September 22, 2020

Why It’s Unusual That The U.S. Committed to Buying Millions of Coronavirus Vaccine Doses

Credit…Pfizer, via Reuters

The Trump administration’s commitment on Wednesday to purchase 100 million doses of a not-yet-finished vaccine is unusual in two ways. The private sector buys most vaccines in the United States, not the government.

The drug industry has lobbied to keep things that way; private payers usually pay more for vaccines than the government does.

And when the government does buy vaccines — typically on behalf of low-income children — it is almost always vaccines that have already received safety and efficacy approval from the Food and Drug Administration.

“This is not at all typical, but I think it’s a great thing,” said Claire Hannan, executive director of the Association of Immunization Managers. “We’re in a public health crisis, and it’s great the government is going to be providing a vaccine for Americans.”

Widespread government purchasing of coronavirus vaccines may ultimately lower their price in the United States. That’s what happens in other countries, like Canada and many in Europe, where large, national health systems routinely buy vaccines, prescription drugs and many other medical services on behalf of citizens.

Experts in vaccine financing policy said the contract, with the pharmaceutical giant Pfizer and a smaller German biotechnology company, was risky because the drug could fail future trials. The Trump administration included a safeguard, and will not send the money until the vaccine proves to be safe and effective.

“It’s a gamble, but a reasonable one,” said Dr. Walter Orenstein, an epidemiologist at Emory University who worked for the Clinton administration as director of the United States immunization program. “What the government is doing here, which I think is a good thing, they’re helping gear up production so that if this vaccine is licensed, it will be available in large quantities.”

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Updated 2020-07-23T01:20:15.569Z

The Obama administration made a similar bet during the H1N1 (swine flu) pandemic, when it awarded the French drugmaker Sanofi $190 million in May 2009 to develop a vaccine against the nascent disease. The drug successfully finished the clinical trial process six months later.

In the United States, where medical prices are set in negotiations between providers and insurers, charges are typically higher and vary significantly from one place to another. A flu shot, for example, can cost between $28 and $80 depending on who delivers it.

The high prices that the American health care system allows — sometimes thousands of dollars for a simple test — have long been a focus of “Medicare for all” advocates, who argue that the country would be better served by a national health system that regulates health prices.

In moments of crisis, with H1N1 and now with the coronavirus, the government sometimes takes small steps in that direction, such as by buying medical goods that its citizens need but may not be able to afford or negotiate for on their own.

“We’re trying to make sure access for all Americans is equal,” said L.J. Tan, chief strategy officer at the Immunization Action Coalition. “The best way to do that is to make vaccines free for everybody.”

The U.S. government has also recently declared that insured Americans wouldn’t face fees for coronavirus testing, and it dedicated a new fund to cover the testing and treatment costs of the uninsured.

In these ways, the United States is acting more like Canada or European countries. Medical prices are typically lower when the government buys in bulk, for example. “The advantage of the government buying is the potential for a better price,” Dr. Orenstein said. “It can remove financial barriers to access.”

Government purchasing of vaccines has a contentious history in the United States. In the early 1990s, the Clinton administration tried to create a public program that would buy vaccines for all American children under 2.

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The program met opposition from drugmakers, who expressed concern that the lower government prices would reduce innovation. One drugmaker told The New York Times that it “may be unwilling to consider further development of vaccines” if the government didn’t set prices high enough to cover development costs.

Some legislators derided the program as a new and expensive entitlement. “The government is taking over the vaccine distribution system,” John Danforth, a Republican senator from Missouri, said at the time. “That’s crazy.”

Mr. Danforth criticized the program as “a new entitlement unrelated to financial need.”

Congress ultimately landed on a compromise: the Vaccines for Children Program, which buys vaccines for about half of Americans under 18. It serves children who are uninsured or those who still face high vaccine costs after their insurers pay, as well as Native American and Alaska Native children.

Data from the Vaccines for Children Program shows that the government typically gets better deals on vaccines. For example: It pays $21.71 for a common measles, mumps and rubella vaccine. Private insurers pay an average of $78.69 for the same drug.

The price for the new Pfizer vaccine — which could work out to somewhere between $20 and $40 depending on how many doses are needed — is in line with what the government pays for many childhood vaccines. (Americans would receive the vaccine free.)

“Forty dollars for a two-dose treatment is, in my opinion, very reasonable,” Dr. Tan said.

A 2014 study showed that vaccination rates among children had improved rapidly since the start of the Vaccines for Children Program. The authors concluded that the program’s ability to “remove financial and logistical barriers hindering vaccination for low-income children likely played a significant role in obtaining high coverage.”

In using the federal government’s purchasing power for a coronavirus vaccine, the Trump administration is taking an approach similar to one suggested by the Democratic presidential candidate Joe Biden. Mr. Biden’s coronavirus response plan calls for the nation to “ramp up the large-scale manufacturing of as many vaccine candidates as necessary” and to “ensure everyone, not just the wealthy and well connected,” has access to new therapies.