Prominent drugmakers want to more than quadruple the prices of their COVID-19 vaccines when the shots transition to the commercial market later this year, sparking a showdown with congressional lawmakers who say Pfizer and Moderna benefited from taxpayer largesse and are now gouging the public to pad handsome profits.
Sen. Bernard Sanders, chairman of the Committee on Health, Education, Labor and Pensions, will demand answers from Moderna CEO Stephane Bancel over the proposed hike at a highly anticipated hearing this week that will underscore tensions between Big Pharma and lawmakers outraged about ballooning drug prices.
Mr. Sanders, a democratic socialist from Vermont, is angry because Moderna benefited from collaboration with the federal government to bring the COVID-19 vaccine to market but is now planning to charge $110 to $130 per dose once federally purchased stockpiles are expended. Moderna charged the government $15 to $26 per dose earlier in the pandemic.
Mr. Sanders said it costs $2.85 to make each dose, which is 2.2% of what Moderna plans to charge.
The transition to the commercial market will likely coincide with a fall booster campaign that uses new shots targeted against circulating strains.
Drugmakers will be under pressure to fulfill their pledges that no American will have to reach into their pocket for COVID-19 shots. The companies say patient assistance programs will help the uninsured. Lawmakers hailed that move as a step in the right direction while fretting that the programs would be insufficient or filled with red tape.
Lawmakers also want to know how much the companies will charge private insurers and government programs after factoring in rebates and discounts.
“The huge increase in price will have a significantly negative impact on the budgets of Medicaid, Medicare and other government programs that will continue covering the vaccine without cost-sharing for patients,” Mr. Sanders told The Washington Times. “It’s not a coincidence Moderna announced plans to give free vaccines to the uninsured after we invited them to testify.”
The standoff between lawmakers and drugmakers underscores the thorny transition from a response that relies on direct federal intervention to one in which COVID-19 is treated like other diseases in the complex and costly U.S. health care market. It also speaks to a long-running concern that drugmakers make huge profits from government-sponsored research but don’t return the favor.
“They ought to be obligated to put a share of windfall profits back into the [National Institutes of Health] research budget. A hearing is fine, but Congress needs to act to prevent this sort of exploitation of the taxpayer, who pays for research that companies sell back to them at high prices,” said Arthur Caplan, director of the division of medical ethics at the New York University Grossman School of Medicine.
Lawmakers in recent years have dragged executives to Capitol Hill to testify about costly drugs for diseases such as hepatitis C. President Biden is browbeating insulin companies to cap out-of-pocket costs for diabetes patients at $35 per month after Democrats’ attempts for widespread limits ran into Republican opposition last year.
Pfizer emerged on Congress’ radar in October when the drugmaker told investors that a potential U.S. list price of $110 to $130 per single dose vial “reflects the value of the vaccine and as well the thresholds for what would be considered a highly cost-effective vaccine.”
Moderna then floated a similar price increase.
Senate Democrats were livid. They wrote scathing letters pointing to the nearly $10 billion that the Massachusetts company received in federal government funding to boost its manufacturing capacity, execute large-scale clinical trials and secure doses and said Moderna reported $12 billion in net income for 2021.
“Your company has already earned billions in profits from the vaccine, which benefited from extensive taxpayer support for research and development, and your proposed price increase threatens to reduce access to a life-saving vaccine while boosting your company’s profits,” Sens. Elizabeth Warren of Massachusetts and Peter Welch of Vermont wrote to the company in January.
The Kaiser Family Foundation said the proposed commercial prices would be far above the roughly $15 that Moderna charged the government for its first tranche of shots in mid-2020, or the $26 it sought for the updated “bivalent” booster shots that attack both the original strain of the virus and omicron variants.
Kaiser analysts said the cost of vaccinating just half of Americans under the proposed commercial prices would exceed the cost of purchasing enough vaccines for everyone in the country at the federal bivalent booster price. Even so, they noted that even at higher spending levels driven by commercial pricing, COVID-19 vaccination is likely to be cost-effective compared with not vaccinating, given the economic benefits of preventing hospitalizations and deaths.
Lawmakers are pressuring Moderna in part because its scientists worked alongside government teams at the National Institute of Allergy and Infectious Diseases during the rush to combat the coronavirus in 2020. Moderna’s shots became a dominant option alongside the ones that Pfizer developed with its German partner, BioNTech.
Federal data shows that more than 250 million doses of the Moderna versions have been administered in the U.S. alone.
The two-dose primary vaccines and booster shots use groundbreaking messenger RNA technology, which injects a snippet of genetic code encased in a bubble of fat to instruct the body to recognize and combat the virus.
Government news releases on the effort typically noted that the shots were “co-developed” by the national institute and Moderna. The effort included a dramatic weekend in January 2020 in which government and Moderna scientists worked to figure out the genetic sequence needed to mimic the virus’ spike protein.
Moderna made a $400 million “catch-up payment” earlier this year to the federal agency, which will be shared with two academic institutions, for royalty rights related to a molecular technique it borrowed to make the vaccine.
Mr. Bancel has rejected the idea that the government created the platform for its vaccine.
“What the government did — and we’re very grateful for it, and I think they got a lot of value out of it — is to accelerate the development of a vaccine. We would have funded the vaccine; it would just have taken longer,” he said during a Wall Street Journal health forum this month.
