By Peter Loftus

Drugmaker Eli Lilly & Co. agreed to provide 300,000 doses of its experimental Covid-19 antibody drug to the federal government for $375 million, if the medicine is authorized for emergency use in the U.S., the company said Wednesday.

The U.S. Department of Health and Human Services said the federal government will allocate the doses to state and territorial health departments, which will, in turn, determine which hospitals and health facilities get the drug.

Under the supply agreement, each vial costs $1,250, Lilly said. One vial would be enough for an individual patient, who federal health officials said won't face out-of-pocket costs for the drug, though health-care facilities may charge a fee for administering the IV infusion.

HHS partnered with the Defense Department to reach the Lilly supply agreement.

The deal is the latest by the federal government to lock up supplies of promising coronavirus vaccines and treatments. Earlier this year, Regeneron Pharmaceuticals Inc. said it received $450 million to manufacture and supply 300,000 doses of its experimental antibody-based drug for Covid-19.

Antibody drugs, which borrow from the immune system's natural defenses against pathogens, promise to fill a big gap in Covid-19 care, treating patients before their cases turn serious and require hospitalization.

They might also briefly protect against infections, providing a bridge to vaccines until they are available.

Public attention on the drugs received a boost after President Trump took Regeneron's following his diagnosis and then touted their benefits.

Indianapolis-based Lilly has asked for U.S. Food and Drug Administration authorization of its drug to treat patients with mild to moderate Covid-19 who are at higher risk of advancing to severe disease.

In a clinical trial, the drug kept a higher proportion of these recently diagnosed patients out of the hospital than those who received a placebo.

The antibody, which Lilly originally code-named LY-CoV555 but is now calling bamlanivimab, is essentially a clone of an immune-system agent that can block the coronavirus that causes Covid-19.

Lilly developed it in collaboration with AbCellera Biologics of Vancouver, Canada, which identified the antibody from a blood sample taken from one of the first U.S. patients to recover from Covid-19.

Earlier this week, the National Institute of Allergy and Infectious Diseases ended a study of bamlanivimab after concluding that adding it to standard treatment -- including Gilead Sciences Inc.'s remdesivir -- provided no clinical benefit to hospitalized Covid-19 patients.

Lilly says it believes the antibody is more effective earlier in the course of disease than in severe cases that require hospitalization.

Lilly and federal researchers continue to test the antibody for other uses and in different populations. In addition to treating patients with mild to moderate Covid-19, it is being tested for its potential to prevent disease in people at risk of infection, including nursing-home residents and staff.

Even before receiving authorization, Lilly has been manufacturing doses of bamlanivimab and expects to have 100,000 ready to ship within days of a clearance. The company expects to make up to 1 million doses by the end of the year.

The new U.S. supply agreement has an option for the U.S. to buy up to an additional 650,000 vials through June 30, 2021, for up to $812.5 million.

Lilly said it also is discussing with global regulators the potential to make the drug available in other countries. The company will pursue tiered pricing agreements for government purchases of the drug, basing ability to pay on income per capita.

The drugmaker said it would offer the price of $1,250 per vial to all wealthy countries, which it said would yield a modest financial return for its investors by the end of 2021.

Write to Peter Loftus at peter.loftus@wsj.com

(END) Dow Jones Newswires

10-28-20 1421ET