Pfizer has a $2 billion deal with the U.S. government to supply as many as 600 million doses of the vaccine it is developing. Many of its competitors are in collaborations with public universities, or receive state funding. That raises an intensely ideological issue: Should a private company be free to set prices for a public good developed with government aid?
“We have to make a profit out of the first product,” Moderna chief executive Stephane Bancel told Yahoo Finance. “We have invested $2 billion of our shareholder capital since we started the company. We need to get a return.” But Moderna has also received some $955 million in government funding to finance its big test. According to the Financial Times, Moderna is planning to price its vaccine at $25-$30 per dose, significantly above the $19.50 at which Pfizer is selling each of 100 million doses to the U.S..
Meanwhile, AstraZeneca PLC says it will sell the vaccine it is developing with Oxford to European governments at no profit, while Johnson & Johnson says it will sell its vaccine at a “not-for-profit price” for emergency use.
The issue is already very political. Five pharma industry leaders have had to testify on their pricing plans before a committee of the U.S. House of Representatives, and Democratic-sponsored bills are in Congress to stop price gouging. They have some Republican support.
Representative Lloyd Doggett, a Texas Democrat who is sponsoring one such bill, told Politico that “a drug company’s claim that it’s providing a vaccine at cost should be viewed with the same skepticism as that by a used car salesperson.”
Once governments have bought the vaccine, should they require patients to pay for their own shots? Most people with money would happily pay much more than $30 to free themselves from the coronavirus. But in the many developed countries with nationalized health systems, the question doesn’t arise: taxpayers pay, and the vaccine is free for patients.
The U.S., however, has a political issue on its hands. Senator Patty Murray, a Washington Democrat, now backs a bill to ensure that every American has a right to a free vaccine. Meanwhile, the deal with Pfizer will result in free immunizations. Having established the principle of taxpayer-paid vaccines, it could be hard to retreat.
These are issues decided within countries. When it comes to international cooperation, poorer countries complain about “vaccine nationalism.” In the U.K., Prime Minister Boris Johnson pulled out of the EU’s so-called Inclusive Vaccines Alliance in a move attacked for playing to his Brexit-friendly political base.
Wealthy countries have little incentive to collaborate with poor ones. Costa Rica led an effort with the World Health Organization to set up a new “Covid-19 Technology Access Pool” that would share research and then coordinate production – and also share the vaccine once it was ready.
But the list of countries that responded is telling. The U.S., China, Canada and Japan are all absent, while the only European countries to sign up have been Belgium, Luxembourg, the Netherlands and Norway. A group of much smaller developing nations has been left to build a collaboration — even though the virus knows no boundaries, and it is in all countries’ interest to stamp it out everywhere.