer and George Yancopoulos founded Regeneron in 1988 to focus on neurological problems and rare disorders, but the company’s early years were rocky. One of its first products, envisioned as a treatment for Lou Gehrig’s disease, proved a high profile failure in 1997 when data showed it was ineffective against the fatal neurological disorder.


The company’s fortunes turned in part because of its work on monoclonal antibodies, proteins that are produced in a lab but mimic antibodies made by the body’s immune system. Regeneron has developed versions of the antibodies to fight severe eczema, high cholesterol, a type of skin cancer, and, with a product approved by the FDA just last week, Ebola.

In January, as the new coronavirus began spreading in the U.S., Regeneron struck an agreement with a division of Department of Health and Human Services known as the Biomedical Advanced Research and Development Authority, or BARDA, to receive up to $81 million for work on antibodies that would prevent Covid-19 from infecting cells by attaching to the spikes on its surface. The two antibodies Regeneron chose were developed using cell lines that were derived from the kidney tissue of an aborted fetus.

Shadowy Agreements

The January contract, of which only a heavily redacted version has been been made public, expanded upon an existing $284 million agreement Regeneron had with BARDA to research and develop antibodies for a variety of pathogens. According to the company’s filings with the Security and Exchange Commission, the January agreement committed the government to pay for 80 percent of the cost of developing antibodies to combat Covid-19. But as The Intercept previously reported, neither the January extension nor the original arrangement appear to include intellectual property protections and safeguards to ensure the affordability of the treatments Regeneron produced with the funding. Both agreements lack a standard clause that ensures interventions developed with government funding are available to the public “on reasonable terms.”

With two bandages on his hand, President Donald Trump gestures while speaking from the Blue Room Balcony of the White House to a crowd of supporters, Saturday, Oct. 10, 2020, in Washington. (AP Photo/Alex Brandon)

With two bandages on his hand, President Donald Trump gestures while speaking from the Blue Room Balcony of the White House to a crowd of supporters, on Oct. 10, 2020, in Washington, D.C.

Photo: Alex Brandon/AP

Since then, Regeneron has entered into yet another shadowy agreement with the federal government that lacks the standard oversight to which federal contracts are usually subjected. According to its July filings with the SEC, Regeneron has a contract worth up to $450.2 million “to manufacture and deliver to the U.S. Government the Company’s novel investigational dual antibody ‘cocktail’ treatment.”

While the July agreement was made “on behalf of” the Department of Defense and an entity called the Medical CBRN Defense Consortium, according to the SEC filing, it was done through a third party called Advanced Technologies International, Inc. Because it is a nongovernmental entity, Advanced Technologies International is not subject to public records laws, which will make it difficult or impossible for the public to review the contract or its terms. Advanced Technologies International has awarded more than $6 billion in contracts to companies through the administration’s vaccine mobilization program Operation Warp Speed, including Novavax, Pfizer, and Johnson & Johnson, as NPR recently reported.

Both Public Citizen and Knowledge Ecology International are suing the Department of Health and Human Services seeking the unredacted contracts with pharmaceutical corporations for coronavirus-related products through Operation Warp Speed.

In an emailed statement, Regeneron said that its July agreement for the antibody cocktail went through Advanced Technologies International because “this was the preferred contract structure of the U.S. Government.”

Advanced Technologies International and the Medical CBRN Defense Consortium did not respond to repeated requests for comment.

In an email, a spokesperson for the Department of Health and Human Services wrote, “We are diligently working with our interagency colleagues to gather, review, and appropriately release relevant contracts without revealing protected information, such as information that is proprietary or trade secret, or impacts any ongoing negotiations. We remain committed to continued accommodation of both General Accountability Office review and congressional oversight of Operation Warp Speed.”

The department of Health and Human Services spokesperson did not respond to a question about why it chose to route the agreements through a nongovernmental third party. But Joshua Frey, a press officer for the Pentagon, did offer an explanation for the choice:

“The threat posed to national security by the COVID-19 pandemic makes it imperative that a vaccine be discovered and manufactured as quickly as possible. The large pharmaceutical companies capable of the research and development activities necessary to create such vaccines and then transition to production of these products at the rates necessary to meet the stated intent of the U.S. Government are not traditional defense contractors. The use of the other transaction authority in general, and the MCDC OTA in particular, allows the Government to utilize streamlined competitive processes for evaluation and selection of companies for award of prototype projects.”

But some close watchers of federal contracting dismiss the idea that the government used Advanced Technologies International because of the need for expedience during the pandemic.

