Pfizer and BioNTech's COVID-19 vaccine demonstrates over 90% efficacy as hope builds for an early end to the pandem… https://t.co/7oajgLXB0B
The pandemic pricing dilemma: A COVID-19 vaccine at-cost or for profit?
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.
- Pfizer and BioNTech's COVID-19 vaccine
- Mixed news on COVID19 vaccines: COVID-19 R&D tracker
- Innovation in Japan’s regenerative sector
- US drug prices could be drastically impacted by Most Favored Nation executive order
- Global healthcare spend to remain stable
- US school re-opening decisions in a pandemic environment are complex – data can help
- Trump resurrects International Reference Pricing (IRP) proposal on pharmaceuticals with executive order
- Climate Change: Potential impact on cardiovascular health of older adults
Register from the latest on the progression of the pandemic and the future that lies ahead of us from our Vice Pres… https://t.co/GiqhM1V318
We are expecting major clinical readouts from several key COVID-19 vaccine and therapeutics candidates- our weekly… https://t.co/aIcNOmccrx