Democratic lawmakers and some Republicans pressed Moderna’s CEO to lower the price of its COVID-19 vaccine (Spikevax) during a hearing of the Senate Health, Education, Labor, and Pensions (HELP) Committee on Wednesday.
U.S. taxpayers spent $12 billion on the research, development, and procurement of the COVID vaccine made by Moderna and the NIH, committee chairman Sen. Bernie Sanders (I-Vt.) said during his opening statement.
“And here is the thank-you that the taxpayers of this country received from Moderna for that huge investment,” he said. “They are … proposing to quadruple the price of the COVID vaccine to as much as $130, once the government stockpile runs out.”
Good News, Bad News
The average price of a dose of COVID vaccine — either Moderna’s or Pfizer’s — from 2020 to 2022 was $20.69, according to the Kaiser Family Foundationopens in a new tab or window. The Moderna vaccine costs roughly $3 to manufacture, according to Sanders.
In mid-February, after the HELP Committee hearing was scheduled, Sanders said, Moderna announced that it would create a patient assistance program and provide the vaccine for free to “uninsured and underinsured”opens in a new tab or window patients — a move Sanders described as “good news.”
However, the “bad news” is that such programs are often “poorly designed and extremely difficult” to navigate, the senator said, adding that he would call on Moderna CEO Stéphane Bancel, the sole witness during the first panel of the hearing, to ensure that Moderna’s own program is “simple, non-bureaucratic, and in fact gets [the vaccine] out to the people who need it.”
Sen. Bill Cassidy, MD (R-La.), the committee’s ranking member, said that COVID-19 cost the U.S. economy approximately $26 billion a day from 2020 to 2021, and according to the International Monetary Fund, the amount that taxpayer dollars invested in vaccines “would have paid for itself had it cut the duration of the pandemic by 12 hours.”
“Now, it’s easy to criticize and decry capitalism, but it is the reason that we developed multiple world-leading vaccines in 10 months, and is a reason that hundreds of thousands, if not millions, of Americans are still alive today,” said Cassidy. “We should not hate the thought of a person or a company making a profit [so much] that we lose sight of the ideas and accomplishments … their profit is rewarding.”
New Risks, Costs
Bancel defended his company’s decision to raise the cost of the vaccine based both on the value to American health and the changes, new risks, and costs Moderna will take on once the public health emergency ends and government involvement in COVID vaccination recedes.
“The U.S. vaccination program is responsible for an estimated $5 trillion in economic value, prevention of 18 million hospitalizations in this country and 3 million American lives saved,” he said, citing figures in a Commonwealth Fund analysisopens in a new tab or window.
The CEO further detailed the added risks and responsibilities that Moderna would be subjected to once the U.S. government transitions from the “pandemic to endemic” phase of its response, including increased supply chain complexity, “wastage risk,” and the fact that the drug developer will also be “losing economies of scale.”
As an example, during the pandemic, Moderna had one customer: the U.S. government. Now it will have 10,000 customers. Also, during the pandemic Moderna only delivered products to three CDC warehouses; now it must manage the process of distributing products to 60,000 pharmacies and doctor’s offices. Additionally, during the pandemic, each vial held 10 doses; in the endemic market there will be single-dose vials or pre-filled syringes.
“On top of all this, we’re expecting a 90% — nine-zero — reduction in demand,” Bancel said.
Later in the hearing, responding to questions from Sen. Patty Murray (D-Wash.) about the increased costs of the vaccine, Bancel spoke about the cost of waste and uncertainty. He noted that in the fall of 2022, the U.S. government purchased 160 million doses, but only around 50 million doses actually “got in arms,” according to CDC data.
“But the government bought everything,” he said. So, even the argument that the vaccines were estimated to cost $20, when the government was the only customer is flawed, because that wasn’t the cost to the U.S. taxpayer per dose, said Bancel. “If you do the math, it’s around $80.”
While many Republican committee members, including Cassidy, seemed to suggest that Moderna was being unfairly punished for its success, Sen. Mike Braun (R-Ind.) was not one of them.
Braun compared the drugmaker to “an unregulated utility” that shuns both transparency and competition.
“Why do you need this much money? A 400% price increase is preposterous, especially when you’ve been given all this government largess, and it’s even going to protect you from all these lawsuits,” Braun said, alluding to Genevant Sciences and Arbutus Biopharma’s patent infringement lawsuitopens in a new tab or window related to the production and sale of Moderna’s COVID vaccine.
Questions on Distribution Costs
Braun also took issue with the Bancel’s argument that increased distribution costs justify a price increase. As for Moderna’s distribution system, Braun asked, “Why is it something that you sound like you’ve got to recreate? Where’s it been up to this point?” Braun suggested simply use the same distribution system as Moderna uses for its flu vaccine, and Bancel countered that Moderna’s flu vaccine is still in clinical studies.
“You may not have one on the market, but there’s a distribution network for them from your competitors,” Braun said. “Why wouldn’t you be able to get into that?”
Bancel clarified that the company would not be “build[ing] our own warehouses” but it does have to set up contracts with companies, and those didn’t exist during the pandemic, when the CDC had the responsibility and covered the costs of getting the products to hospitals and pharmacies, he said.
In closing the hearing, Sanders asked the same version of a question he put to Bancel multiple times that day: “Are you prepared to substantially charge less for the vaccine to the United States government and our agencies?”
Bancel began to rehash his points around the uncertainty of the volume of product that’s needed, and the “increased complexity” of the process, but Sanders cut him off. “You have complexity, but you have money for stock buybacks by the billions,” he said and tried another tack, asking Bancel to pledge that the price Moderna would charge would at least be lower than what other countries pay.
“Or once again, are we going to pay the highest prices?” asked Sanders.
“Mr. Chairman, the price will depend on the value in each country — the cost of healthcare is different in each country,” Bancel said. Sanders pressed on, looking for a different answer, urging Bancel to state that the price U.S. taxpayers pay would be less than that of other countries.
“I cannot say the price will be lower [than] in other countries,” Bancel said.