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The US is buying COVID-19 vaccine for everyone. That could pave the way for drug price reform

Sarah Gantz, The Philadelphia Inquirer on

Published in Business News

Before the coronavirus vaccines had even been proven to work, the United States scrambled to pre-order hundreds of millions of doses. The government has paid billions to Pfizer, Moderna and other vaccine makers so that every person in the country can get vaccinated free of charge.

It doesn’t matter if you’re uninsured, undocumented, don’t have a regular doctor or a driver’s license. In the interest of taming the pandemic, the government did away with some of the biggest barriers people often face in accessing health care.

Industry analysts and patient advocates are keeping a close eye on what happens next: If, once the federal health emergency has ended, the government stops bulk-buying the vaccine, costs could go up and people who are uninsured may be at risk of going without. Or perhaps the government’s approach to COVID-19 vaccination could lead the way to drug price reform that would allow federal programs, such as Medicare, to negotiate prices.

“The price negotiation the U.S. government has engaged in with COVID-19 vaccines is exactly what is prohibited for other drugs,” said Larry Levitt, executive vice president for health policy at the Kaiser Family Foundation. “We in the U.S. pay far higher prices for drugs than in other countries where governments negotiate or set prices. COVID-19 vaccines have been the exception because of the role the federal government played in purchasing doses and providing them to everyone at no charge.”

Normally, private health insurers, Medicare, Medicaid and other agencies that operate public health programs, such as Veterans Affairs, all independently negotiate rates for vaccines and prescription medications directly with pharmaceutical companies. Access depends on what type of health insurance you have.

But in order to get as many people as possible vaccinated quickly, the government took a different approach for the COVID-19 vaccine.

 

Under bulk purchasing agreements each worth over $1.5 billion, the U.S. is paying about $15 per shot for Moderna’s vaccine and $19.50 per shot for Pfizer’s vaccine — a price Pfizer’s chief financial officer, Frank A. D’Amelio, called “pandemic pricing.”

“Obviously, that’s not a normal price,” he said in February, during a call with investors following the release of the company’s 2020 fourth quarter earnings. Pfizer would normally charge between $150 and $175 per dose for this type of vaccine, he said.

The government’s ability to negotiate as the sole purchaser of vaccines in the U.S. only partly explains the bargain prices, Levitt said. Pre-purchasing before the vaccines were available likely helped hold down prices.

“Drug companies have likely been hesitant to look like they were price gouging in the middle of a pandemic, especially with a coming political debate over drug prices more generally,” Levitt said.

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