It looks like there will be plenty of Covid vaccines available for a fall and winter surge, but once the money in the current program runs out, the U.S. government won’t be paying for them.
With no additional funds authorized by Congress, the Biden administration won’t have the money to continue to buy Covid shots and therapies for free distribution. The money for the existing program could run out as early as January.
The Department of Health and Human Services has already locked up about 171 million doses of bivalent, omicron-targeted boosters, and the Food and Drug Administration okayed the updated shots, which are expected in pharmacies within days.
The federal government will turn over payment responsibility to private insurers, and that stands to benefit the two largest Covid vaccine producers, Pfizer Inc. (PFE, Financial) and Moderna Inc. (MRNA, Financial).
Pfizer had record sales in the second quarter, with its Covid-19 vaccine and antiviral drug contributing nearly $17 billion. The company expects the two products will rack up full-year sales of $54 billion.
Last month, Moderna maintained its full-year Covid vaccine sales forecast of $21 billion as canceled orders offset gains from new ones. The company took a $4.5 billion charge in the second quarter, including a $499 million charge related to vaccines that have expired.
The two vaccine producers think the move to private insurers may be a good thing for them. That’s because, according to them, they will have access to more distribution channels and the ability to utilize additional marketing tools.
“As we look to 2023, we are prepared for a shift to the commercial market in the U.S. for Covid boosters, where the market will be more fragmented than it was during the pandemic where the U.S. government was the sole purchaser of vaccines,” Moderna chief commercial officer Arpa Garay said during an investor call earlier this month, reported Fierce Pharma. "Moderna has talked to commercial payers, distributors and key pharmacies about the transition," she added.
As Pfizer’s Albert Bourla sees it, Pfizer can be “even more competitive” and its commercial skills are “even better suited” in an open market than in a government-contracting model.
Reading between the lines, these two statements might just mean the companies believe they will be able to charge private insurers more than they did the federal government.
Investors are hoping the change can help boost the share prices of both Pfizer and Moderna. Since Dec. 1 of last year, Pfizer shares have dropped 22%, which looks good next to Moderna, which has shed 64% of its value.
The two Covid vaccine leaders aren’t exactly bosom buddies, which could be contributing to their enthusiasm for the shift away from government purchasing.
Last week, Moderna sued Pfizer and its vaccine partner BioNTech SE (BNTX, Financial), contending their shot, known as Comirnaty, infringes on patents issued to Moderna between 2010 and 2016. Any settlement isn’t likely to be of material significance for Moderna. The company doesn’t even want to have Comirnaty taken off the market. It’s simply asking to be compensated for the alleged use of its intellectual property by Pfizer and BioNTech in developed countries after March 2022, likely because it has realized it would expose itself to bad press otherwise.
