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Pfizer (US) and partner BioNTech (Germany) have announced an
advance purchase agreement with the US Department of Health and
Human Services (HHS) and the Department of Defense (DoD) to provide
100 million doses of their coronavirus disease 2019 (COVID-19)
vaccine candidate, BNT162, for USD1.95 billion.
This is the largest payment provided as part of
Operation Warp Speed for a COVID-19 vaccine to date.
Unlike other research and development (R&D) funding provided
by the US Biomedical Advanced Research and Development Authority
(BARDA), this payment will only be made upon receipt of the 100
million doses after US FDA approval or emergency use authorization
(EUA) of the vaccine. It also uniquely among the US deals excludes
funding support for R&D and manufacturing activities and as
such provides the first pricing benchmark of around USD20
per dose for a COVID-19 vaccine sold for profit in the
US.
According to the HHS, the company could start delivering the
doses to government-specified locations across the US starting from
the fourth quarter of 2020 but has not confirmed if all 100 million
will be available this year. The US government has the option to
acquire an additional 500 million doses at a later time.
The BNT162 vaccine program and 1.3 billion vaccine
doses
The BNT162 COVID-19 vaccine program includes four potential
candidates based on unique messenger RNA (mRNA) technology,
including leading candidate BNT162b1 for which favorable early
results from German and US trials have already been published. A
prime-boost immunization schedule with BNT162b1 elicited
neutralizing antibody titres in vaccinated participants that were
at or above levels of antibodies detected from COVID-19-recovered
patients. The companies also reported promising T-cell response
data for BNT162b1 from the German trial, as long-term immunity
against SARS-CoV-2 could be dependent on both antibody levels and
T-cell immune responses. If successful, an EUA submission could be
made as early as October 2020. At-risk manufacturing of the vaccine
aims to provide up to 100 million doses by the end of 2020, and
over 1.3 billion by the end of 2021, subject to final dose
selection.
Less than USD20 per dose
Assuming the government's payment of USD1.95 billion would only
go towards the purchase of 100 million doses, this suggests a
purchase price of USD19.50 per dose, or USD39.00 for the two doses
that will likely be required to optimize protection. The company
has confirmed that Americans will receive the vaccines for free in
line with the US government's commitment to provide free access to
COVID-19 vaccines. The COVID-19 vaccine price for a
two-dose regimen is nearly 30% below the price for a seasonal flu
vaccine and takes into account "public health requirements
during the pandemic", according to Pfizer spokesperson Sally Beaty,
interviewed by Bloomberg.
According to Bloomberg analyst Sam Fazeli, one-time use of the
vaccine could help Pfizer generate USD15 billion in "windfall"
revenue; however, the requirement for annual boosters could further
swell sales expectations. Fazeli also noted that USD20 per
dose is likely to be the price ceiling for a COVID-19
vaccine.
Pricing at-cost vs for profit
Pfizer stands out among other leading vaccine developers as the
company has opted not to take government funding to help mitigate
some of the risks associated with vaccine R&D and at-risk
manufacturing. Other OWP candidates include those being developed
by Moderna (US), AstraZeneca (UK), Johnson & Johnson (J&J,
US), and Novavax (US) have benefited from notable BARDA investments
worth more than USD3.7 billion combined for R&D and
manufacturing activities.
Pfizer Chairperson and CEO Albert Bourla has previously
confirmed that their vaccine will be sold at a "very
marginal profit" to facilitate access to the public at no cost
to them, but not all vaccine developers will follow the same
pricing strategy. In a US congressional hearing on 21 July,
AstraZeneca head of biopharmaceutical R&D Mene Pangalos stated
that the company will supply 300 million doses of its COVID-19
vaccine candidate, AZD1222, to the US at no profit, based on its
current agreement with BARDA. AZD1222 could cost around EUR2.50
(USD2.80) per dose in Europe, according to Italy's health ministry.
