In the years before the pandemic, pharmaceutical companies had stopped developing vaccines. It requires high research, testing and manufacturing costs and the market can be limited.
However, for Covid-19, the vaccine market spans the globe and many of the production and development costs are subsidized by the government.
Operation Warp Speed invested $ 1.6 billion in a vaccine candidate from Novavax last week. It said the US will “own the 100 million doses of research vaccine” produced by the study. The Department of Health and Human Services also made it clear that if the vaccine were found to be safe and effective, those 100 million doses would be given “free” to the Americans.
That’s the first, and so far, only government guarantee on pricing and dosages – even though it’s the sixth vaccine to receive US funds.
Rep. Rosa DeLauro (D-Conn.), Chairman of the House Subropriations health subcommittee, said she expects “Congress will need to provide additional additional funding to purchase hundreds of millions of doses of the vaccine once it is developed.” Homeowners communicate with HHS to determine how many doses are guaranteed under current contracts with vaccine manufacturers, she added.
A HHS spokesperson offered some reassurance about the final cost, saying, “One of the dose price considerations is all federal funding that was provided to develop the vaccine.” And she noted, as seen at Novavax, that “when the federal government pays for all development and manufacturing of a product, the federal government owns the doses made with tax dollars.”
But she said the money previously invested by BARDA in launching vaccine production capacity did not include purchasing doses.
AstraZeneca and Johnson & Johnson, who together received more than $ 1.5 billion from the U.S. government, said last month they would develop their respective candidate vaccines during the pandemic on a non-profit basis.
“Like everyone else, we do it without a profit,” said AstraZeneca CEO Pascal Soriot. “This is what a successful, healthy pharmaceutical industry can do.”
But the companies’ caveat that the nonprofit vaccines would be offered “during the pandemic” may create a scenario where if the outbreak is declared the companies could ask more – even if people need boosters or annual shots to take the virus keep it at a distance.
When POLITICO contacted him, neither company was willing to provide more details about what they specifically mean by “no profit”. Due to that lack of detail, many wonder what to expect, especially given Pfizer’s position.
Pfizer initially said in a press release in late May that the price of the vaccine would be aligned with Johnson & Johnson and AstraZeneca. Albert Bourla, Pfizer’s CEO, said financial returns do not drive vaccine work.
But then at a Goldman Sachs conference in June, Bourla told the vaccine that it would be priced in accordance with shots on the market for other conditions. Later that month at a Milken Institute event, he said it would be manufactured and manufactured for profit.
Pfizer’s existing vaccines have generated more than $ 20 billion since 2015.
The general lack of transparency about the U.S. government’s first contracts with vaccine developers means that even Congress does not know if doses of those vaccines are guaranteed. Lawmakers also don’t know what the nonprofit’s commitments mean, a senior Hill employee noted. This is important because the government will be a major buyer.
Senator Maggie Hassan (DN.H.) emailed POLITICO that the administration was “remarkably quiet about the actual terms of these agreements and at what price the federal government would insure doses.”
Even if non-profit vaccines are developed, it doesn’t mean there are no costs. In fact, costs could shift to insurance premiums or higher deductibles, indirectly affecting consumers.
Advocates who have pushed for lower drug prices are concerned that the promises made by nonprofits are hollow because of the billions of taxpayers who have invested in the vaccine projects and the lack of transparency about what developers are spending on their research, development and manufacturing activities.
David Mitchell, a cancer patient who founded and leads the nonprofit Patients For Affordable Drugs, called the nonprofit’s pledge “part of the charm offensive to save us from the corona virus, but billions are going from taxpayers to this businesses.” He predicted that U.S. taxpayers will be forced to repurchase the doses that prove to be effective.
Kate Elder, vaccine policy advisor at Doctors Without Borders, echoed Mitchell’s concerns, noting that what the US is getting in the background of vaccines developed under these BARDA transactions may not be related to what is prepaid. She also said that the deals between BARDA and the vaccine developers are confidential, so “no one knows if certain vaccine prices are included.”
Similarly, Peter Maybarduk, director of the Consumer Advocacy Nonprofit Public Citizen, questioned the promises: “What is a nonprofit price if the investment is backed by taxpayers and the invention is based on public funds?”
The non-governmental organization Knowledge Ecology International obtained edited versions of some of the BARDA vaccine contracts in early July. In a version of the J&J contract, the government has at least limited the ability to intervene, even if a vaccine developer charges an unreasonable price.
It is unclear how the government could intervene if a vaccine was too expensive. At a recent Senate hearing, NIH director Francis Collins was questioned about the KEI documents, but said the Bayh-Dole Act is not intended to address unacceptable prices. That 1980 law does contain a provision that allows the government to break a patent and market cheaper alternatives if it has invested significantly in the development of a drug. But the facility has never been used.