- Pharmaceutical companies around the world are hard at work on a viable
- Many drugmakers have promised to keep the price low, but price gouging and inflated costs have plagued vaccine rollouts in recent years.
- Experts agree health insurance companies will cover a coronavirus shot, but the cost may be passed down to consumers through increased premiums.
- Visit Business Insider’s homepage for more stories.
With more than 3.5 million reported coronavirus infections worldwide and nearly 250,000 deaths, scientists are racing to find a vaccine.
Dr. Anthony Fauci, director of the US National Institute of Allergy and Infectious Disease, said it could be another 12 to 18 months before the US has a coronavirus vaccine.
If and when a vaccine is approved, how much will a dose cost US consumers?
How vaccine prices are set
Many factors impact the cost of producing a vaccine, including the manufacturing process, the availability of ingredients, the number of doses required, and how it needs to be stored and transported.
Vaccines are typically most expensive when they’re new: Developed in the 1920s, the tetanus vaccine costs less than $35 a shot, according to the CDC. But Gardasil, an HPV vaccine from Merck approved by the FDA in 2006, can cost nearly $230 out-of-pocket for a single dose.
Between 1986 and 2014, the cost of an American child’s full immunization schedule rose from $100 to more than $2,000, The New York Times reported. The amount the federal government spends on vaccines increased 15-fold during that same period.
In a free market, how much a pharmaceutical company charges for a vaccine is mainly determined by how much governments are willing to pay for it. The result is a tiered system, in which wealthier nations typically pay more.
According to the World Health Organization, a typical immunization schedule in developing countries — including measles, polio, and tuberculosis vaccines — can cost less than 10% of the price in Europe or the United States.
In the US, pharmaceutical companies often base their rates not on their own development costs, but by the benefit they believe a vaccine brings. A Merck spokesperson told Discover magazine’s Emily Saarman that the price for Gardasil, for example, is based “on a number of factors, most importantly the value Gardasil brings to individuals and society.”
“HPV-related diseases cost the U.S.
The threat of vaccine price gouging
At the start of the 2004 influenza season, the FDA determined a vaccine developed by the Chiron Corporation was unsafe after inspecting the company’s factory in Liverpool, England.
That meant nearly half of the projected US supply — about 100 million doses — was unusable, according to the Center for Infectious Disease Research and Policy. It also meant France’s Sanofi Pasteur was initially the sole supplier of the flu shot in the US.
The shortage led to price gouging, according to a survey conducted by the American Society of Health-System Pharmacists: More than 55% of pharmacists said they had been offered flu vaccines at inflated prices.
Hospitals reported distributors offering flu shots for as much as $100, compared to the typical $12 to $20 per jab, the AP reported.
Government intervention could be needed to keep down the price of a coronavirus vaccine
To prevent a similar crisis, 46 Congressional Democrats signed a letter to President Trump in February, calling on the Department of Health and Human Services to prevent any private company from having an exclusive license on a successful coronavirus vaccine.
“Providing exclusive monopoly rights could result in an expensive medicine that is inaccessible, wasting public resources, and putting public health at risk in the United States and around the globe,” the letter read in part.
Robert Weissman, president of the nonprofit consumer advocacy organization Public Citizen, told Business Insider that a private company obtaining an exclusive license “could establish a “monopoly with no reasonable pricing condition.”
On February 26, Health and Human Services Secretary Alex Azar said he couldn’t guarantee any price controls on a coronavirus vaccine.
“We would want to ensure that we work to make it affordable, but we can’t control that price because we need the private sector to invest,” Azar said during a Congressional hearing. “The priority is to get vaccines and therapeutics. Price controls won’t get us there.”
The next day, though, Azar reversed course, saying that, if the government had co-funded private research or development of a vaccine, “we would ensure there’s access to the fruits of that, whether vaccine or therapeutics.”
Public funds are the financial backbone of pharmaceutical research, giving lawmakers leverage. “Every single drug approved by the Food and Drug Administration from 2010 to 2016 was based on some element of science funded by taxpayers through the National Institutes of Health,” Patients For Affordable Drugs founder David Mitchell told Business Insider.