The Inclusive Vaccine Alliance, signed an advance purchase
agreement with AstraZeneca to supply participating EU countries
300 million doses of AZD1222 for EUR750 million "at no profit"
- implying a purchase price of EUR2.50 per dose. Similarly,
according to testimony at the hearing, J&J would sell the
vaccine at no profit while the pandemic is ongoing. J&J's CEO,
Paul Stoffels back in March announced that the vaccine could be
priced at around USD10 or EUR10 per dose,
in an interview with the De Tijd newspaper. This
suggests the at-cost pricing benchmark for vaccines could range
around USD3-10 per dose. Meanwhile, Moderna and Merck & Co (US)
have confirmed that they do not anticipate commercialisation of
their respective vaccines at cost.
The price of a single COVID-19 vaccine is likely to vary
considerably based on multiple factors related to time, geography,
and pre-existing contracts. Certain pricing restrictions
may have been incorporated into some of the contracts signed with
governments or external funding entities such as Coalition for
Epidemic Preparedness Innovations (CEPI). This could further be
dependent on whether the pandemic is still ongoing or not, with
companies potentially raising at-cost prices to generate more of a
profit once most outbreaks are under control. Furthermore, where
the vaccine is being bought will also determine the price, with
lower and middle income countries likely paying much less than
developed countries.
USD20 per dose seen as a price cap, but Moderna signals
it may price its vaccine higher
It is becoming increasingly clear that about USD20 per dose or
USD40 for course of two vaccinations is seen as a maximum price in
other high-income countries beyond the US. Pfizer (US) announced on
28 July that its price for BNT162, in other developed countries
would be on a par with the price charged in the United States (i.e.
around USD19.50 per dose, or USD39.00 for a two-dose treatment
course). Meanwhile Seth Berkley, chief executive of Gavi, which is
co-leading the global COVAX Facility for procuring COVID-19
vaccines, has sought to dispel reports that the price of vaccines
under COVAX for high-income countries will be set at USD40. The
statement came after an EU joint procurement team raised concerns
about the price. Berkley stated that while the European Union had
focused on the USD40 number in its criticism of the COVAX scheme,
there had been a variety of price points for a future COVID-19
vaccine discussed in a presentation to EU officials. He
specifically told Reuters "that [USD40] was the maximum price in
the range for high income countries, rather than a set price".
Moderna, however, appears set to pursue a higher price point for
its COVID-19 vaccine candidate mRNA-1273, which is currently in a
Phase III clinical trial, of about USD50 to USD60 per course,
according the UK's Financial Times. The source, which
cites "people familiar with talks between the company and potential
buyers", indicated this price range would apply to the US and other
high-income developed countries. The cited "per course" price
suggests the price quoted is for two doses, if two are required to
optimize protection.
Who will get the vaccines first?
Besides pricing, COVID-19 vaccine availability will also heavily
depend on manufacturing capacity and allocation. Although Pfizer
has confirmed that it can only produce about 100 million doses this
year, it remains unclear if these will all be allocated to the US,
particularly as the UK government has already agreed to purchase 30
million doses of a BNT162 vaccine, with some made available
starting in 2020. Nevertheless, HHS Secretary Alex Azar has
confirmed that "expanding Operation Warp Speed's diverse portfolio
by adding a vaccine from Pfizer and BioNTech increases the odds
that we will have a safe, effective vaccine as soon as the end of
this year".
According to co-founder and CEO of BioNTech Ugur Sahin, this
purchase deal with the US is "one of many steps towards providing
global access to safe and efficacious vaccines for COVID-19". Sahin
added that the companies are in advanced discussions with various
government bodies, with announcements of more supply agreements
anticipated soon. Pfizer and BioNTech have also announced their
interest in participation in the COVAX
Facility established by the Gavi, the Vaccine Alliance, the
Coalition for Epidemic Preparedness Innovations (CEPI), and the
World Health Organization (WHO) that aims to provide global and
equitable access to COVID-19 vaccines. Novavax and AstraZeneca are
participants in the COVAX Facility. Unlike other advance purchase
agreements, vaccine candidates procured through the COVAX Facility
will be distributed globally with priority to high-risk individuals
such as healthcare workers. Such initiatives based on global
co-operation are critical
to ensure that the pandemic can be brought to an end
effectively, particularly if immunity from vaccines proves to
be short-lived and new outbreaks continue to surface in different
areas around the globe for years to come.