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Too Little, Too Late: Welcome to the World of COVID-19 Vaccine Price Gouging
Why the Biden Administration warning today has little impact on Pharma CEOs
Last year, Pfizer’s CEO announced that once the government ended its public health emergency for the pandemic, the company planned to quadruple the price it charged Americans for its COVID-19 vaccine. The new price, $130, was a 10,000% markup over what analysts believe is Pfizer’s manufacturing cost.
At the price it charged the government, $30, Pfizer had still made a killing. In its first full year of sales, Pfizer had $36.7 billion in worldwide vaccine revenue, representing a stunning 45% of all its sales. It was the biggest selling drug in pharma history in its debut. Last year, Pfizer pulled in another $32 billion.
Moderna added $19 billion last year for its mRNA vaccine. Not bad for a company that had never managed to successfully get a single drug to the market before its Covid vaccine. Little wonder that Moderna followed Pfizer’s lead in setting its upcoming vaccine prices at $130. Evidently no one is aware, or cares, that price fixing is still illegal.
The U.S. government gave billions to drug companies in the frenetic rush to find a vaccine. That is the way it works with Washington spending taxpayer money and drug companies making outsized profits. A study completed in 2019 disclosed that the National Institutes of Health had spent $900 billion on research grants since the 1930s. That money was indispensable to the development of dozens of blockbuster drugs, whose billions in profits went to the pharmaceutical companies that managed to obtain exclusive patents.
When it came to COVID-19, there was an inflection point early in the scare. In March 2020, the federal government gave the first of several billion-dollar grants to drug companies to hasten the work on a vaccine. The money was given without any strings. A few lawmakers had requested that the money should be given only if the companies agreed to share the research and not own any exclusive patents on a future vaccine. They also wanted a system to ensure low prices. That is what happened in World War II when the government had a successful, crash program to manufacture a new wonder drug, penicillin.
The fright over Covid overcame any concerns that the pharmaceutical companies might eventually price gouge.
Pfizer and its mRNA competitor, Moderna, took in $30 billion either from NIH funding, federal contracts to purchase the vaccines, or direct grants.
None of this is secret. None of it is news to those following the money when it comes to Covid vaccines. That is why it was surprising to see the Biden administration complain only today about Pfizer’s extraordinary new pricing. Health and Human Services Secretary, Xavier Becerra, released an open letter addressed to the CEOs of Pfizer, Moderna and Novavax.
“Updated COVID-19 vaccines entering the market this fall should be priced at a reasonable rate, reflective of the value that you have obtained through U.S. government investment,” wrote Becerra. “Price gouging behavior takes advantage of the trust the American people have placed in you through the COVID-19 response.”
In March 2020, I told The Intercept, that “Pharmaceutical companies view COVID-19 as a once-in-a-lifetime business opportunity.” The pandemic “will potentially be a blockbuster for the industry in terms of sales and profits; the worse the pandemic gets, the higher their eventual profit.”
At that time, I said that the drug industry lobbyists who had won the billions in federal grants without any strings attached “deserved a medal from their pharma clients…To allow them to have this power during a pandemic is outrageous.”
Bottom line: it is good to see the head of HHS finally talking about COVID-19 vaccines and “price gouging” in the same sentence. It is long overdue. However, without any robust action from the federal government, it is only talk. It does not scare any of the Pharma CEOs who have enjoyed record company revenues, profits, and bonuses, on the back of COVID-19. Too little. Too late.