“I think that’s bogus,” said Kathryn Ardizzone, an attorney for Knowledge Ecology International. Ardizzone pointed to an agreement between BARDA and Moderna for that company’s work on a coronavirus vaccine as evidence that the government can contract quickly while maintaining protections for the public. Ardizzone suggested that the real reason for using a third-party contractor was likely to evade oversight and transparency. “When there’s not a good reason, you wonder if there’s a bad reason,” she said.

Asked whether the Department of Defense is using Advanced Technologies International to avoid oversight, Frey responded “absolutely not.” But the Pentagon official declined to provide a copy of the agreement or comment on whether it contains any language pertaining to the affordability of the antibody cocktail.

It’s Called Regeneron

In September, Regeneron released results of a trial of 275 nonhospitalized Covid-19 patients treated with its combination of antibodies. The findings were encouraging, showing that the treatment reduced both patients’ viral load and their symptoms. A press release the company issued at the time said the antibodies “showed positive trends in reducing medical visits” and described the results as “having positive implications.”

But in a video he tweeted just over a week later, after becoming one of just 10 people to get the experimental treatment through the company’s compassionate use program, Trump was far less measured. “They gave me Regeneron. It’s called Regeneron,” the president said of the treatment, which is actually called REGN-COV2. “They gave me Regeneron. And it was like unbelievable. I felt good immediately.”

“We have things happening that look like they’re miracles coming down from God,” a heavily made-up Trump went on to say during almost five minutes of rambling remarks he made on the White House lawn. “They call them therapeutic. But to me, it wasn’t therapeutic, it made me better. OK?” he said. “I call that a cure!”

It is not clear whether the antibodies actually contributed to Trump’s recovery. The president was also reportedly given the widely available steroid dexamethasone and remdesivir, an antiviral drug that has been shown to reduce the time patients are hospitalized with Covid-19 but is not yet widely available to the public. Still the frenzied endorsement proved profitable for Regeneron.

Just the news that Trump had been given the antibody treatment had already caused the company’s stock price to soar even before he was released from the hospital; his bizarre testimonial sent it climbing further. And in the hours afterward, a Regeneron executive and a member of the company’s board of directors cashed in on the steep increase, selling stock for a profit of more than $1 million. The sales came after Regeneron’s executives and board members had already sold nearly $700 million in stock in the months immediately following the announcement that the company received BARDA funding to work on a Covid-19 treatment. Schleifer, Regeneron’s chief officer, sold $178 million worth of stock in a single day, according to the New York Times.

In the emailed statement, a spokesperson for Regeneron wrote that “a significant portion of these transactions — including Dr. Schleifer’s — involved stock options that were about to reach their ten year expiration, so would have been forfeited if not exercised.” The spokesperson also noted that “Regeneron’s stock has performed well this year on the basis of many major business events,” and that “when the stock and company are performing well, it’s not unusual to see people exercising long-held options or selling long-held shares.”

According to Regeneron’s statement, “It is important to note that the bulk of these transactions by our directors and executives were conducted pursuant to pre-established trading plans, known as 10b5-1 plans (including specifically the October transactions you reference). These plans are pre-established at a time when the executive/director is not aware of any material, non-public information about Regeneron and automatically trigger when the stock hits a certain price, without the plan holder’s involvement. In addition, it is Regeneron’s practice to require at least a 30 day ‘waiting period’ before a plan becomes effective.”

Schleifer, who has an estimated net worth of $2.4 billion, was the highest paid pharmaceutical executive in the U.S. during 2018 and 2019, and the vast majority of that compensation came in the form of stock. Schleifer, whom Trump reportedly calls “Lenny,” has been known to golf with the president at his private Westchester club in New York.

Regeneron co-founder and chief scientific officer Yancopoulos was the second most highly paid pharmaceutical executive in those years. And in 2017, when Regeneron received its first federal funding for antibody treatments, Schleifer ranked second to Yancopoulos, who received $268 million in direct compensation — more than triple the pay any pharmaceutical company executive received that year and the most any pharmaceutical executive has made before or since.

Regeneron Pharmaceuticals Inc. signage is displayed outside their headquarters in Tarrytown, N.Y., U.S., on June 12, 2020. Regeneron Pharmaceuticals Inc. said it had begun human trials of a new antibody cocktail for Covid-19, part of an ambitious clinical-testing plan that could lead to a new treatment option by the end of summer if all goes well. Photographer: Michael Nagle/Bloomberg via Getty Images

Regeneron Pharmaceuticals Inc. signage is displayed outside their headquarters in Tarrytown, N.Y., on June 12, 2020.

