A senior Pfizer executive suggested to investors last week that the prices of his Vaccine for covid-19 may increase the post-pandemic. The suggestion raises questions about whether a drug, developed at the request of the federal government to respond to a global crisis, could make a profit for a company.
The possibility was raised by Carter Lewis Gould, senior analyst at Biopharma Equity Research at Barclays, during a virtual global health conference organized by the bank. Gould, referring to comments made by Pfizer executives over the summer, asked how the pharmaceutical company still envisioned seeking “higher prices” as “we moved from a pandemic to an endemic phase”, according to an edited transcript of talk.
“Obviously, I focused a lot on the streets. And, in particular, on some of his comments on the potential for higher prices,” said Gould of Pfizer’s summer suggestion. “I think one of the things that people point out is the perspective of that, as well as a little bit of your experience with the flu market. Now, this is absolutely different. But I hoped you could give us a little more depth about the what do you think here and about the potential to seek higher prices in the future? “
In response, Frank A. D’Amelio, CFO and executive vice president of global supply at Pfizer, said the company anticipates a “significant opportunity” for its vaccine “from a pricing perspective” as we move forward “from a situation pandemic to an endemic situation. ”
“So if you look at how current demand and prices are being driven, this is clearly not being driven by what I will call normal market conditions, normal market forces. It really has been driven by the pandemic state that we have and the needs governments to really guarantee the doses of the various vaccine suppliers “, explained D’Amelio. “So what we believe, what I believe is that as we move from a pandemic state, from a pandemic situation to an endemic situation, normal market forces, normal market conditions will start to take effect. And factors like effectiveness, reinforcement capacity, clinical usefulness is going to become basically very important, and we see this as, frankly, a significant opportunity for our vaccine from the point of view of demand, from the point of view of prices, given the clinical profile of our vaccine “, he said. “So clearly, more to come here. But we think that, as it changes from a pandemic to an endemic one, we think there is an opportunity here for us.”
In July, Pfizer signed a $ 1.95 billion pact to provide the US government 100 million doses of your COVID-19 vaccine. What order was duplicated in December, when the company struck another $ 2 billion deal with former President Trump’s administration.
“Qualified US residents will continue to receive the vaccine free of charge, in accordance with the US government’s commitment to provide free access to COVID-19 vaccines and in accordance with the Centers for Disease Control and Prevention Advisory Committee (ACIP). US Disease Prevention (CDC) recommendations for phased launch of the vaccine, “says a Pfizer press release after the second agreement.
The public-private relationship has allowed Americans to receive the vaccine free of charge, but, according to Pfizer, it does not mean that the federal government helped finance its creation. Kathrin Jansen, senior vice president and head of vaccine research and development at Pfizer, noted in November that the company did not receive any federal money to help pay for research and development.
According to The New York Times, Jansen said that Pfizer “was never part of Warp Speed” and “never received money from the United States government or anyone”.
A Pfizer spokeswoman later clarified that Pfizer was part of Operation Warp Speed, but the federal government’s investment was not for vaccine research or development.
“Although Pfizer has reached an advance purchase agreement with the United States government, the company has not accepted BARDA funding for the research and development process,” says the Pfizer statement. “All investment in R&D was made by Pfizer at risk. Dr. Jansen was emphasizing that last point.”
That condition of the Pfizer deal – which is not shared by the other two pharmaceutical companies that have developed approved COVID vaccines for distribution – can complicate things as soon as the pandemic passes, according to Jordan Paradise, a law professor at the University of Chicago who wrote about the “eventual costs” of “approved products” associated with COVID-19 in September.
Paradise’s article examined the federal government’s power to regulate prices for products created with the help of federal funds. That power comes from the Bayh-Dole Act, a set of regulations passed in 1980 to deal with inventions stemming from research funded by the federal government.
The key to the legislation is something called “marching rights”, which allows the federal government to “intervene and claim the legal title of an invention”, under “certain circumstances”, writes Paradise. These circumstances fall into two categories: “When there have been no efforts to market within an agreed timeframe”, or when “‘action is needed to alleviate health or safety needs'”.
Paradise, however, points out that “while these marching rights sound like an attractive way to keep institutional patent holders under control, the United States government has never actually used that authority.” In fact, she notes, the National Institutes of Health “has denied all six petitions to exercise the rights to demonstrate.”
Power was never invoked, said Paradise, because it is poorly defined: “It is not clear. It is not clear whether the government has ever pursued its march for rights.”
Asked whether the law could be used to prevent pharmaceutical companies – whether or not they received money from the federal government, and to what extent – to increase the prices of COVID-19 vaccines, Paradise said that, in general, new legislation might be needed . She pointed to the insulin price cap laws in force in several states as potential models, but noted that, “at the federal level, it is a free market”.
Another unknown is when the pandemic officially ends, or becomes endemic, as Pfizer executives mentioned last week. Paradise said the call was for the head of Health and Human Services, currently led by interim secretary Norris Cochran. President Joe Biden has appointed Xavier Becerra to head the department, although his confirmation was stalled until last week.
“I think it will be a change,” she said. “At what point does the pandemic end and the government stops paying for vaccines?”