Responding to congressional criticism, the company said the government financed its clinical trials “to enable the scale and speed it wanted.” Moderna also said it discounted the price of its vaccine early on to reflect public contributions.
The company said it spent $1.4 billion in private funding to open its Norwood, Massachusetts, manufacturing facility in the summer of 2018, well before the onset of the COVID-19 pandemic.
The Department of Health and Human Services said the transition to the commercial market will likely be made in the fall for vaccines and at the end of the year for treatments such as Paxlovid. In a recent blog post, a top HHS official pressured drugmakers to keep costs in check.
“We fully expect that industry will look to the example that the U.S. government has set by pricing these products at a reasonable rate and eliminating access hurdles for every American. Additionally, we expect that insurers will keep any out-of-pocket costs, including co-pays and deductibles, as low as possible for consumers,” said Dawn O’Connell, assistant secretary for preparedness and response.
In a statement on its pricing decisions and congressional scrutiny, Pfizer stressed that it relied on its investments to develop the vaccine on its own.
“Pfizer did not receive any government funding for the development of the Comirnaty COVID-19 vaccine or Paxlovid. The funds received by Pfizer from the U.S. government were payments for products that the government acquired, but only upon delivery of the products,” the company said in a statement. “We have invested from our own resources at risk and are prepared to continue to bear the costs of development and manufacturing to advance COVID vaccines and therapeutics.”
Moderna said its price reflects “the value of our vaccine from both a human health and economic perspective.”
“Our vaccines have helped protect the lives of millions of people around the world and have allowed both the U.S. economy and economies around the world get back to work,” company spokesman Christopher Ridley said. “Our vaccine will be priced similar to other vaccines, including those for hepatitis and pneumonia. These vaccines are all part of preventative patient care and are priced to reflect the value they provide to society in avoiding healthcare and economic costs associated with disease, like costly hospitalizations.”
Jennifer Kates, a senior vice president at the Kaiser Family Foundation, said multiple factors can impact what drugmakers decide to charge, including manufacturing costs and whether demand for the drug is rising or decreasing.
It is “sort of a market assessment — what will the market bear for this?” she said. “That’s different from the government coming in and saying, ‘We want millions of doses, and here’s what we’re going to pay.’”
Demand for COVID-19 vaccines is dwindling. Uptake hit a high point in April 2021 during the early rush to immunize the population, with more than 3 million shots per day injected into arms. Average delivery has fluctuated with various booster campaigns since then but has generally dwindled. The fall 2021 booster drive reached about 1.8 million shots per day, and the pre-winter booster drive in October last year averaged 650,000 shots per day.
More than 8 in 10 Americans have received at least one dose of a COVID-19 vaccine, and over two-thirds have completed a two-dose series.
Yet even as federal regulators outline plans for boosters, demand for the extra shots has dwindled. Only 16% of the U.S. population received one dose of the bivalent boosters since they were authorized in the fall to match circulating strains.
Demand for the bivalent boosters, specifically, averaged 600,000 doses per day in October, shortly after their authorization. That average fell to about 41,000 shots per day by the start of this month, according to the Centers for Disease Control and Prevention.
“The only reason we purchased them [in 2020] was because we felt demand would exceed supply and we wanted distribution to be equitable and get to the neediest first,” said Paul Mango, a former top official at the Department of Health and Human Services. “Supply has now exceeded demand for quite a while.”
Mr. Mango said the Trump administration determined that vaccine makers’ costs were “down closer” to what the government paid for doses in 2020, so the proposed commercial price “sounds like one hell of a profit margin.”
While vaccine makers may forfeit certain liability protections once Mr. Biden unwinds COVID-19 emergency protocols in May, that would not entirely explain the difference, he said.
Mr. Mango noted that Moderna charged the government less than Pfizer in early rounds of purchasing, essentially accounting for the government’s upfront assistance.
“Congress should not interfere with the free market at this point, but government officials should be free to point out that they believe the manufacturers are charging exorbitant prices if they choose,” Mr. Mango said. “Freedom is bilateral.”
The average person won’t see a direct cost when they get the vaccines under commercial prices, particularly if they are covered by government-run or private insurance, though the health care system must absorb the higher costs.
“From our assessment, from looking at private insurers’ filings, it potentially could have an effect on premiums,” Ms. Kates said.
She said a parallel issue is whether the patient assistance programs will be adequate or cover everyone who wants the vaccine.
Pfizer said health care professionals who want to vaccinate uninsured patients should contact the Pfizer Patient Assistance Program to understand the eligibility requirements. Eligible patients will not be expected to pay upfront, though clinicians and pharmacies will need to submit documentation to receive reimbursement.
Moderna said its free drug program will provide COVID-19 vaccines “at no cost — the details will be determined before our vaccines enter the commercial market.”
Health care professionals said senators can press Moderna for the details of its program but will not be able to impact the list price of the vaccine.
At this point, all they can do is huff and puff.
Moderna got “enormous government support, NIH owns some of the patents on mRNA technology, they’ve gotten money through Operation Warp Speed, they got pre-purchase agreements from the government that were lucrative. I think they’re acting entirely irresponsibly to make it so unaffordable,” said Lawrence Gostin, a global health law professor at Georgetown University. “Having said that, I think all the hearings can do is blame and shame them, reprimand them for being bad citizens. Unless Congress actually passes legislation, signed by the president — which is almost inconceivable at this point — Moderna can do what it wants as a private company.”
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