Will Medicare Cover the Coronavirus Vaccine?

There is finally good news on the coronavirus vaccine front. First Pfizer and BioNTech announced that their vaccine was able to prevent 90% of cases; the companies raised that number to 95% after they concluded their efficacy trial. In between those announcements, Moderna released data showing that its vaccine was 94.5% effective. Health and Human Services Secretary Alex Azar said he expected both Pfizer and Moderna to apply for FDA emergency use authorization very soon.

“Hope and help are on the way,” Azar said during the White House’s Coronavirus task force briefing Thursday. High-risk people could begin receiving the vaccines in a few weeks.

But once a vaccine is developed and approved for use, how much will it cost? For the approximately 120 million Americans who receive Medicare and Medicaid, the answer will be nothing. The Centers for Medicare and Medicaid Services released a plan to cover vaccines that receive emergency authorization from the FDA — a shift from the current policy. While it remains unknown how much the rest of the population will pay for the vaccine, seniors can rest easy knowing the government will foot the bill for their doses.

Here’s a look at the many different factors that go into the price of a COVID-19 vaccine. A number of factors are at play, but the goal remains recovery from the coronavirus.

Unlike many other developed countries, the United States allows pharmaceutical companies to set their own prices for prescription drugs, the Los Angeles Times reported.

Because pharmaceutical companies call the shots in terms of pricing in the U.S., it often has higher drug prices than other countries. A 2017 study that compared the cost of cancer drugs in Australia, China, India, Israel, South Africa, the United Kingdom and the United States found that the U.S. had the highest drug prices.

Australia, Canada and the United Kingdom — which all have universal healthcare — provide routine vaccinations at no cost. In Germany, insurance companies cover the cost of vaccinations recommended by the Vaccination Commission, Business Insider reported. And Singapore strictly regulates vaccine prices.

The pharmaceutical company Celgene defended its recent price hike of two of its key cancer drugs by stating that “pricing decisions reflect the benefits that our innovative therapies provide to patients, the healthcare system and society,” in a statement given to FiercePharma.

Los Angeles Times business columnist David Lazarus explains why this type of pricing model is so dangerous: “When you’re pricing a drug relative to its ‘benefits’ rather than its actual production cost, you can charge as much as you like. This is why a vial of insulin that sold for $20 a quarter-century ago now sells for about $300.”

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It’s not just the relative benefit that determines how much a vaccine will cost. Other factors that are taken into consideration include the manufacturing process, the availability of ingredients, the number of doses needed and how it needs to be stored and transported, Business Insider reported.

If the coronavirus vaccine uses an adjuvant, or booster, that can make the initial price higher. An adjuvant enhances immune response, however, so it would lower the number of doses required.

The vaccine will likely cost more right when it comes out than it will in a few years. For example, tetanus shots — which were developed in the 1920s — cost less than $35, while the newer HPV vaccine Gardasil costs around $230 per dose, Business Insider reported.

When there is a limited supply or a limited number of suppliers, price gouging can occur. In 2004, 100 million doses of flu shots that were manufactured at a factory in England were deemed unsafe by the U.S. Food and Drug Administration. This left only one supplier for the U.S.’s flu shots for the year, which allowed the company to inflate prices. Some hospitals reported being charged $100 for a dose that would normally cost $12 to $20, Business Insider reported.

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In a February 2020 letter to President Trump, 46 Congressional Democrats asked for the government to actively prevent potential price gouging for a coronavirus vaccine.

“We write to ask you to ensure that any vaccine or treatment developed with U.S. taxpayer dollars be accessible, available and affordable,” the letter stated. “That goal cannot be met if pharmaceutical corporations are given authority to set prices and determine distribution, putting profit-making interests ahead of public health priorities.”

And now it’s not only Democrats who are asking to ensure fair pricing for a vaccine. In June, two bipartisan bills aimed at preventing price gouging for taxpayer-funded treatments and vaccines for the coronavirus were introduced: the Make Medications Affordable by Preventing Pandemic Price Gouging Act of 2020, sponsored by Rep. Jan Schakowsky, and the Taxpayer Research and Coronavirus Knowledge Act, sponsored by Rep. Lloyd Doggett.