Healthcare industry attorney Maria D. Garcia says the government could employ price-capping measures to stave off price gouging.
“They may also subsidize manufacturing costs for the vaccine to help control the price and ensure that any future vaccine is widely distributed in US communities,” Garcia told Business Insider.
In the US, childhood vaccinations are covered through both private and public programs. Insurance plans usually cover routine vaccines without charging a copayment or coinsurance, while the CDC buys vaccines for Medicaid recipients at a discount.
Medicare Part B pays for influenza, pneumococcal, hepatitis B, rabies, and tetanus vaccinations. (Medicare Part D may also cover shingles and MMR vaccines and the combined tetanus, diphtheria, and pertussis shot.)
The cost of vaccines in other countries
In countries with universal healthcare, such as Australia, Canada, and the United Kingdom, routine vaccinations are offered to children and adults at no cost.
In Germany, public and private insurance companies cover the cost of vaccinations recommended by the Vaccination Commission. Most vaccines are not compulsory, though the government recently started requiring children receive a measles shot to attend school.
Some countries strictly regulate vaccine prices: In Singapore, a single dose of the measles, mumps, and rubella vaccine costs about $15. In the US an MMR jab costs nearly $80 in the private sector and $21.70 for the CDC.
Will US health insurance companies cover a coronavirus vaccine?
Garcia predicts all major health insurance providers will cover a coronavirus vaccine, just as they’ve covered COVID-19 treatments.
“[They] will also feel the pressure from public opinion and the government to make the vaccine widely available and affordable,” she added. “It would be a PR nightmare to not cover the vaccine.”
Passed in March, the Coronavirus Aid, Relief and Economic Security act pledges to cover the full cost of the shot for Medicare recipients.
Harvard virologist Peter Kolchinsky told Business Insider that in all likelihood, a COVID vaccine will be fully covered by private insurance, too, “much like we all receive flu vaccines for free each year.”
But LA Times business writer David Lazarus has warned that, because pharmaceutical companies typically price a drug “relative to its ‘benefits,’ rather than its actual production cost,” the price tag for insurance companies could be exorbitant.
“If the pharmaceutical industry runs the same playbook with a COVID-19 remedy, the list price of a vaccine could be set stratospherically high, regardless of actual R&D costs,” Lazarus wrote.
Even if health insurance companies absorb a steep cost, they may pass it on to consumers in the form of higher premiums.
The pharmaceutical companies respond
Many vaccine developers have promised to price a viable coronavirus shot fairly. EpiVax, which manufactures vaccines for smallpox, tuberculosis, and influenza, says it is three months away from clinical trials of its coronavirus vaccine candidate, EPV-CoV19.
It could cost at least $300 million to get EPV-CoV19 to the finish line, EpiVax CEO Annie De Groot told Business Insider. But when it comes time to price a dose, she added, “We are not looking to make a profit on this pandemic, but to simply cover costs.”
Moderna, the frontrunner in the coronavirus vaccine race, has offered a similar sentiment.
“There is no world, I think, where we would contemplate to price this higher than other respiratory-virus vaccines,” Moderna CEO Stephane Bancel told Business Insider in March.
For comparison, Prevnar 13, Pfizer’s pneumococcal pneumonia vaccine, costs approximately $200 for each of the four doses comprising a full course.
Paul Stoffels, chief scientific officer at Johnson & Johnson, told Belgium’s De Tijd he expected a coronavirus vaccine from his company would cost as little as $10 or $11.
“That is quite cheap,” Stoffels said. “Everything depends on the output of our production lines, the worldwide availability of hypodermic needles, and the ability to sterilize hundreds of millions of those vaccines on-site.”
Neither Johnson & Johnson nor Moderna chose to comment further on the potential price of a coronavirus shot. But vaccines are not typically big moneymakers for pharmaceutical companies, Kolchinsky said.
“The truth is that it’s unlikely any large vaccine companies will make much if any return on investment in their vaccine development for COVID-19,” he said. “Their near-term reward will be just like everyone else’s — getting back to work and getting the economy humming again.”
Read the original article on