Photo: Michael Nagle/Bloomberg/Getty Images

Shortages Expected

Hours after the president tweeted the video, in which he said that emergency use authorization for the antibody cocktail was “all set,” Regeneron applied for the fast tracking, which would make the treatment available before it has been thoroughly vetted. But the Food and Drug Administration has yet to grant the authorization.

While Regeneron initially estimated that it would have between 70,000 and 300,000 doses “as early as end of summer and completed this fall,” Schleifer admitted on CBS News’ “Face the Nation” that, as of October 11, it had only produced 50,000 doses, which is fewer than the number of coronavirus infections diagnosed on a single day in the U.S. last week.

And although Regeneron has committed to selling some of the antibodies to the government, which in turn is obligated to distribute them “to the American people at no cost,” according to the government’s July 6 agreement, that deal applies only to “a fixed number of bulk lots.” After that, the pricing is up to the company — a prospect that frightens some economists.

“Executives have an interest in getting the stock price up and price gouging customers is one way they can do this,” said William Lazonick, professor emeritus of economics at University of Massachusetts and co-founder of the Academic-Industry Research Network. While many drug companies argue that they use their vast profits to fund ongoing pharmaceutical innovation, Lazonick said, “we’ve shown that most of these companies don’t do that.” Instead, the soaring prices fuel soaring stock prices and executive pay, which is often based largely on that price.

The pharmaceutical industry has a long history of opposing efforts to rein in drug prices, including the “affordable pricing” clause. Regeneron was fighting that measure, which obligates companies that develop drugs with public money to sell them at reasonable prices, as far back as 1994.

Monoclonal antibodies are already among the most expensive pharmaceutical products available. The treatments on the market for conditions other than Covid-19 cost an average of $96,731 per year. When used to treat cancer, the antibodies went for a median price of $142,833, according to a 2018 study in the American Journal of Managed Care.

A Looming Nightmare

While Trump promised that the government would provide the antibody cocktail to Americans for free, drug pricing efforts say that many people probably won’t have access to the treatment at all, let alone at an affordable price.

“This is a looming nightmare,” said Zain Rizvi, a drug pricing expert who works at Public Citizen. “If the drug is safe and effective, the shortages will be rampant and will exacerbate the insidious inequality that’s already part of our healthcare system. The privileged few may get at the head of the line and the people who need it most may not have the same opportunities.”

While Rizvi said that a lack of regulation plagues the entire U.S. pharmaceutical system, he said the maker of the antibody cocktail epitomizes the administration’s failure to hold companies accountable during the pandemic. “The story of Regeneron’s monoclonal antibody treatment is the story of president Trump’s billionaire buddy who received massive taxpayer subsidies to work on a coronavirus treatment with no strings attached,” said Rizvi, who pointed out that Regeneron will be able to both set high prices for the tax-payer funded treatment and market it exclusively. “You have massive public investment, but the knowledge that comes out of it is being privatized. It doesn’t benefit public health.”

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Already the pandemic has showcased a brutal disparity in health care. Unlike Trump, who was given two cutting-edge treatments that are inaccessible to the general public a few days after being diagnosed, patients have often had to wait for medical care when hospitals were stretched to capacity — delays that sometimes proved deadly. Although the administration has set up a fund to help cover the costs of some coronavirus treatments, many patients do not qualify. Some survivors of the disease have been hit with staggering medical bills for their treatments. And a lack of insurance is believed to have contributed to the astronomical toll of the pandemic, which has already claimed more than 223,000 lives.

For his part, Trump announced he was feeling “like perfect” after taking the Regeneron cocktail and hurried back to the White House. Once there, he helped fast-track the confirmation process of Amy Coney Barrett, his Supreme Court nominee who is widely expected to vote to strip tens of millions of Americans of their health care coverage and to outlaw the kind of research that produced the very treatment that he claims cured him.

Meanwhile, as the virus continues to surge across the country, Regeneron has said that it is continuing to produce its monoclonal antibodies and will do its best to make the treatment available to everyone.

“We are committed to ensuring that REGN-COV2 will be affordable for patients in need,” Regeneron said in its emailed statement. “We know our medicines only help if people can access them, and, as such, we are working hard to develop and scale-up a completely novel treatment for COVID-19 that is accessible to the people who need it.”

For Rizvi, the reassurance rings hollow. “The corporate executives will control the price and the supply,” he said. “What could go wrong?”

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