If a drug is developed entirely in the private sector, the government might not be able to have a say in its pricing, MarketWatch reported.

One of the companies that’s working on a vaccine, EpiVax, which makes vaccines for smallpox, tuberculosis and influenza, told Business Insider in early May that the vaccine could be very expensive to create. Specifically, EpiVax CEO Annie De Groot told that site that it could cost at least $300 million to get EPV-CoV19 to the finish line.

During a Sept. 25 Zoom webinar, EpiVax revealed it is working to raise $3 million to get the vaccine into clinical trials and hopes to meet its fundraising goal by the end of October. The company has entered the manufacturing phase of its new vaccine, based on previously-approved EPA processes.

EpiVax is just one of nearly 200 groups trying to develop a vaccine, however. And their price estimate for how much it will cost to develop a vaccine is actually on the lower end.

A 2018 study published in The Lancet found that it can cost $1 billion to fund the research and development of a new vaccine. Because of the high cost, many vaccine manufacturers accept funding from the government, which means the government could have a say in the pricing, MarketWatch reported.

The U.S. government has invested more than $9 billion in companies pursuing a coronavirus vaccine, USA Today reported. That includes $2.1 billion — plus $31 million as a base award — to Sanofi Pasteur and GSK to complete development and manufacture 100 million doses by the end of the year. Pfizer and BioNTech will receive $1.95 billion if the companies receive FDA approval for their candidate vaccine and produce 100 million doses by the end of 2020.

Novavax will also score $1.6 billion to develop, test and produce 300 million doses of its vaccine candidate — possibly by the end of the year. Janssen Research & Development received $1.5 billion for research, the Phase 1 trial and the production of 100 million doses of its vaccine candidate. AstraZeneca and Oxford will receive up to $1.2 billion to produce 300 million doses of their candidate vaccine, as soon as the end of the year. Moderna was awarded $955 million to develop its vaccine and Merck and IAVI USA received $38 million for the vaccine the two companies are collaborating on.

Under the Pfizer agreement, Americans would receive the vaccine for free.

Despite the high cost of developing a coronavirus vaccine, EpiVax and other pharmaceutical companies have said that they are not seeking profits.

“We are not looking to make a profit on this pandemic, but to simply cover costs,” De Groot told Business Insider.

Similarly, Moderna and Johnson & Johnson told the site that they would be offering fair pricing for a potential vaccine: Moderna CEO Stephane Bancel told Business Insider that “there is no world, I think, where we would contemplate to price this higher than other respiratory-virus vaccines,” and a representative for Johnson & Johnson stated, “we are on the record as saying it will be on a not-for-profit basis … essentially at cost.”

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In general, vaccines are not exorbitantly expensive. According to figures from the Centers for Disease Control and Prevention, the private sector cost for common adult vaccines ranges from $26 per dose on the low end to $228 per dose on the high end, though most vaccines cost less than $200 per dose.

The leading pneumonia vaccine, Prevnar 13, costs $202 per dose, and the typical pediatric patient gets four doses, bringing the cost per patient to $808. If the coronavirus vaccine is priced similarly to other respiratory-virus vaccines — as the Moderna CEO said it would be — and it requires the same number of doses, that could mean the coronavirus vaccine would cost around $800 per patient.

Although it’s unknown what the out-of-pocket costs will be for Americans who pay for the vaccine with no insurance or with a co-pay, Medicare recipients will be able to receive the vaccine at no cost. The Coronavirus Aid, Relief and Economic Security Act pledges to cover the full cost of the shot for these individuals.

Healthcare industry attorney Maria D. Garcia told Business Insider that insurers will likely cover the costs of the coronavirus vaccine.

“[U.S. health insurance providers] will feel the pressure from public opinion and the government to make the vaccine widely available and affordable,” she told the site. “It would be a PR nightmare to not cover the vaccine.”

Even if you don’t have to pay anything out of pocket for a coronavirus vaccine, it’s likely you’ll pay for it in the end as premiums are likely to rise if the vaccine is fully covered by insurance, Business Insider reported.

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Laura Woods and Mark Evitt contributed to the reporting for this article.