$2 billion vaccine deal with Pfizer raises pricing concerns

The Trump administration’s nearly $2 billion investment in Pfizer and a smaller German biotechnology company for a coronavirus vaccine is raising eyebrows among lawmakers and drug pricing advocates.

The deal announced Wednesday is the largest yet for “Operation Warp Speed,” the Trump administration’s sprawling push to have a coronavirus vaccine widely available by early next year.

The program has already poured billions of dollars into several different companies, including Moderna, AstraZeneca and Johnson & Johnson. Earlier this month, the administration announced it would pay the small Maryland-based company Novavax $1.6 billion for its COVID-19 vaccine.

The agreement with Pfizer, however, is different. While the other companies received funding for development of a vaccine, Pfizer’s deal is only for the doses and distribution. Additionally, AstraZeneca and Johnson & Johnson have both said they will sell doses to the government at no profit, whereas Pfizer has made no such commitment.

The U.S. government will be guaranteed 100 million doses for $1.95 billion, or about $20 a dose, if the vaccine is successful, and will have the option to acquire up to 500 million more doses. Patients will not pay for the drug at the point of care.

Drug pricing advocates are worried the deal could lead to price gouging.

“While we all hope that this vaccine ends up panning out, it raises serious alarm bells to see taxpayers on the hook to hand Pfizer a massive profiteering opportunity and locking in a $20 per-dose cost before we even know how many doses would be needed for long-term protection,” said Eli Zupnick, spokesman for the advocacy group Patients Over Pharma.

“This is another deeply concerning move by the former drug company executives in charge of Operation Warp Speed who are shoveling money into the hands of drug companies without any meaningful transparency or accountability,” Zupnick added.

Pfizer is set to begin a large-scale clinical trial as early as this month. If successful, Pfizer and the German company BioNTech expect to be ready to seek emergency use authorization from the Food and Drug Administration as early as October with the goal of manufacturing up to 100 million doses globally by the end of the year.

Ben Wakana, executive director of Patients for Affordable Drugs, noted the different price points for potential vaccines.

AstraZeneca expects to price its vaccine at about $3 a dose, while Johnson & Johnson predicts its vaccine will cost about $10.

During a House Energy and Commerce subcommittee hearing Tuesday, Rep. Jan Schakowsky (D-Ill.) pressed the pharmaceutical executives for similar commitments.

Neither Pfizer nor Moderna executives made such a promise.

“We recognize that these are extraordinary times, and our pricing will reflect that during the term of the pandemic,” Pfizer’s chief business officer, John Young, told lawmakers.

“We’ll price our potential vaccine consistent with the urgent global emergency that we’re facing. And secondly, we also believe, and critically, that COVID vaccines should be free to the public. A vaccine is meaningless if people are unable to afford it.”

Pfizer CEO Albert Bourla has previously said the company would sell the vaccine for a profit but wants to give priority to governments to distribute the initial doses to the most vulnerable at no cost.

Pfizer initially rejected federal funding, allowing the company to move more quickly toward clinical trials, Young said.

“We didn’t accept the federal government funding solely for the reason that we wanted to be able to move as quickly as possible with our vaccine candidate into the clinic,” he said during Tuesday’s testimony.

Democratic lawmakers have expressed concern that a lack of transparency in Operation Warp Speed’s contracts means the public won’t know if there is language ensuring affordability.

Schakowsky said Wednesday she believes Congress will ensure a coronavirus vaccine is available to patients at no cost.

“But insurance plans, public programs like Medicaid and Medicare, and states will still have to pay whatever price these companies set. If vaccine manufacturers are allowed to charge sky high prices, they will create a formula for cost-shifting—the costs that consumers don’t pay on a vaccine will be redistributed to them in the form of higher insurance premiums, out of pocket costs, and fees,” Schakowsky said in a statement.

Pfizer spokeswoman Sharon Castillo emphasized that the company is not taking taxpayer money for developing or manufacturing a vaccine and will still bear the financial risk if its vaccine fails.

Pfizer has already invested more than $1 billion, and the Trump administration will not send money until the vaccine proves to be safe and effective.

Castillo said the price for a course of treatment is “nearly 30 percent less” than a seasonal flu vaccine.

However, the price of a flu vaccine can vary dramatically depending on where it is administered and who pays for it.