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The deal, which is contingent on an approvable product, secures
enough vaccine to inoculate 50 million Americans for about $40 a
person, or about the cost of annual flu shots, and is the first to
provide a direct window into likely pricing of successful COVID-19
vaccines.
It also allows for some drugmakers to profit from their efforts to
protect people from the virus that has killed some 620,000 people
worldwide, almost a quarter of those in the United States.
Unlike other vaccine deals signed by the government, Pfizer and
BioNTech will not collect a payment until their vaccine proves to be
safe and effective in a large pivotal clinical trial expected to
start this month.
The U.S. and other governments have previously struck deals to
support COVID-19 vaccine development, some of which included
guaranteed deliveries of doses. But this is the first deal to
outline a specific price for finished products.
"The average price for a flu vaccine is around $40," said Peter
Pitts, president and co-founder of the Center for Medicine in the
Public Interest. "It looks good with that comparison. It's well
within the ballpark of reasonableness."
So far, the other major experimental vaccines have all displayed
relatively similar data on safety and efficacy, suggesting that no
one drugmaker would be able to charge dramatically more than its
peers, said Mizuho biotechnology analyst Vamil Divan.
The U.S. government agreed to purchase 100 million doses of the
Pfizer/BioNTech vaccine at a price that amounts to $39 for what is
likely to be a two-dose course of treatment, or $19.50 per dose.
Health experts believe effective vaccines are needed to break the
pandemic that has battered economies worldwide. But they would need
to be available to billions of people, and drugmakers are under
considerable pressure to avoid making big profits during a global
health crisis.
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At $40 per person, "manufacturers will certainly generate profits" and gross
margins could be in the range of 60% to 80% in some geographic areas, said SVB
Leerink analyst Geoffrey Porges. Gross margins do not include research and
development costs, which Pfizer has said could run as high as $1 billion for its
vaccine.
Still, analysts and pricing experts said the price tag is on par with other
common vaccines and a good deal for governments, given the desperate need.
The deal "would provide important benchmarks for COVID vaccine pricing," Porges
said, adding that vaccine makers are likely to aim for a single price around the
word.
Pfizer, Moderna Inc and Merck & Co have all said they plan to sell their
vaccines at a profit.
Governments and non-profits are in a race to secure supply from companies with
promising COVID-19 vaccine candidates, although there are no guarantees any will
ultimately succeed.
Last week, Johnson & Johnson told Reuters it is in talks for vaccine deals with
the European Union, Japan and the Bill and Melinda Gates Foundation. [L2N2EN1FW]
Some drugmakers, including J&J, have announced plans to price their vaccines on
a not-for-profit basis while the pandemic is ongoing, although J&J has not
provided specifics on pricing.
AstraZeneca Plc agreed to provide the United States 300 million doses of the
vaccine it is developing with Oxford University researchers in exchange for $1.2
billion in upfront funding.
Although the cost per dose comes out to around $4 - far less than what Pfizer
and BioNTech would receive - AstraZeneca can use some of that funding to offset
research and development costs even if its vaccine ultimately fails.
(Reporting by Carl O'Donnell; Editing by Peter Henderson and Bill Berkrot)
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